Hancock Park Income Plunges Amid Investment Losses

TL;DR

**Hancock Park is bleeding cash and its investments are tanking; get out now.**

AI Summary

Hancock Park Corporate Income, Inc. reported a significant decline in net assets and profitability for the nine months ended September 30, 2025. Total investment income decreased by 21.7% to $3,588,227 from $4,590,792 in the prior year period. Net investment income also saw a substantial drop of 35.2% to $855,397 from $1,320,585. The company experienced a net loss on investments of $2,044,379, a sharp increase from the $809,209 loss in the same period of 2024, primarily due to a net realized loss of $809,620 and net unrealized depreciation of $1,245,800. Consequently, the net decrease in net assets resulting from operations was $1,188,982, a stark contrast to the net increase of $511,376 in the prior year. The company's total assets decreased to $32,213,667 from $38,783,709, and net asset value per share fell to $8.91 from $10.21 as of December 31, 2024. Total liabilities also decreased to $18,544,024 from $21,792,705, driven by a reduction in the revolving line of credit to $2,150,000 from $5,265,000.

Why It Matters

Hancock Park Corporate Income's significant decline in net investment income and substantial investment losses signal a challenging environment for its debt and equity investments, particularly in middle-market loans and structured credit. This performance could erode investor confidence, especially given the 13% drop in NAV per share to $8.91. For employees and customers of its portfolio companies, this could imply tighter credit conditions or increased scrutiny. In a competitive landscape, this underperformance might make it harder for Hancock Park to attract new capital or retain existing investors, potentially impacting its ability to compete with larger, more diversified BDCs like OFS Capital Corporation, which also operates under OFS Advisor.

Risk Assessment

Risk Level: high — The company reported a net decrease in net assets from operations of $1,188,982 for the nine months ended September 30, 2025, a significant reversal from a $511,376 increase in the prior year. This is primarily driven by a net loss on investments of $2,044,379, including $1,245,800 in net unrealized depreciation, indicating substantial portfolio valuation challenges.

Analyst Insight

Investors should consider divesting from Hancock Park Corporate Income, Inc. given the consistent decline in net investment income, significant unrealized losses, and decreasing NAV per share. The company's inability to generate positive returns from operations suggests fundamental issues with its investment strategy or market conditions for its specific asset classes.

Financial Highlights

debt To Equity

1.36

revenue

$3,588,227

operating Margin

-97.5%

total Assets

$32,213,667

total Debt

$17,065,199

net Income

-$1,188,982

eps

N/A

gross Margin

N/A

cash Position

$1,089,063

revenue Growth

-21.7%

Revenue Breakdown

Key Numbers

• $3,588,227 — Total investment income (Decreased by 21.7% for the nine months ended September 30, 2025, from $4,590,792 in 2024)
• $855,397 — Net investment income (Decreased by 35.2% for the nine months ended September 30, 2025, from $1,320,585 in 2024)
• $2,044,379 — Net loss on investments (Increased significantly for the nine months ended September 30, 2025, from $809,209 in 2024)
• $1,188,982 — Net decrease in net assets from operations (For the nine months ended September 30, 2025, compared to a $511,376 increase in 2024)
• $8.91 — Net asset value per share (Decreased from $10.21 as of December 31, 2024)
• $30,740,401 — Non-control/non-affiliate investments, at fair value (Decreased from $36,054,042 as of December 31, 2024)
• $2,150,000 — Revolving line of credit (Decreased from $5,265,000 as of December 31, 2024)
• 1,534,942 — Common shares outstanding (Decreased from 1,664,123 as of December 31, 2024)

Key Players & Entities

• Hancock Park Corporate Income, Inc. (company) — Registrant
• OFS Advisor (company) — Investment adviser
• Banc of California (company) — Lender for revolving credit facility
• The HCM Master Fund Limited (company) — Purchaser of unsecured note
• OFS Capital Management, LLC (company) — Wholly owned subsidiary of OFSAM and registered investment advisor
• OFS Capital Corporation (company) — Publicly traded BDC advised by OFS Advisor
• SEC (regulator) — Securities and Exchange Commission
• FASB (regulator) — Financial Accounting Standards Board

FAQ

Risk Factors

• Investment Value Fluctuations [high — market]: The company experienced a net loss on investments of $2,044,379 for the nine months ended September 30, 2025, a significant increase from $809,209 in the prior year. This was driven by net realized losses of $809,620 and net unrealized depreciation of $1,245,800, indicating substantial market volatility impacting asset values.
• Declining Net Asset Value and Profitability [high — financial]: Net investment income decreased by 35.2% to $855,397 for the nine months ended September 30, 2025, from $1,320,585 in the prior year. Consequently, net assets decreased by $1,188,982, a sharp reversal from a $511,376 increase in 2024, and net asset value per share fell to $8.91 from $10.21.
• Reduced Investment Portfolio Size [medium — financial]: Total investment assets decreased to $30,740,401 as of September 30, 2025, from $36,054,042 as of December 31, 2024. This 14.7% reduction suggests a contraction in the company's investment base, potentially impacting future income generation.
• Leverage Reduction [medium — financial]: The company reduced its revolving line of credit from $5,265,000 as of December 31, 2024, to $2,150,000 as of September 30, 2025. While this lowers financial risk, it also indicates a potential deleveraging strategy or reduced access to capital.
• Increased Operating Expenses Relative to Income [medium — operational]: Despite a decrease in total investment income, certain operating expenses like administrative fees and professional fees remained relatively high, contributing to the significant drop in net investment income. Total operating expenses were $2,755,395 for the nine months ended September 30, 2025.

Industry Context

Hancock Park Corporate Income, Inc. operates in the business development company (BDC) sector, which typically invests in debt and equity of small to medium-sized private companies. The sector is sensitive to interest rate changes and overall economic conditions. Recent market volatility and rising interest rates have put pressure on investment income and asset valuations across the BDC industry.

Regulatory Implications

As a BDC, the company is subject to regulations designed to protect investors, including rules on leverage, asset coverage, and distributions. Changes in market conditions or investment performance could trigger covenant breaches or require adjustments to comply with regulatory requirements.

What Investors Should Do

1. Monitor investment performance closely for further deterioration or signs of recovery, paying attention to realized and unrealized gains/losses.
2. Analyze the drivers of the significant decrease in net investment income to understand the sustainability of current revenue streams.
3. Evaluate the company's strategy for managing its investment portfolio and liabilities in light of the reduced asset base and deleveraging.
4. Assess the impact of market volatility on the company's ability to generate future income and preserve capital.

Key Dates

• 2025-09-30: Nine months ended — Reporting period for significant declines in investment income, net investment income, and net assets, alongside increased investment losses.
• 2024-12-31: Year-end — Prior period benchmark for asset values, liabilities, and net asset value per share, showing a substantial decrease by September 30, 2025.

Glossary

PIK interest income

Payment-in-kind interest income, where interest is paid in the form of additional debt or equity rather than cash. (Contributed to investment income, showing a positive growth trend in this specific category.)

Net realized loss

Loss incurred when an investment is sold for less than its purchase price. (A significant component of the total net loss on investments, indicating losses from selling assets.)

Net unrealized depreciation

A decrease in the fair value of investments that have not yet been sold. (Another major contributor to the total net loss on investments, reflecting a decline in the market value of holdings.)

Net asset value per share

The value of a company's assets minus its liabilities, divided by the number of outstanding shares. (Decreased significantly from $10.21 to $8.91, reflecting the overall decline in the company's financial health and investment performance.)

Revolving line of credit

A flexible loan that allows a borrower to draw down, repay, and redraw funds up to a certain limit. (The reduction in this line of credit from $5,265,000 to $2,150,000 indicates a deleveraging or reduced borrowing capacity.)

Year-Over-Year Comparison

Compared to the prior year period, Hancock Park Corporate Income, Inc. has experienced a significant downturn. Total investment income fell by 21.7% to $3,588,227, and net investment income dropped by 35.2% to $855,397. The company shifted from a net increase in net assets of $511,376 to a net decrease of $1,188,982. Key risks include a substantial increase in net losses on investments, a decrease in total assets by $6,570,042, and a fall in net asset value per share from $10.21 to $8.91.

Key Financial Figures

• $0.001 — of shares of the issuer's common stock, $0.001 par value, outstanding as of November 5
• $15,000,000 B — in an aggregate principal amount up to $15,000,000 BDC Business Development Company under th
• $200,000,000 — Offering Continuous offering of up to $200,000,000 of shares of the Company's common stock
• $15,000,000 — ote in an aggregate principal amount of $15,000,000 HANCOCK PARK CORPORATE INCOME, INC.

Filing Documents

• han-20250930.htm (10-Q) — 2860KB
• hpci2025q3ex311.htm (EX-31.1) — 11KB
• hpci2025q3ex312.htm (EX-31.2) — 11KB
• hpci2025q3ex321.htm (EX-32.1) — 6KB
• hpci2025q3ex322.htm (EX-32.2) — 6KB
• 0001661306-25-000087.txt ( ) — 11977KB
• han-20250930.xsd (EX-101.SCH) — 62KB
• han-20250930_cal.xml (EX-101.CAL) — 51KB
• han-20250930_def.xml (EX-101.DEF) — 304KB
• han-20250930_lab.xml (EX-101.LAB) — 619KB
• han-20250930_pre.xml (EX-101.PRE) — 440KB
• han-20250930_htm.xml (XML) — 2466KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 3 Item 1.

Financial Statements

Financial Statements 3 Consolidated Statements of Assets and Liabilities as of September 3 0 , 202 5 (unaudited) and December 31, 202 4 3 Consolidated Statements of Operations for the Three and Ni ne Months Ended September 3 0 , 202 5 (unaudited) and 202 4 (unaudited) 4 Consolidated Statements of Changes in Net Assets for the Three and Nine Months Ended September 3 0 , 202 5 (unaudited) and 202 4 (unaudited) 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 3 0 , 202 5 (unaudited) and 202 4 (unaudited) 7 Consolidated Schedules of Investments as of September 3 0 , 202 5 (unaudited) and December 31, 202 4 8

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 20 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 37 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 50 Item 4.

Controls and Procedures

Controls and Procedures 51

OTHER INFORMATION

PART II. OTHER INFORMATION 52 Item 1.

Legal Proceedings

Legal Proceedings 52 Item 1A.

Risk Factors

Risk Factors 52 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 52 Item 3. Defaults Upon Senior Securities 53 Item 4. Mine Safety Disclosures 53 Item 5. Other Information 53 Item 6. Exhibits 54

SIGNATURES

SIGNATURES 55 OFS , HPCI , OFS Capital and OFS Credit are registered trademarks of Orchard First Source Asset Management, LLC. OFS Capital Management is a trademark of Orchard First Source Asset Management, LLC. All other trademarks or trade names referred to in this Quarterly Report on Form 10-Q are the property of their respective owners.

Forward-Looking Statements

Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "would," "should," "targets," "projects," and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation: our ability and experience operating a BDC or maintaining our qualification as a RIC under the Code; our dependence on key personnel; our ability to maintain or develop referral relationships; our ability to replicate historical results; the ability of OFS Advisor to identify, invest in and monitor companies that meet our investment criteria; the belief that the carrying amounts of our financial instruments, such as cash, cash equivalents, receivables and payables approximate the fair value of such items due to the short maturity of such instruments and that such financial instruments are held with high credit quality institutions to mitigate the risk of loss due to credit risk; actual and potential conflicts of interest with OFS Advisor and other affiliates of OFSAM Holdings; constraint on investment due to access to material nonpublic information; restrictions on our ability to enter into transactions with our affiliates; the use of borrowed money to finance a portion of our investments; our ability to incur additional

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements Hancock Park Corporate Income, Inc. Consolidated Statements of Assets and Liabilities (unaudited) September 30, 2025 December 31, 2024 Assets: Non-control/non-affiliate investments, at fair value (amortized cost of $ 35,441,212 and $ 39,509,053 , respectively) $ 30,740,401 $ 36,054,042 Cash and cash equivalents 1,089,063 980,084 Interest receivable 133,604 163,585 Receivable for investments sold 220,000 1,501,861 Prepaid expenses and other assets 30,599 84,137 Total assets $ 32,213,667 $ 38,783,709 Liabilities: Revolving line of credit $ 2,150,000 $ 5,265,000 Unsecured note (net of discount and deferred debt issuance costs of $ 84,801 and $ 139,317 , respectively) 14,915,199 14,860,683 Payable for investments purchased — 257,393 Due to adviser and affiliates (Note 3) 419,777 507,133 Payable for repurchases of common stock 391,621 294,331 Distributions payable 281,332 140,785 Interest payable 78,454 81,861 Other liabilities 307,641 385,519 Total liabilities 18,544,024 21,792,705 Commitments and contingencies (Notes 3 and 6) Net assets: Common stock, par value of $ 0.001 per share; 20,000,000 shares authorized, 1,534,942 and 1,664,123 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 1,535 1,664 Paid-in capital in excess of par 20,938,943 22,203,936 Total accumulated losses ( 7,270,835 ) ( 5,214,596 ) Total net assets 13,669,643 16,991,004 Total liabilities and net assets $ 32,213,667 $ 38,783,709 Number of common shares outstanding 1,534,942 1,664,123 Net asset value per share $ 8.91 $ 10.21 See Notes to Consolidated Financial Statements (unaudited). 3 Hancock Park Corporate Income, Inc. Consolidated Statements of Operations (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Investment income Interest income $ 1,001,286 $ 1,361,546 $ 3,313,809 $ 4,371,675 PIK interest income 79,237 57,97

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