Kayne DL 2021 Sees Net Asset Growth Amid Rising Income, Unrealized Losses

TL;DR

**Kayne DL 2021 is growing its asset base and income, but watch out for those unrealized losses dragging down overall performance.**

AI Summary

Kayne DL 2021, Inc. reported a net increase in net assets from operations of $7,509,000 for the three months ended September 30, 2025, a slight increase from $7,297,000 in the prior year period. For the nine months ended September 30, 2025, the net increase was $22,309,000, up from $19,873,000 in 2024. Total investment income rose to $9,330,000 for the three-month period in 2025, compared to $7,658,000 in 2024, and to $25,965,000 for the nine-month period, up from $20,792,000. Expenses also increased, with total expenses reaching $888,000 for the three months and $2,650,000 for the nine months in 2025, up from $701,000 and $2,020,000 respectively. The company experienced a net change in unrealized losses on investments of $(933,000) for the three months and $(1,006,000) for the nine months ended September 30, 2025, a reversal from unrealized gains of $340,000 and $1,101,000 in the corresponding 2024 periods. Net assets grew significantly to $349,932,000 as of September 30, 2025, from $272,473,000 at December 31, 2024, driven by $75,000,000 from the issuance of common shares and $3,267,000 from reinvestment of dividends for the nine months. The company's investment portfolio, at fair value, increased to $330,601,000 from $261,833,000 over the same period.

Why It Matters

For investors, Kayne DL 2021, Inc.'s significant increase in net assets to $349,932,000 and investment income to $25,965,000 for the nine months ended September 30, 2025, signals robust growth in its investment activities. However, the shift from unrealized gains to unrealized losses on investments, totaling $(1,006,000) for the nine-month period, warrants close attention as it could indicate potential valuation challenges in its portfolio, impacting future returns. The company's reliance on common share issuances, bringing in $75,000,000, suggests an active capital raising strategy to fuel its investment growth, which could dilute existing shareholders if not managed effectively. In a competitive market for private credit and direct lending, the ability to generate consistent investment income while managing unrealized losses will be crucial for Kayne DL 2021, Inc. to maintain its competitive edge and deliver value to its investors.

Risk Assessment

Risk Level: medium — The company reported a net change in unrealized losses on investments of $(1,006,000) for the nine months ended September 30, 2025, a significant reversal from a $1,101,000 gain in the prior year. This indicates potential deterioration in the fair value of its portfolio companies. Additionally, the company's net asset value per common share slightly decreased to $5,246 as of September 30, 2025, from $5,259 at December 31, 2024, despite substantial capital share transactions, suggesting underlying valuation pressures.

Analyst Insight

Investors should scrutinize the composition of Kayne DL 2021, Inc.'s investment portfolio and the specific drivers behind the $(1,006,000) in unrealized losses. Consider if these losses are concentrated in particular sectors or types of investments. Monitor future filings for trends in fair value adjustments and the company's strategy for mitigating these risks, especially given the active issuance of common shares totaling $75,000,000.

Financial Highlights

debt To Equity

0.03

revenue

$9,330,000

operating Margin

90.5%

total Assets

$359,241,000

total Debt

$9,309,000

net Income

$7,509,000

eps

$117

gross Margin

N/A

cash Position

$2,179,000

revenue Growth

+21.8%

Revenue Breakdown

Key Numbers

• $7,509,000 — Net Increase in Net Assets from Operations (3 months) (Increased from $7,297,000 in Q3 2024)
• $22,309,000 — Net Increase in Net Assets from Operations (9 months) (Increased from $19,873,000 in the first nine months of 2024)
• $9,330,000 — Total Investment Income (3 months) (Increased from $7,658,000 in Q3 2024)
• $25,965,000 — Total Investment Income (9 months) (Increased from $20,792,000 in the first nine months of 2024)
• $(933,000) — Net Change in Unrealized Gains (Losses) on Investments (3 months) (Shifted from a gain of $340,000 in Q3 2024)
• $(1,006,000) — Net Change in Unrealized Gains (Losses) on Investments (9 months) (Shifted from a gain of $1,101,000 in the first nine months of 2024)
• $349,932,000 — Total Net Assets (Increased from $272,473,000 at December 31, 2024)
• $75,000,000 — Proceeds from Issuance of Common Shares (9 months) (Significant capital infusion for the period)
• $330,601,000 — Investments, at fair value (Increased from $261,833,000 at December 31, 2024)
• $5,246 — Net Asset Value Per Common Share (Slight decrease from $5,259 at December 31, 2024)

Key Players & Entities

• Kayne DL 2021, Inc. (company) — Registrant
• KA Credit Advisors II, LLC (company) — Advisor
• United States Securities and Exchange Commission (regulator) — Filing oversight
• Fastener Distribution Holdings, LLC (company) — Portfolio company (Aerospace & defense)
• Vitesse Systems Parent, LLC (company) — Portfolio company (Aerospace & defense)
• Speedstar Holding LLC (company) — Portfolio company (Automobile components)
• WAM CR Acquisition, Inc. (Wolverine) (company) — Portfolio company (Automobile components)
• Alcami Corporation (company) — Portfolio company (Biotechnology)
• Ruff Roofers Buyer, LLC (company) — Portfolio company (Building products)
• US Anchors Group, Inc. (Mechanical Plastics Corp.) (company) — Portfolio company (Building products)

FAQ

Risk Factors

• Unrealized Losses on Investments [high — market]: The company experienced a net change in unrealized losses on investments of $(933,000) for the three months ended September 30, 2025, a significant shift from an unrealized gain of $340,000 in the prior year period. For the nine-month period, the net change in unrealized losses was $(1,006,000), compared to an unrealized gain of $1,101,000 in 2024.
• Investment Portfolio Volatility [medium — financial]: The fair value of the investment portfolio increased to $330,601,000 as of September 30, 2025, from $261,833,000 at December 31, 2024. However, the shift to net unrealized losses indicates potential volatility and market risk impacting the value of these investments.
• Increasing Operating Expenses [medium — operational]: Total expenses increased to $888,000 for the three months ended September 30, 2025, up from $701,000 in the prior year period. For the nine-month period, expenses rose to $2,650,000 from $2,020,000, primarily driven by higher management fees and professional fees.
• Dependence on Investment Performance [high — financial]: The company's net assets and overall financial performance are heavily reliant on the performance of its investment portfolio. A sustained downturn in market conditions could negatively impact investment income and net asset value.

Industry Context

Kayne DL 2021, Inc. operates within the investment management industry, which is characterized by intense competition and a strong reliance on market performance. The sector is influenced by macroeconomic factors, interest rate environments, and investor sentiment. Companies in this space focus on generating investment income and capital appreciation for their clients and shareholders.

Regulatory Implications

As a publicly traded entity, Kayne DL 2021, Inc. is subject to SEC regulations and reporting requirements, including the timely filing of 10-Q and 10-K reports. Compliance with securities laws and accounting standards is crucial to maintain investor confidence and avoid penalties.

What Investors Should Do

1. Monitor Unrealized Losses
2. Evaluate Expense Management
3. Assess Capital Infusion Impact
4. Review Net Asset Value Growth

Key Dates

• 2025-09-30: Quarterly Report (10-Q) Filing — Provides updated financial performance and condition for the period ending September 30, 2025, including investment income, expenses, and net asset changes.
• 2025-09-30: Net Assets as of Period End — Total net assets reached $349,932,000, reflecting growth driven by capital infusions and operational performance.
• 2025-09-30: Investment Portfolio Fair Value — The investment portfolio's fair value stood at $330,601,000, indicating an increase in the company's core assets.
• 2024-12-31: Previous Year-End Net Assets — Provides a baseline for comparison, showing net assets of $272,473,000 at the end of the prior fiscal year.

Glossary

Net Assets

The total value of a company's assets minus its liabilities. For investment companies, this represents the value attributable to shareholders. (Key indicator of the company's overall value and growth. Increased to $349,932,000 as of September 30, 2025.)

Investment Income

Income generated from a company's investments, typically including interest, dividends, and other investment-related earnings. (Primary driver of the company's revenue. Total investment income was $9,330,000 for Q3 2025.)

Unrealized Gains (Losses)

The change in the market value of an investment that has not yet been sold. Gains are increases in value, and losses are decreases. (Reflects market fluctuations impacting the investment portfolio. The company reported net unrealized losses of $(933,000) for Q3 2025.)

Additional Paid-in Capital

The amount of capital raised by a company from the sale of its stock above the par value of the stock. (Indicates capital contributions from shareholders. Stood at $346,510,000 as of September 30, 2025.)

Net Investment Income (Loss)

The difference between investment income and operating expenses. (Measures the profitability of the company's core investment activities before considering capital gains or losses. Was $8,442,000 for Q3 2025.)

Year-Over-Year Comparison

Compared to the prior year, Kayne DL 2021, Inc. has demonstrated revenue growth, with total investment income increasing by 21.8% for the three months and 24.9% for the nine months ended September 30, 2025. However, operating expenses have also risen significantly, by 26.7% and 31.2% respectively. A key change is the reversal from net unrealized gains in the prior year to net unrealized losses in the current periods, indicating increased market volatility impacting the investment portfolio's value.

Key Financial Figures

• $0.001 — rant had 66,937 shares of common stock, $0.001 par value per share, issued and outstan

Filing Documents

• ea0261708-10q_kaynedl.htm (10-Q) — 2934KB
• ea026170801ex31-1_kaynedl.htm (EX-31.1) — 23KB
• ea026170801ex31-2_kaynedl.htm (EX-31.2) — 11KB
• ea026170801ex32-1_kaynedl.htm (EX-32.1) — 10KB
• ea026170801ex32-2_kaynedl.htm (EX-32.2) — 5KB
• 0001213900-25-108226.txt ( ) — 11921KB
• cik0001850787-20250930.xsd (EX-101.SCH) — 77KB
• cik0001850787-20250930_cal.xml (EX-101.CAL) — 28KB
• cik0001850787-20250930_def.xml (EX-101.DEF) — 226KB
• cik0001850787-20250930_lab.xml (EX-101.LAB) — 481KB
• cik0001850787-20250930_pre.xml (EX-101.PRE) — 260KB
• ea0261708-10q_kaynedl_htm.xml (XML) — 2986KB

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 46 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 55 Item 4.

Controls and Procedures

Controls and Procedures 55 PART II. OTHER INFORMATION 56 Item 1.

Legal Proceedings

Legal Proceedings 56 Item 1A.

Risk Factors

Risk Factors 56 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 56 Item 3. Defaults Upon Senior Securities 56 Item 4. Mine Safety Disclosures 56 Item 5. Other Information 56 Item 6. Exhibits 57

Forward-Looking Statements

Forward-Looking Statements This quarterly report on Form 10-Q contains forward-looking about the company, current and prospective portfolio investments, the industry, beliefs and assumptions. Words such as "anticipates," "expects," "intends," "plans," "will," "may," "continue," "believes," "seeks," "estimates," "would," "could," "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 control of Kayne DL 2021, Inc. ("the Company") and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including: future operating results; business prospects and the prospects of portfolio companies in which we invest; the ability of our portfolio companies to achieve their objectives; changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets; the ability of KA Credit Advisors II, LLC (our "Advisor") to locate suitable investments and to monitor and administer investments; the ability of the Advisor and its affiliates to attract and retain highly talented professionals; risks associated with possible disruptions in our operations, the operations of our portfolio companies or the economy generally, including disruptions due to terrorism, war or other geopolitical conflict, natural disasters, pandemics or cybersecurity incidents; the adequacy of our cash resources, financing sources and working capita

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements. Kayne DL 2021, Inc. Consolidated Statements of Assets and Liabilities (amounts in 000's, except share and per share amounts) (Unaudited) September 30, 2025 (Unaudited) December 31, 2024 Assets: Investments, at fair value: Long-term investments (amortized cost of $ 327,194 and $ 257,420 ) $ 330,601 $ 261,833 Investments in money market funds (amortized cost of $ 23,962 and $ 13,440 ) 23,962 13,440 Cash 2,179 2,899 Receivable for principal payments on investments 27 71 Interest receivable 2,460 2,070 Prepaid expenses and other assets 12 115 Total Assets $ 359,241 $ 280,428 Liabilities: Unamortized Subscription Credit Facility issuance costs $ ( 14 ) $ ( 12 ) Distributions payable 8,338 7,202 Management fee payable 612 481 Accrued expenses and other liabilities 373 284 Total Liabilities $ 9,309 $ 7,955 Commitments and contingencies (Note 8) Net Assets: Common Shares, $ 0.001 par value; 100,000 shares authorized; 66,701 and 51,812 as of September 30, 2025 and December 31, 2024, respectively, issued and outstanding $ - $ - Additional paid-in capital 346,510 268,243 Total distributable earnings (deficit) 3,422 4,230 Total Net Assets $ 349,932 $ 272,473 Total Liabilities and Net Assets $ 359,241 $ 280,428 Net Asset Value Per Common Share $ 5,246 $ 5,259 See accompanying notes to consolidated financial 1 Kayne DL 2021, Inc. Consolidated Statements of Operations (amounts in 000's, except share and per share amounts) (Unaudited) For the three months ended September 30, For the nine months ended September 30, 2025 2024 2025 2024 Income: Investment income from investments: Interest income $ 9,162 $ 7,585 $ 25,625 $ 20,461 Dividend income 168 73 340 331 Total Investment Income 9,330 7,658 25,965 20,792 Expenses: Interest expense 29 35 132 124 Management fees 612 446 1,712 1,1

View Full Filing

View this 10-Q filing on SEC EDGAR