North Haven Income Fund Sees Rising Expenses, Unrealized Losses

TL;DR

**North Haven's rising expenses and unrealized losses are a red flag, signaling potential trouble ahead for this private income fund.**

AI Summary

North Haven Private Income Fund LLC reported a net increase in members' capital from operations of $187,945 thousand for the nine months ended September 30, 2025, a slight decrease from $188,500 thousand in the prior year period. Total investment income rose to $492,936 thousand for the nine months ended September 30, 2025, up from $391,237 thousand in the same period of 2024, driven by increased interest income from non-controlled/non-affiliated investments. However, total expenses also significantly increased to $281,166 thousand from $192,587 thousand, primarily due to higher interest and other financing expenses, which jumped to $183,619 thousand from $110,611 thousand. The fund experienced a net realized and unrealized loss of $47,585 thousand for the nine months ended September 30, 2025, a substantial increase from a loss of $16,035 thousand in the prior year, largely due to a net change in unrealized depreciation on non-controlled/non-affiliated investments of $33,632 thousand. Net asset value per unit decreased to $18.70 as of September 30, 2025, from $18.96 as of December 31, 2024. The company's debt increased to $3,227,050 thousand from $2,861,892 thousand, reflecting increased borrowings to fund investments.

Why It Matters

For investors, the slight dip in net increase in members' capital from operations, coupled with a significant rise in total expenses and a substantial increase in net realized and unrealized losses, signals potential headwinds. The decrease in Net Asset Value per unit from $18.96 to $18.70 could impact investor returns and confidence. The competitive landscape for private income funds is intense, and rising financing costs could squeeze margins, making it harder to deliver attractive yields. Employees might face pressure if financial performance continues to be challenged, while customers could see changes in investment strategies or offerings. The broader market may view this as an indicator of increasing volatility and risk within the private debt sector.

Risk Assessment

Risk Level: medium — The fund's risk level is medium due to a significant increase in total expenses to $281,166 thousand for the nine months ended September 30, 2025, up from $192,587 thousand in the prior year, primarily driven by a 66% jump in interest and other financing expenses to $183,619 thousand. Additionally, the net change in unrealized depreciation on non-controlled/non-affiliated investments of $33,632 thousand for the nine months ended September 30, 2025, indicates potential valuation challenges in its investment portfolio.

Analyst Insight

Investors should scrutinize North Haven Private Income Fund's expense management and the underlying health of its investment portfolio, particularly given the increase in unrealized losses. Consider re-evaluating exposure to private income funds with rising financing costs and potential valuation issues, and look for funds demonstrating stronger expense control and more stable asset valuations.

Financial Highlights

revenue

$492.9M

total Debt

$3.23B

net Income

$187.9M

revenue Growth

+26.0%

Revenue Breakdown

Key Numbers

• $187.9M — Net increase in members' capital from operations (Slight decrease from $188.5M in prior year period for nine months ended Sep 30, 2025)
• $492.9M — Total investment income (Increased from $391.2M in prior year period for nine months ended Sep 30, 2025)
• $281.2M — Total expenses (Increased from $192.6M in prior year period for nine months ended Sep 30, 2025)
• $183.6M — Interest and other financing expenses (Increased from $110.6M in prior year period for nine months ended Sep 30, 2025)
• $47.6M — Net realized and unrealized loss (Increased from $16.0M loss in prior year period for nine months ended Sep 30, 2025)
• $18.70 — Net asset value per unit (Decreased from $18.96 as of December 31, 2024)
• $3.23B — Debt (Increased from $2.86B as of December 31, 2024)
• $33.6M — Net change in unrealized depreciation on non-controlled/non-affiliated investments (Significant contributor to overall realized and unrealized loss for nine months ended Sep 30, 2025)

Key Players & Entities

• North Haven Private Income Fund LLC (company) — registrant
• SEC (regulator) — filing authority
• $187,945 thousand (dollar_amount) — net increase in members' capital from operations for nine months ended Sep 30, 2025
• $188,500 thousand (dollar_amount) — net increase in members' capital from operations for nine months ended Sep 30, 2024
• $492,936 thousand (dollar_amount) — total investment income for nine months ended Sep 30, 2025
• $391,237 thousand (dollar_amount) — total investment income for nine months ended Sep 30, 2024
• $281,166 thousand (dollar_amount) — total expenses for nine months ended Sep 30, 2025
• $192,587 thousand (dollar_amount) — total expenses for nine months ended Sep 30, 2024
• $183,619 thousand (dollar_amount) — interest and other financing expenses for nine months ended Sep 30, 2025
• $110,611 thousand (dollar_amount) — interest and other financing expenses for nine months ended Sep 30, 2024

FAQ

Risk Factors

• Increased Financing Expenses [high — financial]: Interest and other financing expenses surged to $183.6M from $110.6M, a 66% increase, significantly impacting profitability. This rise is likely due to higher debt levels and potentially increased interest rates.
• Unrealized Depreciation [high — market]: The fund experienced a net change in unrealized depreciation on non-controlled/non-affiliated investments of $33.6M. This contributed substantially to the overall net realized and unrealized loss of $47.6M, indicating market volatility affecting investment values.
• Rising Debt Levels [high — financial]: Total debt increased to $3.23B from $2.86B. While intended to fund investments, this substantial leverage amplifies financial risk, especially in a rising interest rate environment or if investment performance falters.
• Decreasing Net Asset Value Per Unit [medium — financial]: NAV per unit declined to $18.70 from $18.96. This decrease, coupled with increased losses and expenses, suggests a potential erosion of shareholder value.
• Expense Management [medium — operational]: Total expenses increased by 46% to $281.2M from $192.6M. A significant portion of this increase is due to financing costs, but overall expense growth outpaced investment income growth, pressuring margins.

Industry Context

The private income fund sector typically focuses on generating stable income streams through debt investments in private companies. Competition is high, with many funds vying for attractive deal flow. Current industry trends include rising interest rates, which can increase borrowing costs for underlying companies but also boost income for lenders, and increased scrutiny on valuation methodologies for illiquid assets.

Regulatory Implications

As a financial entity, North Haven Private Income Fund LLC is subject to various financial regulations. Increased debt levels and complex investment structures may attract closer regulatory attention regarding capital adequacy and risk management practices. Compliance with reporting requirements for private funds remains critical.

What Investors Should Do

1. Monitor interest expense closely: The significant increase in interest and other financing expenses to $183.6M warrants close monitoring. Investors should assess if this is a temporary rise due to market conditions or a structural increase due to higher leverage.
2. Evaluate impact of unrealized losses: The $33.6M in unrealized depreciation on non-controlled investments highlights market risk. Investors should understand the fund's strategy for managing these positions and the potential for further value erosion.
3. Assess debt sustainability: With debt at $3.23B, investors should scrutinize the fund's ability to service this debt, especially if interest rates continue to rise or investment income falters.
4. Review expense management: The 46% increase in total expenses, outpacing revenue growth, needs careful examination. Investors should seek clarity on the drivers of this increase beyond financing costs.
5. Consider NAV trend: The decrease in NAV per unit to $18.70 signals a potential decline in underlying asset value. Investors should compare this trend against industry peers and the fund's stated investment objectives.

Glossary

Net increase in members' capital from operations

The profit generated by the fund's core business activities over a period, after accounting for all revenues and expenses, which is then added to the total capital contributed by the fund's members. (Indicates the fund's operational profitability. A slight decrease suggests operational performance is stable but not improving year-over-year.)

Net realized and unrealized loss

The total loss incurred from selling investments (realized) and the change in value of investments still held (unrealized) during a specific period. (Reflects the impact of market fluctuations and investment performance on the fund's value. A significant increase in loss is a negative indicator.)

Net asset value per unit

The total value of the fund's assets minus its liabilities, divided by the number of outstanding units. It represents the per-unit market value of the fund's holdings. (A key metric for investors to track the value of their investment. A decrease suggests a decline in the fund's underlying asset value.)

Non-controlled/non-affiliated investments

Investments in companies where the fund does not have significant influence or control, and is not related to the fund's management or ownership. (The performance of these investments, particularly the interest income and unrealized depreciation, is a major driver of the fund's overall financial results.)

Unrealized depreciation

A decrease in the market value of an asset that has not yet been sold. It represents a paper loss until the asset is disposed of. (A significant component of the fund's overall losses, indicating that the market value of its holdings has declined.)

Year-Over-Year Comparison

Compared to the prior year period, North Haven Private Income Fund LLC saw a substantial increase in total investment income to $492.9M, driven by higher interest income. However, this was overshadowed by a significant rise in total expenses, particularly interest and financing costs, which grew by 66% to $183.6M. Consequently, despite higher revenue, the net increase in members' capital from operations saw a slight decrease. The fund also reported a much larger net realized and unrealized loss of $47.6M, largely due to market depreciation on investments, and its total debt increased to $3.23B, indicating a more leveraged and potentially riskier financial position.

Filing Documents

• ck0001851322-20250930.htm (10-Q) — 31959KB
• ck0001851322-ex31_1.htm (EX-31.1) — 14KB
• ck0001851322-ex31_2.htm (EX-31.2) — 15KB
• ck0001851322-ex32_1.htm (EX-32.1) — 8KB
• ck0001851322-ex32_2.htm (EX-32.2) — 7KB
• 0001193125-25-274423.txt ( ) — 72474KB
• ck0001851322-20250930.xsd (EX-101.SCH) — 1887KB
• ck0001851322-20250930_htm.xml (XML) — 24556KB

Financial Information

Part I. Financial Information Item 1. Consolidated Financial Statements (Unaudited) 3 Consolidated Statements of Financial Condition 3 Consolidated Statements of Operations 4 Consolidated Statements of Changes in Members' Capital 5 Consolidated Statements of Cash Flows 6 Consolidated Schedules of Investments 7 Notes to the Consolidated Financial Statements 106 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 135 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 148 Item 4.

Controls and Procedures

Controls and Procedures 149

Other Information

Part II. Other Information Item 1.

Legal Proceedings

Legal Proceedings 150 Item 1A.

Risk Factors

Risk Factors 150 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 150 Item 3. Defaults Upon Senior Securities 150 Item 4. Mine Safety Disclosures 150 Item 5. Other Information 150 Item 6. Exhibits 151

SIGNATURES

SIGNATURES Table of Contents North Haven Private Income Fund LLC Consolidated State men ts of Financial Condition (In thousands, except unit and per unit amounts) As of September 30, 2025 December 31, 2024 (Unaudited) (Audited) Assets Non-controlled/non-affiliated investments, at fair value (amortized cost of $ 6,692,010 and $ 6,103,560 at September 30, 2025 and December 31, 2024, respectively) $ 6,635,937 $ 6,079,019 Non-controlled/affiliated investments, at fair value (amortized cost of $ 22,584 and $ 0 ) 21,786 — Total investments, at fair value (cost of $ 6,714,594 and $ 6,103,560 ) 6,657,723 6,079,019 Cash and cash equivalents (restricted cash of $ 8,510 and $ 1,650 ) 149,756 159,788 Investments in unaffiliated money market fund (cost of $ 34,869 and $ 58,216 ) 34,869 58,216 Deferred financing costs 35,828 35,183 Interest and dividend receivable from non-controlled/non-affiliated investments 38,900 58,637 Interest receivable from non-controlled/affiliated investments 209 — Receivable for investments sold/repaid 3,698 15,465 Other assets 14,401 2,196 Total assets 6,935,384 6,408,504 Liabilities Debt (net of unamortized debt issuance costs of $ 13,240 and $ 12,828 ) 3,227,050 2,861,892 Payable for investments purchased 24 47,887 Payable to affiliates (Note 3) 100 583 Distributions payable 32,880 26,178 Management fees payable 6,863 7,337 Subscriptions received in advance (Note 13) 29,011 51,728 Payable for units repurchased (Note 8) 107,961 55,792 Income based incentive fee payable 7,625 8,399 Interest and financing costs payable 29,868 53,852 Accrued expenses and other liabilities 12,924 23,670 Total liabilities 3,454,306 3,137,318 Commitments and contingencies (Note 7) Members' Capital Units, par value $ 0.001 per unit ( 186,168,113 and 172,510,464 units issued and outstanding) 186 173 Paid-in

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