Willow Tree Capital Merges Funds, Boosts Assets to $389M

Willow Tree Capital Corp 10-K Filing Summary
FieldDetail
CompanyWillow Tree Capital Corp
Form Type10-K
Filed DateMar 24, 2026
Risk Levelmedium
Pages15
Reading Time18 min
Key Dollar Amounts$0.001, $0.01, $5 million, $75 million, $5 billion
Sentimentmixed

Complexity: moderate

Sentiment: mixed

Topics: BDC, Middle Market Lending, Private Credit, Mergers and Acquisitions, Investment Management, Floating Rate Loans, Risk-Adjusted Returns

TL;DR

**Willow Tree Capital's pre-BDC mergers created a $389M loan powerhouse, positioning it for aggressive middle-market plays despite fierce competition.**

AI Summary

Willow Tree Capital Corporation, formed on June 29, 2022, aims for attractive risk-adjusted returns by investing primarily in floating rate middle market senior secured loans, targeting companies with $5 million to $75 million in annual EBITDA. The company completed two significant mergers on November 8, 2024, prior to its BDC election: the Onshore Merger with Willow Tree Capital Fund, LLC, resulting in the issuance of 6,939,661 shares and the acquisition of $108.9 million in net assets (96 loans to 32 borrowers), and the Offshore Merger with Willow Tree Capital Offshore Fund, LLC, issuing 4,803,384 shares and acquiring $75.4 million in net assets (51 loans to 26 borrowers). Immediately after these mergers, Willow Tree Capital Corporation's total assets were approximately $389.0 million, comprising 99 loans to 33 borrowers. The company is externally managed by Willow Tree Capital Corp Advisors LLC and administered by Willow Tree Credit Partners LP, leveraging a team led by Timothy Lower and James Roche, who manage over $5 billion across various funds as of December 31, 2025.

Why It Matters

Willow Tree Capital's strategic mergers significantly expanded its asset base to $389.0 million and diversified its loan portfolio across 33 borrowers, enhancing its competitive position in the middle market lending space. For investors, this increased scale could lead to more stable income streams from senior secured loans and potential capital appreciation, though the highly competitive market for investment opportunities, including larger funds and other BDCs, poses a challenge. Employees benefit from a larger, more established platform, while customers gain access to a more robust lending partner. The consolidation also signals a growing trend in the private credit market, where firms are seeking scale to better compete and manage macroeconomic pressures.

Risk Assessment

Risk Level: medium — The company operates in a highly competitive market for investment opportunities, facing larger competitors with greater financial resources and potentially lower costs of funds. Additionally, the company's reliance on leverage as part of its investment strategy, as noted in the forward-looking statements, introduces interest rate volatility risk, which could adversely affect results.

Analyst Insight

Investors should closely monitor Willow Tree Capital's ability to effectively deploy its expanded $389.0 million asset base into attractive middle-market loans amidst intense competition. Evaluate the performance of its loan portfolio and its ability to generate consistent current income and capital appreciation, especially given its use of leverage.

Financial Highlights

revenue
$389.0M
total Assets
$389.0M
revenue Growth
+0.0%

Key Numbers

  • $389.0M — Total Assets (Immediately following the completion of the Onshore and Offshore Mergers on November 8, 2024.)
  • 99 — Total Loans (Held across 33 borrowers after the mergers, indicating portfolio diversification.)
  • 24,524,008 — Shares of Common Stock Outstanding (As of March 23, 2026, reflecting shares issued post-mergers.)
  • $108.9M — Onshore Fund Net Asset Value (Acquired from Willow Tree Capital Fund, LLC in the Onshore Merger.)
  • $75.4M — Offshore Fund Net Asset Value (Acquired from Willow Tree Capital Offshore Fund, LLC in the Offshore Merger.)
  • $5M to $75M — Target EBITDA Range (For middle market companies, defining Willow Tree Capital's investment focus.)
  • $5B — Managed Assets (By Willow Tree and its affiliates as of December 31, 2025, demonstrating significant scale.)
  • 80 years — Combined Investment Experience (Of the Investment Committee members, highlighting deep expertise.)

Key Players & Entities

  • Willow Tree Capital Corporation (company) — Registrant
  • Willow Tree Capital Corp Advisors LLC (company) — External Investment Adviser
  • Willow Tree Credit Partners LP (company) — Administrator
  • Timothy Lower (person) — Industry Veteran, Investment Committee Member
  • James Roche (person) — Industry Veteran, Investment Committee Member
  • Alex Dashiell (person) — Investment Committee Member
  • Willow Tree Capital Fund, LLC (company) — Onshore Merger Target
  • Willow Tree Capital Offshore Fund, LLC (company) — Offshore Merger Target
  • $389.0 million (dollar_amount) — Total assets after mergers
  • $5 billion (dollar_amount) — Assets under management by Willow Tree and affiliates as of December 31, 2025

Forward-Looking Statements

  • The details within EX-10.13, the second amendment to the capital fund agreement, will reveal changes in Willow Tree Capital Corp's investment strategy or capital structure. (Willow Tree Capital Corp) — medium confidence, target: 2026-06-24

FAQ

What is Willow Tree Capital Corporation's primary investment objective?

Willow Tree Capital Corporation's primary investment objective is to maximize the total return to its shareholders through current income and capital appreciation. It achieves this by investing primarily in floating rate middle market senior secured loans, targeting companies with annual EBITDA ranging from approximately $5 million to $75 million.

How did Willow Tree Capital Corporation expand its asset base in 2024?

Willow Tree Capital Corporation expanded its asset base through two mergers on November 8, 2024: the Onshore Merger with Willow Tree Capital Fund, LLC, acquiring $108.9 million in net assets, and the Offshore Merger with Willow Tree Capital Offshore Fund, LLC, acquiring $75.4 million in net assets. These transactions resulted in total assets of approximately $389.0 million.

Who manages Willow Tree Capital Corporation's investments?

Willow Tree Capital Corporation is externally managed by Willow Tree Capital Corp Advisors LLC, a registered investment adviser with the SEC. The Adviser is responsible for sourcing, researching, diligencing, structuring, and monitoring investments.

What are the key risks for Willow Tree Capital Corporation investors?

Key risks for investors include operating in a highly competitive market with larger, better-resourced competitors, potential conflicts of interest with the Adviser's other funds, and interest rate volatility due to the company's use of leverage as part of its investment strategy.

What is the role of Willow Tree Credit Partners LP?

Willow Tree Credit Partners LP serves as the Administrator for Willow Tree Capital Corporation, providing all necessary administrative services. It also makes certain employees, facilities, and systems available to the Adviser through a Resource Sharing Agreement.

What is a Business Development Company (BDC) and how does it relate to Willow Tree Capital Corporation?

A Business Development Company (BDC) is a type of closed-end investment company that invests in small and mid-sized companies. Willow Tree Capital Corporation has elected to be regulated as a BDC under the Investment Company Act of 1940, allowing it to invest in private companies and make its shares available to the public.

Who are the key individuals on Willow Tree Capital Corporation's Investment Committee?

The Investment Committee for Willow Tree Capital Corporation consists of Timothy Lower, James Roche, and Alex Dashiell. All investment decisions require their unanimous consent, leveraging their combined experience of over 80 years in credit asset classes.

How does Willow Tree Capital Corporation address potential conflicts of interest with its Adviser?

To address potential conflicts where the Adviser and its affiliates may favor other funds, Willow Tree Capital Corp Advisors LLC has implemented an investment allocation policy. This policy aims to ensure fair and equitable allocation of investment opportunities over time.

What was the total number of loans and borrowers after Willow Tree Capital Corporation's mergers?

Immediately following the completion of the Onshore and Offshore Mergers on November 8, 2024, Willow Tree Capital Corporation's portfolio consisted of 99 loans to 33 borrowers, including term loans, delayed draw term loans, and revolvers.

What is Willow Tree Capital Corporation's strategy for sourcing investment opportunities?

Willow Tree Capital Corporation leverages its Adviser's extensive network of relationships with sophisticated institutions, sponsors, and borrowers to source, evaluate, and partner on transactions. They also utilize Operating Advisors with local market presence and industry expertise to support their diligence and deployment strategy.

Risk Factors

  • Interest Rate Volatility [high — market]: The company's portfolio is primarily invested in floating rate loans, making it susceptible to fluctuations in interest rates. A significant increase in interest rates could increase borrowing costs for its portfolio companies, potentially impacting their ability to service debt and increasing the risk of default. Conversely, a sharp decrease in rates could reduce the company's net investment income.
  • Credit Risk of Borrowers [high — financial]: The company invests in middle-market companies, which may have a higher risk profile than larger, more established corporations. The default of a significant borrower could materially impact the company's financial condition and results of operations, especially given the concentration of 99 loans to 33 borrowers.
  • Reliance on External Management [medium — operational]: Willow Tree Capital Corp is externally managed by Willow Tree Capital Corp Advisors LLC and administered by Willow Tree Credit Partners LP. The company's success is heavily dependent on the expertise and performance of this management team, led by Timothy Lower and James Roche. Any disruption or underperformance by the management team could adversely affect the company.
  • BDC Regulatory Compliance [medium — regulatory]: As a Business Development Company (BDC), Willow Tree Capital Corp is subject to specific regulatory requirements, including asset coverage limitations and dividend distribution requirements. Failure to comply with these regulations could result in penalties or restrictions on its operations.
  • Economic Downturn Impact [high — market]: A general economic downturn could negatively impact the performance of the company's portfolio investments. This could lead to increased defaults, reduced investment income, and a decline in the fair value of its assets.

Industry Context

The middle-market lending sector is characterized by its focus on companies that are too large for traditional bank loans but too small for public capital markets. This segment often offers attractive risk-adjusted returns due to a premium over larger-cap lending. However, it also presents higher credit risk and requires specialized underwriting expertise. The industry is influenced by macroeconomic conditions, interest rate movements, and regulatory changes affecting BDCs.

Regulatory Implications

As a BDC, Willow Tree Capital Corp must adhere to strict regulatory requirements, including asset coverage ratios and dividend distribution mandates. Non-compliance can lead to penalties and operational limitations. The company's investment strategy in floating rate loans also exposes it to interest rate risk, which is a key consideration for BDCs.

What Investors Should Do

  1. Monitor interest rate sensitivity.
  2. Assess credit quality of the loan portfolio.
  3. Evaluate the external management team's track record.
  4. Understand BDC regulatory compliance.

Key Dates

  • 2022-06-29: Formation of Willow Tree Capital Corporation — Marks the inception of the company as a legal entity.
  • 2024-11-08: Completion of Onshore and Offshore Mergers — Significantly increased the company's asset base and loan portfolio, forming the foundation of its current operations prior to BDC election.
  • 2025-12-31: Management's AUM as of year-end — Demonstrates the scale of assets managed by the external management team, indicating experience and capacity.
  • 2026-03-23: Shares of Common Stock Outstanding — Provides an updated count of outstanding shares, relevant for per-share calculations and ownership analysis.

Glossary

BDC
Business Development Company, a type of closed-end investment company that invests in small and medium-sized companies and provides capital to them. (Willow Tree Capital Corporation is electing to be treated as a BDC, which subjects it to specific regulatory and operational frameworks.)
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of a company's operating performance. (Used by Willow Tree Capital to define its target investment size for middle-market companies, indicating its focus on profitability before certain non-cash and financing expenses.)
Floating Rate Loans
Loans where the interest rate is periodically reset based on a benchmark interest rate, such as LIBOR or SOFR. (The primary investment focus of Willow Tree Capital, meaning its income is sensitive to changes in market interest rates.)
Senior Secured Loans
Debt instruments that are typically the first to be repaid in the event of a borrower's bankruptcy and are backed by specific collateral. (Represents the type of debt Willow Tree Capital primarily invests in, indicating a focus on lower-risk debt within the capital structure.)
Net Asset Value (NAV)
The total value of a company's assets minus its liabilities, often expressed on a per-share basis. (Key metric for investment companies, representing the underlying value of the company's investments.)

Year-Over-Year Comparison

As this is the initial 10-K filing for Willow Tree Capital Corporation following its formation and mergers, there are no prior year filings to compare against. Key metrics such as revenue, net income, and total assets are presented as of the current reporting period, reflecting the combined entities post-merger on November 8, 2024. The risk factors presented are specific to the company's current operational stage and investment strategy.

Filing Stats: 4,449 words · 18 min read · ~15 pages · Grade level 15.2 · Accepted 2026-03-24 15:19:36

Key Financial Figures

  • $0.001 — Act: Shares of Common Stock, par value $0.001 per share (Title of Class) __________
  • $0.01 — 4,008 shares of common stock, par value $0.01 per share, outstanding. DOCUMENTS INCO
  • $5 million — or "EBITDA" ranging from approximately $5 million to $75 million. These loans are typical
  • $75 million — anging from approximately $5 million to $75 million. These loans are typically secured with
  • $5 billion — December 31, 2025 manages in excess of $5 billion across multiple funds, discretionary an
  • $108.9 million — ich had an aggregate net asset value of $108.9 million. Contemporaneously with entering the O
  • $75.4 million — ich had an aggregate net asset value of $75.4 million. Immediately following the completion
  • $389.0 m — rs, our total assets were approximately $389.0 million, consisting of 99 loans to 33 bor

Filing Documents

Business

Business 3 Item 1A.

Risk Factors

Risk Factors 26 Item 1B. Unresolved Staff Comments 80 Item 1C. Cybersecurity 80 Item 2.

Properties

Properties 81 Item 3.

Legal Proceedings

Legal Proceedings 81 Item 4. Mine Safety Disclosures 81 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 82 Item 6. [Reserved] 83 Item 7.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 83 Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 99 Item 8. Consolidated Financial Statements and Supplementary Data 101 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 141 Item 9A.

Controls and Procedures

Controls and Procedures 141 Item 9B. Other Information 141 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection 141 Part III Item 10. Directors, Executive Officers and Corporate Governance 142 Item 11.

Executive Compensation

Executive Compensation 142 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 142 Item 13. Certain Relationships and Related Transactions, and Director Independence 142 Item 14. Principal Accountant Fees and Services 142 Part IV Item 15. Exhibits and Financial Statement Schedules 143 Item 16 Form 10-K Summary 144

SIGNATURES

SIGNATURES 145 1 Table of Contents

FORWARD LOOKING STATEMENTS

FORWARD LOOKING STATEMENTS This report contains forward-looking statements regarding the plans and objectives of management for future operations. Any such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "target," "goals," "plan," "forecast," "project," other variations on these words or comparable terminology, or the negative of these words. These forward-looking statements are based on assumptions that may be incorrect, and we cannot assure you that the projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors, including the factors discussed in Item 1A under "Risk Factors" in this Annual Report on Form 10-K (this "Annual Report"), as well as any cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. The occurrence of the events described in these risk factors and elsewhere in this report could have a material adverse effect on our business, results of operations and financial position. Our future operating results; Our business prospects and prospects of our portfolio companies; The ability of our portfolio companies to achieve their objectives; Changes in political, economic, or industry conditions, the interest rate environment, the imposition of tariffs, a prolonged sh

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