10-K 1 arccq4-202110k.htm 10-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________
FORM 10-K
ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File No. 814-00663
__________________________________________________________________________
ARES CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)
Maryland 33-1089684
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
245 Park Avenue, 44th Floor, New York, New York 10167
 (Address of principal executive offices) (Zip Code)
(212) 750-7300
 (Registrant’s telephone number, including area code)
____________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class 
Trading Symbol
Name of each exchange on which registered 
Common Stock, par value $0.001 per shareARCCThe NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ý    No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section §232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes o    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer ý
 
Accelerated filer o
 
Non-accelerated filer o
 
Smaller reporting company o
Emerging Growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.Yes ý    No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

The aggregate market value of the voting stock held by non-affiliates of the registrant on June 30, 2021, based on the closing price on that date of $19.59 on The NASDAQ Global Select Market, was approximately $8,659,785,910. As of February 2, 2022, there were 478,883,014 shares of the registrant’s common stock outstanding.

Portions of the registrant’s Proxy Statement for its 2022 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K are incorporated by reference into Part III of this Form 10-K.


ARES CAPITAL CORPORATION
 
TABLE OF CONTENTS
 
 
 
Signatures

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PART I

Item 1.    Business

GENERAL

Ares Capital Corporation

Ares Capital Corporation, a Maryland corporation (together with its subsidiaries, where applicable, “Ares Capital” or the “Company,” which may also be referred to as “we,” “us” or “our”), is a specialty finance company that is a closed-end, non-diversified management investment company. We have elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder, the “Investment Company Act.” We were founded on April 16, 2004, were initially funded on June 23, 2004 and completed our initial public offering (“IPO”) on October 8, 2004. As of December 31, 2021, we were the largest publicly traded BDC by market capitalization in the United States with approximately $20.8 billion of total assets.

We are externally managed by Ares Capital Management LLC (“Ares Capital Management” or our “investment adviser”), a subsidiary of Ares Management Corporation (NYSE:ARES) (“Ares Management” or “Ares”), a publicly traded, leading global alternative investment manager, pursuant to our investment advisory and management agreement. Ares Operations LLC (“Ares Operations” or our “administrator”), a subsidiary of Ares Management, provides certain administrative and other services necessary for us to operate.

Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in U.S. middle-market companies, where we believe the supply of primary capital is limited and the investment opportunities are most attractive. However, we may from time to time invest in larger or smaller companies. We generally use the term “middle-market” to refer to companies with annual EBITDA between $10 million and $250 million. As used herein, EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization.

We invest primarily in first lien senior secured loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt, generally in a first lien position), and second lien senior secured loans. In addition to senior secured loans, we also invest in subordinated debt (sometimes referred to as mezzanine debt), which in some cases includes an equity component, and preferred equity. First and second lien senior secured loans generally are senior debt instruments that rank ahead of subordinated debt of a given portfolio company. Subordinated debt and preferred equity are subordinated to senior loans and are generally unsecured. Our investments in corporate borrowers generally range between $30 million and $500 million each. However, the investment sizes may be more or less than these ranges and may vary based on, among other things, our capital availability, the composition of our portfolio and general micro- and macro-economic factors.

To a lesser extent, we also make common equity investments, which have generally been non-control equity investments of less than $20 million (usually in conjunction with a concurrent debt investment). However, we may increase the size or change the nature of these investments.

The proportion of these types of investments will change over time given our views on, among other things, the economic and credit environment in which we are operating. In pursuit of our investment objective we generally seek to self-originate investments and lead the investment process.

The instruments in which we invest typically are not rated by any rating agency, but we believe that if such instruments were rated, they would be below investment grade (rated lower than “Baa3” by Moody’s Investors Service, lower than “BBB-” by Fitch Ratings or lower than “BBB-” by Standard & Poor’s Ratings Services), which, under the guidelines established by these entities, is an indication of having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. Bonds that are rated below investment grade are sometimes referred to as “high yield bonds” or “junk bonds.” We may invest without limit in debt or other securities of any rating, as well as debt or other securities that have not been rated by any nationally recognized statistical rating organization.

We believe that our investment adviser, Ares Capital Management, is able to leverage the current investment platform, resources and existing relationships of Ares Management with financial sponsors, financial institutions, hedge funds and other investment firms to provide us with attractive investment opportunities. For purposes of this document, we refer to Ares Management and its affiliated companies (other than portfolio companies of its affiliated funds) as “Ares.” In addition to deal flow, the Ares investment platform assists our investment adviser in analyzing, structuring and monitoring investments. Ares has been in existence for over 20 years and its partners have an average of approximately 25 years of experience in leveraged
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finance, private equity, distressed debt, commercial real estate finance, investment banking and capital markets. We have access to Ares’ investment professionals and administrative professionals, who provide assistance in accounting, finance, legal, compliance, operations, information technology and investor relations. As of December 31, 2021, Ares had over 750 investment professionals and over 1,350 administrative professionals.

While our primary focus is to generate current income and capital appreciation through investments in first and second lien senior secured loans and subordinated debt and, to a lesser extent, equity securities of eligible portfolio companies, we also may invest up to 30% of our portfolio in non‑qualifying assets, as permitted by the Investment Company Act. Specifically, as part of this 30% basket, we may invest in entities that are not considered “eligible portfolio companies” (as defined in the Investment Company Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the Investment Company Act, and publicly traded entities whose public equity market capitalization exceeds the levels provided for under the Investment Company Act.
Ares Management Corporation

Ares is a publicly traded, leading global alternative investment manager. As of December 31, 2021, Ares had over 2,100 employees in over 40 offices in more than 15 countries. Since its inception in 1997, Ares has adhered to a disciplined investment philosophy that focuses on delivering strong risk-adjusted investment returns throughout market cycles. Ares believes each of its distinct but complementary investment groups in credit, private equity, real estate, secondary solutions and strategic initiatives is a market leader based on assets under management and investment performance. Ares was built upon the fundamental principle that each group benefits from being part of the greater whole.

Ares Capital Management LLC

Ares Capital Management, our investment adviser, is served by an origination, investment and portfolio management team of approximately 145 U.S.-based investment professionals as of December 31, 2021 and led by certain partners of the Ares Credit Group: Kipp deVeer, Mitchell Goldstein and Michael Smith. Ares Capital Management leverages off of Ares’ investment platform and benefits from the significant capital markets, trading and research expertise of Ares’ investment professionals. Ares Capital Management’s investment committee has nine members primarily comprised of certain of the U.S.-based partners of the Ares Credit Group.

MARKET OPPORTUNITY

We believe that current market conditions present attractive opportunities for us to invest in middle-market companies, specifically:

•We believe that many commercial and investment banks have de-emphasized their service and product offerings to middle-market businesses in favor of lending to large corporate clients and managing capital markets transactions. In addition, these lenders may be constrained in their ability to underwrite and hold bank loans and high yield securities for middle-market issuers as they seek to meet existing and future regulatory capital requirements. These factors may result in opportunities for alternative funding sources to middle-market companies and therefore more new-issue market opportunities for us.

•We believe the disruption and volatility that occurs periodically in the credit markets reduces capital available to certain capital providers, causing a reduction in competition. Furthermore, in our view, the stable capital solutions provided by direct lenders is increasingly valuable and, as a result, widens the market opportunity for direct lending.

•We believe that there is a lack of market participants that are willing to hold meaningful amounts of certain middle-market loans. As a result, we believe our ability to minimize syndication risk for a company seeking financing by being able to hold our loans without having to syndicate or sell them is a competitive advantage.

•We believe that middle-market companies have faced difficulty in raising debt through the capital markets. This approach to financing may become more difficult to the extent institutional investors seek to invest in larger, more liquid offerings, leaving less competition and fewer financing alternatives for middle-market companies.    

•We believe there is a large pool of un-invested private equity capital for middle-market businesses. We expect private equity firms will seek to leverage their investments by combining equity capital with senior secured loans and subordinated debt from other sources such as us.
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•We believe the middle-market represents a significant portion of the overall economy, and exhibits healthy demand for capital. In addition, due to the fragmented nature of the middle-market and the lack of publicly available information, we believe direct lenders have an opportunity to originate and underwrite investments with more favorable terms, including stronger covenant and reporting packages, as well as better call protection and change of control provisions as compared to the large, broadly syndicated loan market.

COMPETITIVE ADVANTAGES

We believe that we have the following competitive advantages over other capital providers to middle-market companies:

The Ares Platform

Ares operates integrated groups across credit, private equity, real estate, secondary solutions and strategic initiatives. We believe our affiliation with Ares provides a distinct competitive advantage through Ares’ originations, due diligence and marketing activities. In particular, we believe that the Ares platform provides us with an advantage through its deal flow generation and investment evaluation process. Ares’ asset management platform also provides additional market information, company knowledge and industry insight that benefit our investment and due diligence process. Ares’ professionals maintain extensive financial sponsor and intermediary relationships, which provide valuable insight and access to transactions and information.

Seasoned Investment Team

The investment professionals in the Ares Credit Group and members of our investment adviser’s investment committee have significant experience investing across market cycles. This experience provides us with a competitive advantage in identifying, originating, investing in and managing a portfolio of investments in middle-market companies.

Broad Origination Strategy

We focus on self-originating most of our investments by pursuing a broad array of investment opportunities in middle-market companies. We also leverage off of the extensive relationships of the broader Ares platform, including relationships with the portfolio companies in the IHAM Vehicles (as defined below), to identify investment opportunities. Additionally, our size and scale provide the opportunity to source attractive investments in some of our existing portfolio companies. Collectively, we believe these advantages allow for enhanced asset selectivity as we believe there is a significant relationship between proprietary deal origination and credit performance. We believe that this allows for asset selectivity and that there is a significant relationship between proprietary deal origination and credit performance. We believe that our focus on generating proprietary deal flow and lead investing also gives us greater control over capital structure, deal terms, pricing and documentation and enables us to actively manage our portfolio investments. Moreover, by leading the investment process, we are often able to secure controlling positions in credit tranches, thereby providing additional control in investment outcomes. We also have originated substantial proprietary deal flow from middle-market intermediaries, which often allows us to act as the sole or principal source of institutional capital to the borrower.

Scale and Flexible Transaction Structuring

We believe that being one of the largest BDCs makes us a more desirable and flexible capital provider, especially in competitive markets. We are flexible with the types of investments we make and the terms associated with those investments. We believe this approach and experience enables our investment adviser to identify attractive investment opportunities throughout economic cycles and across a company’s capital structure so we can make investments consistent with our stated investment objective and preserve principal while seeking appropriate risk adjusted returns. In addition, we have the flexibility to provide “one stop” financing with the ability to invest capital across the balance sheet and syndicate and hold larger investments than many of our competitors. We believe that the ability to underwrite, syndicate and hold larger investments benefits our stockholders by (a) potentially increasing net income and earnings through leadership of the investment process and making commitments in excess of our final investment, (b) increasing originated deal flow flexibility, (c) broadening market relationships and deal flow, (d) allowing us to optimize our portfolio composition and (e) allowing us to provide capital to a broader spectrum of middle-market companies, which we believe currently have limited access to capital from traditional lending sources. In addition, we believe that the ability to provide capital at every level of the balance sheet provides a strong value proposition to middle-market borrowers which supports meaningful deal sourcing and relative value analysis capabilities.

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Experience with and Focus on Middle-Market Companies

Ares has historically focused on investments in middle-market companies and we benefit from this experience. In sourcing and analyzing deals, our investment adviser benefits from Ares’ extensive network of relationships focused on middle-market companies, including management teams, members of the investment banking community, private equity groups and other investment firms with whom Ares has had long-term relationships. We believe this network enables us to identify well-positioned prospective portfolio company investments. The Ares Credit Group works closely with Ares’ other investment professionals. As of December 31, 2021, Ares oversaw a portfolio of investments in over 3,100 companies, over 925 alternative credit investments and over 470 properties across over 60 industries, which provides access to an extensive network of relationships and insights into industry trends and the state of the capital markets.

Disciplined Investment Philosophy

In making its investment decisions, our investment adviser has adopted Ares’ long-standing, consistent, credit-based investment approach that was developed over 20 years ago by its founders. Specifically, our investment adviser’s investment philosophy, portfolio construction and portfolio management involve an assessment of the overall macroeconomic environment and financial markets and company-specific research and analysis. Its investment approach emphasizes capital preservation, low volatility and minimization of downside risk. In addition to engaging in extensive due diligence from the perspective of a long-term investor, our investment adviser’s approach seeks to reduce risk in investments by focusing on:

•businesses with strong franchises and sustainable competitive advantages;

•industries with positive long-term dynamics;

•businesses and industries with cash flows that are dependable and predictable;

•management teams with demonstrated track records and appropriate economic incentives;

•rates of return commensurate with the perceived risks;

•securities or investments that are structured with appropriate terms and covenants; and

•businesses backed by experienced private equity sponsors.

Extensive Industry Focus

We seek to concentrate our investing activities in industries with a history of predictable and dependable cash flows and in which the Ares investment professionals have had extensive investment experience. Ares investment professionals have developed long-term relationships with management teams and management consultants in over 60 industries, and have accumulated substantial information and identified potential trends within these industries. In turn, we benefit from these relationships, information and identification of potential trends in making investments.

OPERATING AND REGULATORY STRUCTURE

Our investment activities are managed by our investment adviser and supervised by our board of directors, a majority of whom are independent of Ares and its affiliates. Our investment adviser is registered under the Investment Advisers Act of 1940, or the “Advisers Act.” Under our Second Amended and Restated Investment Advisory and Management Agreement with Ares Capital Management, referred to herein as our “investment advisory and management agreement,” we have agreed to pay our investment adviser base management fees based on our total assets, as defined under the Investment Company Act (other than cash and cash equivalents, but including assets purchased with borrowed funds) (“base management fees”), fees based on our net investment income (“income based fees”) and fees based on our net capital gains (“capital gains incentive fees”). See “Investment Advisory and Management Agreement.” Ares Operations provides us with certain administrative and other services necessary for us to operate pursuant to an Amended and Restated Administration Agreement, referred to herein as our “administration agreement.” See “Administration Agreement.”

We have elected to be regulated as a BDC under the Investment Company Act and have elected to be treated as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”). As with other companies regulated by the Investment Company Act, we are required to comply with certain substantive regulatory requirements. For example, we are not generally permitted to co-invest in any portfolio company in which a fund managed by
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Ares or any of its downstream affiliates (other than us and our downstream affiliates) is also co-investing. On January 18, 2017, we received an order from the Securities and Exchange Commission (the “SEC”) that permits us and other BDCs and registered closed-end management investment companies managed by Ares to co-invest in portfolio companies with each other and with affiliated investment funds (the “Co-investment Exemptive Order”). Co-investments made under the Co-investment Exemptive Order are subject to compliance with certain conditions and other requirements, which could limit our ability to participate in a co-investment transaction. In addition, we are relying on a conditional exemptive order issued by the SEC on April 8, 2020 (the “Exemptive Relief”) that permits a BDC with an effective Co-investment Exemptive Order to allow an affiliated investment fund to participate in a follow-on investment in a portfolio company where such affiliated investment fund is not already invested. Although this relief expired on December 31, 2020, on January 5, 2021, the SEC stated that until March 31, 2022, it will not recommend enforcement action against any BDC with an existing co-investment order that relies on the Exemptive Relief. We may also otherwise co-invest with funds managed by Ares or any of its downstream affiliates, subject to compliance with existing regulatory guidance, applicable regulations and our allocation procedures. There can be no guarantee that the Co- investment Exemptive Order will be further extended.

Also, while we may borrow funds to make investments, our ability to use debt is limited in certain significant aspects. See “Regulation.” In particular, because we obtained the required approvals under Section 61(a)(2) of the Investment Company Act, we must have at least 150% asset coverage calculated pursuant to the Investment Company Act in order to incur debt or issue preferred stock (which we refer to collectively as “senior securities”) (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources.”

As of December 31, 2021, our asset coverage was 179%.

In addition, as a consequence of our being a RIC under the Code, for U.S. federal income tax purposes, our asset growth is dependent on our ability to raise equity capital through the issuance of common stock. RICs generally must distribute substantially all of their investment company taxable income (as defined under the Code) to stockholders as dividends in order to preserve their status as a RIC and not to be subject to additional U.S. federal corporate-level income taxes. This requirement, in turn, generally prevents us from using our earnings to support our operations, including making new investments.

INVESTMENTS

Ares Capital Corporation Portfolio

We have built an investment portfolio of primarily first and second lien senior secured loans, subordinated debt, preferred equity and, to a lesser extent, common equity investments in private middle-market companies. Our portfolio is well diversified by industry sector and its concentration to any single issuer is limited.

Our debt investments in corporate borrowers generally range between $30 million and $500 million each. However, the sizes of our investments may be more or less than these ranges and may vary based on, among other things, our capital availability, the composition of our portfolio and general micro- and macro-economic factors.

Our common equity investments have generally been non-control equity investments of less than $20 million (usually in conjunction with a concurrent debt investment). However, we may increase the size or change the nature of these investments.

The proportion of these types of investments will change over time given our views on, among other things, the economic and credit environment in which we are operating. In pursuit of our investment objective we generally seek to self-originate investments and lead the investment process, which may result in us making commitments with respect to indebtedness or securities of a potential portfolio company in excess of our expected final hold size. In such situations, while we may initially agree to fund up to a certain dollar amount of an investment, we may subsequently syndicate or sell a portion of such amount (including, without limitation, to vehicles managed by our portfolio company, IHAM), such that we are left with a smaller investment than what was reflected in our original commitment. In addition to originating investments, we may also acquire investments in the secondary market (including purchases of a portfolio of investments).

We make senior secured loans primarily in the form of first lien loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt, generally in a first lien position) and second lien loans. Our senior secured loans generally have terms of three to 10 years and our subordinated debt investments generally have a term of up to 10 years. However, we may invest in loans and securities with any maturity or duration. In connection with our senior secured loans, we
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generally receive a security interest in certain of the assets of the borrower and consequently such assets serve as collateral in support of the repayment of such senior secured loans. Senior secured loans are generally exposed to the least amount of credit risk because they typically hold a senior position with respect to scheduled interest and principal payments and security interests in assets of the borrower. In connection with our senior secured loans, we may be provided opportunities to invest in equity interests of the borrower, typically in the form of an equity co-investment. However, unlike subordinated debt, senior secured loans typically do not receive any stock, warrants to purchase stock or other yield enhancements. Senior secured loans may include both revolving lines of credit and term loans.

Structurally, subordinated debt usually ranks junior in priority of payment to senior secured loans and is often unsecured. However, subordinated debt ranks senior to preferred and common equity in a borrower’s capital structure. Subordinated debt investments generally offer lenders fixed returns in the form of interest payments and will often provide lenders an opportunity to participate in the capital appreciation of a borrower, if any, through an equity interest. This equity interest typically takes the form of preferred equity, an equity co-investment and/or warrants. The preferred equity, equity co-investment and warrants (if any) associated with a subordinated debt investment typically allow lenders to receive repayment of their debt principal on an agreed upon amortization schedule or at maturity while retaining their equity interest in the borrower. Equity issued in connection with subordinated debt also may include a “put” feature, which permits the holder to sell its equity interest back to the borrower at a price determined through an agreed formula.

In making an equity investment, in addition to considering the factors discussed under “—Investment Selection” below, we also consider the anticipated timing of a liquidity event, such as a public offering, sale of the company or redemption of our equity securities.

While our primary focus is to generate current income and capital appreciation through debt and equity investments in eligible portfolio companies, we also may invest up to 30% of our portfolio in non-qualifying assets, as permitted by the Investment Company Act. See “—Regulation.” Specifically, as part of this 30% basket, we may invest in entities that are not considered “eligible portfolio companies” (as defined in the Investment Company Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the Investment Company Act, and publicly traded entities whose public equity market capitalization exceeds the levels provided for under the Investment Company Act.

Senior Direct Lending Program

We have established a joint venture with Varagon Capital Partners (“Varagon”) to make certain first lien senior secured loans, including certain stretch senior and unitranche loans, primarily to U.S. middle-market companies. Varagon was formed in 2013 as a lending platform by American International Group, Inc. and other partners. The joint venture is called the Senior Direct Lending Program, LLC (d/b/a the “Senior Direct Lending Program” or the “SDLP”). In July 2016, we and Varagon and its clients completed the initial funding of the SDLP. The SDLP may generally commit and hold individual loans of up to $350 million. We may directly co‑invest with the SDLP to accommodate larger transactions. The SDLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SDLP must be approved by an investment committee of the SDLP consisting of representatives of ours and Varagon (with approval from a representative of each required).

We provide capital to the SDLP in the form of subordinated certificates (the “SDLP Certificates”), and Varagon and its clients provide capital to the SDLP in the form of senior notes, intermediate funding notes and SDLP Certificates. As of December 31, 2021, we and a client of Varagon owned 87.5% and 12.5%, respectively, of the outstanding SDLP Certificates. The SDLP Certificates pay a coupon equal to London Interbank Offered Rate (“LIBOR”) plus a stated spread and also entitle the holders thereof to receive a portion of the excess cash flow from the loan portfolio, which may result in a return to the holders of the SDLP Certificates that is greater than the stated coupon. The SDLP Certificates are junior in right of payment to the senior notes and intermediate funding notes.

As of December 31, 2021, we and Varagon and its clients had agreed to make capital available to the SDLP of $6.2 billion in the aggregate, of which $1.4 billion is to be made available from us. We will continue to provide capital to the SDLP in the form of SDLP Certificates, and Varagon and its clients will provide capital to the SDLP in the form of senior notes, intermediate funding notes and SDLP Certificates. This capital will only be committed to the SDLP upon approval of transactions by the investment committee of the SDLP as discussed above.
For more information on the SDLP, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Portfolio and Investment Activity—Senior Direct Lending Program” and Note 4 to our consolidated financial statements for the year ended December 31, 2021.

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Ivy Hill Asset Management, L.P.

As of December 31, 2021, our portfolio company, Ivy Hill Asset Management, L.P. (“IHAM”), an asset management services company and an SEC-registered investment adviser, managed 20 vehicles and served as the sub-manager/sub-servicer for one other vehicle (such vehicles are collectively referred to as the “IHAM Vehicles”). As of December 31, 2021, IHAM had assets under management of approximately $9.5 billion. As of December 31, 2021, the amortized cost and fair value of our investment in IHAM was $781 million and $936 million, respectively. In connection with IHAM’s registration as a registered investment adviser, on March 30, 2012, we received exemptive relief from the SEC allowing us to, subject to certain conditions, own directly or indirectly up to 100% of IHAM’s outstanding equity interests and make additional investments in IHAM. From time to time, IHAM or certain IHAM Vehicles may purchase investments from us or sell investments to us, in each case for a price equal to the fair market value of such investments determined at the time of such transactions.

Industry Composition

We generally seek to invest in companies in the industries in which Ares’ investment professionals have direct expertise. The industries in the table listed below are where we have focused our investing activities; however, we may invest in other industries if we are presented with attractive opportunities.

The industrial and geographic compositions of our portfolio at fair value as of December 31, 2021 and 2020 were as follows:
 As of December 31,
20212020
Industry
Software & Services21.9 %15.1 %
Health Care Services10.8 17.3 
Commercial & Professional Services9.2 8.0 
Diversified Financials7.5 6.0 
Insurance Services5.8 4.0 
Investment Funds and Vehicles(1)5.2 7.5 
Capital Goods4.8 5.1 
Automobiles & Components4.6 5.5 
Power Generation4.5 5.2 
Consumer Durables & Apparel4.4 6.3 
Consumer Services3.9 7.1 
Retailing and Distribution2.8 1.9 
Media & Entertainment2.2 0.5 
Food & Beverage2.2 2.2 
Materials2.0 1.7 
Other8.2 6.6 
Check100.0 %100.0 %
_______________________________________________________________________________

(1)Includes our investment in the SDLP, which had made first lien senior secured loans to 19 and 23 different borrowers as of December 31, 2021 and 2020, respectively. The portfolio companies in the SDLP are in industries similar to the companies in our portfolio.

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 As of December 31,
 20212020
Geographic Region  
West(1)31.2 %24.9 %
Midwest27.9 26.0 
Southeast17.2 22.6 
Mid-Atlantic14.5 16.7 
Northeast4.8 7.1 
International4.4 2.7 
Total100.0 %100.0 %
_______________________________________________________________________________

(1)Includes our investment in the SDLP, which represented 4.9% and 7.2% of the total investment portfolio at fair value as of December 31, 2021 and 2020, respectively.

As of December 31, 2021, loans on non-accrual status represented 0.8% and 0.5% of the total investments at amortized cost and at fair value, respectively. As of December 31, 2020, loans on non-accrual status represented 3.3% and 2.0% of the total investments at amortized cost and at fair value, respectively.

Since our IPO on October 8, 2004 through December 31, 2021, our exited investments resulted in an asset level realized gross internal rate of return to us of approximately 14% (based on original cash invested, net of syndications, of approximately $36.6 billion and total proceeds from such exited investments of approximately $46.9 billion). Internal rate of return is the discount rate that makes the net present value of all cash flows related to a particular investment equal to zero. Internal rate of return is gross of expenses related to investments as these expenses are not allocable to specific investments. Investments are considered to be exited when the original investment objective has been achieved through the receipt of cash and/or non-cash consideration upon the repayment of a debt investment or sale of an investment or through the determination that no further consideration was collectible and, thus, a loss may have been realized. Approximately 57% of these exited investments resulted in an asset level realized gross internal rate of return to us of 10% or greater.

Additionally, since our IPO on October 8, 2004 through December 31, 2021, our realized gains have exceeded our realized losses by approximately $1.0 billion (excluding a one-time gain on the acquisition of Allied Capital Corporation (“Allied Capital”) in April 2010 (the “Allied Acquisition”) and realized gains/losses from the extinguishment of debt and other assets). For the same time period, our average annualized net realized gain rate was approximately 1.0% (excluding a one-time gain on the Allied Acquisition and realized gains/losses from the extinguishment of debt and other assets). Net realized gain/loss rates for a particular period are the amount of net realized gains/losses during such period divided by the average quarterly investments at amortized cost in such period.

Information included herein regarding internal rates of return, realized gains and losses and annualized net realized gain rates are historical results relating to our past performance and are not necessarily indicative of future results, the achievement of which cannot be assured.

INVESTMENT SELECTION

Ares’ investment philosophy was developed over 20 years ago and has remained consistent and relevant throughout a number of economic cycles. We are managed using a similar investment philosophy used by the investment professionals of Ares in respect of its other investment funds.

This investment philosophy involves, among other things:

•an assessment of the overall macroeconomic environment and financial markets and how such assessment may impact industry and asset selection;

•company-specific research and analysis; and

•with respect to each individual company, an emphasis on capital preservation, low volatility and minimization of downside risk.

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The foundation of Ares’ investment philosophy is intensive credit investment analysis, a portfolio management discipline based on both market technicals and fundamental value-oriented research, and diversification strategy. Ares also recognizes the importance of considering environmental, social and governance (“ESG”) factors in the investment-decision making process in accordance with its ESG policy. We follow a rigorous investment process based on:

•a comprehensive analysis of issuer creditworthiness, including a quantitative and qualitative assessment of the issuer’s business;

•an evaluation of management and its economic incentives;

•an analysis of business strategy and industry trends; and

•an in-depth examination of capital structure, financial results and projections.

We seek to identify those companies exhibiting superior fundamental risk-reward profiles and strong defensible business franchises while focusing on the relative value of the investment across the industry as well as for the specific company.

Intensive Due Diligence

The process through which an investment decision is made involves extensive research into the target company, its industry, its growth prospects and its ability to withstand adverse conditions. If the senior investment professional responsible for the potential transaction determines that an investment opportunity should be pursued, we will engage in an intensive due diligence process. Approximately 40-50% of the investments initially reviewed by us proceed to this phase. Though each transaction will involve a somewhat different approach, the regular due diligence steps generally undertaken include:

•meeting with the target company’s management team to get a detailed review of the business, and to probe for potential weaknesses in business prospects;

•checking management’s backgrounds and references;

•performing a detailed review of historical financial performance, including performance through various economic cycles, and the quality of earnings;

•reviewing both short and long term projections of the business, and sensitizing them for both upside and downside risk;

•visiting headquarters and company operations and meeting with top and middle-level executives;

•contacting customers and vendors to assess both business prospects and standard practices;

•conducting a competitive analysis, and comparing the issuer to its main competitors on an operating, financial, market share and valuation basis;

•researching the industry for historic growth trends and future prospects as well as to identify future exit alternatives (including available Wall Street research, industry association literature and general news);

•assessing asset value and the ability of physical infrastructure and information systems to handle anticipated growth; and

•investigating legal risks and financial and accounting systems.

Selective Investment Process

After an investment has been identified and preliminary diligence has been completed, a credit research and analysis report is prepared. This report is reviewed by the senior investment professional in charge of the potential investment. If such senior and other investment professionals are in favor of the potential investment, then it is first presented to the investment committee on a preliminary basis.

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After the investment committee approves continued work on the potential investment, a more extensive due diligence process is employed by the transaction team. Additional due diligence with respect to any investment may be conducted on our behalf by attorneys, independent accountants, and other third party consultants and research firms prior to the closing of the investment, as appropriate on a case-by-case basis. Approximately 10-15% of all investments initially reviewed by us will be presented to the investment committee. Approval of an investment for funding requires the approval of the majority of the investment committee of our investment adviser, although unanimous consent is sought.

Issuance of Formal Commitment

Once we have determined that a prospective portfolio company is suitable for investment, we work with the management and/or sponsor of that company and its other capital providers, including senior, junior and equity capital providers, if any, to finalize the structure of the investment. Approximately 3-5% of the investments initially reviewed by us eventually result in the issuance of formal commitments and the closing of such transactions.

Investments

We invest in portfolio companies primarily in the form of first lien senior secured loans (including “unitranche” loans which are loans that combine both senior and subordinated debt, generally in a first lien position), second lien senior secured loans, subordinated debt and preferred equity. The first and second lien senior secured loans generally have terms of three to 10 years. In connection with our first and second lien senior secured loans, we generally receive security interests in certain assets of our portfolio companies that could serve as collateral in support of the repayment of such loans. First and second lien senior secured loans generally have floating interest rates, which may have interest rate floors, and also may provide for some amortization of principal and excess cash flow payments, with the remaining principal balance due at maturity.

We structure our subordinated debt investments primarily as unsecured subordinated loans that provide for relatively higher fixed interest rates. The subordinated debt investments generally have terms of up to 10 years. These loans typically have interest-only payments, with amortization of principal, if any, deferred to the later years of the subordinated debt investment. In some cases, we may enter into loans that, by their terms, convert into equity or additional debt or defer payments of interest (or at least cash interest) for the first few years after our investment. Also, in some cases our subordinated debt will be secured by a subordinated lien on some or all of the assets of the borrower.

In some cases, our debt and preferred equity investments may provide for a portion of the interest or dividends payable to be payment-in-kind (“PIK”). To the extent interest or dividends are PIK, they will be payable through the increase of the principal amount of the loan or preferred equity by the amount of interest or dividend due on the then-outstanding aggregate principal amount of such loan or preferred equity and is generally collected upon repayment of the outstanding principal or redemption of the equity, as applicable.

In the case of our first and second lien senior secured loans, subordinated debt and preferred equity investments, we tailor the terms of the investment to the facts and circumstances of the transaction and the prospective portfolio company, negotiating a structure that aims to protect our rights and manage our risk while creating incentives for the portfolio company to achieve its business plan and improve its profitability. For example, in addition to generally seeking a senior position in the capital structure of our portfolio companies, we will seek, where appropriate, to limit the downside potential of our investments by:

•targeting a total return on our investments (including from both interest and potential equity appreciation) that compensates us for credit risk;

•incorporating call protection and interest rate floors for floating rate loans into the investment structure; and

•negotiating covenants in connection with our investments that afford our portfolio companies as much flexibility in managing their businesses as possible, consistent with preservation of our capital. Such restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control provisions and board rights, including either observation or participation rights.

We generally require financial covenants and terms that require an issuer to reduce leverage, thereby enhancing credit quality. These methods include: (a) maintenance leverage covenants requiring a decreasing ratio of indebtedness to cash flow over time, (b) maintenance cash flow covenants requiring an increasing ratio of cash flow to the sum of interest expense and capital expenditures and (c) indebtedness incurrence prohibitions, limiting a company’s ability to take on additional
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indebtedness. In addition, by including limitations on asset sales and capital expenditures we may be able to prevent a borrower from changing the nature of its business or capitalization without our consent.

Our subordinated debt investments may include equity features, such as warrants or options to buy a minority interest in the portfolio company. Warrants we receive with our debt investments may require only a nominal cost to exercise, and thus, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We may structure the warrants to provide provisions protecting our rights as a minority-interest holder, as well as puts, or rights to sell such securities back to the portfolio company, upon the occurrence of specified events. In many cases, we also obtain registration rights in connection with these equity interests, which may include demand and “piggyback” registration rights.

We believe that our focus on generating proprietary deal flow and lead investing gives us greater control over the capital structures and investment terms described above and enables us to actively manage our investments. Moreover, by leading the investment process, we are often able to secure controlling positions in loan tranches, thereby providing additional control in investment outcomes.

To a lesser extent, we also make common equity investments, which have generally been non-control equity investments of less than $20 million (usually in conjunction with a concurrent debt investment). However, we may increase the size or change the nature of these investments.

ACQUISITION OPPORTUNITIES

We believe that there may be opportunity for further consolidation in our industry. From time to time, we evaluate potential strategic opportunities, including acquisitions of:

•asset portfolios; 

•other private and public finance companies, business development companies and asset managers; and 

•selected secondary market assets.

We have been in, and from time to time may engage in, discussions with counterparties in respect of various potential strategic acquisition and investment transactions, including potential acquisitions of other finance companies, business development companies and asset managers. Some of these transactions could be material to our business and, if completed, could be difficult to integrate, result in increased leverage or dilution and/or subject us to unexpected liabilities. However, none of these discussions has progressed to the point at which the completion of any such transaction could be deemed to be probable or reasonably certain as of the date of this Annual Report. Completion of any such transaction would be subject to completion of due diligence, finalization of key business and financial terms (including price) and negotiation of final definitive documentation as well as a number of other factors and conditions including, without limitation, the approval of our board of directors, any required third party consents and, in certain cases, the approval of our stockholders. We cannot predict how quickly the terms of any such transaction could be finalized, if at all. Accordingly, there can be no assurance that such transaction would be completed. In connection with evaluating potential strategic acquisition and investment transactions, we may incur significant expenses for the evaluation and due diligence investigation of these potential transactions.

ON-GOING RELATIONSHIPS WITH AND MONITORING OF PORTFOLIO COMPANIES

We closely monitor each investment we make, maintain a regular dialogue with both the management team and other stakeholders and seek specifically tailored financial reporting. In addition, senior investment professionals may take board seats or obtain board observation rights in connection with our portfolio companies. As of December 31, 2021, of our 387 portfolio companies, we were entitled to board seats or board observation rights on 22% of these companies and these companies represented approximately 33% of our portfolio at fair value.

In addition to covenants and other contractual rights and through board participation, when appropriate, we seek to enhance portfolio company performance post-investment by actively working with management on strategic and operating initiatives where there is an opportunity to do so. We often introduce managers of companies in which we have invested to other portfolio companies to capitalize on complementary business activities and best practices.

We believe that our focus on generating proprietary deal flow gives us greater control over capital structure and investment terms and lead investing enhances our ability to closely monitor each investment we make.

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Our investment adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our investment adviser grades the credit risk of all investments on a scale of 1 to 4 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of origination or acquisition), although it may also take into account under certain circumstances the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The grade of a portfolio investment may be reduced or increased over time. The following is a description of each investment grade:

Investment gradeDescription
4Involves the least amount of risk to our initial cost basis. The trends and risk factors for this investment since origination or acquisition are generally favorable, which may include the performance of the portfolio company or a potential exit.
3Involves a level of risk to our initial cost basis that is similar to the risk to our initial cost basis at the time of origination or acquisition. This portfolio company is generally performing as expected and the risk factors to our ability to ultimately recoup the cost of our investment are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a grade of 3.
2Indicates that the risk to our ability to recoup the initial cost basis of such investment has increased materially since origination or acquisition, including as a result of factors such as declining performance and non-compliance with debt covenants; however, payments are generally not more than 120 days past due. For investments graded 2, our investment adviser enhances its level of scrutiny over the monitoring of such portfolio company.
1Indicates that the risk to our ability to recoup the initial cost basis of such investment has substantially increased since origination or acquisition, and the portfolio company likely has materially declining performance. For debt investments with an investment grade of 1, most or all of the debt covenants are out of compliance and payments are substantially delinquent. For investments graded 1, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit. For investments graded 1, our investment adviser enhances its level of scrutiny over the monitoring of such portfolio company.

As of December 31, 2021, the weighted average grade of our portfolio at fair value was 3.1. For more information on our portfolio investment grades, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Portfolio and Investment Activity.”

MANAGERIAL ASSISTANCE

As a BDC, we must offer, and must provide upon request, significant managerial assistance to certain of our portfolio companies. This assistance could involve, among other things, monitoring the operations of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance. Ares Operations may provide all or a portion of this assistance pursuant to our administration agreement, the costs of which will be reimbursed by us. We may receive fees for these services.

COMPETITION

Our primary competitors include public and private funds, commercial and investment banks, commercial finance companies, other BDCs and private equity funds, each of which we compete with for financing opportunities. Some of our competitors are substantially larger and have considerably greater financial and marketing resources than we do. For example, some competitors may have access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider more investments and establish more relationships than we do. Furthermore, many of our competitors are not subject to the regulatory restrictions that the Investment Company Act imposes on us as a BDC. For more information concerning the competitive risks we face, see “Risk Factors—Risks Relating to Our Business—We operate in a highly competitive market for investment opportunities.”

We believe that the relationships of the members of our investment adviser’s investment committee and of the partners of Ares enable us to learn about, and compete effectively for, financing opportunities with attractive middle-market companies in the industries in which we seek to invest. We believe that Ares’ professionals’ deep and long-standing direct sponsor relationships and the resulting proprietary transaction opportunities that these relationships often present, provide valuable insight and access to transactions and information. We use the industry information of Ares’ investment professionals to which we have access to assess investment risks and determine appropriate pricing for our investments in portfolio companies.

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STAFFING

We do not currently have any employees and do not expect to have any employees. Services necessary for our business are provided by individuals who are employees or affiliates of our investment adviser, Ares Capital Management, and our administrator, Ares Operations, each of which is a subsidiary of Ares Management, pursuant to the terms of our investment advisory and management agreement and our administration agreement, respectively, each as described below. Each of our executive officers is an employee or affiliate of our investment adviser or our administrator. Our day-to-day investment activities are managed by our investment adviser. Most of the services necessary for the origination of our investment portfolio are provided by investment professionals employed by Ares Capital Management. Ares Capital Management had approximately 145 U.S.-based investment professionals as of December 31, 2021 who focus on origination, transaction development, investment and the ongoing monitoring of our investments. See “Investment Advisory and Management Agreement” below. We reimburse both our investment adviser and our administrator for a certain portion of expenses incurred in connection with such staffing, as described in more detail below. Because we have no employees, Ares Capital does not have a formal employee relations policy.

INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT

Management Services

Ares Capital Management serves as our investment adviser and is registered as an investment adviser under the Advisers Act. Subject to the overall supervision of our board of directors, our investment adviser manages the day-to-day operations of, and provides investment advisory and management services to, Ares Capital. Under the terms of the investment advisory and management agreement, our investment adviser:

•determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;

•identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies);

•closes and monitors the investments we make;

•determines the investments and other assets that we purchase, retain or sell; and

•provides us with such other investment advisory and research and related services as we may from time to time reasonably require.

Ares Capital Management’s services to us under the investment advisory and management agreement are not exclusive, and it is free to furnish similar services to other entities. Similarly, our investment adviser or its affiliates may directly or indirectly manage funds or other investment vehicles with investment objectives similar to ours. Accordingly, we may compete with these Ares funds or other investment vehicles managed by our investment adviser and its affiliates for capital and investment opportunities. Ares Capital Management endeavors to allocate investment opportunities in a fair and equitable manner, and in any event consistent with any fiduciary duties owed to Ares Capital. Nevertheless, it is possible that we may not be given the opportunity to participate in certain investments made by investment funds or other investment vehicles managed by our investment adviser or its affiliates. See “Risk Factors—Risks Relating to Our Business—There are significant potential conflicts of interest that could impact our investment returns.”

Base Management Fee
Pursuant to the investment advisory and management agreement and subject to the overall supervision of our board of directors, our investment adviser provides investment advisory and management services to us. For providing these services, our investment adviser receives fees from us consisting of a base management fee, an income based fee and a capital gains incentive fee.
Effective June 21, 2019, in connection with our board of directors’ approval of the modification of the asset coverage requirement applicable to senior securities from 200% to 150%, the investment advisory and management agreement was amended to reduce our annual base management fee rate from 1.5% to 1.0% on all assets financed using leverage over 1.0x debt to equity. For all assets financed using leverage up to 1.0x debt to equity, the annual base management fee rate remains at 1.5%. The base management fee is based on the average value of our total assets (other than cash or cash equivalents but
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including assets purchased with borrowed funds) at the end of the two most recently completed calendar quarters and is calculated by applying the applicable fee rate. The base management fee is payable quarterly in arrears.
Income Based Fee
The income based fee is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income, as defined in the investment advisory and management agreement, for the quarter. Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the administration agreement, and any interest expense and dividends paid on any outstanding preferred stock, but excluding the income based fee and capital gains incentive fee accrued under U.S. generally accepted accounting principles (“GAAP”)). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities, accrued income that we have not yet received in cash. Our investment adviser is not under any obligation to reimburse us for any part of the income based fees it received that were based on accrued interest that we never actually received. See “Risk Factors—Risks Relating to Our Business—There are significant potential conflicts of interest that could impact our investment returns” and “Risk Factors—Risks Relating to Our Business—We may be obligated to pay our investment adviser certain fees even if we incur a loss.”
Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses, unrealized capital appreciation, unrealized capital depreciation or income tax expense related to realized gains and losses. Because of the structure of the income based fee, it is possible that we may pay such fees in a quarter where we incur a loss. For example, if we receive pre-incentive fee net investment income in excess of the hurdle rate for a quarter, we will pay the applicable income based fee even if we have incurred a loss in that quarter due to realized and/or unrealized capital losses.
Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets (defined as total assets less indebtedness and before taking into account any income based fees and capital gains incentive fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed “hurdle rate” of 1.75% per quarter. If market credit spreads rise, we may be able to invest our funds in debt instruments that provide for a higher return, which may increase our pre-incentive fee net investment income and make it easier for our investment adviser to surpass the fixed hurdle rate and receive an income based fee based on such net investment income. To the extent we have retained pre-incentive fee net investment income that has been used to calculate the income based fee, it is also included in the amount of our total assets (other than cash and cash equivalents but including assets purchased with borrowed funds) used to calculate the base management fee.
We pay our investment adviser an income based fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:
•No income based fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the hurdle rate;

•100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter. We refer to this portion of our pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 2.1875%) as the “catch-up” provision. The “catch-up” is meant to provide our investment adviser with 20% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeded 2.1875% in any calendar quarter; and

•20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter.
 
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The following is a graphical representation of the calculation of the income based fee:
Quarterly Income Based Fee Based on Net Investment Income

Pre-incentive fee net investment income return
(expressed as a percentage of the value of net assets)

incentiveimagea39a.jpg

Percentage of pre-incentive fee net investment income
allocated to income based fee

These calculations are adjusted for any share issuances or repurchases during the quarter.
    
Capital Gains Incentive Fee

The capital gains incentive fee is determined and payable in arrears as of the end of each calendar year (or, upon termination of our investment advisory and management agreement, as of the termination date) and is calculated at the end of each applicable year by subtracting (a) the sum of our cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (b) our cumulative aggregate realized capital gains, in each case calculated from October 8, 2004, (the date we completed our IPO). Realized capital gains and losses include gains and losses on investments and foreign currencies, gains and losses on extinguishment of debt and from other assets, as well as any income tax and other expenses related to cumulative aggregate realized gains and losses. If such amount is positive at the end of such year, then the capital gains incentive fee for such year is equal to 20% of such amount, less the aggregate amount of capital gains incentive fees paid in all prior years. If such amount is negative, then there is no capital gains incentive fee for such year.

The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive, between (a) the net sales price of each investment in our portfolio when sold and (b) the accreted or amortized cost basis of such investment.
The cumulative aggregate realized capital losses are calculated as the sum of the amounts by which (a) the net sales price of each investment in our portfolio when sold is less than (b) the accreted or amortized cost basis of such investment.
The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each investment in our portfolio as of the applicable capital gains incentive fee calculation date and (b) the accreted or amortized cost basis of such investment.
Notwithstanding the foregoing, if we are required by GAAP to record an investment at its fair value as of the time of acquisition instead of at the actual amount paid for such investment by us (including, for example, as a result of the application of the asset acquisition method of accounting), then solely for the purposes of calculating the capital gains incentive fee, the “accreted or amortized cost basis” of an investment shall be an amount (the “Contractual Cost Basis”) equal to (1) (x) the actual amount paid by us for such investment plus (y) any amounts recorded in our financial statements as required by GAAP that are attributable to the accretion of such investment plus (z) any other adjustments made to the cost basis included in our financial statements, including PIK interest or additional amounts funded (net of repayments) minus (2) any amounts recorded in our financial statements as required by GAAP that are attributable to the amortization of such investment, whether such calculated Contractual Cost Basis is higher or lower than the fair value of such investment (as determined in accordance with GAAP) at the time of acquisition.
We defer cash payment of any income based fee and the capital gains incentive fee otherwise earned by our investment adviser if during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made the sum of (a) the aggregate distributions to our stockholders and (b) the change in net assets (defined as total assets less indebtedness and before taking into account any income based fees and capital gains incentive fees payable during the period) is less than 7.0% of our net assets (defined as total assets less indebtedness) at the beginning of such period. Any deferred income based fees and capital gains incentive fees are carried over for payment in subsequent calculation periods to the extent such payment is payable under our investment advisory and management agreement.
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Payment of Our Expenses

The services of all investment professionals and staff of our investment adviser, when and to the extent engaged in providing investment advisory and management services to us and routine overhead expenses of such personnel allocable to such services, are provided and paid for by our investment adviser. Under the investment advisory and management agreement, we bear all other costs and expenses of our operations and transactions, including, but not limited to, those relating to: organization; calculation of our net asset value (including, but not limited to, the cost and expenses of any independent valuation firm); expenses incurred by our investment adviser payable to third parties, including agents, consultants or other advisers, in monitoring our financial and legal affairs and in monitoring our investments (including the cost of consultants hired to develop information technology systems designed to monitor our investments) and performing due diligence on our prospective portfolio companies; interest payable on indebtedness, if any, incurred to finance our investments (including payments to third party vendors for financial information services); cost of rating agencies; offerings of our common stock and other securities; investment advisory and management fees; administration fees; fees payable to third parties, including agents, attorneys, consultants or other advisers, relating to, or associated with, evaluating, negotiating with and making investments in portfolio companies, regardless of whether such transactions are ultimately consummated; transfer agent and custodial fees; registration fees; listing fees; taxes; independent directors’ fees and expenses; costs of preparing and filing reports or other documents with the SEC; the costs of any reports, proxy statements or other notices to stockholders, including printing costs; to the extent we are covered by any joint insurance policies, our allocable portion of the insurance premiums for such policies; direct costs and expenses of administration, including auditor and legal costs; and all other expenses incurred by us or our administrator in connection with administering our business as described in more detail under “—Administration Agreement” below.

Duration, Termination and Amendment

At a meeting of our board of directors on May 26, 2021, our board of directors, including a majority of the directors who are not “interested persons” of the Company as defined in the Investment Company Act, voted to approve the continuation of our investment advisory and management agreement, which extended the terms of the agreement until June 6, 2022. Such meeting was held via videoconference pursuant to the exemptive relief granted under SEC Release No. 33897, dated June 19, 2020. Our board of directors ratified the approval of the continuation of our investment advisory and management agreement during an in-person meeting on October 21, 2021. See “Regulation.”

Unless terminated earlier, our investment advisory and management agreement will renew for successive annual periods if approved annually by our board of directors or by the affirmative vote of the holders of a majority of our outstanding voting securities, and, in either case, approval by a majority of our directors who are not “interested persons” of the Company (as defined in the Investment Company Act). Our investment advisory and management agreement will automatically terminate in the event of its assignment (as defined in the Investment Company Act). The investment advisory and management agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.

In voting to approve the investment advisory and management agreement, our independent directors consulted in executive session with their independent legal counsel regarding the approval of such agreement. In reaching a decision to approve the investment advisory and management agreement, our board of directors reviewed a significant amount of information and considered, among other things:

(i)    the nature, extent and quality of the services provided to the Company by our investment adviser;

(ii)    the advisory fees paid by the Company under the investment advisory and management agreement as compared to the advisory fees paid by other funds and accounts managed by our investment adviser with similar investment strategies as well as the fees and expenses of comparable BDCs;

(iii)    the long- and short-term investment performance of the Company and our investment adviser;

(iv)    the costs of the services provided by our investment adviser (including the base management fee, the income based fee and the capital gains incentive fee (including the applicable hurdle rates and conditions for the deferral of fee payments) and expense ratios) under the investment advisory and management agreement and comparative data based on publicly available information;

(v)    the potential for, and sharing of, economies of scale in investment management given the directly originated nature of the Company’s investment portfolio and resources dedicated by our investment adviser thereto;

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(vi)    our investment adviser’s pro forma profitability with respect to managing the Company based on financial information provided by our investment adviser;

(vii)    additional benefits to be derived by our investment adviser and its affiliates as a result of our relationship with our investment adviser; and

(viii)    various other matters, including the alignment of interests of our stockholders.

In voting to approve the investment advisory and management agreement, our board of directors, including all of the directors who are not “interested persons,” of the Company, made the following conclusions:

•Nature, Extent and Quality of Services. Our board of directors considered the nature, extent and quality of the investment selection process employed by our investment adviser, including the flow of transaction opportunities resulting from Ares Capital Management’s investment professionals’ significant capital markets, trading and research expertise, the employment of Ares Capital Management’s investment philosophy, diligence procedures, credit recommendation process, investment structuring, and ongoing relationships with and monitoring of portfolio companies, in light of the investment objective of the Company. Our board of directors also considered our investment adviser’s personnel and their prior experience in connection with the types of investments made by us, including such personnel’s network of relationships with intermediaries focused on U.S. middle-market companies and other companies in which we may make investments. Our board of directors also considered the benefit and increasing costs of our investment adviser continuing to be able to recruit and retain top talent. In addition, our board of directors considered the other terms and conditions of the investment advisory and management agreement, including that the substantive terms of the investment advisory and management agreement (other than the fees payable thereunder, which our board of directors reviewed separately) are generally the same as those of comparable BDCs described in the available market data and that it would be difficult to obtain similar services of similar quality on a comparable basis from other third party service providers or through an internally managed structure. In addition, our board of directors considered the fact that we have the ability to terminate the investment advisory and management agreement without penalty upon 60 days’ written notice to our investment adviser. Our board of directors further determined that our investment adviser is served by a dedicated origination, transaction development and investment team of investment professionals, and that these investment professionals have historically focused on investments in U.S. middle-market companies and other companies in which we may make investments, which experience and relationships coincide with our investment objective and generally equal or exceed those of the management teams or investment advisers of other comparable BDCs described in the available market data.

•Investment Performance. Our board of directors reviewed the long-term and short-term investment performance of the Company and our investment adviser, as well as comparative data based on publicly available information with respect to the long-term and short-term investment performance of other externally managed BDCs and their investment advisers. Our board of directors noted the longevity and consistency of the Company’s investment performance and determined that our investment adviser was delivering results consistent with the investment objective of the Company and that the Company’s investment performance was generally above average when compared to comparable BDCs, including based on one, three and five year time periods. Our board of directors further determined that in light of the performance history of the Company, our investment adviser’s extensive experience with our particular investment objectives and policies and our investment adviser’s commitment to the Company, our investment adviser was well-positioned to manage our investment performance, including through the volatile market conditions caused by the novel Coronavirus (“COVID-19”) pandemic, supply chain disruptions and inflationary pressures, with the approval of the investment advisory and management agreement.

•Costs of the Services Provided to the Company. Our board of directors considered (i) comparative data based on publicly available information with respect to services rendered and the advisory fees (including the base management fee, income based fee and capital gains incentive fee or similar fees (including applicable hurdle rates, other payment conditions and/or fee waivers)) of other BDCs with similar investment objectives, our operating expenses and expense ratios compared to other BDCs of similar size and with similar investment objectives and (ii) the administrative services that our administrator will provide to us at cost. Further, our board of directors considered comparative information with respect to the advisory fees paid by the Company as compared to the advisory fees paid by other funds and accounts managed by our investment adviser with similar investment strategies, and considered the rationale for the differences in fees, including, but not limited to, differences in investment objectives and investment strategies as well as the regulated nature of the Company.

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•Economies of Scale. Our board of directors considered information about the potential for our stockholders to experience economies of scale as we grow in size.

In view of the wide variety of material factors that our board of directors considered in connection with its evaluation of the investment advisory and management agreement, it is not practical to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision. Our board of directors did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of our board of directors. Rather, our board of directors based its approval on the totality of information presented to, and the investigation conducted by, it. In considering the factors discussed above, individual directors may have given different weights to different factors.

Based on the information reviewed and the factors discussed above, our directors (including those directors who are not “interested persons” of the Company) concluded that the terms of the investment advisory and management agreement, including the fee rates thereunder, are fair and reasonable in relation to the services provided and approved the investment advisory and management agreement as being in the best interests of the Company and its stockholders.

Conflicts of interest may arise if our investment adviser seeks to change the terms of our investment advisory and management agreement, including, for example, the amount of the base management fee, the income based fee, the capital gains incentive fee or other compensation terms. Material amendments to our investment advisory and management agreement must be approved by the affirmative vote of the holders of a majority of our outstanding voting securities and by a majority of our independent directors, and we may from time to time decide it is appropriate to seek the requisite approval to change the terms of the agreement.

Indemnification

The investment advisory and management agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, our investment adviser, its members and their respective officers, managers, partners, agents, employees, controlling persons and members and any other persons affiliated with it are entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of our investment adviser’s services under the investment advisory and management agreement or otherwise as our investment adviser.

Organization of our Investment Adviser

Our investment adviser is a Delaware limited liability company that is registered as an investment adviser under the Advisers Act. The principal executive offices of Ares Capital Management are located at 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067.

ADMINISTRATION AGREEMENT

We are also party to an administration agreement, referred to herein as the “administration agreement”, with our administrator, Ares Operations. Our board of directors approved the continuation of our administration agreement on May 26, 2021, which extended the term of the agreement until June 1, 2022. Pursuant to the administration agreement, Ares Operations furnishes us with office equipment and clerical, bookkeeping and record keeping services at our office facilities. Under the administration agreement, Ares Operations also performs, or oversees the performance of, our required administrative services, which include, among other things, providing assistance in accounting, legal, compliance, operations, technology and investor relations, being responsible for the financial records that we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. In addition, Ares Operations assists us in determining and publishing our net asset value, assists us in providing managerial assistance to our portfolio companies, oversees the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others. Payments under the administration agreement are equal to an amount based upon our allocable portion of Ares Operations’ overhead and other expenses (including travel expenses) incurred by Ares Operations in performing its obligations under the administration agreement, including our allocable portion of the compensation, rent and other expenses of certain of our officers (including our chief compliance officer, chief financial officer, chief accounting officer, general counsel, secretary, treasurer and assistant treasurer) and their respective staffs. The administration agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.

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For the years ended December 31, 2021 and 2020, we incurred $15 million and $13 million, respectively, in administrative fees. As of December 31, 2021 and 2020, $4 million and $3 million, respectively, of the administrative fees were unpaid and included in “accounts payable and other liabilities” in the accompanying consolidated balance sheets.

Indemnification

The administration agreement provides that, absent willful misfeasance, bad faith or negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, Ares Operations, its members and their respective officers, managers, partners, agents, employees, controlling persons and members and any other persons or entities affiliated with it are entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of Ares Operations’ services under the administration agreement or otherwise as our administrator.

LICENSE AGREEMENT

Ares Management LLC, the sole member of Ares Capital Management, has granted us a non‑exclusive, royalty‑free license to use the name “Ares” pursuant to a license agreement. Under this agreement, we will have a right to use the Ares name for so long as Ares Capital Management remains our investment adviser. Other than with respect to this limited license, we have no legal right to the “Ares” name.

LEVERAGE

We may from time to time borrow funds to make investments, a practice known as “leverage,” to attempt to increase returns to our stockholders. With certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, as calculated in accordance with the Investment Company Act, equals at least 150% after such borrowing (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us).

The amount of leverage that we employ at any particular time will depend on our investment adviser’s and our board of directors’ assessments of market and other factors at the time of any proposed borrowing. As of February 2, 2022, we had $10.6 billion in total aggregate principal amount of debt outstanding under the various debt instruments. See “Risk Factors—Risks Relating to Our Business—We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing with us.” For more information on our debt, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources” as well as Note 5 and Note 15 to our consolidated financial statements for the year ended December 31, 2021.

We may from time to time seek to retire or repurchase our common stock through cash purchases, as well as retire, cancel or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. The amounts involved may be material.

REGULATION

We have elected to be regulated as a BDC under the Investment Company Act and have elected to be treated as a RIC under the Code. As with other companies regulated by the Investment Company Act, a BDC must adhere to certain substantive regulatory requirements. The Investment Company Act contains prohibitions and restrictions relating to certain transactions between BDCs and certain affiliates (including any investment advisers or sub-advisers), principal underwriters and certain affiliates of those affiliates or underwriters. Among other things, we generally cannot co-invest in any portfolio company in which a fund managed by Ares or any of its downstream affiliates other than us and our downstream affiliates) is also co-investing. On January 18, 2017, we received the Co-investment Exemptive Order from the SEC that permits us and other business development companies and registered closed-end management investment companies managed by Ares to co-invest in portfolio companies with each other and with affiliated investment funds. Co-investments made under the Co-investment Exemptive Order are subject to compliance with certain conditions and other requirements contained in the Co-investment Exemptive Order, which could limit our ability to participate in a co-investment transaction. In addition, we are relying on the Exemptive Relief that permits a BDC with an effective Co-investment Exemptive Order to allow an affiliated investment fund to participate in a follow-on investment in a portfolio company where such affiliated investment fund is not already invested. Although this relief expired on December 31, 2020, on January 5, 2021, the SEC stated that, until March 31, 2022, it will not recommend enforcement action against any BDC with an existing co-investment order that relies on the Exemptive Relief. We may also co-invest with funds managed by Ares or any of its downstream affiliates, subject to compliance with existing
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regulatory guidance, applicable regulations and our allocation procedures. There can be no guarantee that the Co-investment Exemptive Order will be further extended.

The Investment Company Act contains certain restrictions on certain types of investments we may make. Specifically, we may only invest up to 30% of our portfolio in entities that are not considered “eligible portfolio companies” (as defined in the Investment Company Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the Investment Company Act, and publicly traded entities whose public equity market capitalization exceeds the levels provided for under the Investment Company Act.

The Investment Company Act also requires that a majority of our directors be persons other than “interested persons,” as that term is defined in Section 2(a)(19) of the Investment Company Act, referred to herein as “independent directors.” In addition, the Investment Company Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless that change is approved by holders of at least a majority of our outstanding voting securities. Under the Investment Company Act, the vote of holders of at least a “majority of outstanding voting securities” means the vote of the holders of the lesser of: (a) 67% or more of the outstanding shares of our common stock present at a meeting or represented by proxy if holders of more than 50% of the shares of our common stock are present or represented by proxy or (b) more than 50% of the outstanding shares of our common stock.

Under the Investment Company Act, we are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the current net asset value per share of our common stock if our board of directors determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale. Pursuant to approval granted at a special meeting of stockholders held on August 13, 2021, we currently are permitted to sell or otherwise issue shares of our common stock at a price below net asset value, subject to certain limitations and determinations that must be made by our board of directors. Such stockholder approval expires on August 13, 2022.

We may invest up to 100% of our assets in securities acquired directly from issuers in privately negotiated transactions. Our intention is to not write (sell) or buy put or call options to manage risks associated with the publicly traded securities of our portfolio companies. We may enter into hedging transactions to manage the risks associated with interest rate and currency fluctuations. We may purchase or otherwise receive warrants or options to purchase the common stock of our portfolio companies in connection with acquisition financings or other investments. In connection with such an acquisition, we may acquire rights to require the issuers of acquired securities or their affiliates to repurchase them under certain circumstances.

We also do not intend to acquire securities issued by any investment company that exceed the limits imposed by the Investment Company Act. Under these limits, we generally cannot acquire more than 3% of the voting stock of any investment company (as defined in the Investment Company Act), invest more than 5% of the value of our total assets in the securities of one investment company or invest more than 10% of the value of our total assets in the securities of investment companies in the aggregate unless certain conditions are met. With regard to that portion of our portfolio invested in securities issued by investment companies, it should be noted that such investments might subject our stockholders to additional expenses.

We are currently allowed to borrow amounts or issue debt securities or preferred stock, which we refer to collectively as “senior securities,” such that our asset coverage, as calculated pursuant to the Investment Company Act, equals at least 150% immediately after such borrowing (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us).

PRIVACY PRINCIPLES

We endeavor to maintain the privacy of our recordholders and to safeguard their non-public personal information. The following information is provided to help our recordholders understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with select other parties.

Generally, we will not receive any non-public personal information about recordholders of our common stock, although certain of our recordholders’ non-public information may become available to us. The non-public personal information that we may receive falls into the following categories:

•information we receive from recordholders, whether we receive it orally, in writing or electronically. This includes recordholders’ communications to us concerning their investment;

•information about recordholders’ transactions and history with us; and
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•other general information that we may obtain about recordholders, such as demographic and contact information such as address.

We disclose non-public personal information about recordholders:

•to our affiliates (such as our investment adviser and administrator) and their employees for everyday business purposes;

•to our service providers (such as our accountants, attorneys, custodians, transfer agent, underwriters and proxy solicitors) and their employees, as is necessary to service recordholder accounts or otherwise provide the applicable service;

•to comply with court orders, subpoenas, lawful discovery requests or other legal or regulatory requirements; or

•as allowed or required by applicable law or regulation.

When we share non-public recordholder personal information referred to above, the information is made available for limited business purposes and under controlled circumstances designed to protect our recordholders’ privacy. We do not permit use of recordholder information for any non-business or marketing purpose, nor do we permit third parties to rent, sell, trade or otherwise release or disclose information to any other party.

Our service providers, such as our investment adviser, administrator and transfer agent, are required to maintain physical, electronic, and procedural safeguards to protect recordholder non-public personal information, to prevent unauthorized access or use and to dispose of such information when it is no longer required.

Personnel of affiliates may access recordholder information only for business purposes. The degree of access is based on the sensitivity of the information and on personnel need for the information to service a recordholder’s account or comply with legal requirements.

If a recordholder ceases to be a recordholder, we will adhere to the privacy policies and practices as described above. We may choose to modify our privacy policies at any time. Before we do so, we will notify recordholders and provide a description of our privacy policy.

In the event of a corporate change in control resulting from, for example, a sale to, or merger with, another entity, or in the event of a sale of assets, we reserve the right to transfer non-public personal information of holders of our securities to the new party in control or the party acquiring assets.

AVAILABLE INFORMATION

We file with or submit to the SEC annual, quarterly and current periodic reports, proxy statements and other information meeting the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This information is available free of charge by calling us collect at (310) 201-4200 or on our website at www.arescapitalcorp.com. Information contained on our website is not incorporated into this Annual Report and you should not consider such information to be part of this Annual Report. Such information is also available from the EDGAR database on the SEC’s website at http://www.sec.gov.

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Item 1A.    Risk Factors

RISK FACTORS

You should carefully consider the risk factors described below, together with all of the other information included in this Annual Report, including our consolidated financial statements and the related notes thereto, before you decide whether to make an investment in our securities. The risks set out below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. If any of the following events occur, our business, financial condition and results of operations could be materially adversely affected. In such case, the net asset value of our common stock and the trading price, if any, of our securities could decline, and you may lose all or part of your investment.

RISK FACTOR SUMMARY

The following is a summary of the principal risks that you should carefully consider before investing in our securities.

•The capital markets may experience periods of disruption and instability, including supply chain disruption and inflation. Such market conditions may materially and adversely affect debt and equity capital markets, which may have a negative impact on our business and operations.

•The COVID-19 pandemic has caused severe disruptions in the global economy, including supply chain disruptions, which have had, and may continue to have, a negative impact on our portfolio companies and our business and operations.

•Global economic, political and market conditions, including uncertainty about the financial stability of the United States, could have a significant adverse effect on our business, financial condition and results of operations.

•A failure on our part to maintain our status as a BDC may significantly reduce our operating flexibility and a failure to maintain our status as a RIC may subject us to additional corporate-level income taxes and reduce earnings available from which to pay dividends.

•We are dependent upon certain key personnel of Ares for our future success and upon their access to other Ares investment professionals.

•We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing with us.

•We operate in a highly competitive market for investment opportunities.

•There are significant potential conflicts of interest that could impact our investment returns.

•We are exposed to risks associated with changes in interest rates, including the transition away from LIBOR and the adoption of alternative reference rates.

•Most of our portfolio investments are not publicly traded and, as a result, the fair value of these investments may not be readily determinable. Additionally, to the extent that we need liquidity and need to sell assets, the lack of liquidity in our investments may adversely affect our business.

•Our financial condition and results of operations could be negatively affected if a significant investment fails to perform as expected.

•Declines in market prices and liquidity in the corporate debt markets can result in significant net unrealized depreciation of our portfolio, which in turn would reduce our net asset value.

•Economic recessions or downturns, including as a result of the COVID-19 pandemic, could impair our portfolio companies and harm our operating results.

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•Our investments, which are primarily in middle-market companies, may be risky and we could lose all or part of our investment.

•Our portfolio companies may be highly leveraged.

•Our shares of common stock may trade at a price above or below net asset value. If our common stock trades at a discount to net asset value, our ability to raise capital may be limited.

•Our ability to grow depends on our ability to raise capital.

•Our asset coverage requirement is 150%, which may increase the risk of investing with us.

•Cybersecurity risks and cyber incidents may adversely affect our business or the business of our portfolio companies by causing a disruption to our operations or the operations of our portfolio companies, a compromise or corruption of our confidential information or the confidential information of our portfolio companies and/or damage to our business relationships or the business relationships of our portfolio companies, all of which could negatively impact the business, financial condition and operating results of us or our portfolio companies.

RISKS RELATING TO OUR BUSINESS

The capital markets may experience periods of disruption and instability. Such market conditions may materially and adversely affect debt and equity capital markets, which may have a negative impact on our business and operations.

From time to time, capital markets may experience periods of disruption and instability, including as recently as 2020 as a result of the COVID-19 pandemic. In addition, between 2008 and 2009, the global capital markets were unstable as evidenced by periodic disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. There can be no assurance these market conditions will not continue or worsen in the future, including as a result of COVID-19, as discussed below.

Equity capital may be difficult to raise during such periods of adverse or volatile market conditions because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than net asset value without first obtaining approval for such issuance from our stockholders and our independent directors. We generally seek approval from our stockholders so that we have the flexibility to issue up to 25% of our then outstanding shares of our common stock at a price below net asset value. Pursuant to approval granted at a special meeting of stockholders held on August 13, 2021, we are permitted to sell or otherwise issue shares of our common stock at a price below net asset value, subject to certain limitations and determinations that must be made by our board of directors. Such stockholder approval expires on August 13, 2022.

Volatility and dislocation in the capital markets can also create a challenging environment in which to raise or access debt capital. The reappearance of market conditions similar to those experienced during portions of 2020 and from 2008 through 2009 for any substantial length of time could make it difficult to extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with similar terms and any failure to do so could have a material adverse effect on our business. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than what we currently experience, including being at a higher cost in rising rate environments. If we are unable to raise or refinance debt, then our equity investors may not benefit from the potential for increased returns on equity resulting from leverage and we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies.

Significant disruption or volatility in the capital markets may also have a negative effect on the valuations of our investments. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity). Significant disruption or volatility in the capital markets may also affect the pace of our investment activity and the potential for liquidity events involving our investments. Thus, the illiquidity of our investments may make it difficult for us to sell such investments to access capital if required, and as a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them for liquidity
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purposes. An inability to raise or access capital could have a material adverse effect on our business, financial condition or results of operations.

The COVID-19 pandemic has caused severe disruptions in the global economy, including supply chain disruptions, which have had, and may continue to have, a negative impact on our portfolio companies and our business and operations.

The COVID-19 pandemic has adversely impacted global commercial activity and contributed to significant volatility in the equity and debt markets. The COVID-19 pandemic and restrictive measures taken during the course of the pandemic to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns, or the re-introduction of business shutdowns, cancellations of events and restrictions on travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions, labor shortages, increased inflationary pressure and overall economic and financial market instability both globally and in the United States. Many states, including those in which we and our portfolio companies operate, have issued orders requiring the closure of, or certain restrictions on the operation of certain businesses. Such actions and effects remain ongoing and the ultimate duration and severity of the COVID-19 pandemic, including COVID-19 variants, such as the recent Delta and Omicron variants, remain uncertain. While several countries, as well as certain states, counties and cities in the United States, relaxed the public health restrictions throughout 2021 partly as a result of the introduction of vaccines, recurring COVID-19 outbreaks caused by different virus variants continue to lead to the re-introduction of certain restrictions in certain states in the United States and globally. Even after the COVID-19 pandemic subsides, the U.S. economy and most other major global economies may continue to experience a recession, and our business and operations, as well as the business and operations of our portfolio companies, could be materially adversely affected by a prolonged recession in the U.S. and other major markets.

The COVID-19 pandemic (including the restrictive measures taken in response thereto) has to date (i) created significant business disruption issues for certain of our portfolio companies, and (ii) materially and adversely impacted the value and performance of certain of our portfolio companies. The COVID-19 pandemic is having a particularly adverse impact on industries in which certain of our portfolio companies operate, including energy, hospitality, travel, retail and restaurants. As a result of the COVID-19 pandemic and other factors, supply chains worldwide have been, and continue to be, interrupted, slowed or rendered inoperable, which have also adversely impacted certain of our portfolio companies’ operating results. Certain of our portfolio companies in other industries have also been significantly impacted. The COVID-19 pandemic is continuing as of the filing date of this Annual Report, and its extended duration may have further adverse impacts on our portfolio companies after December 31, 2021, including for the reasons described below. Although the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020, which contains provisions intended to mitigate the adverse economic effects of the COVID-19 pandemic, and a second and third stimulus package on December 27, 2020 and March 11, 2021, respectively, which provided $900 billion and $1.9 trillion, respectively, in resources to small businesses and individuals as well as certain industries and state and local governments that have been adversely affected by the COVID-19 pandemic, it is uncertain whether, or how much, our portfolio companies have benefited or may benefit from such legislation or any other subsequent legislation intended to provide financial relief or assistance. As a result of this disruption and the pressures on their liquidity, certain of our portfolio companies, particularly in the beginning of the COVID-19 pandemic, drew on a higher percentage of the available revolving loans made available by us. While the levels of draw on available revolving loans have generally returned to pre-COVID-19 pandemic levels, some of our portfolio companies with such available revolving loans may draw or continue to draw on such loans at a higher level than before the COVID-19 pandemic, subject to availability under the terms of such loans.

The effects described above on our portfolio companies have, for certain of our portfolio companies to date, impacted their ability to make payments on their loans on a timely basis and in many cases have required us to amend certain terms of their loans, including payment terms. In addition, an extended duration of the COVID-19 pandemic may impact the ability of our portfolio companies to continue making their loan payments on a timely basis or meeting their loan covenants. The inability of portfolio companies to make timely payments or meet loan covenants may in the future require us to undertake similar amendment actions with respect to other of our investments or to restructure our investments. The amendment or restructuring of our investments may include the need for us to make additional investments in our portfolio companies (including debt or equity investments) beyond any existing commitments, exchange debt for equity, or change the payment terms of our loans to permit an affected portfolio company to pay a portion of its interest through PIK, which would defer the cash collection of such interest and add it to the principal balance, which would generally be due upon repayment of the outstanding principal.

The COVID-19 pandemic has adversely impacted the fair value of certain of our investments, including those reported as of December 31, 2021, and the values reported may differ materially from the values that we may ultimately realize with respect to our investments. The impact of the COVID-19 pandemic may not yet be fully reflected in the fair value of our
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investments as our valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information that is often from a time period earlier, generally two to three months, than the quarter for which we are reporting. Additionally, we may not have yet received information or certifications from our portfolio companies that indicate the full and ongoing extent of declining performance or non-compliance with debt covenants, as applicable, as a result of the COVID-19 pandemic. As a result, our valuations, including those reported as of December 31, 2021, may not show the complete or continuing impact of the COVID-19 pandemic and the resulting restrictive measures taken in response thereto. In addition, write downs in the value of our investments have reduced, and any additional write downs may further reduce, our net asset value (and, as a result, our asset coverage calculation). Accordingly, we may incur additional net unrealized or realized losses after December 31, 2021, which could have a material adverse effect on our business, financial condition and results of operations.

Despite actions of the U.S. federal government and foreign governments, the uncertainty surrounding the COVID-19 pandemic, including uncertainty regarding existing or future variants and other factors, has contributed to significant volatility in the global public equity markets and global debt capital markets, including the market price of shares of our common stock and the trading prices of our issued debt securities. Market conditions may make it difficult for us to raise equity capital because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than net asset value without first obtaining approval for such issuance from our stockholders and our independent directors. Pursuant to approval granted at a special meeting of stockholders, held on August 13, 2021, we are permitted to sell or otherwise issue shares of our common stock at a price below net asset value, subject to certain limitations and determinations that must be made by our board of directors. This stockholder approval expires on August 13, 2022. Moreover, these market conditions may make it difficult to access or obtain new indebtedness with similar terms to our existing indebtedness or otherwise have a negative effect on our cost of capital. See “Risk Factors-Risks Relating to Our Business-The capital markets may experience periods of disruption and instability.

A failure on our part to maintain our status as a BDC may significantly reduce our operating flexibility.

If we fail to maintain our status as a BDC, we might be regulated as a closed-end investment company that is required to register under the Investment Company Act, which would subject us to additional regulatory restrictions and significantly decrease our operating flexibility. In addition, any such failure could cause an event of default under our outstanding indebtedness, which could have a material adverse effect on our business, financial condition or results of operations.

We are dependent upon certain key personnel of Ares for our future success and upon their access to other Ares investment professionals.

We depend on the diligence, skill, judgment, network of business contacts and personal reputations of certain key personnel of the Ares Credit Group and our future success depends on their continued service. We also depend, to a significant extent, on access to the investment professionals of other groups within Ares, the information and deal flow generated by Ares’ investment professionals in the course of their investment and portfolio management activities, as well as the support of senior business operations professionals of Ares.

The departure or misconduct of any of these individuals, or of a significant number of the investment professionals or partners of Ares, could have a material adverse effect on our business, financial condition or results of operations. In addition, we cannot assure you that Ares Capital Management will remain our investment adviser or that we will continue to have access to Ares’ investment professionals or its information and deal flow. Further, there can be no assurance that Ares Capital will replicate its own or Ares’ historical success, and we caution you that our investment returns could be substantially lower than the returns achieved by other Ares-managed funds.

Our financial condition and results of operations depend on our ability to manage future growth effectively.

Our ability to achieve our investment objective depends on our ability to acquire suitable investments and monitor and administer those investments, which depends, in turn, on our investment adviser’s ability to identify, invest in and monitor companies that meet our investment criteria.

Accomplishing this result on a cost-effective basis is largely a function of the structuring of our investment process and the ability of our investment adviser to provide competent, attentive and efficient services to us. Our executive officers and the members of our investment adviser’s investment committee have substantial responsibilities in connection with their roles at Ares and with the other Ares funds, as well as responsibilities under the investment advisory and management agreement. They may also be called upon to provide significant managerial assistance to certain of our portfolio companies. These demands on
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their time, which will increase as the number of investments grow, may distract them or slow the rate of investment. In order for us to grow, Ares will need to hire, train, supervise, manage and retain new employees. However, we cannot assure you that Ares will be able to do so effectively. Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations.

Our ability to grow depends on our ability to raise capital.

We will need to periodically access the capital markets to raise cash to fund new investments in excess of our repayments, and we may also need to access the capital markets to refinance existing debt obligations to the extent such maturing obligations are not repaid with availability under our revolving credit facilities or cash flows from operations. We have elected to be treated as a RIC and operate in a manner so as to qualify for the U.S. federal income tax treatment applicable to RICs. Among other things, in order to maintain our RIC status, we must distribute to our stockholders on a timely basis generally an amount equal to at least 90% of our investment company taxable income, and, as a result, such distributions will not be available to fund investment originations or repay maturing debt. We must continue to borrow from financial institutions and issue additional securities to fund our growth. Unfavorable economic or capital market conditions may increase our funding costs, limit our access to the capital markets or could result in a decision by lenders not to extend credit to us. An inability to successfully access the capital markets may limit our ability to refinance our existing debt obligations as they come due and/or to fully execute our business strategy and could limit our ability to grow or cause us to have to shrink the size of our business, which could decrease our earnings, if any.
In addition, we are currently allowed to borrow amounts or issue debt securities or preferred stock, which we refer to collectively as “senior securities,” such that our asset coverage, as calculated pursuant to the Investment Company Act, equals at least 150% immediately after such borrowing (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us). Such requirement, in certain circumstances, may restrict our ability to borrow or issue debt securities or preferred stock. The amount of leverage that we employ will depend on our investment adviser’s and our board of directors’ assessments of market and other factors at the time of any proposed borrowing or issuance of senior securities. We cannot assure you that we will be able to maintain or increase the amount available to us under our current Facilities (as defined below), obtain other lines of credit or issue senior securities at all or on terms acceptable to us.
Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital.

We may issue senior securities or borrow money from banks or other financial institutions, up to the maximum amount permitted by the Investment Company Act. As a BDC, we are currently permitted to incur indebtedness or issue senior securities only in amounts such that our asset coverage, as calculated pursuant to the Investment Company Act, equals at least 150% after each such incurrence or issuance (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us). If the value of our assets declines, we may be unable to satisfy this test, which may prohibit us from paying dividends and could prevent us from maintaining our status as a RIC or may prohibit us from repurchasing shares of our common stock. In addition, our inability to satisfy this test could cause an event of default under our existing indebtedness. If we cannot satisfy this test, we may be required to sell a portion of our investments at a time when such sales may be disadvantageous and, depending on the nature of our leverage, repay a portion of our indebtedness. Accordingly, any failure to satisfy this test could have a material adverse effect on our business, financial condition or results of operations. As of December 31, 2021, our asset coverage calculated in accordance with the Investment Company Act was 179%. Also, to generate cash for funding new investments, we may in the future seek to issue additional debt or to securitize certain of our loans. The Investment Company Act may impose restrictions on the structure of any such securitization.

We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the current net asset value per share of our common stock if our board of directors determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale. Any such sale would be dilutive to the net asset value per share of our common stock. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our board of directors, closely approximates the market value of such securities (less any commission or discount). If our common stock trades at a discount to net asset value, this restriction could adversely affect our ability to raise capital.

Pursuant to approval granted at a special meeting of stockholders held on August 13, 2021, we are permitted to sell or otherwise issue shares of our common stock at a price below net asset value, subject to certain limitations and determinations that must be made by our board of directors. Such stockholder approval expires on August 13, 2022.
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We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing with us.

Borrowings, also known as leverage, magnify the potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing in our securities. We currently borrow under the Facilities and have issued or assumed other senior securities, and in the future may borrow from, or issue additional senior securities to, banks, insurance companies, funds, institutional investors and other lenders and investors. Lenders and holders of such senior securities have fixed dollar claims on our consolidated assets that are superior to the claims of our common stockholders or any preferred stockholders. If the value of our consolidated assets increases, then leveraging would cause the net asset value per share of our common stock to increase more sharply than it would have had we not incurred leverage.

Conversely, if the value of our consolidated assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not incurred leverage. Similarly, any increase in our consolidated income in excess of consolidated interest payable on the borrowed funds would cause our net income to increase more than it would had we not incurred leverage, while any decrease in our consolidated income would cause net income to decline more sharply than it would have had we not incurred leverage. Such a decline could negatively affect our ability to make common stock dividend payments. There can be no assurance that a leveraging strategy will be successful.

As of December 31, 2021, we had approximately $2.7 billion of outstanding borrowings under the Facilities, approximately $791 million aggregate principal amount of unsecured convertible notes outstanding comprised of $388 million aggregate principal amount of unsecured convertible notes that mature on February 1, 2022 (the “2022 Convertible Notes”) and $403 million aggregate principal amount of unsecured convertible notes that mature on March 1, 2024 (the “2024 Convertible Notes” and together with the 2022 Convertible Notes, the “Convertible Unsecured Notes”) and approximately $7.6 billion in aggregate principal amount outstanding of senior unsecured notes comprised of $750 million in aggregate principal amount of senior unsecured notes that mature on February 10, 2023 and bear interest at a rate of 3.500% (the “2023 Notes”), $900 million in aggregate principal amount of senior unsecured notes that mature on June 10, 2024 and bear interest at a rate of 4.200% (the “2024 Notes”), $600 million in aggregate principal amount of senior unsecured notes that mature on March 1, 2025 and bear interest at a rate of 4.250% (the “March 2025 Notes”), $1,250 million in aggregate principal amount of senior unsecured notes that mature on July 15, 2025 and bear interest at a rate of 3.250% (the “July 2025 Notes”), $1,150 million in aggregate principal amount of senior unsecured notes that mature on January 15, 2026 and bear interest at a rate of 3.875% (the “January 2026 Notes”), $1,000 million in aggregate principal amount of senior unsecured notes that mature on July 15, 2026 and bear interest at a rate of 2.150% (the “July 2026 Notes”), $500 million in aggregate principal amount of senior unsecured notes that mature on June 15, 2027 and bear interest at a rate of 2.875% (the “2027 Notes”), $1,250 million in aggregate principal amount of senior unsecured notes that mature on June 15, 2028 and bear interest at a rate of 2.875% (the “2028 Notes”) and $700 million in aggregate principal amount of senior unsecured notes that mature on November 15, 2031 and bear interest at a rate of 3.200% (the “2031 Notes” and together with the 2023 Notes, the 2024 Notes, the March 2025 Notes, the July 2025 Notes, the January 2026 Notes, the July 2026 Notes, the 2028 Notes, the “Unsecured Notes”). In order for us to cover our annual interest payments on our outstanding indebtedness at December 31, 2021, we must achieve annual returns on our December 31, 2021 total assets of at least 1.6%. The weighted average stated interest rate charged on our principal amount of outstanding indebtedness as of December 31, 2021 was 3.1%. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments,” as well as Note 15 to our consolidated financial statements for the year ended December 31, 2021 for subsequent events relating to the Unsecured Notes and the 2022 Convertible Notes. We intend to continue borrowing under the Facilities in the future and we may increase the size of the Facilities or issue additional debt securities or other evidences of indebtedness (although there can be no assurance that we will be successful in doing so). For more information on our indebtedness, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources.” Our ability to service our debt depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures. The amount of leverage that we employ at any particular time will depend on our investment adviser’s and our board of directors’ assessments of market and other factors at the time of any proposed borrowing. We are currently allowed to borrow amounts such that our asset coverage, as calculated pursuant to the Investment Company Act, equals at least 150% after such borrowing (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us).

The Facilities, the Convertible Unsecured Notes and the Unsecured Notes impose financial and operating covenants that restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC. A failure to renew the Facilities or to add new or replacement debt facilities or to issue additional debt securities or other evidences of indebtedness could have a material adverse effect on our business, financial condition and results of operations.

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The following table illustrates the effect on return to a holder of our common stock of the leverage created by our use of borrowing at the weighted average stated interest rate of 3.1% as of December 31, 2021, together with (a) our total value of net assets as of December 31, 2021; (b) approximately $11.1 billion in aggregate principal amount of indebtedness outstanding as of December 31, 2021 and (c) hypothetical annual returns on our portfolio of minus 15% to plus 15%.

Assumed Return on Portfolio (Net of Expenses)(1)-15.00 %-10.00 %-5.00 %— %5.00 %10.00 %15.00 %
Corresponding Return to Common Stockholders(2)-39.11 %-27.36 %-15.60 %-3.85 %7.90 %19.65 %31.41 %
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(1)The assumed portfolio return is required by SEC regulations and is not a prediction of, and does not represent, our projected or actual performance. Actual returns may be greater or less than those appearing in the table. Pursuant to SEC regulations, this table is calculated as of December 31, 2021. As a result, it has not been updated to take into account any changes in assets or leverage since December 31, 2021.

(2)In order to compute the “Corresponding Return to Common Stockholders,” the “Assumed Return on Portfolio” is multiplied by the total value of our assets at December 31, 2021 to obtain an assumed return to us. From this amount, the interest expense (calculated by multiplying the weighted average stated interest rate of 3.1% by the approximately $11.1 billion of principal debt outstanding) is subtracted to determine the return available to stockholders. The return available to stockholders is then divided by the total value of our net assets as of December 31, 2021 to determine the “Corresponding Return to Common Stockholders.”

In addition to regulatory requirements that restrict our ability to raise capital, the Facilities, the Convertible Unsecured Notes and the Unsecured Notes contain various covenants that, if not complied with, could accelerate repayment under the Facilities, the Convertible Unsecured Notes and the Unsecured Notes, thereby materially and adversely affecting our liquidity, financial condition and results of operations.

The agreements governing the Facilities, the Convertible Unsecured Notes and the Unsecured Notes require us to comply with certain financial and operational covenants. These covenants may include, among other things:

•restrictions on the level of indebtedness that we are permitted to incur in relation to the value of our assets;

•restrictions on our ability to incur liens; and

•maintenance of a minimum level of stockholders’ equity.

As of the date of this Annual Report, we are in compliance in all material respects with the covenants of the Facilities, the Convertible Unsecured Notes and the Unsecured Notes. However, our continued compliance with these covenants depends on many factors, some of which are beyond our control. For example, depending on the condition of the public debt and equity markets and pricing levels, unrealized depreciation in our portfolio may increase in the future. Any such increase could result in our inability to comply with our obligation to restrict the level of indebtedness that we are able to incur in relation to the value of our assets or to maintain a minimum level of stockholders’ equity.

Accordingly, although we believe we will continue to be in compliance, there are no assurances that we will continue to comply with the covenants in the Facilities, the Convertible Unsecured Notes and the Unsecured Notes. Failure to comply with these covenants could result in a default under the Facilities, the Convertible Unsecured Notes or the Unsecured Notes, that, if we were unable to obtain a waiver from the lenders or holders of such indebtedness, as applicable, such lenders or holders could accelerate repayment under such indebtedness and thereby have a material adverse impact on our business, financial condition and results of operations.

We operate in a highly competitive market for investment opportunities.

A number of entities compete with us to make the types of investments that we make in middle-market companies. We compete with other BDCs, public and private funds, commercial and investment banks, commercial financing companies, insurance companies, hedge funds, and, to the extent they provide an alternative form of financing, private equity funds. Some of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. Some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition,
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some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the Investment Company Act imposes on us as a BDC and that the Code imposes on us as a RIC. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, we may not be able to pursue attractive investment opportunities from time to time.

We do not seek to compete primarily based on the interest rates we offer and we believe that some of our competitors may make loans with interest rates that are comparable to or lower than the rates we offer. Rather, we compete with our competitors based on our existing investment platform, seasoned investment professionals, experience and focus on middle-market companies, disciplined investment philosophy, extensive industry focus and flexible transaction structuring. For a more detailed discussion of these competitive advantages, see “Business—Competitive Advantages.”

We may lose investment opportunities if we do not match our competitors’ pricing, terms and structure. The loss of such investment opportunities may limit our ability to grow or cause us to have to shrink the size of our portfolio, which could decrease our earnings. If we match our competitors’ pricing, terms and structure, we may experience decreased net interest income and increased risk of credit loss. As a result of operating in such a competitive environment, we may make investments that are on less favorable terms than what we may have originally anticipated, which may impact our return on these investments.

There are significant potential conflicts of interest that could impact our investment returns.

Conflicts may arise in allocating and structuring investments, time, services, expenses or resources among the investment activities of Ares funds, Ares, other Ares-affiliated entities and the employees of Ares. Certain of our executive officers and directors, and members of the investment committee of our investment adviser, serve or may serve as officers, directors or principals of other entities and affiliates of our investment adviser and investment funds managed by our investment adviser or its affiliates. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in our or our stockholders’ best interests or may require them to devote time to services for other entities, which could interfere with the time available to provide services to us. Members of our investment adviser’s investment committee may have significant responsibilities for other Ares funds. Similarly, although the professional staff of our investment adviser will devote as much time to the management of us as appropriate to enable our investment adviser to perform its duties in accordance with the investment advisory and management agreement, the investment professionals of our investment adviser may have conflicts in allocating their time and services among us, on the one hand, and investment vehicles managed by our investment adviser or one or more of its affiliates, on the other hand. These activities could be viewed as creating a conflict of interest insofar as the time and effort of the professional staff of our investment adviser and its officers and employees will not be devoted exclusively to our business but will instead be allocated between our business and the management of these other investment vehicles.

In addition, certain Ares funds may have investment objectives that compete or overlap with, and may from time to time invest in asset classes similar to those targeted by, Ares Capital. Consequently, we, on the one hand, and these other entities, on the other hand, may from time to time pursue the same or similar capital and investment opportunities. Ares and our investment adviser endeavor to allocate investment opportunities in a fair and equitable manner, and in any event consistent with any fiduciary duties owed to Ares Capital. Nevertheless, it is possible that we may not be given the opportunity to participate in certain investments made by investment funds managed by investment managers affiliated with Ares (including our investment adviser). In addition, there may be conflicts in the allocation of investments among us and the funds managed by investment managers affiliated with Ares (including our investment adviser) or one or more of our controlled affiliates or among the funds they manage, including investments made pursuant to the Co-investment Exemptive Order. Further, such other Ares-managed funds may hold positions in portfolio companies in which Ares Capital has also invested. Such investments may raise potential conflicts of interest between Ares Capital and such other Ares-managed funds, particularly if Ares Capital and such other Ares-managed funds invest in different classes or types of securities or investments of the same underlying portfolio company. In that regard, actions may be taken by such other Ares-managed funds that are adverse to Ares Capital’s interests, including, but not limited to, during a restructuring, bankruptcy or other insolvency proceeding or similar matter occurring at the underlying portfolio company.

We have from time to time sold assets to IHAM and certain of the IHAM Vehicles and, as part of our investment strategy, we may offer to sell additional assets to vehicles managed by one or more of our affiliates (including IHAM) or we may purchase assets from vehicles managed by one or more of our affiliates (including IHAM). In addition, vehicles managed by one or more of our affiliates (including IHAM) may offer assets to or may purchase assets from one another. While assets may be sold or purchased at prices that are consistent with those that could be obtained from third parties in the marketplace,
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and although these types of transactions generally require approval of one or more independent parties, there may be an inherent conflict of interest in such transactions between us and funds managed by one of our affiliates (including our investment adviser).

We pay a base management fee, an income based fee and a capital gains incentive fee to our investment adviser, and reimburse our investment adviser for certain expenses it incurs. Ares, from time to time, incurs fees, costs, and expenses on behalf of more than one fund. To the extent such fees, costs, and expenses are incurred for the account or benefit of more than one fund, each such fund will typically bear an allocable portion of any such fees, costs, and expenses in proportion to the size of its investment in the activity or entity to which such expense relates (subject to the terms of each fund’s governing documents) or in such other manner as Ares considers fair and equitable under the circumstances such as the relative fund size or capital available to be invested by such funds. Where a fund’s governing documents do not permit the payment of a particular expense, Ares will generally pay such fund’s allocable portion of such expense. In addition, investors in our common stock will invest on a gross basis and receive distributions on a net basis after expenses, resulting in, among other things, a lower rate of return than one might achieve if distributions were made on a gross basis.

Our investment adviser’s base management fee is based on a percentage of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) and, consequently, our investment adviser may have conflicts of interest in connection with decisions that could affect our total assets, such as decisions as to whether to incur indebtedness or to make future investments. We are currently allowed to borrow amounts such that our asset coverage, as calculated pursuant to the Investment Company Act, equals at least 150% after such borrowing (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us). Accordingly, our investment adviser may have conflicts of interest in connection with decisions to use increased leverage permitted under our asset coverage requirement applicable to senior securities, as the incurrence of such additional indebtedness would result in an increase in the base management fees payable to our investment adviser and may also result in an increase in the income based fees and capital gains incentive fees payable to our investment adviser.

The income based fees payable by us to our investment adviser that relate to our pre-incentive fee net investment income is computed and paid on income that may include interest that is accrued but not yet received in cash. If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of such fee will become uncollectible. Our investment adviser is not under any obligation to reimburse us for any part of the income based fees it received that were based on accrued interest that we never actually receive.

Our investment advisory and management agreement renews for successive annual periods if approved by our board of directors or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not “interested persons” of us as defined in Section 2(a)(19) of the Investment Company Act. However, both we and our investment adviser have the right to terminate the agreement without penalty upon 60 days’ written notice to the other party. Moreover, conflicts of interest may arise if our investment adviser seeks to change the terms of our investment advisory and management agreement, including, for example, the terms for compensation to our investment adviser. While any material change to the investment advisory and management agreement must be submitted to stockholders for approval under the Investment Company Act, we may from time to time decide it is appropriate to seek stockholder approval to change the terms of the agreement.

We are party to an administration agreement with our administrator, Ares Operations, a subsidiary of Ares Management, pursuant to which our administrator furnishes us with administrative services and we pay our administrator at cost our allocable portion of overhead and other expenses (including travel expenses) incurred by our administrator in performing its obligations under our administration agreement, including our allocable portion of the compensation, rent, and other expenses of certain of our officers (including our chief compliance officer, chief financial officer, chief accounting officer, general counsel, secretary, treasurer and assistant treasurer) and their respective staffs, but not investment professionals.

Our portfolio company, IHAM, is party to an administration agreement, referred to herein as the “IHAM administration agreement,” with Ares Operations. Pursuant to the IHAM administration agreement, our administrator provides IHAM with administrative services and IHAM reimburses our administrator for all of the actual costs associated with such services, including its allocable portion of our administrator’s overhead and the cost of our administrator’s officers and respective staff in performing its obligations under the IHAM administration agreement. Prior to entering into the IHAM administration agreement, IHAM was party to a services agreement with our investment adviser, pursuant to which our investment adviser provided similar services.

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As a result of the arrangements described above, there may be times when the management team of Ares Management (including those members of management focused primarily on managing Ares Capital) has interests that differ from those of our stockholders, giving rise to a conflict.

Our stockholders may have conflicting investment, tax and other objectives with respect to their investments in us. The conflicting interests of individual stockholders may relate to or arise from, among other things, the nature of our investments, the structure or the acquisition of our investments, and the timing of dispositions of our investments. As a consequence, conflicts of interest may arise in connection with decisions made by our investment adviser, including with respect to the nature or structuring of our investments, that may be more beneficial for one stockholder than for another stockholder, especially with respect to stockholders’ individual tax situations. In selecting and structuring investments appropriate for us, our investment adviser will consider the investment and tax objectives of the Company and our stockholders, as a whole, not the investment, tax or other objectives of any stockholder individually.

We may be subject to additional corporate-level income taxes if we fail to maintain our status as a RIC.

We have elected to be treated as a RIC under the Code and operate in a manner so as to qualify for the U.S. federal income tax treatment applicable to RICs. As a RIC, we generally will not pay U.S. federal corporate-level income taxes on our income and net capital gains that we distribute to our stockholders as dividends on a timely basis. We will be subject to U.S. federal corporate-level income tax on any undistributed income and/or gains. To maintain our status as a RIC, we must meet certain source of income, asset diversification and annual distribution requirements. We may also be subject to certain U.S. federal excise taxes, as well as state, local and foreign taxes.

To maintain our RIC status, we must timely distribute an amount equal to at least 90% of our investment company taxable income (as defined by the Code, which generally includes net ordinary income and net short term capital gains) to our stockholders (the “Annual Distribution Requirement”). We have the ability to pay a large portion of our dividends in shares of our stock, and as long as a portion of such dividend is paid in cash and other requirements are met, such stock dividends will be taxable as a dividend for U.S. federal income tax purposes. This may result in our U.S. stockholders having to pay tax on such dividends, even if no cash is received, and may result in our non-U.S. stockholders being subject to withholding tax in respect of amounts distributed in our stock. Because we use debt financing, we are subject to certain asset coverage ratio requirements under the Investment Company Act and financial covenants under our indebtedness that could, under certain circumstances, restrict us from making distributions necessary to qualify as a RIC. If we are unable to obtain cash from other sources, we may fail to maintain our status as a RIC and, thus, may be subject to corporate-level income tax on all of our income and/or gains.

To maintain our status as a RIC, in addition to the Annual Distribution Requirement, we must also meet certain annual source of income requirements at the end of each taxable year and asset diversification requirements at the end of each calendar quarter. Failure to meet these requirements may result in our having to (a) dispose of certain investments quickly or (b) raise additional capital to prevent the loss of RIC status. Because most of our investments are in private companies and are generally illiquid, any such dispositions may be at disadvantageous prices and may result in losses. Also, the rules applicable to our qualification as a RIC are complex with many areas of uncertainty. Accordingly, no assurance can be given that we have qualified or will continue to qualify as a RIC. If we fail to maintain our status as a RIC for any reason and become subject to regular “C” corporation income tax, the resulting corporate-level income taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and on any investment in us. Certain provisions of the Code provide some relief from RIC disqualification due to failures of the source of income and asset diversification requirements, although there may be additional taxes due in such cases. We cannot assure you that we would qualify for any such relief should we fail the source of income or asset diversification requirements.

We may have difficulty paying our required distributions under applicable tax rules if we recognize income before or without receiving cash representing such income.

For U.S. federal income tax purposes, we generally are required to include in income certain amounts that we have not yet received in cash, such as original issue discount, which may arise, for example, if we receive warrants in connection with the making of a loan, or PIK interest representing contractual interest added to the loan principal balance and due at the end of the loan term. Such original issue discount or PIK interest is included in income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we will not receive in cash, including, for example, amounts attributable to hedging and foreign currency transactions.

Since, in certain cases, we may recognize income before or without receiving cash in respect of such income, we may have difficulty meeting the U.S. federal income tax requirement to distribute generally an amount equal to at least 90% of our
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investment company taxable income to maintain our status as a RIC. Accordingly, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements. If we are not able to obtain cash from other sources, we may fail to qualify as a RIC and thus be subject to additional corporate-level income taxes. Such a failure could have a material adverse effect on us and on any investment in us.

We are exposed to risks associated with changes in interest rates.

General interest rate fluctuations may have a substantial negative impact on our investments and investment opportunities and, accordingly, may have a material adverse effect on our investment objective and our net investment income. Because we borrow money and may issue debt securities or preferred stock to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds or pay interest or dividends on such debt securities or preferred stock and the rate at which we invest these funds. If market rates decrease we may earn less interest income from investments made during such lower rate environment. From time to time, we may also enter into certain hedging transactions to mitigate our exposure to changes in interest rates. In the past, we have entered into certain hedging transactions, such as interest rate swap agreements, to mitigate our exposure to adverse fluctuations in interest rates, and we may do so again in the future. In addition, we may increase our floating rate investments to position the portfolio for rate increases. However, we cannot assure you that such transactions will be successful in mitigating our exposure to interest rate risk. There can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

Trading prices tend to fluctuate more for fixed-rate securities that have longer maturities. Although we have no policy governing the maturities of our investments, under current market conditions we expect that we will invest in a portfolio of debt generally having maturities of up to 10 years. Trading prices for debt that pays a fixed rate of return tend to fall as interest rates rise. This means that we are subject to greater risk (other things being equal) than a fund invested solely in shorter-term securities. A decline in the prices of the debt we own could adversely affect the trading price of our common stock. Also, an increase in interest rates available to investors could make an investment in our common stock less attractive if we are not able to increase our dividend rate, which could reduce the value of our common stock.

Most of our portfolio investments are not publicly traded and, as a result, the fair value of these investments may not be readily determinable.

A large percentage of our portfolio investments are not publicly traded. The fair value of investments that are not publicly traded may not be readily determinable. We value these investments quarterly at fair value as determined in good faith by our board of directors based on, among other things, the input of our management and audit committee and independent valuation firms that have been engaged at the direction of our board of directors to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing 12-month period (with certain de minimis exceptions). The valuation process is conducted at the end of each fiscal quarter, with a portion (based on value) of our valuations of portfolio companies without readily available market quotations subject to review by an independent valuation firm each quarter. However, we may use these independent valuation firms to review the value of our investments more frequently, including in connection with the occurrence of significant events or changes in value affecting a particular investment. In addition, our independent registered public accounting firm obtains an understanding of, and performs select procedures relating to, our investment valuation process within the context of performing the integrated audit.

The types of factors that may be considered in valuing our investments include the enterprise value of the portfolio company (the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time), the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to similar publicly traded securities, changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments would trade in their principal markets and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate our valuation. Because such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these investments existed and may differ materially from the values that we may ultimately realize. Our net asset value per share could be adversely affected if our determinations regarding the fair value of these investments are higher than the values that we realize upon disposition of such investments.

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The lack of liquidity in our investments may adversely affect our business.

As we generally make investments in private companies, substantially all of these investments are subject to legal and other restrictions on resale or are otherwise less liquid than publicly traded securities. The illiquidity of our investments may make it difficult for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we could realize significantly less than the value at which we have recorded our investments or could be unable to dispose of our investments in a timely manner. In addition, we may face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we or an affiliated manager of Ares has material non-public information regarding such portfolio company.

Our financial condition and results of operations could be negatively affected if a significant investment fails to perform as expected.

Our investment portfolio includes investments that may be significant individually or in the aggregate. If a significant investment in one or more companies fails to perform as expected, such a failure could have a material adverse effect on our business, financial condition and operating results, and the magnitude of such effect could be more significant than if we had further diversified our portfolio.

We are subject to risks related to corporate social responsibility.
 
Our business (including that of our portfolio companies) faces increasing public scrutiny related to ESG activities, which are increasingly considered to contribute to the long-term sustainability of a company’s performance. A variety of organizations measure the performance of companies on ESG topics, and the results of these assessments are widely publicized. In addition, investment in funds that specialize in companies that perform well in such assessments are increasingly popular, and major institutional investors have publicly emphasized the importance of such ESG measures to their investment decisions.

We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as diversity, equity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency and considering ESG factors in our investment processes. Adverse incidents with respect to ESG activities could impact the value of our brand, our relationship with existing and future portfolio companies, the cost of our operations and relationships with investors, all of which could adversely affect our business and results of operations.

Additionally, new regulatory initiatives related to ESG that are applicable to us and our portfolio companies could adversely affect our business. For example, in May 2018, the European Commission adopted an “action plan on financing sustainable growth.” The action plan is, among other things, designed to define and reorient investment toward sustainability. The action plan contemplates: establishing EU labels for green financial products; increasing disclosure requirements in the financial services sector around ESG and strengthening the transparency of companies on their ESG policies and introducing a ‘green supporting factor’ in the EU prudential rules for banks and insurance companies to incorporate climate risks into banks’ and insurance companies’ risk management policies. There is a risk that a significant reorientation in the market following the implementation of these and further measures could be adverse to our portfolio companies if they are perceived to be less valuable as a consequence of, e.g., their carbon footprint or “greenwashing” (i.e., the holding out of a product as having green or sustainable characteristics where this is not, in fact, the case). We and our portfolio companies are subject to the risk that similar measures might be introduced in other jurisdictions in the future. In addition, the SEC has announced that it may require disclosure of certain ESG-related matters. At this time, there is uncertainty regarding the scope of such proposals or when they would become effective (if at all). Compliance with any new laws or regulations increases our regulatory burden and could make compliance more difficult and expensive, affect the manner in which we or our portfolio companies conduct our businesses and adversely affect our profitability.

Changes in laws or regulations governing our operations or the operations of our portfolio companies, changes in the interpretation thereof or enacted laws or regulations, such as the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the Small Business Credit Availability Act (the “SBCAA”), could require changes to certain business practices of us or our portfolio companies, negatively impact the operations, cash flows or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies.

We and our portfolio companies are subject to regulation by laws and regulations at the local, state, federal and, in some cases, foreign levels. These laws and regulations, as well as their interpretation, may be changed from time to time, and new laws and regulations may be enacted. Accordingly, any change in these laws or regulations, changes in their interpretation, or enacted laws or regulations could require changes to certain business practices of us or our portfolio companies, negatively
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impact the operations, cash flows or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies.

On July 21, 2010, President Obama signed into law the Dodd-Frank Act, certain aspects of which were amended by the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act. In addition, U.S. regulatory agencies continue to consider changes to regulations promulgated under the Dodd-Frank Act. Although the full impact of the Dodd-Frank Act on us and our portfolio companies may not be known for an extended period of time, the Dodd-Frank Act, including the rules implementing its provisions and the interpretation of those rules relating to capital, margin, trading and clearance and settlement of derivatives, may negatively impact the operations, cash flows or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies, intensify the regulatory supervision of us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies.

On February 3, 2017, President Trump signed Executive Order 13772 announcing the new Administration’s policy to regulate the U.S. financial system in a manner consistent with certain “Core Principles,” including regulation that is efficient, effective and appropriately tailored. The Executive Order directed the Secretary of the Treasury, in consultation with the heads of the member agencies of the Financial Stability Oversight Council, to report to the President on the extent to which existing laws, regulations and other government policies promote the Core Principles and to identify any laws, regulations or other government policies that inhibit federal regulation of the U.S. financial system. On June 12, 2017, the U.S. Department of the Treasury published the first of several reports in response to the Executive Order on the depository system covering banks and other savings institutions. On October 6, 2017, the Treasury released a second report outlining ways to streamline and reform the U.S. regulatory system for capital markets, followed by a third report, on October 26, 2017, examining the current regulatory framework for the asset management and insurance industries. The Treasury released a fourth report on July 31, 2018 describing recommendations relating to non-bank financial institutions, financial technology and innovation. Subsequent reports are expected to address retail and institutional investment products and vehicles.

On May 24, 2018, President Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act, which increased from $50 billion to $250 billion the asset threshold for designation of “systemically important financial institutions” or “SIFIs” subject to enhanced prudential standards set by the Federal Reserve, staggering application of this change based on the size and risk of the covered bank holding company. On July 17, 2018, the House of Representatives passed the JOBS and Investor Confidence Act, which includes 32 pieces of legislation intended to help small businesses, entrepreneurs and investors by reforming capital markets. The proposed legislation includes provisions to expand the definition of “accredited investors,” extend on‑ramp exemptions for emerging growth companies (EGCs) and ease securities regulations on initial public offerings. The legislation was forwarded to the Senate for consideration, where no further action was taken, although it may be reintroduced in the future. At this time it is not possible to determine the potential impact of these new laws and proposals on us.
On March 23, 2018, the SBCAA was signed into law. The SBCAA, among other things, modified the applicable provisions of the Investment Company Act to reduce the required asset coverage ratio applicable to a BDC from 200% to 150% subject to certain approval, time and disclosure requirements (including either stockholder approval or approval of a “required majority” of its board of directors). On June 21, 2018, our board of directors, including a “required majority” of our board of directors, approved the application of the modified asset coverage requirement set forth in Section 61(a)(2) of the Investment Company Act, as amended by the SBCAA. As a result, effective on June 21, 2019, our asset coverage requirement applicable to senior securities was reduced from 200% to 150% (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us), and the risks associated with an investment in us may increase.

Additionally, legislative or other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly under review by legislators and by the Internal Revenue Service (“IRS”) and the U.S. Treasury Department. At the end of 2021, the Build Back Better Act included proposals that, if adopted, would have changed the corporate statutory and effective tax rate. While there are no immediate prospects for the Build Back Better Act to become law, future tax acts tend to draw upon earlier proposals. We are unable to predict the content or timing of adoption of any such proposal. Previously, the Tax Cuts and Jobs Act of 2017 significantly changed U.S. tax law and tax rates. We cannot predict how future tax proposals and changes in the Tax Cuts and Jobs Act, or regulations or other guidance issued under it, might affect us, our business, our stockholders, or our portfolio companies in the long-term. New legislation and any U.S. Treasury regulations, administrative interpretations or court decisions interpreting such legislation could significantly and negatively affect our ability to qualify for tax treatment as a RIC or the U.S. federal income tax consequences to us and our stockholders of such qualification, or could have other adverse consequences. Stockholders are urged to consult with their tax advisor regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our securities.
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Changes to United States tariff and import/export regulations may have a negative effect on our portfolio companies and, in turn, harm us.

There has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs. There continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and restrict our portfolio companies’ access to suppliers or customers and have a material adverse effect on their business, financial condition and results of operations, which in turn would negatively impact us.

The discontinuation of LIBOR may adversely affect the value of the LIBOR‑indexed, floating‑rate debt securities in our portfolio or the cost of our borrowings.

National and international regulators and law enforcement agencies have conducted investigations into a number of rates or indices that are deemed to be “reference rates.” Actions by such regulators and law enforcement agencies may result in changes to the manner in which certain reference rates are determined, their discontinuance, or the establishment of alternative reference rates. In particular, on July 27, 2017, the Chief Executive of the U.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. On November 30, 2020, ICE Benchmark Administration (“IBA”), the administrator of LIBOR tenors, with the support of the U.S. Federal Reserve and the FCA, announced plans to consult on ceasing publication of USD LIBOR on December 31, 2021 for only the one-week and two-month USD LIBOR, and on June 30, 2023 for all other USD LIBOR tenors. The U.S. Federal Reserve concurrently issued a statement advising banks to stop new USD LIBOR issuances by the end of 2021. On March 5, 2021, the IBA confirmed its intention to cease publication of (i) one-week and two-month USD LIBOR tenors after December 31, 2021 and (ii) remaining USD LIBOR tenors after June 30, 2023.

On the same day, the FCA, as supervisor of IBA, made its announcement on the future cessation and loss of representativeness of the LIBOR benchmarks. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is expected to replace U.S. dollar LIBOR with a new index calculated by short‑term repurchase agreements, backed by Treasury securities (the “Secured Overnight Financing Rate,” or “SOFR”), plus a recommended spread adjustment as LIBOR’s replacement. Although there have been certain issuances utilizing SOFR or the Sterling Over Night Index Average (an alternative reference rate that is based on transactions), it is unknown whether SOFR or any other alternative reference rates will attain market acceptance as replacements for LIBOR.

Given the inherent differences between LIBOR and SOFR, or any other alternative reference rates that may be established, the transition from LIBOR may disrupt the overall financial markets and adversely affect the market for LIBOR‑based securities, including our portfolio of LIBOR‑indexed, floating‑rate debt securities, or the cost of our borrowings. In addition, changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR‑based securities, including the value and/or transferability of the LIBOR‑indexed, floating‑rate debt securities in our portfolio, or the cost of our borrowings. Additionally, if as currently expected LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond June 30, 2023, with our credit facility lenders and our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with SOFR or other alternative reference rates, The transition from LIBOR to SOFR or other alternative reference rates may also introduce operational risks in our accounting, financial reporting, loan servicing, liability management and other aspects of our business. We are assessing the impact of a transition from LIBOR; however, we cannot reasonably estimate the impact of the transition at this time.

Additionally, the phase-out or replacement of LIBOR may decrease the demand for floating-rate loans, which could adversely impact our business and financial condition. We may need to renegotiate the credit agreements extending beyond June 30, 2023 with our credit facility lenders and our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with SOFR or other alternative reference rates, which could require us to incur significant expense and may subject us to disputes or litigation over the appropriateness or comparability to the relevant replacement reference index. The transition from LIBOR to SOFR or other alternative reference rates may also introduce operational risks in our accounting, financial reporting, loan servicing, liability management and other aspects of our business. We are assessing the impact of a transition from LIBOR; however, we cannot reasonably estimate the impact of the transition at this time.

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Our investment adviser’s liability is limited under the investment advisory and management agreement, and we are required to indemnify our investment adviser against certain liabilities, which may lead our investment adviser to act in a riskier manner on our behalf than it would when acting for its own account.

Our investment adviser has not assumed any responsibility to us other than to render the services described in the investment advisory and management agreement, and it will not be responsible for any action of our board of directors in declining to follow our investment adviser’s advice or recommendations. Pursuant to the investment advisory and management agreement, our investment adviser and its members and their respective officers, managers, partners, agents, employees, controlling persons and members and any other persons affiliated with it will not be liable to us for their acts under the investment advisory and management agreement, absent willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of their duties. We have agreed to indemnify, defend and protect our investment adviser and its members and their respective officers, managers, partners, agents, employees, controlling persons and members and any other persons or entities affiliated with it with respect to all damages, liabilities, costs and expenses arising out of or otherwise based upon the performance of any of our investment adviser’s duties or obligations under the investment advisory and management agreement or otherwise as an investment adviser for us, and not arising out of willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of their duties under the investment advisory and management agreement. These protections may lead our investment adviser to act in a riskier manner when acting on our behalf than it would when acting for its own account. See “Risk Factors—Risks Relating to Our Investments—Our investment adviser's fee structure may induce it to make certain investments on our behalf, including speculative investments.”

We may be obligated to pay our investment adviser certain fees even if we incur a loss.

Our investment adviser is entitled to income based fees for each fiscal quarter in an amount equal to a percentage of the excess of our pre-incentive fee net investment income for that quarter (before deducting any income based fee and capital gains incentive fees and certain other items) above a threshold return for that quarter. Our pre-incentive fee net investment income for income based fee purposes excludes realized and unrealized capital losses or depreciation and income taxes related to realized gains that we may incur in the fiscal quarter, even if such capital losses or depreciation and income taxes related to realized gains result in a net loss on our statement of operations for that quarter. Thus, we may be required to pay our investment adviser income based fees for a fiscal quarter even if there is a decline in the value of our portfolio or the net asset value of our common stock or we incur a net loss for that quarter.

Under the investment advisory and management agreement, we will defer cash payment of any income based fee and the capital gains incentive fee otherwise earned by our investment adviser if, during the most recent four full calendar quarter periods ending on or prior to the date such payment is to be made, the sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined as total assets less indebtedness and before taking into account any income based fees or capital gains incentive fees accrued during the period) is less than 7.0% of our net assets (defined as total assets less indebtedness) at the beginning of such period. These calculations will be adjusted for any share issuances or repurchases. Any such deferred fees will be carried over for payment in subsequent calculation periods to the extent such payment can then be made under the investment advisory and management agreement.

If a portfolio company defaults on a loan that is structured to provide interest, it is possible that accrued and unpaid interest previously used in the calculation of income based fees will become uncollectible. Our investment adviser is not under any obligation to reimburse us for any part of income based fees it received that was based on accrued income that we never receive.

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RISKS RELATING TO OUR INVESTMENTS

Declines in market prices and liquidity in the corporate debt markets can result in significant net unrealized depreciation of our portfolio, which in turn would reduce our net asset value.

As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by or under the direction of our board of directors. We may take into account the following types of factors, if relevant, in determining the fair value of our investments: the enterprise value of a portfolio company (the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time), the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to similar publicly traded securities, changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments would trade in their principal markets and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our valuation. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity). As a result, volatility in the capital markets can also adversely affect our investment valuations. Decreases in the market values or fair values of our investments are recorded as unrealized depreciation. The effect of all of these factors on our portfolio can reduce our net asset value (and, as a result our asset coverage calculation) by increasing net unrealized depreciation in our portfolio. Depending on market conditions, we could incur substantial realized and/or unrealized losses, which could have a material adverse effect on our business, financial condition or results of operations.

Economic recessions or downturns could impair our portfolio companies and harm our operating results.

As the COVID-19 pandemic has demonstrated, many of our portfolio companies may be susceptible to economic downturns or recessions and may be unable to repay our loans during these periods. Therefore, during these periods our non-performing assets may increase and the value of our portfolio may decrease if we are required to write down the values of our investments. Adverse economic conditions may also decrease the value of collateral securing some of our loans and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing investments and harm our operating results. We experienced to some extent such effects as a result of the economic downturn that occurred in 2020 as a result of the COVID-19 pandemic and from 2008 through 2009 and may experience such effects again in any future downturn or recession.

A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, acceleration of the time when the loans are due and foreclosure on its assets representing collateral for its obligations, which could trigger cross defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the debt investments that we hold and the value of any equity securities we own. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company.

Inflation may adversely affect the business, results of operations and financial condition of our portfolio companies.

Certain of our portfolio companies are in industries that may be impacted by inflation. If such portfolio companies are unable to pass any increases in their costs of operations along to their customers, it could adversely affect their operating results and impact their ability to pay interest and principal on our loans, particularly if interest rates rise in response to inflation. In addition, any projected future decreases in our portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments could result in future realized or unrealized losses and therefore reduce our net assets resulting from operations.

Investments in privately held middle-market companies involve significant risks.

We primarily invest in privately held U.S. middle-market companies. Investments in privately held middle-market companies involve a number of significant risks, including the following:

•these companies may have limited financial resources and may be unable to meet their obligations, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing our investment;

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•they typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns;

•they typically depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse effect on such portfolio company and, in turn, on us;

•there is generally little public information about these companies. These companies and their financial information are generally not subject to the Exchange Act (as defined below) and other regulations that govern public companies, and we may be unable to uncover all material information about these companies, which may prevent us from making a fully informed investment decision and cause us to lose money on our investments;

•they generally have less predictable operating results and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position;

•we, our executive officers, directors and our investment adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in our portfolio companies and may, as a result, incur significant costs and expenses in connection with such litigation;

•changes in laws and regulations (including the tax laws), as well as their interpretations, may adversely affect their business, financial structure or prospects; and

•they may have difficulty accessing the capital markets to meet future capital needs.

Our debt investments may be risky and we could lose all or part of our investment.

The debt that we invest in is typically not initially rated by any rating agency, but we believe that if such investments were rated, they would be below investment grade (rated lower than “Baa3” by Moody’s Investors Service, lower than “BBB-” by Fitch Ratings or lower than “BBB-” by Standard & Poor’s Ratings Services), which under the guidelines established by these entities is an indication of having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. Bonds that are rated below investment grade are sometimes referred to as “high yield bonds” or “junk bonds.” Therefore, our investments may result in an above average amount of risk and volatility or loss of principal. While the debt we invest in is often secured, such security does not guarantee that we will receive principal and interest payments according to the terms of the loan, or that the value of any collateral will be sufficient to allow us to recover all or a portion of the outstanding amount of the loan should we be forced to enforce our remedies.

Some of the loans in which we may invest may be “covenant-lite” loans, which means the loans contain fewer covenants than other loans (in some cases, none) and may not include terms which allow the lender to monitor the performance of the borrower and declare a default if certain criteria are breached. An investment by us in a covenant-lite loan may potentially hinder the ability to reprice credit risk associated with the issuer and reduce the ability to restructure a problematic loan and mitigate potential loss. We may also experience delays in enforcing our rights under covenant-lite loans. As a result of these risks, our exposure to losses may be increased, which could result in an adverse impact on our net income and net asset value.

We also may invest in assets other than first and second lien and subordinated debt investments, including high-yield securities, U.S. government securities, credit derivatives and other structured securities and certain direct equity investments. These investments entail additional risks that could adversely affect our investment returns.

Investments in equity securities, many of which are illiquid with no readily available market, involve a substantial degree of risk.

We may purchase common and other equity securities. Although common stock has historically generated higher average total returns than fixed income securities over the long-term, common stock also has experienced significantly more volatility in those returns. The equity securities we acquire may fail to appreciate and may decline in value or become worthless and our ability to recover our investment will depend on the underlying portfolio company’s success. Investments in equity securities involve a number of significant risks, including:

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•any equity investment we make in a portfolio company could be subject to further dilution as a result of the issuance of additional equity interests and to serious risks as a junior security that will be subordinate to all indebtedness (including trade creditors) or senior securities in the event that the issuer is unable to meet its obligations or becomes subject to a bankruptcy process;

•to the extent that the portfolio company requires additional capital and is unable to obtain it, we may not recover our investment; and

•in some cases, equity securities in which we invest will not pay current dividends, and our ability to realize a return on our investment, as well as to recover our investment, will be dependent on the success of the portfolio company. Even if the portfolio company is successful, our ability to realize the value of our investment may be dependent on the occurrence of a liquidity event, such as a public offering or the sale of the portfolio company. It is likely to take a significant amount of time before a liquidity event occurs or we can otherwise sell our investment. In addition, the equity securities we receive or invest in may be subject to restrictions on resale during periods in which it could be advantageous to sell them.

There are special risks associated with investing in preferred securities, including:

•preferred securities may include provisions that permit the issuer, at its discretion, to defer distributions for a stated period without any adverse consequences to the issuer. If we own a preferred security that is deferring its distributions, we may be required to report income for tax purposes before we receive such distributions;

•preferred securities are subordinated to debt in terms of priority to income and liquidation payments, and therefore will be subject to greater credit risk than debt;

•preferred securities may be substantially less liquid than many other securities, such as common stock or U.S. government securities; and

•generally, preferred security holders have no voting rights with respect to the issuing company, subject to limited exceptions.

Additionally, when we invest in first lien senior secured loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt, generally in a first lien position), second lien senior secured loans or subordinated debt, we may acquire warrants or other equity securities as well. Our goal is ultimately to dispose of such equity interests and realize gains upon our disposition of such interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.

We may invest, to the extent permitted by law, in the equity securities of investment funds that are operating pursuant to certain exceptions to the Investment Company Act and in advisers to similar investment funds and, to the extent we so invest, will bear our ratable share of any such company’s expenses, including management and performance fees. We will also remain obligated to pay the base management fee, income based fee and capital gains incentive fee to our investment adviser with respect to the assets invested in the securities and instruments of such companies. With respect to each of these investments, each of our common stockholders will bear his or her share of the base management fee, income based fee and capital gains incentive fee due to our investment adviser as well as indirectly bearing the management and performance fees and other expenses of any such investment funds or advisers.

There may be circumstances in which our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims.

If one of our portfolio companies were to go bankrupt, even though we may have structured our interest as senior debt, depending on the facts and circumstances, a bankruptcy court might recharacterize our debt holding as an equity investment and subordinate all or a portion of our claim to that of other creditors. In addition, lenders can be subject to lender liability claims for actions taken by them where they become too involved in the borrower’s business or exercise control over the borrower. For example, we could become subject to a lender’s liability claim, if, among other things, we actually render significant managerial assistance.

Our portfolio companies may incur debt or issue equity securities that rank equally with, or senior to, our investments in such companies.
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Our portfolio companies may have, or may be permitted to incur, other debt, or issue other equity securities, that rank equally with, or senior to, our investments. By their terms, such instruments may provide that the holders are entitled to receive payment of dividends, interest or principal on or before the dates on which we are entitled to receive payments in respect of our investments. These debt instruments would usually prohibit the portfolio companies from paying interest on or repaying our investments in the event and during the continuance of a default under such debt. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of securities ranking senior to our investment in that portfolio company typically are entitled to receive payment in full before we receive any distribution in respect of our investment. After repaying such holders, the portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of securities ranking equally with our investments, we would have to share on an equal basis any distributions with other security holders in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

The rights we may have with respect to the collateral securing any junior priority loans we make to our portfolio companies may also be limited pursuant to the terms of one or more intercreditor agreements (including agreements governing “first out” and “last out” structures) that we enter into with the holders of senior debt. Under such an intercreditor agreement, at any time that senior obligations are outstanding, we may forfeit certain rights with respect to the collateral to the holders of the senior obligations. These rights may include the right to commence enforcement proceedings against the collateral, the right to control the conduct of such enforcement proceedings, the right to approve amendments to collateral documents, the right to release liens on the collateral and the right to waive past defaults under collateral documents. We may not have the ability to control or direct such actions, even if as a result our rights as junior lenders are adversely affected.

When we are a debt or minority equity investor in a portfolio company, we are often not in a position to exert influence on the entity, and other equity holders and management of the company may make decisions that could decrease the value of our investment in such portfolio company.

When we make debt or minority equity investments, we are subject to the risk that a portfolio company may make business decisions with which we disagree and the other equity holders and management of such company may take risks or otherwise act in ways that do not serve our interests. As a result, a portfolio company may make decisions that could decrease the value of our investment.

Our portfolio companies may be highly leveraged.

Some of our portfolio companies may be highly leveraged, which may have adverse consequences to these companies and to us as an investor. These companies may be subject to restrictive financial and operating covenants and the leverage may impair these companies’ ability to finance their future operations and capital needs. As a result, these companies’ flexibility to respond to changing business and economic conditions and to take advantage of business opportunities may be limited. Further, a leveraged company’s income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used.

Our investment adviser’s fee structure may induce it to make certain investments on our behalf, including speculative investments.

The fees payable by us to our investment adviser may create an incentive for our investment adviser to make investments on our behalf that are risky or more speculative than would be the case in the absence of such compensation arrangement. The way in which income based fees payable to our investment adviser are determined, which are calculated as a percentage of the return on invested capital, may encourage our investment adviser to use leverage to increase the return on our investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would disfavor the holders of our common stock and the holders of securities convertible into our common stock. In addition, our investment adviser will receive the capital gains incentive fee based, in part, upon net capital gains realized on our investments. Unlike income based fees, there is no hurdle rate applicable to the capital gains incentive fee. As a result, our investment adviser may have a tendency to invest more in investments that are likely to result in capital gains as compared to income producing securities. Such a practice could result in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.

The income based fees are computed and paid on income that has been accrued but not yet received in cash, including as a result of investments with a deferred interest feature such as debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities. If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the income based fee will become uncollectible. Our
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investment adviser is not under any obligation to reimburse us for any part of the fees it received that were based on such accrued interest that we never actually received.

Because of the structure of the income based fees, it is possible that we may have to pay income based fees in a quarter during which we incur a loss. For example, if we receive pre-incentive fee net investment income in excess of the hurdle rate for a quarter, we will pay the applicable income based fees even if we have incurred a loss in that quarter due to realized and/or unrealized capital losses. In addition, if market interest rates rise, our investment adviser may be able to invest our funds in debt instruments that provide for a higher return, which would increase our pre-incentive fee net investment income and make it easier for our investment adviser to surpass the fixed hurdle rate and receive income based fees.

Our investments in foreign companies may involve significant risks in addition to the risks inherent in U.S. investments.

Our investment strategy contemplates potential investments in foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes (potentially at confiscatory levels), less liquid markets, less available information than is generally the case in the U.S., higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

Although we expect most of our investments will be U.S. dollar denominated, our investments that are denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation and political developments. We may employ hedging techniques to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to us.

We may expose ourselves to risks if we engage in hedging transactions.

We have and may in the future enter into hedging transactions, which may expose us to risks associated with such transactions. We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Use of these hedging instruments may include counter-party credit risk.

Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. However, such hedging can establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions should increase. Moreover, it may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price.

The success of our hedging transactions will depend on our ability to correctly predict movements in currencies and interest rates. Therefore, while we may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary. Moreover, for a variety of reasons, we may not seek to (or be able to) establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of factors not related to currency fluctuations. See also “Risk Factors—Risks Relating to Our Business—We are exposed to risks associated with changes in interest rates.”

In November 2020, the SEC adopted a rulemaking regarding the ability of a BDC (or a registered investment company) to use derivatives and other transactions that create future payment or delivery obligations (except reverse repurchase agreements and similar financing transactions). Under the newly adopted rules, BDCs that use derivatives will be subject to a value-at-risk leverage limit, a derivatives risk management program and testing requirements and requirements related to board reporting. These new requirements will apply unless the BDC qualifies as a “limited derivatives user,” as defined under the adopted rules. Under the new rule, a BDC may enter into an unfunded commitment agreement that is not a derivatives transaction, such as an agreement to provide financing to a portfolio company, if the BDC has, among other things, a reasonable
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belief, at the time it enters into such an agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as it becomes due. Collectively, these requirements may limit our ability to use derivatives and/or enter into certain other financial contracts.

RISKS RELATING TO OUR COMMON STOCK AND PUBLICLY TRADED NOTES

Our shares of common stock have traded at a discount from net asset value and may do so again, which could limit our ability to raise additional equity capital.

Shares of closed‑end investment companies frequently trade at a market price that is less than the net asset value that is attributable to those shares. This characteristic of closed‑end investment companies is separate and distinct from the risk that our net asset value per share may decline. It is not possible to accurately predict whether any shares of our common stock will trade at, above, or below net asset value. In the recent past (including during much of 2020), the stocks of BDCs as an industry, including at times shares of our common stock, have traded below net asset value and during much of 2009 traded at near historic lows as a result of concerns over liquidity, leverage restrictions and distribution requirements. See “Risk Factors—Risks Relating to Our Business—The capital markets may experience periods of disruption and instability. Such market conditions may materially and adversely affect debt and equity capital markets, which may have a negative impact on our business and operations.” When our common stock is trading below its net asset value per share, we will generally not be able to issue additional shares of our common stock at its market price without first obtaining approval for such issuance from our stockholders and our independent directors. Pursuant to approval granted at a special meeting of stockholders held on August 13, 2021, we currently are permitted to sell or otherwise issue shares of our common stock at a price below net asset value, subject to certain limitations and determinations that must be made by our board of directors. Such stockholder approval expires on August 13, 2022.

There is a risk that investors in our common stock may not receive dividends or that our dividends may not grow over time and that investors in our debt securities may not receive all of the interest income to which they are entitled.

We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. If we declare a dividend and if more stockholders opt to receive cash distributions rather than participate in our dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash dividend payments.

In addition, due to the asset coverage test applicable to us as a BDC, we may be limited in our ability to make distributions. Certain of the Facilities may also limit our ability to declare dividends if we default under certain provisions. Further, if we invest a greater amount of assets in non-income producing securities, it could reduce the amount available for distribution and may also inhibit our ability to make required interest payments to holders of our debt, which may cause a default under the terms of our debt agreements. Such a default could materially increase our cost of raising capital, as well as cause us to incur penalties under the terms of our debt agreements.

Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse effect on the price of our common stock.

The Maryland General Corporation Law (the “MGCL”), our charter and our bylaws contain provisions that may discourage, delay or make more difficult a change in control of Ares Capital or the removal of our directors. We are subject to the Maryland Business Combination Act (the “Business Combination Act”), subject to any applicable requirements of the Investment Company Act. Our board of directors has adopted a resolution exempting from the Business Combination Act any business combination between us and any other person, subject to prior approval of such business combination by our board, including approval by a majority of our disinterested directors. If the resolution exempting business combinations is repealed or our board or disinterested directors do not approve a business combination, the Business Combination Act may discourage third parties from trying to acquire control of us and may increase the difficulty of consummating such an offer. Our bylaws exempt from the Maryland Control Share Acquisition Act (the “Control Share Acquisition Act”) acquisitions of our stock by any person. If we amend our bylaws to repeal the exemption from the Control Share Acquisition Act, subject to any applicable requirements of the Investment Company Act, the Control Share Acquisition Act also may make it more difficult for a third party to obtain control of us and may increase the difficulty of consummating such an offer.

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We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our charter classifying our board of directors into three classes serving staggered three-year terms, and provisions of our charter authorizing our board of directors to classify or reclassify shares of our stock into one or more classes or series, to cause the issuance of additional shares of our stock, and to amend our charter from time to time, without stockholder approval, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. These provisions, as well as other provisions of our charter and bylaws, may discourage, delay, defer, make more difficult or prevent a transaction or a change in control that might otherwise be in stockholders’ best interest.

Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
 
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the U.S. District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for: (i) any derivative action or proceeding brought on our behalf, (ii) any Internal Corporate Claim, as such term is defined in Section 1-101(p) of the MGCL, including, without limitation, (a) any action asserting a claim of breach of any duty owed by any of our directors or officers or other employees to us or to our stockholders or (b) any action asserting a claim against us or any of our directors or officers or other employees arising pursuant to any provision of the MGCL or our charter or bylaws or (iii) any action asserting a claim against us or any of our directors or officers or other employees that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring or holding any interest in our shares shall be deemed to have notice of and to have consented and waived any objection to this exclusive forum provision of our bylaws, as the same may be amended from time to time. Our board of directors, without stockholder approval, adopted this exclusive forum provision so that we can respond to such litigation more efficiently, reduce the costs associated with our responses to such litigation, particularly litigation that might otherwise be brought in multiple forums, and make it less likely that plaintiffs’ attorneys will be able to employ such litigation to coerce us into otherwise unjustified settlements. However, this exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that such stockholder believes is favorable for disputes with us or our directors, officers or other employees, if any, and may discourage lawsuits against us and our directors, officers or other employees, if any. We believe the risk of a court declining to enforce this exclusive forum provision is remote, as the General Assembly of Maryland has specifically amended the MGCL to authorize the adoption of such provision. However, if a court were to find such provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings notwithstanding that the MGCL expressly provides that the charter or bylaws of a Maryland corporation may require that any Internal Corporate Claim be brought only in courts sitting in one or more specified jurisdictions, we may incur additional costs that we do not currently anticipate associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition and results of operations.

Investing in our common stock may involve an above average degree of risk.

The investments we make in accordance with our investment objective may result in a higher amount of risk than alternative investment options and volatility or loss of principal. Our investments in portfolio companies may be highly speculative and aggressive and, therefore, an investment in our securities may not be suitable for someone with lower risk tolerance.

The market price of our common stock may fluctuate significantly.

The capital and credit markets have experienced periods of extreme volatility and disruption over the past several years (including throughout much of 2020 and 2021 as a result of the COVID-19 pandemic). The market price and liquidity of the market for shares of our common stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include:

•significant volatility in the market price and trading volume of securities of publicly traded RICs, BDCs or other companies in our sector, which are not necessarily related to the operating performance of these companies;

•price and volume fluctuations in the overall stock market from time to time;

•the inclusion or exclusion of our common stock from certain indices;

•changes in law, regulatory policies or tax guidelines, or interpretations thereof, particularly with respect to RICs or BDCs;
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•loss of our RIC status;

•our ability to manage our capital resources effectively;

•changes in our earnings or variations in our operating results;

•changes in the value of our portfolio of investments;

•any shortfall in investment income or net investment income or any increase in losses from levels expected by investors or securities analysts;

•departure of Ares’ key personnel;

•short-selling pressure with respect to shares of our common stock or BDCs generally;

•future sales of our securities convertible into or exchangeable or exercisable for our common stock or the conversion of such securities, including the Convertible Unsecured Notes;

•uncertainty surrounding the strength of the U.S. economy;

•uncertainty between the U.S. and other countries with respect to trade policies, treaties, and tariffs; and

•general economic trends and other external factors.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. If our stock price fluctuates significantly, we may be the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources from our business.

We may in the future determine to issue preferred stock, which could adversely affect the market value of our common stock.

The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive. In addition, the dividends on any preferred stock we issue must be cumulative. Payment of dividends and repayment of the liquidation preference of preferred stock must take preference over any dividends or other payments to our common stockholders, and holders of preferred stock are not subject to any of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their stated preference (other than convertible preferred stock that converts into common stock). In addition, under the Investment Company Act, preferred stock constitutes a “senior security” for purposes of the asset coverage test.

The net asset value per share of our common stock may be diluted if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or securities to subscribe for or convertible into shares of our common stock.
At a special meeting of stockholders held on August 13, 2021, subject to certain determinations required to be made by our board of directors, our stockholders approved our ability to sell or otherwise issue shares of our common stock, in an amount not exceeding 25% of our then outstanding common stock, at a price below the then current net asset value per share during a period that began on August 13, 2021 and expires on August 13, 2022.
In addition, at our 2009 annual stockholders meeting, our stockholders approved a proposal authorizing us to sell or otherwise issue warrants or securities to subscribe for or convertible into shares of our common stock subject to certain limitations (including, without limitation, that the number of shares issuable does not exceed 25% of our then outstanding common stock and that the exercise or conversion price thereof is not, at the date of issuance, less than the greater of the market value per share and the net asset value per share of our common stock). The authorization granted to sell or issue warrants or securities to subscribe for or convertible into shares of our common stock has no expiration.
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Any decision to sell shares of our common stock below its then current net asset value per share or securities to subscribe for or convertible into shares of our common stock would be subject to the determination by our board of directors that such issuance is in our and our stockholders’ best interests.
If we were to sell shares of our common stock below its then current net asset value per share, such sales would result in an immediate dilution to the net asset value per share of our common stock. This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our common stock and a proportionately greater decrease in the stockholders’ interest in our earnings and assets and their voting interest in us than the increase in our assets resulting from such issuance. Because the number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted.
In addition, if we issue warrants or securities to subscribe for or convertible into shares of our common stock, subject to certain limitations, the exercise or conversion price per share could be less than net asset value per share at the time of exercise or conversion (including through the operation of anti‑dilution protections). Because we would incur expenses in connection with any issuance of such securities, such issuance could result in a dilution of the net asset value per share at the time of exercise or conversion. This dilution would include reduction in net asset value per share as a result of the proportionately greater decrease in the stockholders’ interest in our earnings and assets and their voting interest than the increase in our assets resulting from such issuance.
Further, if our current stockholders do not purchase any shares to maintain their percentage interest when we issue new shares, regardless of whether such offering is above or below the then current net asset value per share, their voting power will be diluted.
Our stockholders will experience dilution in their ownership percentage if they opt out of our dividend reinvestment plan.

All dividends declared in cash payable to stockholders that are participants in our dividend reinvestment plan are automatically reinvested in shares of our common stock. As a result, our stockholders that opt out of our dividend reinvestment plan will experience dilution in their ownership percentage of our common stock over time.

Our stockholders may experience dilution upon the conversion of the Convertible Unsecured Notes.
As of December 31, 2021, the 2022 Convertible Notes are convertible into shares of our common stock beginning on August 1, 2021 and the 2024 Convertible Notes are convertible into shares of our common stock beginning on December 1, 2023 or, under certain circumstances, earlier. To the extent the 2022 Convertible Notes are converted, the Company has elected to settle in cash for all conversion dates after August 1, 2021. As of December 31, 2021, the conversion price of the 2022 Convertible Notes was effectively $18.99 per share and the conversion price of the 2024 Convertible Notes was effectively $19.88 per share, in each case taking into account certain de minimis adjustments that will be made on the conversion date and subject to further adjustment in certain circumstances. If we elect to deliver shares of common stock upon a conversion at the time our tangible book value per share exceeds the conversion price in effect at such time, our stockholders may incur dilution. In addition, our stockholders will experience dilution in their ownership percentage of common stock upon our issuance of common stock in connection with the conversion of the Convertible Unsecured Notes and any dividends paid on our common stock will also be paid on shares issued in connection with such conversion after such issuance.
Our stockholders may receive shares of our common stock as dividends, which could result in adverse cash flow consequences to them.

In order to satisfy the Annual Distribution Requirement applicable to RICs, we have the ability to declare a large portion of a dividend in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion could be as low as 20%) and certain requirements are met, the entire distribution would be treated as a dividend for U.S. federal income tax purposes. As a result, a stockholder would be taxed on 100% of the fair market value of the shares received as part of the dividend on the date a stockholder received it in the same manner as a cash dividend, even though most of the dividend was paid in shares of our common stock.

Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock.

Sales of substantial amounts of our common stock, or the availability of such common stock for sale (including as a result of the conversion of our Convertible Unsecured Notes into common stock), could adversely affect the prevailing market
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prices for our common stock. If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities should we desire to do so.

The trading market or market value of our publicly issued debt securities may fluctuate.

Our publicly issued debt securities may or may not have an established trading market. We cannot assure holders of our debt securities that a trading market for our publicly issued debt securities will ever develop or be maintained if developed. In addition to our creditworthiness, many factors may materially adversely affect the trading market for, and market value of, our publicly issued debt securities. These factors include, but are not limited to, the following:

•the time remaining to the maturity of these debt securities;

•the outstanding principal amount of debt securities with terms identical to these debt securities;

•the ratings assigned by national statistical ratings agencies;

•the general economic environment;

•the supply of such debt securities trading in the secondary market, if any;

•the redemption or repayment features, if any, of these debt securities;

•the level, direction and volatility of market interest rates generally; and

•market rates of interest higher or lower than rates borne by the debt securities.

Holders of our debt securities should also be aware that there may be a limited number of buyers if and when they decide to sell their debt securities. This too may materially adversely affect the market value of the debt securities or the trading market for the debt securities.

Terms relating to redemption may materially adversely affect our noteholders’ return on any debt securities that we may issue.

If our noteholders’ debt securities are redeemable at our option, we may choose to redeem their debt securities at times when prevailing interest rates are lower than the interest rate paid on their debt securities. In addition, if our noteholders’ debt securities are subject to mandatory redemption, we may be required to redeem their debt securities also at times when prevailing interest rates are lower than the interest rate paid on their debt securities. In this circumstance, our noteholders may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as their debt securities being redeemed.

Our credit ratings may not reflect all risks of an investment in our debt securities.

Our credit ratings are an assessment by third parties of our ability to pay our obligations. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of our debt securities. Our credit ratings, however, may not reflect the potential impact of risks related to market conditions generally or other factors discussed above on the market value of or trading market for the publicly issued debt securities.

GENERAL RISK FACTORS

Global economic, political and market conditions, including uncertainty about the financial stability of the United States, could have a significant adverse effect on our business, financial condition and results of operations.

Downgrades by rating agencies to the U.S. government’s credit rating or concerns about its credit and deficit levels in general could cause interest rates and borrowing costs to rise, which may negatively impact both the perception of credit risk associated with our debt portfolio and our ability to access the debt markets on favorable terms. In addition, a decreased U.S. government credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on our financial performance and the value of our common stock.

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Deterioration in the economic conditions in the Eurozone and other regions or countries globally and the resulting instability in global financial markets may pose a risk to our business. Financial markets have been affected at times by a number of global macroeconomic events, including the following: large sovereign debts and fiscal deficits of several countries in Europe and in emerging markets jurisdictions, levels of non‑performing loans on the balance sheets of European banks, the effect of the United Kingdom (the “U.K.”) leaving the European Union (the “EU”), instability in the Chinese capital markets and the COVID-19 pandemic. Global market and economic disruptions have affected, and may in the future affect, the U.S. capital markets, which could adversely affect our business, financial condition or results of operations. We cannot assure you that market disruptions in Europe and other regions or countries, including the increased cost of funding for certain governments and financial institutions, will not impact the global economy, and we cannot assure you that assistance packages will be available, or if available, be sufficient to stabilize countries and markets in Europe or elsewhere affected by a financial crisis. To the extent uncertainty regarding any economic recovery in Europe or elsewhere negatively impacts consumer confidence and consumer credit factors, our business, financial condition and results of operations could be significantly and adversely affected. Moreover, there is a risk of both sector-specific and broad-based corrections and/or downturns in the equity and credit markets. Any of the foregoing could have a significant impact on the markets in which we operate and could have a material adverse impact on our business prospects and financial condition.

Various social and political circumstances in the U.S. and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may also contribute to increased market volatility and economic uncertainties or deterioration in the U.S. and worldwide. Such events, including rising trade tensions between the United States and China, other uncertainties regarding actual and potential shifts in U.S. and foreign, trade, economic and other policies with other countries, escalating border tensions between Russia and Ukraine, and the COVID-19 pandemic, could adversely affect our business, financial condition or results of operations. These market and economic disruptions could negatively impact the operating results of our portfolio companies.

Additionally, the Federal Reserve may raise, or may announce its intention to raise, the Federal Funds Rate in 2022. These developments, along with the United States government’s credit and deficit concerns, global economic uncertainties and market volatility and the impacts of COVID-19, could cause interest rates to be volatile, which may negatively impact our ability to access the debt markets and capital markets on favorable terms.

We may experience fluctuations in our quarterly results.

We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rates payable on the debt investments we make, the default rates on such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

We are dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect our liquidity, financial condition or results of operations.

Our business is dependent on our and third parties’ communications and information systems. Further, in the ordinary course of our business we or our investment adviser may engage certain third party service providers to provide us with services necessary for our business. Any failure or interruption of those systems or services, including as a result of the termination or suspension of an agreement with any third-party service providers, could cause delays or other problems in our business activities. Our financial, accounting, data processing, backup or other operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. There could be:

•sudden electrical or telecommunications outages;

•natural disasters such as earthquakes, tornadoes and hurricanes;

•disease pandemics;

•events arising from local or larger scale political or social matters, including terrorist acts; and

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•cyber-attacks.

These events, in turn, could have a material adverse effect on our business, financial condition and operating results and negatively affect the market price of our common stock and our ability to pay dividends to our stockholders.

Cybersecurity risks and cyber incidents may adversely affect our business or the business of our portfolio companies by causing a disruption to our operations or the operations of our portfolio companies, a compromise or corruption of our confidential information or the confidential information of our portfolio companies and/or damage to our business relationships or the business relationships of our portfolio companies, all of which could negatively impact the business, financial condition and operating results of us or our portfolio companies.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of the information resources of us or our portfolio companies. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems or those of our portfolio companies for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusions, including by computer hackers, nation-state affiliated actors, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. We and our investment adviser’s employees have been and expect to continue to be the target of fraudulent calls, emails and other forms of potentially malicious or otherwise negatively impacting activities. The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation and damage to business relationships.

The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. As our and our portfolio companies’ reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided by Ares Management and third-party service providers, and the information systems of our portfolio companies. Ares Management has implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent of a risk of a cyber incident, do not guarantee that a cyber incident will not occur and/or that our financial results, operations or confidential information will not be negatively impacted by such an incident. Even the most well-protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we and our service providers may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us and our service providers to entirely mitigate this risk. Cybersecurity risks require continuous and increasing attention and other resources from us to, among other actions, identify and quantify these risks, upgrade and expand our technologies, systems and processes to adequately address such risks. Such attention diverts time and other resources from other activities and there is no assurance that our efforts will be effective.

In addition, cybersecurity has become a top priority for global lawmakers and regulators, and some jurisdictions have proposed or enacted laws requiring companies to notify regulators and individuals of data security breaches involving certain types of personal data. If we fail to comply with the relevant and increasing complex laws and regulations, we could suffer financial losses, a disruption of our business, liability to investors, regulatory intervention or reputational damage.

Ineffective internal controls could impact our business and operating results.

Our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed and we could fail to meet our financial reporting obligations.

Item 1B.    Unresolved Staff Comments

None.

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Item 2.    Properties

We do not own any real estate or other physical properties materially important to our operation. Our headquarters are currently located at 245 Park Avenue, 44th Floor, New York, New York 10167. We are party to office leases pursuant to which we are leasing office facilities from third parties.
 
Item 3.    Legal Proceedings
    
    We are not subject to any material pending legal proceedings, and no such proceedings are known to be contemplated.

Item 4.    Mine Safety Disclosures

Not applicable.
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PART II

Item 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

PRICE RANGE OF COMMON STOCK AND DISTRIBUTIONS

Our common stock is traded on The NASDAQ Global Select Market under the symbol “ARCC.” Our common stock has historically traded at prices both above and below our net asset value per share. It is not possible to predict whether our common stock will trade at, above or below net asset value. See “Risk Factors—Risks Relating to Our Common Stock and Publicly Traded Notes—Our shares of common stock have traded at a discount from net asset value and may do so again, which could limit our ability to raise additional equity capital.”
The following table sets forth, for each fiscal quarter for the fiscal years ended December 31, 2021, 2020 and 2019, the net asset value per share of our common stock, the range of high and low closing sales prices of our common stock, the closing sales price as a premium (discount) to net asset value and the dividends or distributions declared by us.

Net
Asset
Price Range
High
Sales Price
Premium
(Discount)
to Net Asset
Low
Sales Price
Premium
(Discount)
to Net Asset
Cash
Dividend
Per
Value(1)
High
Low
Value(2)
Value(2)
Share(3)
Year ended December 31, 2019
First Quarter
$17.21 $17.48 $15.28 1.57 %(11.21)%$0.48 (4)
Second Quarter
$17.27 $18.12 $17.22 4.92 %(0.29)%$0.40 
Third Quarter
$17.26 $19.19 $17.99 11.18 %4.23 %$0.40 
Fourth Quarter
$17.32 $19.02 $18.10 9.82 %4.50 %$0.40 
Year ended December 31, 2020
First Quarter
$15.58 $19.23 $8.08 23.43 %(48.14)%$0.40 
Second Quarter
$15.83 $16.20 $9.13 2.34 %(42.32)%$0.40 
Third Quarter
$16.48 $15.02 $13.27 (8.86)%(19.48)%$0.40 
Fourth Quarter
$16.97 $17.28 $13.82 1.83 %(18.56)%$0.40 
Year ended December 31, 2021
First Quarter
$17.45 $19.23 $16.51 10.20 %(5.39)%$0.40 
Second Quarter
$18.16 $19.97 $18.29 9.97 %0.72 %$0.40 
Third Quarter
$18.52 $20.43 $19.52 10.31 %5.40 %$0.41 
Fourth Quarter
$18.96 $21.70 $19.66 14.45 %3.69 %$0.41 

_______________________________________________________________________________

(1)Net asset value per share is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low closing sales prices. The net asset values shown are based on outstanding shares at the end of the relevant quarter.

(2)Calculated as the respective high or low closing sales price less net asset value, divided by net asset value (in each case, as of the applicable quarter).

(3)Represents the dividend or distribution declared in the relevant quarter.
(4)Consists of a quarterly dividend of $0.40 per share and additional quarterly dividends of $0.02 per share, all of which were declared in the first quarter of 2019 and paid on March 29, 2019, June 28, 2019, September 30, 2019 and December 27, 2019 to stockholders of record as of March 15, 2019, June 14, 2019, September 16, 2019 and December 16, 2019, respectively.

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On February 2, 2022, the last reported closing sales price of our common stock on The NASDAQ Global Select Market was $22.22 per share, which represented a premium of approximately 17.19% to the net asset value per share reported by us as of December 31, 2021.

HOLDERS

As of February 2, 2022, there were 1,183 holders of record of our common stock (including Cede & Co.).

DIVIDEND/DISTRIBUTION POLICY

We currently intend to distribute dividends or make distributions to our stockholders on a quarterly basis out of assets legally available for distribution. We may also distribute additional dividends or make additional distributions to our stockholders from time to time. Our quarterly and additional dividends or distributions, if any, will be determined by our board of directors.

To maintain our RIC status under the Code, we must timely distribute an amount equal to at least 90% of our investment company taxable income (as defined by the Code, which generally includes net ordinary income and net short term capital gains) to our stockholders. In addition, we generally will be required to pay an excise tax equal to 4% on certain undistributed taxable income unless we distribute in a timely manner an amount at least equal to the sum of (i) 98% of our ordinary income recognized during a calendar year and (ii) 98.2% of our capital gain net income, as defined by the Code, recognized during a calendar year and (iii) any income recognized, but not distributed, in preceding years. The taxable income on which we pay excise tax is generally distributed to our stockholders in the next tax year. Depending on the level of taxable income earned in a tax year, we may choose to carry forward such taxable income for distribution in the following year, and pay any applicable excise tax. For the years ended December 31, 2021, 2020 and 2019, we recorded a net excise tax expense of $24 million, $17 million and $15 million, respectively. We cannot assure you that we will achieve results that will permit the payment of any cash distributions. We maintain an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a cash dividend, stockholders’ cash dividends will be automatically reinvested in additional shares of our common stock, unless they specifically opt out of the dividend reinvestment plan so as to receive cash dividends. See “Dividend Reinvestment Plan.”

RECENT SALES OF UNREGISTERED EQUITY SECURITIES

We did not sell any securities during the period covered by this Annual Report that were not registered under the Securities Act of 1933, as amended.

ISSUER PURCHASES OF EQUITY SECURITIES

Dividend Reinvestment Plan

During the quarter ended December 31, 2021, as a part of our dividend reinvestment plan for our common stockholders, we did not purchase any shares of our common stock in the open market in order to satisfy the reinvestment portion of our dividends.

Stock Repurchase Program

In February 2021, our board of directors authorized an amendment to our stock repurchase program to extend the expiration date of the program from February 15, 2021 to February 15, 2022. Under the stock repurchase program, we may repurchase up to $500 million in the aggregate of our outstanding common stock in the open market at certain thresholds below its net asset value per share, in accordance with the guidelines specified in Rule 10b-18 of the Exchange Act. The timing, manner, price and amount of any share repurchases will be determined by us, in our sole discretion, based upon the evaluation of economic and market conditions, stock price, applicable legal and regulatory requirements and other factors. The stock repurchase program will be in effect through February 15, 2022, unless extended or until the approved dollar amount has been used to repurchase shares. The stock repurchase program does not require us to repurchase any specific number of shares of common stock or any shares of common stock at all. Consequently, we cannot assure stockholders that any specific number of shares of common stock, if any, will be repurchased under the stock repurchase program. The stock repurchase program may be suspended, extended, modified or discontinued at any time. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments,” as well as Note 15 to our consolidated financial statements for the year ended December 31, 2021 for a subsequent event relating to our stock repurchase program.

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During the quarter ended December 31, 2021, there were no repurchases of our common stock under our stock repurchase program. As of December 31, 2021, the approximate dollar value of shares that may yet be purchased under the program was $500 million.
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COMPARISON OF CUMULATIVE TOTAL RETURN AMONG ARES CAPITAL
CORPORATION, S&P 500 INDEX AND SNL US INVESTMENT COMPANY INDEX

Total Return Performance

chart-c89aa321ca8e4588a6fa.jpg

SOURCE:    S&P Global Market Intelligence
NOTES:    Assumes $100 invested on December 31, 2016 in Ares Capital, the S&P 500 Index and the SNL US Investment Company Index. Assumes all dividends are reinvested on the respective dividend payment dates without commissions.
Dec-16Dec-17Dec-18Dec-19Dec-20Dec-21
Ares Capital100.00 104.53 113.71 149.24 150.20 204.54 
S&P 500 Index100.00 121.83 116.49 153.17 181.35 233.41 
SNL US Investment Company Index100.00 123.36 138.31 132.94 162.04 133.69 

The stock performance graph and other information above shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act, as amended.

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FEES AND EXPENSES

The following table is intended to assist you in understanding the costs and expenses that an investor in our common stock will bear, directly or indirectly, based on the assumptions set forth below. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this Form 10-K contains a reference to our fees or expenses, we will pay such fees and expenses out of our net assets and, consequently, stockholders will indirectly bear such fees or expenses as investors in us.
Stockholder transaction expenses (as a percentage of offering price):
Sales load
— (1)
Offering expenses
— (2)
Dividend reinvestment plan expenses
Up to $15
Transaction Fee
(3)
Total stockholder transaction expenses paid
— (4)
Annual expenses (as a percentage of consolidated net assets attributable to common
stock)(5):
Base management fees
3.24 %(6)
Income based fees and capital gains incentive fees
4.80 %(7)
Interest payments on borrowed funds
4.61 %(8)
Other expenses
0.87 %(9)
Acquired fund fees and expenses
1.28 %(10)
Total annual expenses
14.80 %(11)
_______________________________________________________________________________

(1)In the event that shares of our common stock are sold to or through underwriters, the applicable prospectus or prospectus supplement will disclose the applicable sales load (underwriting discount or commission). Purchases of shares of our common stock on the secondary market are not subject to sales charges but may be subject to brokerage commissions or other charges. The table does not include any sales load that stockholders may have paid in connection with their purchase of shares of our common stock.

(2)The applicable prospectus or prospectus supplement will disclose the estimated amount of offering expenses, the offering price and the offering expenses borne by us as a percentage of the offering price.

(3)The expenses of the dividend reinvestment plan are included in “Other expenses.” The plan administrator’s fees under the plan are paid by us. If a participant elects by notice to the plan administrator in advance of termination to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a transaction fee of up to $15 plus a $0.12 per share fee from the proceeds. See “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Issuer Purchases of Equity Securities—Dividend Reinvestment Plan” for more information.

(4)The applicable prospectus or prospectus supplement will disclose the offering price and the total stockholder transaction expenses as a percentage of the offering price.

(5)The "consolidated net assets attributable to common stock" used to calculate the percentages in this table is our average net assets of $8.1 billion for the year ended December 31, 2021.

(6)Our base management fee is calculated at an annual rate of 1.5% based on the average value of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) at the end of the two most recently completed calendar quarters; provided, however, the base management fee is calculated at an annual rate of 1.0% on the average value of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) that exceeds the product of (A) 200% and (B) our net asset value at the end of the most recently completed calendar quarter. See “Business—Investment Advisory and Management Agreement.”

(7)This item represents our investment adviser’s income based fees and capital gains incentive fees based on actual income based fees for the year ended December 31, 2021 and the capital gains incentive fee expense accrued in accordance with GAAP for the year ended December 31, 2021, even though the capital gains incentive fee actually payable under the investment advisory and management agreement as of December 31, 2021 was $26 million.
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GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Company Act or the investment advisory and management agreement. This GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the capital gains incentive fee actually payable under the investment advisory and management agreement plus the aggregate cumulative unrealized capital appreciation. If such amount is positive at the end of a period, then GAAP requires us to record a capital gains incentive fee equal to 20% of such cumulative amount, less the aggregate amount of actual capital gains incentive fees paid or capital gains incentive fees accrued under GAAP in all prior periods. The resulting accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. There can be no assurance that such unrealized capital appreciation will be realized in the future or that the amount accrued for will ultimately be paid.

For purposes of this table, we have assumed that these fees will be payable (in the case of the capital gains incentive fee) and that they will remain constant, although they are based on our performance and will not be paid unless we achieve certain goals. We expect to invest or otherwise utilize all of the net proceeds from securities registered under our registration statement pursuant to a particular prospectus supplement within three months of the date of the offering pursuant to such prospectus supplement and may have capital gains and interest income that could result in the payment of these fees to our investment adviser in the first year after completion of such offerings. Since our IPO through December 31, 2021, the average quarterly fees accrued related to income based fees and capital gains incentive fees (including capital gains incentive fees accrued under GAAP even though they may not be payable) have been approximately 0.68% of our weighted average net assets for such period (2.72% on an annualized basis). For more detailed information about income based fees and capital gains incentive fees previously incurred by us, please see Note 3 to our consolidated financial statements for the year ended December 31, 2021.

Income based fees are payable quarterly in arrears in an amount equal to 20% of our pre‑incentive fee net investment income (including interest that is accrued but not yet received in cash), subject to a 1.75% quarterly (7.0% annualized) hurdle rate and a “catch‑up” provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, our investment adviser receives no income based fees until our net investment income equals the hurdle rate of 1.75% but then receives, as a “catch‑up,” 100% of our pre‑incentive fee net investment income with respect to that portion of such pre‑incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875%. The effect of this provision is that, if pre‑incentive fee net investment income exceeds 2.1875% in any calendar quarter, our investment adviser will receive 20% of our pre‑incentive fee net investment income as if a hurdle rate did not apply.

Capital gains incentive fees are payable annually in arrears in an amount equal to 20% of our realized capital gains on a cumulative basis from inception through the end of the year, if any, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of capital gains incentive fees paid in all prior years.
    
We will defer cash payment of any income based fees and capital gains incentive fees otherwise earned by our investment adviser if, during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made, the sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined as total assets less indebtedness and before taking into account any income based fees or capital gains incentive fees accrued during the period) is less than 7.0% of our net assets (defined as total assets less indebtedness) at the beginning of such period. Any deferred income based fees and capital gains incentive fees are carried over for payment in subsequent calculation periods to the extent such payment is payable under the investment advisory and management agreement.

These calculations will be adjusted for any share issuances or repurchases.
See “Business—Investment Advisory and Management Agreement.”

(8)“Interest payments on borrowed funds” represents our interest expenses estimated based on our actual interest and credit facility expenses incurred for the year ended December 31, 2021. During the year ended December 31, 2021, our average outstanding borrowings were approximately $9.4 billion and cash paid for interest expense was $310 million. We had outstanding borrowings of approximately $11.1 billion (with a carrying value of approximately $11.0 billion) as of December 31, 2021. This item is based on the assumption that our borrowings and interest costs after an
57

offering will remain similar to those prior to such offering. The amount of leverage that we may employ at any particular time will depend on, among other things, our investment adviser’s and our board of directors’ assessment of market and other factors at the time of any proposed borrowing. See “Risk Factors—Risks Relating to Our Business—We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing with us.” We are currently allowed to borrow amounts such that our asset coverage, as calculated pursuant to the Investment Company Act, equals at least 150% after such borrowing (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources.”

(9)Includes our overhead expenses, including payments under our administration agreement based on our allocable portion of overhead and other expenses incurred by Ares Operations in performing its obligations under the administration agreement, and income taxes. Such expenses are estimated based on actual “Other expenses” for the year ended December 31, 2021. The holders of shares of our common stock (and not the holders of our debt securities or preferred stock, if any) indirectly bear the cost associated with our annual expenses. See “Business—Administration Agreement.”

(10)Our stockholders indirectly bear the expenses of underlying funds or other investment vehicles that would be investment companies under section 3(a) of the Investment Company Act but for the exceptions to that definition provided for in sections 3(c)(1) and 3(c)(7) of the Investment Company Act (“Acquired Funds”) in which we invest. This amount is estimated based on the estimated annual fees and operating expenses of Acquired Funds in which the Company is invested as of December 31, 2021. Certain of these Acquired Funds are subject to management fees, which generally range from 1% to 2.5% of total net assets, or incentive fees, which generally range between 15% and 25% of net profits. When applicable, fees and operating expenses estimates are based on historic fees and operating expenses for the Acquired Funds. For those Acquired Funds with little or no operating history, fees and operating expenses are estimates based on expected fees and operating expenses stated in the Acquired Funds’ offering memorandum, private placement memorandum or other similar communication without giving effect to any performance. Future fees and operating expenses for these Acquired Funds may be substantially higher or lower because certain fees and operating expenses are based on the performance of the Acquired Funds, which may fluctuate over time. Also included with the amount is an estimate of the annual fees and operating expenses of the SDLP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Portfolio and Investment Activity—Senior Direct Lending Program” and Note 4 to our consolidated financial statements for the year ended December 31, 2021 for more information on the SDLP. The annual fees and operating expenses of the SDLP were estimated based on the funded portfolio of the SDLP as of December 31, 2021 and include interest payments on the senior notes and intermediate funding notes provided by Varagon and its clients, which represent 83% of such expenses.

(11)Total annual expenses as a percentage of consolidated net assets attributable to common stock are higher than the total annual expenses percentage would be for a company that is not leveraged. We borrow money to leverage and increase our total assets. The SEC requires that the “Total annual expenses” percentage be calculated as a percentage of net assets (defined as total assets less indebtedness and before taking into account any income based fees or capital gains incentive fees accrued during the period), rather than the total assets, including assets that have been funded with borrowed monies.

Example
The following example demonstrates the projected dollar amount of total cumulative expenses over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed that we would have no additional leverage, that none of our assets are cash or cash equivalents and that our annual operating expenses would remain at the levels set forth in the table above. Income based fees and the capital gains incentive fees under the investment advisory and management agreement, which, assuming a 5% annual return, would either not be payable or have an insignificant impact on the expense amounts shown below, are not included in the example, except as specifically set forth below. Transaction expenses are not included in the following example.
58

1 year
3 years
5 years
10 years
You would pay the following expenses on a $1,000 common stock investment, assuming a 5% annual return (none of which is subject to the capital gains incentive fee)(1)
($102)($292)($461)($814)
You would pay the following expenses on a $1,000 common stock investment, assuming a 5% annual return resulting entirely from net realized capital gains (all of which is subject to the capital gains incentive fee)(2)
($112)($319)($502)($876)
_______________________________________________________________________________

(1)Assumes that we will not realize any capital gains computed net of all realized capital losses and unrealized capital depreciation.
(2)Assumes no unrealized capital depreciation and a 5% annual return resulting entirely from net realized capital gains and not otherwise deferrable under the terms of the investment advisory and management agreement and therefore subject to the capital gains incentive fee.
The foregoing table is to assist you in understanding the various costs and expenses that an investor in our common stock will bear directly or indirectly. While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. If we were to achieve sufficient returns on our investments, including through the realization of capital gains, to trigger income based fees or capital gains incentive fees of a material amount, our expenses, and returns to our investors, would be higher. In addition, while the example assumes reinvestment of all dividends and distributions at net asset value, if our board of directors authorizes and we declare a cash dividend, participants in our dividend reinvestment plan who have not otherwise elected to receive cash will receive a number of shares of our common stock determined by dividing the total dollar amount of the dividend payable to a participant by the market price per share of our common stock at the close of trading on the valuation date for the dividend. See “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Issuer Purchases of Equity Securities—Dividend Reinvestment Plan” for additional information regarding our dividend reinvestment plan.

This example and the expenses in the table above should not be considered a representation of our future expenses as actual expenses (including the cost of debt, if any, and other expenses) that we may incur in the future and such actual expenses may be greater or less than those shown.
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SENIOR SECURITIES
(dollar amounts in millions, except per unit data)
Information about our senior securities (including preferred stock, debt securities and other indebtedness) is shown in the following tables as of the end of the last ten fiscal years. The report of our independent registered public accounting firm, KPMG LLP, on the senior securities table as of December 31, 2021, is attached as an exhibit to this annual report on Form 10-K. The “-” indicates information that the SEC expressly does not require to be disclosed for certain types of senior securities.

Class and Year		Total Amount Outstanding Exclusive of Treasury Securities(1)Asset Coverage Per Unit(2)Involuntary Liquidating Preference Per Unit(3)Average Market Value Per Unit(4)
 Revolving Credit Facility
 Fiscal 2021$1,507 $1,792 $— N/A
 Fiscal 20201,180 1,824 — N/A
 Fiscal 20192,250 2,042 —  N/A
 Fiscal 20181,064 2,362 —  N/A
 Fiscal 2017395 2,415 —  N/A
 Fiscal 2016571 2,296 —  N/A
 Fiscal 2015515 2,213 —  N/A
 Fiscal 2014170 2,292 —  N/A
 Fiscal 2013— — —  N/A
 Fiscal 2012— — —  N/A
 Revolving Funding Facility
 Fiscal 2021$762 $1,792 $— N/A
 Fiscal 20201,027 1,824 — N/A
 Fiscal 2019638 2,042 —  N/A
 Fiscal 2018520 2,362 —  N/A
 Fiscal 2017600 2,415 —  N/A
 Fiscal 2016155 2,296 —  N/A
 Fiscal 2015250 2,213 —  N/A
 Fiscal 2014324 2,292 —  N/A
 Fiscal 2013185 2,547 —  N/A
 Fiscal 2012300 2,721 —  N/A
 SMBC Funding Facility
 Fiscal 2021$401 $1,792 $— N/A
 Fiscal 2020453 1,824 — N/A
 Fiscal 2019301 2,042 —  N/A
 Fiscal 2018245 2,362 —  N/A
 Fiscal 201760 2,415 —  N/A
 Fiscal 2016105 2,296 —  N/A
 Fiscal 2015110 2,213 —  N/A
 Fiscal 201462 2,292 —  N/A
 Fiscal 2013— — —  N/A
 Fiscal 2012— — —  N/A
 BNP Funding Facility
 Fiscal 2021$— $1,792 $— N/A
 Fiscal 2020150 1,824 — N/A
 SBA Debentures
 Fiscal 2017$— $— $—  N/A
 Fiscal 201625 2,296 —  N/A
60


Class and Year		Total Amount Outstanding Exclusive of Treasury Securities(1)Asset Coverage Per Unit(2)Involuntary Liquidating Preference Per Unit(3)Average Market Value Per Unit(4)
 Fiscal 201522 2,213 —  N/A
 February 2016 Convertible Notes
 Fiscal 2015$575 $2,213 $—  N/A
 Fiscal 2014575 2,292 —  N/A
 Fiscal 2013575 2,547 —  N/A
 Fiscal 2012575 2,721 —  N/A
 June 2016 Convertible Notes
 Fiscal 2015$230 $2,213 $—  N/A
 Fiscal 2014230 2,292 —  N/A
 Fiscal 2013230 2,547 —  N/A
 Fiscal 2012230 2,721 —  N/A
 2017 Convertible Notes
 Fiscal 2016$163 $2,296 $—  N/A
 Fiscal 2015163 2,213 —  N/A
 Fiscal 2014163 2,292 —  N/A
 Fiscal 2013163 2,547 —  N/A
 Fiscal 2012163 2,721 —  N/A
 2018 Convertible Notes
 Fiscal 2017$270 $2,415 $—  N/A
 Fiscal 2016270 2,296 —  N/A
 Fiscal 2015270 2,213 —  N/A
 Fiscal 2014270 2,292 —  N/A
 Fiscal 2013270 2,547 —  N/A
 Fiscal 2012270 2,721 —  N/A
 2019 Convertible Notes
 Fiscal 2018$300 $2,362 $—  N/A
 Fiscal 2017300 2,415 —  N/A
 Fiscal 2016300 2,296 — N/A
 Fiscal 2015300 2,213 — N/A
 Fiscal 2014300 2,292 — N/A
 Fiscal 2013300 2,547 — N/A
 2022 Convertible Notes
 Fiscal 2021$388 $1,792 $— N/A
 Fiscal 2020 388 1,824 — N/A
 Fiscal 2019388 2,042 —  N/A
 Fiscal 2018388 2,362 —  N/A
 Fiscal 2017388 2,415 — N/A
 2024 Convertible Notes
 Fiscal 2021$403 $1,792 $— N/A
 Fiscal 2020403 1,824 — N/A
 Fiscal 2019403 2,042 —  N/A
 2018 Notes
 Fiscal 2017$750 $2,415 $— N/A
 Fiscal 2016750 2,296 — N/A
 Fiscal 2015750 2,213 — N/A
61


Class and Year		Total Amount Outstanding Exclusive of Treasury Securities(1)Asset Coverage Per Unit(2)Involuntary Liquidating Preference Per Unit(3)Average Market Value Per Unit(4)
 Fiscal 2014750 2,292 — N/A
 Fiscal 2013600 2,547 — N/A
 2020 Notes
 Fiscal 2018$600 $2,362 $—  N/A
 Fiscal 2017600 2,415 — N/A
 Fiscal 2016600 2,296 — N/A
 Fiscal 2015600 2,213 — N/A
 Fiscal 2014400 2,292 — N/A
2022 Notes
 Fiscal 2020$600 $1,824 $— N/A
 Fiscal 2019600 2,042 —  N/A
 Fiscal 2018600 2,362 —  N/A
 Fiscal 2017600 2,415 — N/A
 Fiscal 2016600 2,296 — N/A
 February 2022 Notes
 Fiscal 2014$144 $2,292 $— $1,024 
 Fiscal 2013144 2,547 — 1,043 
 Fiscal 2012144 2,721 — 1,035 
 October 2022 Notes
 Fiscal 2016$183 $2,296 $— $1,017 
 Fiscal 2015183 2,213 — 1,011 
 Fiscal 2014183 2,292 — 1,013 
 Fiscal 2013183 2,547 — 993 
 Fiscal 2012183 2,721 — 986 
 2040 Notes
 Fiscal 2014$200 $2,292 $— $1,040 
 Fiscal 2013200 2,547 — 1,038 
 Fiscal 2012200 2,721 — 1,041 
 2023 Notes
 Fiscal 2021$750 $1,792 $— N/A
 Fiscal 2020750 1,824 — N/A
 Fiscal 2019750 2,042 —  N/A
 Fiscal 2018750 2,362 —  N/A
 Fiscal 2017750 2,415 — N/A
 2024 Notes
 Fiscal 2021$900 $1,792 $— N/A
 Fiscal 2020900 1,824 — N/A
 Fiscal 2019900 2,042 —  N/A
 March 2025 Notes
 Fiscal 2021$600 $1,792 $— N/A
 Fiscal 2020600 1,824 — N/A
 Fiscal 2019600 2,042 —  N/A
 Fiscal 2018600 2,362 —  N/A
 July 2025 Notes
 Fiscal 2021$1,250 $1,792 $— N/A
62


Class and Year		Total Amount Outstanding Exclusive of Treasury Securities(1)Asset Coverage Per Unit(2)Involuntary Liquidating Preference Per Unit(3)Average Market Value Per Unit(4)
 Fiscal 2020750 1,824 — N/A
January 2026 Notes
 Fiscal 2021$1,150 $1,792 $— N/A
 Fiscal 20201,150 1,824 — N/A
July 2026 Notes
 Fiscal 2021$1,000 $1,792 $— N/A
2028 Notes
 Fiscal 2021$1,250 $1,792 $— N/A
2031 Notes
Fiscal 2021$700 $1,792 $— N/A
 2047 Notes
 Fiscal 2020$230 $1,824 $— $1,013 
 Fiscal 2019230 2,042 — 1,033 
 Fiscal 2018230 2,362 — 1,013 
 Fiscal 2017230 2,415 — 1,021 
 Fiscal 2016230 2,296 — 1,015 
 Fiscal 2015230 2,213 — 1,011 
 Fiscal 2014230 2,292 — 985 
 Fiscal 2013230 2,547 — 972 
 Fiscal 2012230 2,721 — 978 
_______________________________________________________________________________

(1)Total amount of each class of senior securities outstanding at principal value at the end of the period presented.

(2)The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the “Asset Coverage Per Unit” (including for the February 2022 Notes, the October 2022 Notes, the 2040 Notes and the 2047 Notes, which were issued in $25 increments). In June 2016, we received exemptive relief from the SEC allowing us to modify the asset coverage requirements to exclude debentures issued by Ares Venture Finance, L.P. and guaranteed by the Small Business Administration (the “SBA”), subject to the issuance of a capital commitment by the SBA and other customary procedures (the “SBA Debentures”), from this calculation. As such, the asset coverage ratio beginning with Fiscal 2016 excludes the SBA Debentures. Certain prior year amounts have been reclassified to conform to the 2016 and 2017 presentation. In particular, unamortized debt issuance costs were previously included in other assets and were reclassified to long‑term debt as a result of the adoption of Accounting Standards Update 2015‑03, Interest-Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs during the first quarter of 2016.

(3)The amount to which such class of senior security would be entitled upon our involuntary liquidation in preference to any security junior to it.

(4)Not applicable, except for with respect to the February 2022 Notes, the October 2022 Notes, the 2040 Notes and the 2047 Notes, as other senior securities are not registered for public trading on a stock exchange. The average market value per unit for each of the February 2022 Notes, the October 2022 Notes, the 2040 Notes and the 2047 Notes is based on the average daily prices of such notes and is expressed per $1,000 of indebtedness (including for the February 2022 Notes, the October 2022 Notes, the 2040 Notes and the 2047 Notes, which were issued in $25 increments).

Item 6.    [Reserved]
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Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this Annual Report. In addition, some of the statements in this Annual Report (including in the following discussion) constitute forward- looking statements, which relate to future events or the future performance or financial condition of Ares Capital Corporation (the “Company,” “Ares Capital,” “we,” “us,” or “our”). The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:

•our, or our portfolio companies’, future business, operations, operating results or prospects;

•the return or impact of current and future investments;

•the impact of global health crises, such as the current novel coronavirus (“COVID-19”) pandemic, on our or our portfolio companies’ business and the U.S. and global economy;

•the impact of a protracted decline in the liquidity of credit markets on our business;

•the impact of the elimination of the London Interbank Offered Rate (“LIBOR”) and implementation of alternatives to LIBOR on our operating results;

•the impact of fluctuations in interest rates on our business;

•the impact of changes in laws or regulations (including the interpretation thereof), including the tax laws, the Coronavirus Aid, Relief and Economic Security Act of 2020 and the American Rescue Plan Act of 2021, governing our operations or the operations of our portfolio companies or the operations of our competitors;

•the March 2022 expiration of the Securities and Exchange Commission’s (“the SEC”) temporary no action position with respect to allowing co-investments with certain other funds managed by the investment adviser or its affiliates;

•the valuation of our investments in portfolio companies, particularly those having no liquid trading market;

•our ability to recover unrealized losses;

•market conditions and our ability to access alternative debt markets and additional debt and equity capital and our ability to manage our capital resources effectively;

•our contractual arrangements and relationships with third parties;

•the state of the general economy;

•the impact of supply chain constraints on our portfolio companies and the global economy;

•the elevating levels of inflation, and its impact on our portfolio companies and on the industries in which we invest;

•uncertainty surrounding global financial stability;

•the social, geopolitical, financial, trade and legal implications of Brexit;

•Middle East turmoil and the potential for volatility in energy prices and its impact on the industries in which we invest;

•the financial condition of our current and prospective portfolio companies and their ability to achieve their objectives;

•the impact of information technology system failures, data security breaches, data privacy compliance, network disruptions, and cybersecurity attacks;

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•our ability to raise capital in the private and public debt markets;

•our ability to successfully complete and integrate any acquisitions;

•the outcome and impact of any litigation;

•the adequacy of our cash resources and working capital;

•the timing, form and amount of any dividend distributions;

•the timing of cash flows, if any, from the operations of our portfolio companies; and

•the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments.

We use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. Our actual results and condition could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and the other information included in this Annual Report.

We have based the forward-looking statements included in this Annual Report on information available to us on the filing date of this Annual Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.

OVERVIEW

We are a specialty finance company that is a closed-end, non-diversified management investment company incorporated in Maryland. We have elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”).
 
We are externally managed by Ares Capital Management LLC (“Ares Capital Management” or our “investment adviser”), a subsidiary of Ares Management Corporation (NYSE: ARES) (“Ares Management”), a publicly traded, leading global alternative investment manager, pursuant to our investment advisory and management agreement. Ares Operations LLC (“Ares Operations” or our “administrator”), a subsidiary of Ares Management, provides certain administrative and other services necessary for us to operate.
 
Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in first lien senior secured loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt, generally in a first lien position) and second lien senior secured loans. In addition to senior secured loans, we also invest in subordinated loans (sometimes referred to as mezzanine debt), which in some cases includes an equity component and preferred equity.
 
To a lesser extent, we also make common equity investments, which have generally been non-control equity investments of less than $20 million (usually in conjunction with a concurrent debt investment). However, we may increase the size or change the nature of these investments.
 
Since our initial public offering (“IPO”) on October 8, 2004 through December 31, 2021, our exited investments resulted in an asset level realized gross internal rate of return to us of approximately 14% (based on original cash invested, net of syndications, of approximately $36.6 billion and total proceeds from such exited investments of approximately $46.9 billion). Internal rate of return is the discount rate that makes the net present value of all cash flows related to a particular investment equal to zero. Internal rate of return is gross of expenses related to investments as these expenses are not allocable to specific investments. Investments are considered to be exited when the original investment objective has been achieved through the receipt of cash and/or non-cash consideration upon the repayment of a debt investment or sale of an investment or through the determination that no further consideration was collectible and, thus, a loss may have been realized. Approximately 57% of these exited investments resulted in an asset level realized gross internal rate of return to us of 10% or greater.
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Additionally, since our IPO on October 8, 2004 through December 31, 2021, our realized gains have exceeded our realized losses by approximately $1.0 billion (excluding a one-time gain on the acquisition of Allied Capital Corporation (“Allied Capital”) in April 2010 (the “Allied Acquisition”) and realized gains/losses from the extinguishment of debt and other transactions). For this same time period, our average annualized net realized gain rate was approximately 1.0% (excluding a one-time gain on the acquisition of Allied Capital and realized gains/losses from the extinguishment of debt and other transactions). Net realized gain/loss rates for a particular period are the amount of net realized gains/losses during such period divided by the average quarterly investments at amortized cost in such period.
 
Information included herein regarding internal rates of return, realized gains and losses and annualized net realized gain rates are historical results relating to our past performance and are not necessarily indicative of future results, the achievement of which cannot be assured.

As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities and indebtedness of private U.S. companies and certain public U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. We also may invest up to 30% of our portfolio in non-qualifying assets, as permitted by the Investment Company Act. Specifically, as part of this 30% basket, we may invest in entities that are not considered “eligible portfolio companies” (as defined in the Investment Company Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the Investment Company Act, and publicly traded entities whose public equity market capitalization exceeds the levels provided for under the Investment Company Act.
 
We have elected to be treated as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”), and operate in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements and timely distribute to our stockholders generally at least 90% of our investment company taxable income, as defined by the Code, for each year. Pursuant to this election, we generally will not have to pay U.S. federal corporate-level taxes on any income that we distribute to our stockholders provided that we satisfy those requirements.



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PORTFOLIO AND INVESTMENT ACTIVITY

Our investment activity for the years ended December 31, 2021 and 2020 is presented below.
 For the Years Ended December 31,
(dollar amounts in millions)20212020
New investment commitments(1):  
New portfolio companies$7,540 $3,070 
Existing portfolio companies8,033 3,633 
Total new investment commitments(2)15,573 6,703 
Less: 
Investment commitments exited(3)(11,195)(5,786)
Net investment commitments$4,378 $917 
Principal amount of investments funded: 
First lien senior secured loans(4)$8,835 $4,966 
Second lien senior secured loans2,497 819 
Subordinated certificates of the SDLP(5)232 308 
Senior subordinated loans445 269 
Preferred equity930 219 
Other equity949 160 
Total$13,888 $6,741 
Principal amount of investments sold or repaid: 
First lien senior secured loans(4)$6,503 $4,503 
Second lien senior secured loans2,318 903 
Subordinated certificates of the SDLP(5)368 94 
Senior subordinated loans442 142 
Collateralized loan obligations— 39 
Preferred equity474 65 
Other equity148 112 
Total$10,253 $5,858 
Number of new investment commitments(6)242 142 
Average new investment commitment amount$64 $47 
Weighted average term for new investment commitments (in months)76 71 
Percentage of new investment commitments at floating rates86 %93 %
Percentage of new investment commitments at fixed rates8 %4 %
Weighted average yield of debt and other income producing securities(7): 
Funded during the period at amortized cost7.8 %7.8 %
Funded during the period at fair value(8)7.9 %7.9 %
Exited or repaid during the period at amortized cost8.0 %7.8 %
Exited or repaid during the period at fair value(8)8.0 %7.8 %

_______________________________________________________________________________

(1)New investment commitments include new agreements to fund revolving loans or delayed draw loans. See Note 7 to our consolidated financial statements for the year ended December 31, 2021, for more information on our commitments to fund revolving loans or delayed draw loans.

(2)Includes both funded and unfunded commitments. Of these new investment commitments, we funded $12.5 billion and $5.6 billion for the years ended December 31, 2021 and 2020, respectively.

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(3)Includes both funded and unfunded commitments. For the years ended December 31, 2021 and 2020, investment commitments exited included exits of unfunded commitments of $1.2 billion and $798 million, respectively.

(4)For the year ended December 31, 2021, net fundings of first lien secured revolving loans were $59 million. For the year ended December 31, 2020, net repayments of first lien secured revolving loans were $29 million.

(5)See “Senior Direct Lending Program” below and Note 4 to our consolidated financial statements for the year ended December 31, 2021 for more information on the SDLP (as defined below). 

(6)Number of new investment commitments represents each commitment to a particular portfolio company or a commitment to multiple companies as part of an individual transaction (e.g., the purchase of a portfolio of investments).

(7)“Weighted average yield of debt and other income producing securities” is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the dividend received by us related to our equity investment in IHAM during the most recent quarter end, as applicable), divided by (b) the total accruing debt and other income producing securities at amortized cost or at fair value (including the amortized cost or fair value of our equity investment in IHAM as applicable), as applicable.

(8)Represents fair value for investments in the portfolio as of the most recent prior quarter end, if applicable.

As of December 31, 2021 and 2020, our investments consisted of the following:
 As of December 31,
 20212020
(in millions)Amortized CostFair Value(1)Amortized CostFair Value(1)
First lien senior secured loans(2)$9,583 $9,459 $7,224 $6,987 
Second lien senior secured loans4,614 4,524 4,386 4,171 
Subordinated certificates of the SDLP(3)987 987 1,123 1,123 
Senior subordinated loans912 906 1,005 951 
Preferred equity1,547 1,561 1,020 926 
Other equity2,167 2,572 1,156 1,357 
Total$19,810 $20,009 $15,914 $15,515 
_______________________________________________________________________________

(1)As of December 31, 2021 and 2020, the fair value of certain of our investments was negatively impacted by the uncertainty surrounding the impact of the COVID-19 pandemic. For more information, see “Results of Operations - Net Unrealized Gains/Losses.”

(2)First lien senior secured loans include certain loans that we classify as “unitranche” loans. The total amortized cost and fair value of the loans that we classified as “unitranche” loans were $5.2 billion and $5.2 billion, respectively, as of December 31, 2021, and $2.9 billion and $2.8 billion, respectively, as of December 31, 2020.

(3)The proceeds from these certificates were applied to co-investments with Varagon Capital Partners (“Varagon”) and its clients to fund first lien senior secured loans to 19 and 23 different borrowers as of December 31, 2021 and 2020, respectively.

We have commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to fund which are at (or substantially at) our discretion. Our commitment to fund delayed draw loans is triggered upon the satisfaction of certain pre-negotiated terms and conditions. Generally, the most significant and uncertain term requires the borrower to satisfy a specific use of proceeds covenant. The use of proceeds covenant typically requires the borrower to use the additional loans for the specific purpose of a permitted acquisition or permitted investment, for example. In addition to the use of proceeds covenant, the borrower is generally required to satisfy additional negotiated covenants (including specified leverage levels). We are also party to subscription agreements to fund equity investments in private equity investment partnerships. See Note 7 to our consolidated financial statements for the year ended December 31, 2021 for more information on our unfunded commitments, including commitments to issue letters of credit, related to certain of our portfolio companies.
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The weighted average yields at amortized cost and fair value of the following portions of our portfolio as of December 31, 2021 and 2020 were as follows:
 As of December 31,
 20212020
 Amortized CostFair ValueAmortized CostFair Value
Debt and other income producing securities(1)8.7 %8.7 %9.3 %9.4 %
Total portfolio(2)7.9 %7.9 %8.5 %8.7 %
First lien senior secured loans(3)7.2 %7.3 %7.7 %8.0 %
Second lien senior secured loans(3)8.6 %8.8 %8.7 %9.1 %
Subordinated certificates of the SDLP(3)(5)13.5 %13.5 %13.5 %13.5 %
Senior subordinated loans(3)10.2 %10.3 %9.0 %9.5 %
Income producing equity securities(4)12.0 %10.8 %13.4 %12.2 %
_______________________________________________________________________________

(1)“Weighted average yield on debt and other income producing securities” is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the dividend received by us related to our equity investment in IHAM during the most recent quarter end), divided by (b) the total accruing debt and other income producing securities at amortized cost or at fair value (including the amortized cost or fair value of our equity investment in IHAM as applicable), as applicable.

(2)“Weighted average yield on total portfolio” is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the dividend received by us related to our equity investment in IHAM during the most recent quarter end), divided by (b) total investments at amortized cost or at fair value, as applicable.

(3)“Weighted average yields” are computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on the relevant accruing investments, divided by (b) the total relevant investments at amortized cost or at fair value, as applicable.

(4)“Weighted average yield on income producing equity securities” is computed as (a) the yield earned on the relevant income producing equity securities (including the annualized amount of the dividend received by us related to our equity investment in IHAM during the most recent quarter end), divided by (b) the total relevant income producing equity securities at amortized cost or fair value (including amortized cost or fair value of our equity investment in IHAM), as applicable.

(5)The proceeds from these certificates were applied to co-investments with Varagon and its clients to fund first lien senior secured loans.
 
Ares Capital Management employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our investment adviser grades the credit risk of all investments on a scale of 1 to 4 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of origination or acquisition), although it may also take into account under certain circumstances the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The grade of a portfolio investment may be reduced or increased over time. The following is a description of each investment grade:
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Investment gradeDescription
4Involves the least amount of risk to our initial cost basis. The trends and risk factors for this investment since origination or acquisition are generally favorable, which may include the performance of the portfolio company or a potential exit.
3Involves a level of risk to our initial cost basis that is similar to the risk to our initial cost basis at the time of origination or acquisition. This portfolio company is generally performing as expected and the risk factors to our ability to ultimately recoup the cost of our investment are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a grade of 3.
2Indicates that the risk to our ability to recoup the initial cost basis of such investment has increased materially since origination or acquisition, including as a result of factors such as declining performance and non-compliance with debt covenants; however, payments are generally not more than 120 days past due. For investments graded 2, our investment adviser enhances its level of scrutiny over the monitoring of such portfolio company.
1Indicates that the risk to our ability to recoup the initial cost basis of such investment has substantially increased since origination or acquisition, and the portfolio company likely has materially declining performance. For debt investments with an investment grade of 1, most or all of the debt covenants are out of compliance and payments are substantially delinquent. For investments graded 1, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit. For investments graded 1, our investment adviser enhances its level of scrutiny over the monitoring of such portfolio company.
    
Set forth below is the grade distribution of our portfolio companies as of December 31, 2021 and 2020:

 As of December 31,
 20212020
(dollar amounts in millions)Fair Value%Number of
Companies		%Fair Value%Number of
Companies		%
Grade 4$3,422 17.1 %49 12.7 %$1,596 10.3 %34 9.7 %
Grade 315,529 77.6 294 76.0 11,756 75.8 244 69.8 
Grade 2910 4.5 24 6.1 2,046 13.2 47 13.4 
Grade 1148 0.8 20 5.2 117 0.7 25 7.1 
Total$20,009 100.0 %387 100.0 %$15,515 100.0 %350100.0 %

As of December 31, 2021 and 2020, the weighted average grade of the investments in our portfolio at fair value was 3.1 and 3.0, respectively. The increase in the fair value of investments graded 4 was primarily due to recognition of unrealized appreciation in certain of our equity investments. As of December 31, 2021, investments graded 1 and 2 included certain of our portfolio investments which had increased risk due to supply chain disruptions, inflationary pressures and the COVID-19 pandemic and the continuing uncertainty surrounding its full duration and impact. For more information, see “Results of Operations - Net Unrealized Gains/Losses.”

As of December 31, 2021, loans on non-accrual status represented 0.8% and 0.5% of the total investments at amortized cost and at fair value, respectively. As of December 31, 2020, loans on non-accrual status represented 3.3% and 2.0% of the total investments at amortized cost and at fair value, respectively.

Senior Direct Lending Program

We have established a joint venture with Varagon to make certain first lien senior secured loans, including certain stretch senior and unitranche loans, primarily to U.S. middle-market companies. Varagon was formed in 2013 as a lending platform by American International Group, Inc. and other partners. The joint venture is called the Senior Direct Lending Program, LLC (d/b/a the “Senior Direct Lending Program” or the “SDLP”). In July 2016, we and Varagon and its clients completed the initial funding of the SDLP. The SDLP may generally commit and hold individual loans of up to $350 million. The SDLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SDLP must be approved by an investment committee of the SDLP consisting of representatives of ours and Varagon (with approval from a representative of each required).

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We provide capital to the SDLP in the form of subordinated certificates (the “SDLP Certificates”), and Varagon and its clients provide capital to the SDLP in the form of senior notes, intermediate funding notes and SDLP Certificates. As of December 31, 2021, we and a client of Varagon owned 87.5% and 12.5%, respectively, of the outstanding SDLP Certificates.

    As of December 31, 2021 and 2020, we and Varagon and its clients had agreed to make capital available to the SDLP of $6.2 billion and $6.2 billion, respectively, in the aggregate, of which $1.4 billion and $1.4 billion, respectively, is to be made available from us. This capital will only be committed to the SDLP upon approval of transactions by the investment committee of the SDLP. Below is a summary of the funded capital and unfunded capital commitments of the SDLP.
 As of December 31,
(in millions)20212020
Total capital funded to the SDLP(1)$4,168 $4,772 
Total capital funded to the SDLP by the Company(1)$987 $1,123 
Total unfunded capital commitments to the SDLP(2)$262 $152 
Total unfunded capital commitments to the SDLP by the Company(2)$62 $37 
___________________________________________________________________________
(1) At principal amount.

(2)These commitments to fund delayed draw loans have been approved by the investment committee of the SDLP and will be funded if and when conditions to funding such delayed draw loans are met.

The SDLP Certificates pay a coupon equal to LIBOR plus 8.0% and also entitle the holders thereof to receive a portion of the excess cash flow from the loan portfolio, after expenses, which may result in a return to the holders of the SDLP Certificates that is greater than the stated coupon. The SDLP Certificates are junior in right of payment to the senior notes and intermediate funding notes.

The amortized cost and fair value of our SDLP Certificates were $1.0 billion and $1.0 billion, respectively, as of December 31, 2021 and $1.1 billion and $1.1 billion, respectively, as of December 31, 2020. Our yield on our investment in the SDLP Certificates at amortized cost and fair value was 13.5% and 13.5%, respectively, as of December 31, 2021 and 13.5% and 13.5%, respectively, as of December 31, 2020. For the years ended December 31, 2021, 2020 and 2019, we earned interest income of $138 million, $127 million and $122 million, respectively, from our investment in the SDLP Certificates. We are also entitled to certain fees in connection with the SDLP. For the years ended December 31, 2021, 2020 and 2019, in connection with the SDLP, we earned capital structuring service and other fees totaling $22 million, $23 million and $25 million, respectively.

As of December 31, 2021 and 2020, the SDLP portfolio was comprised entirely of first lien senior secured loans primarily to U.S. middle-market companies and were in industries similar to the companies in our portfolio. As of December 31, 2021 and 2020, none of the loans were on non-accrual status. Below is a summary of the SDLP’s portfolio as of December 31, 2021 and 2020:

 As of December 31,
(dollar amounts in millions)20212020
Total first lien senior secured loans(1)(2)$4,194 $4,483 
Weighted average yield on first lien senior secured loans(3)6.7 %6.9 %
Largest loan to a single borrower(1)$342 $345 
Total of five largest loans to borrowers(1)$1,540 $1,565 
Number of borrowers in the SDLP19 23 
Commitments to fund delayed draw loans(4)$262 $152 
_______________________________________________________________________________

(1)At principal amount.

(2)First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of December 31, 2021 and 2020, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $2,908 million and $3,551 million, respectively.
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(3) Computed as (a) the annual stated interest rate on accruing first lien senior secured loans, divided by (b) total first lien senior secured loans at principal amount.

(4)As discussed above, these commitments have been approved by the investment committee of the SDLP.


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RESULTS OF OPERATIONS

For the years ended December 31, 2021 and 2020

Operating results for the years ended December 31, 2021 and 2020 were as follows:
 For the Years Ended December 31,
(in millions)20212020
Total investment income$1,820 $1,511 
Total expenses1,050 698 
Net investment income before income taxes770 813 
Income tax expense, including excise tax29 19 
Net investment income741 794 
Net realized gains (losses) on investments, foreign currency and other transactions240 (166)
Net unrealized gains (losses) on investments, foreign currency and other transactions586 (144)
Net increase in stockholders’ equity resulting from operations$1,567 $484 

Net income can vary substantially from period to period due to various factors, including acquisitions, the level of new investment commitments, the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, comparisons of net increase in stockholders’ equity resulting from operations may not be meaningful.

Investment Income
 For the Years Ended December 31,
(in millions)20212020
Interest income from investments$1,247 $1,159 
Capital structuring service fees306 149 
Dividend income222 149 
Other income45 54 
Total investment income$1,820 $1,511 

Interest income from investments for the year ended December 31, 2021 increased from the comparable period in 2020 primarily as a result of the increase in the average size of our portfolio. This increase in interest income from the increase in the average size of our portfolio was partially offset against a decrease in the weighted average yield of our portfolio. The decline in the weighted average yield of our portfolio for the year ended December 31, 2021, as compared to the same period in 2020, was primarily due to the portfolio rotation into lower yielding senior secured loans. The average size and weighted average yield of our portfolio at amortized cost for the years ended December 31, 2021 and 2020 were as follows:

 For the Years Ended December 31,
(in millions)20212020
Average size of portfolio$17,053 $15,187 
Weighted average yield on portfolio8.5 %8.6 %

Capital structuring service fees for the year ended December 31, 2021 increased from the comparable period in 2020 primarily due to an increase in new investment commitments during the year ended December 31, 2021. The new investment commitments and weighted average capital structuring service fee percentages for the years ended December 31, 2021 and 2020 were as follows:

 For the Years Ended December 31,
(in millions)20212020
New investment commitments$15,573 $6,703 
Weighted average capital structuring service fee percentages2.0 %2.2 %

Dividend income for the years ended December 31, 2021 and 2020 were as follows:
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 For the Years Ended December 31,
(in millions)20212020
Dividend income received from IHAM$93 $74 
Recurring dividends110 73 
Non-recurring dividends19 2 
Total dividend income$222 $149 

Recurring dividend income for the year ended December 31, 2021 increased from the comparable period in 2020 primarily due to an increase in yielding preferred equity investments.
    
Operating Expenses
 For the Years Ended December 31,
(in millions)20212020
Interest and credit facility fees$372 $317 
Base management fees253 217 
Income based fees225 184 
Capital gains incentive fees(1)161 (58)
Administrative fees15 13 
Other general and administrative24 25 
Total expenses$1,050 $698 
_______________________________________________________________________________
                        
(1)Calculated in accordance with U.S. generally accepted accounting principles (“GAAP”) as discussed below.

Interest and credit facility fees for the years ended December 31, 2021 and 2020, were comprised of the following:
 For the Years Ended December 31,
(in millions)20212020
Stated interest expense$308 $274 
Credit facility fees33 13 
Amortization of debt issuance costs29 23 
Net accretion of discount on notes payable2 7 
Total interest and credit facility fees$372 $317 

Stated interest expense for the year ended December 31, 2021 increased from the comparable period in 2020 primarily due to the increase in the average principal amount of debt outstanding. The decrease in our weighted average stated interest rate for the year ended December 31, 2021 from the comparable period in 2020 was primarily due to the issuance of lower cost unsecured notes as well as the decline in LIBOR, which lowered the stated interest rate on our revolving credit facilities. Average debt outstanding and weighted average stated interest rate on our debt outstanding for the years ended December 31, 2021 and 2020 were as follows:


 For the Years Ended December 31,
(in millions)20212020
Average debt outstanding$9,411 $7,781 
Weighted average stated interest rate on debt3.3 %3.5 %

Credit facility fees for the year ended December 31, 2021 were higher from the comparable period in 2020 primarily due to the lower utilization of our revolving facilities resulting in higher unused commitment fees.

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Base management fees for the year ended December 31, 2021 increased from the comparable period in 2020 primarily due to the increase in the average size of our portfolio for the year ended December 31, 2021 as compared to the comparable period in 2020.

Income based fees for the year ended December 31, 2021 increased from the comparable period in 2020 primarily due to the pre-incentive fee net investment income, as defined in the investment advisory and management agreement, for the year ended December 31, 2021 being higher than in the comparable period in 2020.

For the year ended December 31, 2021, the capital gains incentive fee calculated in accordance with GAAP was $161 million. For the year ended December 31, 2020, the reduction in the capital gains incentive fee calculated in accordance with GAAP was $58 million. The capital gains incentive fee accrual for the year ended December 31, 2021 changed from the comparable period in 2020 primarily due to net gains on investments, foreign currency, other transactions and the extinguishment of debt of $826 million compared to net losses of $310 million for the year ended December 31, 2020. The capital gains incentive fee accrued under GAAP includes an accrual related to unrealized capital appreciation, whereas the capital gains incentive fee actually payable under our investment advisory and management agreement does not. There can be no assurance that such unrealized capital appreciation will be realized in the future. The accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. As of December 31, 2021, there was $161 million of capital gains incentive fees accrued in accordance with GAAP. As of December 31, 2021, the capital gains incentive fee actually payable under our investment advisory and management agreement was $26 million. See Note 3 to our consolidated financial statements for the year ended December 31, 2021, for more information on the base management fees, income based fees and capital gains incentive fees.
 
Cash payment of any income based fees and capital gains incentive fees otherwise earned by our investment adviser is deferred if during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made the sum of (a) the aggregate distributions to our stockholders and (b) the change in net assets (defined as total assets less indebtedness and before taking into account any income based fees and capital gains incentive fees payable during the period) is less than 7.0% of our net assets (defined as total assets less indebtedness) at the beginning of such period. These calculations will be adjusted for any share issuances or repurchases. Any income based fees and capital gains incentive fees deferred for payment are carried over for payment in subsequent calculation periods to the extent such fees are payable under the terms of the investment advisory and management agreement. As of December 31, 2020, income based fees payable of $140 million in the accompanying consolidated balance sheet included $83 million earned by our investment adviser that were previously deferred. These deferred income based fees were paid in the first quarter of 2021 pursuant to the terms of the investment advisory management agreement.

Administrative fees represent fees paid to Ares Operations for our allocable portion of overhead and other expenses incurred by Ares Operations in performing its obligations under the administration agreement, including our allocable portion of the compensation, rent and other expenses of certain of our corporate officers and their respective staffs. See Note 3 to our consolidated financial statements for the year ended December 31, 2021, for more information on the administrative fees.

Other general and administrative expenses include, among other costs, professional fees, insurance, fees and expenses related to evaluating and making investments in portfolio companies and independent directors’ fees.

Income Tax Expense, Including Excise Tax

We have elected to be treated as a RIC under the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, we must (among other requirements) meet certain source-of-income and asset diversification requirements and timely distribute to our stockholders at least 90% of our investment company taxable income, as defined by the Code, for each year. We have made and intend to continue to make the requisite distributions to our stockholders which will generally relieve us from U.S. federal corporate-level income taxes.
 
Depending on the level of taxable income earned in a tax year, we may choose to carry forward such taxable income in excess of current year dividend distributions from such current year taxable income into the next tax year and pay a 4% excise tax on such income, as required. To the extent that we determine that our estimated current year taxable income will be in excess of estimated dividend distributions for the current year from such income, we accrue excise tax, if any, on estimated excess taxable income as such taxable income is earned. For the years ended December 31, 2021 and 2020, we recorded a net expense of $24 million and $17 million, respectively, for U.S. federal excise tax.

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Certain of our consolidated subsidiaries are subject to U.S. federal and state income taxes. For the years ended December 31, 2021 and 2020, we recorded a net tax expense of $6 million and $2 million, respectively, for these subsidiaries. The income tax expense for our taxable consolidated subsidiaries will vary depending on the level of realized gains from the exits of investments held by such taxable subsidiaries during the respective periods.

Net Realized Gains/Losses

The net realized gains (losses) from the sales, repayments or exits of investments during the years ended December 31, 2021 and 2020 were comprised of the following:
For the Years Ended December 31,
(in millions)20212020
Sales, repayments or exits of investments(1)$10,473 $5,586 
Net realized gains (losses) on investments:
Gross realized gains$442 $122 
Gross realized losses(184)(270)
Total net realized gains (losses) on investments$258 $(148)
_______________________________________________________________________________

(1)Includes $2.4 billion and $940 million of loans sold to IHAM and certain vehicles managed by IHAM during the years ended December 31, 2021 and 2020, respectively. Net realized losses of $7 million and $21 million, respectively, were recorded on these transactions with IHAM during the years ended December 31, 2021 and 2020. See Note 4 to our consolidated financial statements for the year ended December 31, 2021 for more information on IHAM and its managed vehicles.

The net realized gains on investments during the year ended December 31, 2021 consisted of the following:
(in millions)
Portfolio Company		Net Realized Gains (Losses)
SVP-Singer Holdings Inc. and SVP-Singer Holdings LP$110 
Blue Angel Buyer 1, LLC and Blue Angel Holdco, LLC46 
GB Auto Service, Inc. and GB Auto Service Holdings, LLC32 
RMCF III CIV XXIX, L.P30 
Evolent Health LLC and Evolent Health, Inc.21 
BW Landco LLC21 
Mavis Tire Express Services Topco Corp., Metis HoldCo, Inc., and Metis TopCo, LP18 
ChargePoint Holdings, Inc.17 
PERC Holdings 1 LLC11 
Crown Health Care Laundry Services, LLC and Crown Laundry Holdings, LLC11 
 NECCO Holdings, Inc. and New England Confectionery Company, Inc. (12)
 QC Supply, LLC (21)
 Green Energy Partners, Stonewall LLC, Panda Stonewall Intermediate Holdings II LLC and Potomac Intermediate Holdings II LLC (21)
 Garden Fresh Restaurant Corp. and GFRC Holdings LLC (24)
 ADF Capital, Inc., ADF Restaurant Group, LLC, and ARG Restaurant Holdings, Inc. (57)
Other, net 76 
 Total$258 

During the year ended December 31, 2021, we also recognized net realized gains on foreign currency and other transactions of $25 million.

During the year ended December 31, 2021, we redeemed the entire $230 million in aggregate principal amount outstanding of the unsecured notes that were scheduled to mature on April 15, 2047 (the “2047 Notes”) in accordance with the terms of the indenture governing the 2047 Notes. The 2047 Notes were redeemed at par plus accrued and unpaid interest for a total redemption price of approximately $233 million, which resulted in a realized loss on the extinguishment of debt of $43
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million. The $186 million carrying value of the 2047 Notes at the time of redemption represented the aggregate principal amount of the 2047 Notes less the unaccreted purchased discount recorded in connection with the Allied Acquisition.

The net realized losses on investments during the year ended December 31, 2020 consisted of the following:
(in millions)
Portfolio Company		Net Realized Gains (Losses)
Dynatrace, Inc.$29 
UL Holding Co., LLC20 
PERC Holdings 1 LLC16 
Nodality, Inc.(12)
Centric Brands Inc.(22)
Production Resource Group, L.L.C.(65)
VPROP Operating, LLC and Vista Proppants and Logistics, LLC(103)
Other, net(11)
Total$(148)

During the year ended December 31, 2020, we also recognized net realized losses on foreign currency and other transactions of $18 million.

Net Unrealized Gains/Losses

We value our portfolio investments quarterly and the changes in value are recorded as unrealized gains or losses in our consolidated statement of operations. Net unrealized gains and losses on investments for the years ended December 31, 2021 and 2020, were comprised of the following:
 For the Years Ended December 31,
(in millions)20212020
Unrealized appreciation$660 $388 
Unrealized depreciation(344)(620)
Net unrealized depreciation reversed related to net realized gains or losses(1)286 88 
Total net unrealized gains (losses) on investments$602 $(144)
_______________________________________________________________________________

(1)The net unrealized depreciation reversed related to net realized gains or losses represents the unrealized appreciation or depreciation recorded on the related asset at the end of the prior period.

During the year ended December 31, 2020, our operating results were negatively impacted by the uncertainty surrounding the COVID-19 pandemic, which caused severe disruptions in the global economy and negatively impacted the fair value and performance of certain portfolio companies in our investment portfolio. For the year ended December 31, 2020, the net unrealized losses recorded on investments were primarily due to the impact of the COVID-19 pandemic, including from business shutdowns, government restrictions and/or possible additional liquidity needs of certain of our portfolio companies. For the year ended December 31, 2021, the net unrealized gains on investments were primarily due to the reversal of net unrealized depreciation recorded during 2020 as a result of the COVID-19 pandemic as values recovered in 2021, as well as an increase in the fair value of certain of our portfolio company investments. For additional information concerning the COVID-19 pandemic and its potential impact on our business and our operating results, see “Risk Factors—The COVID-19 pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our portfolio companies and our business and operations.”
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The changes in net unrealized appreciation and depreciation on investments during the year ended December 31, 2021 consisted of the following:
(in millions)
Portfolio Company		Net Unrealized Appreciation (Depreciation)
Ivy Hill Asset Management, L.P.$67 
Athenahealth, Inc., VVC Holding Corp., Virence Intermediate Holding Corp., and Virence Holdings LLC35 
OTG Management, LLC28 
Instituto de Banca y Comercio, Inc. & Leeds IV Advisors, Inc.24 
Sundance Group Holdings, Inc.21 
Microstar Logistics LLC, Microstar Global Asset Management LLC, MStar Holding Corporation and Kegstar USA Inc.20 
ADG, LLC and RC IV GEDC Investor LLC19 
CoreLogic, Inc. and T-VIII Celestial Co-Invest LP18 
High Street Buyer, Inc. and High Street Holdco LLC17 
GHX Ultimate Parent Corporation, Commerce Parent, Inc. and Commerce Topco, LLC15 
Essential Services Holding Corporation and OMERS Mahomes Investment Holdings LLC15 
Centric Brands LLC and Centric Brands GP LLC14 
Primrose Holding Corporation13 
Alcami Corporation and ACM Holdings I, LLC11 
Cheyenne Petroleum Company Limited Partnership, CPC 2001 LLC and Mill Shoals LLC11 
Navisun LLC and Navisun Holdings LLC11 
Visual Edge Technology, Inc.(12)
SiroMed Physician Services, Inc. and SiroMed Equity Holdings, LLC(14)
Kellermeyer Bergensons Services, LLC(14)
Implus Footcare, LLC(20)
Elemica Parent, Inc. & EZ Elemica Holdings, Inc.(20)
HAI Acquisition Corporation and Aloha Topco, LLC(20)
Redwood Services, LLC and Redwood Services Holdco, LLC(25)
Laboratories Bidco LLC and Laboratories Topco LLC(31)
Pegasus Global Enterprise Holdings, LLC, Mekone Blocker Acquisition, Inc. and Mekone Parent, LLC(35)
Other, net168 
Total$316 

During the year ended December 31, 2021, we also recognized net unrealized losses on foreign currency and other transactions of $16 million.
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The changes in net unrealized appreciation and depreciation on investments during the year ended December 31, 2020 consisted of the following:
(in millions)
Portfolio Company		Net Unrealized Appreciation (Depreciation)
SVP-Singer Holdings Inc. and SVP-Singer Holdings LP$102 
Blue Angel Buyer 1, LLC and Blue Angel Holdco, LLC18 
Evolent Health LLC and Evolent Health, Inc.16 
Absolute Dental Group LLC and Absolute Dental Equity, LLC11 
BW Landco LLC11 
Ivy Hill Asset Management, L.P.11 
OUTFRONT Media Inc.11 
Alcami Corporation and ACM Holdings I, LLC(13)
Implus Footcare, LLC(14)
Varsity Brands Holding Co., Inc.(15)
Centric Brands LLC and Centric Brands GP LLC(18)
Cipriani USA, Inc.(18)
Sundance Energy, Inc.(22)
Garden Fresh Restaurant Corp.(24)
Microstar Logistics LLC(27)
Teligent, Inc.(30)
Green Energy Partners, Stonewall LLC, Panda Stonewall Intermediate Holdings II LLC and Potomac Intermediate Holdings II LLC(35)
OTG Management, LLC(111)
Other, net(85)
Total$(232)

During the year ended December 31, 2020, we did not recognize any net unrealized gains or losses on foreign currency and other transactions.

For the years ended December 31, 2020 and 2019

The comparison of the fiscal years ended December 31, 2020 and 2019 can be found in our annual report on Form 10-K for the fiscal year ended December 31, 2020 located within Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, which is incorporated herein by reference.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources are generated primarily from the net proceeds of public offerings of equity and debt securities, advances from the Revolving Credit Facility, the Revolving Funding Facility, the SMBC Funding Facility and the BNP Funding Facility (each as defined below, and together, the “Facilities”), net proceeds from the issuance of other securities, including unsecured notes, as well as cash flows from operations.
 
In accordance with the Investment Company Act, we are allowed to borrow amounts such that our asset coverage calculated pursuant to the Investment Company Act, is at least 150% after such borrowings (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us). As of December 31, 2021, we had $372 million in cash and cash equivalents and $11.1 billion in total aggregate principal amount of debt outstanding ($11.0 billion at carrying value) and our asset coverage was 179%. Subject to borrowing base and other restrictions, we had approximately $4.1 billion available for additional borrowings under the Facilities as of December 31, 2021.
 
We may from time to time seek to retire or repurchase our common stock through cash purchases, as well as retire, cancel or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. The amounts involved may be material. In addition, we may from time to time enter into
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additional debt facilities, increase the size of existing facilities or issue additional debt securities, including secured debt, unsecured debt and/or debt securities convertible into common stock. Any such purchases or exchanges of common stock or outstanding debt, or incurrence or issuance of additional debt would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors.
Equity Capital Activities

As of December 31, 2021 and 2020, our total equity market capitalization was $9.9 billion and $7.1 billion, respectively.
    
We may from time to time issue and sell shares of our common stock through public or “at the market” offerings. In connection with the issuance of our common stock, we issued and sold the following shares of common stock during the year ended December 31, 2021:

(in millions, except per share amount)
Issuances of Common Stock		Number of Shares IssuedGross ProceedsUnderwriting Fees/Offering ExpensesNet ProceedsAverage Offering Price Per Share(1)
Public offerings26.5$513.8 $19.0 $494.8 $19.39 (2)
“At the market” offerings16.4$329.3 $5.2 $324.1 $20.07 
Total42.9$843.1 $24.2 $818.9 
________________________________________

(1)    Represents the gross offering price per share before deducting underwriting discounts and commissions and estimated offering expenses.

(2)    14.0 million shares and 12.5 million shares were sold to the underwriters for a price of $17.85 per share and $19.67 per share, respectively, which the underwriters were then permitted to sell at variable prices to the public. See “Recent Developments,” as well as Note 15 to our consolidated financial statements for the year ended December 31, 2021 for a subsequent event relating to our public offerings.

“At the Market” Offerings

We have entered into equity distribution agreements with several banks (the “Equity Distribution Agreements”). The Equity Distribution Agreements provide that we may from time to time issue and sell, by means of “at the market” offerings, up to $500 million shares of our common stock. Subject to the terms and conditions of the Equity Distribution Agreements, sales of common stock, if any, may be made in transactions that are deemed to be “at the market” offerings as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. Under the currently effective Equity Distribution Agreements, common stock with an aggregate offering amount of $366 million remained available for issuance as of December 31, 2021.

Stock Repurchase Program

We are authorized under our stock repurchase program to purchase up to $500 million in the aggregate of our outstanding common stock in the open market at certain thresholds below our net asset value per share, in accordance with the guidelines specified in Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The timing, manner, price and amount of any share repurchases will be determined by us, in our sole discretion, based upon an evaluation of economic and market conditions, stock price, applicable legal and regulatory requirements and other factors. The stock repurchase program does not require us to repurchase any specific number of shares of common stock or any shares of common stock at all. Consequently, we cannot assure stockholders that any specific number of shares of common stock, if any, will be repurchased under the stock repurchase program. As of December 31, 2021, the expiration date of the stock repurchase program is February 15, 2022. The program may be suspended, extended, modified or discontinued at any time. As of December 31, 2021, there was $500 million available for additional repurchases under the program.

During the year ended December 31, 2021, we did not repurchase any shares of our common stock in the open market under the stock repurchase program. During the year ended December 31, 2020, we repurchased a total of 8.5 million shares of our common stock in the open market under the stock repurchase program for $100 million. The shares were repurchased at an average price of $11.83 per share, including commissions paid.

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See “Recent Developments,” as well as Note 15 to our consolidated financial statements for the year ended December 31, 2021 for a subsequent event relating to our stock repurchase program.


Debt Capital Activities

Our debt obligations consisted of the following as of December 31, 2021 and 2020:
 As of December 31, 
 20212020 
(in millions)Total
Aggregate
Principal
Amount
Available/
Outstanding(1)		 Principal Amount OutstandingCarrying
Value		 Total
Aggregate
Principal
Amount
Available/
Outstanding(1)		 Principal Amount OutstandingCarrying
Value		 
Revolving Credit Facility$4,232 (2)$1,507 $1,507 $3,617 (2)$1,180 $1,180 
Revolving Funding Facility1,525 762 762 1,525 1,028 1,028 
SMBC Funding Facility800 (3)401 401 725 (3)453 453 
BNP Funding Facility300 — — 300 150 150 
2022 Convertible Notes388 388 388 (4)388 388 383 (4)
2024 Convertible Notes403 403 395 (4)403 403 392 (4)
2022 Notes— — — (4)600 600 598 (4)
2023 Notes750 750 748 (4)750 750 747 (4)
2024 Notes900 900 897 (4)900 900 896 (4)
March 2025 Notes600 600 596 (4)600 600 595 (4)
July 2025 Notes1,250 1,250 1,260 (4)750 750 742 (4)
January 2026 Notes1,150 1,150 1,143 (4)1,150 1,150 1,141 (4)
July 2026 Notes1,000 1,000 988 (4)— — — 
2028 Notes1,250 1,250 1,246 (5)— — — 
2031 Notes700 700 689 (4)— — — 
2047 Notes— — — (5)230 230 186 (5)
Total$15,248 $11,061 $11,020 $11,938 $8,582 $8,491 
________________________________________

(1)Represents the total aggregate amount committed or outstanding, as applicable, under such instrument. Borrowings under the committed Revolving Credit Facility, Revolving Funding Facility, SMBC Funding Facility and BNP Funding Facility (each as defined below) are subject to borrowing base and other restrictions.

(2)Provides for a feature that allows us, under certain circumstances, to increase the size of the Revolving Credit Facility (as defined below) to a maximum of $5.9 billion.

(3)Provides for a feature that allows ACJB (as defined below), under certain circumstances, to increase the size of the SMBC Funding Facility (as defined below) to a maximum of $1.0 billion.

(4)Represents the aggregate principal amount outstanding, less unamortized debt issuance costs and the net unaccreted/amortized discount or premium recorded upon issuance. In December 2021, the 2022 Notes were redeemed at par plus accrued and unpaid interest for a total redemption price of approximately $609 million. See “Recent Developments,” as well as Note 15 to our consolidated financial statements for the year ended December 31, 2021 for subsequent events relating to the 2022 Convertible Notes.

(5)Represents the aggregate principal amount outstanding of the 2047 Notes, less the unaccreted purchased discount recorded in connection with the Allied Acquisition. In March 2021, the 2047 Notes were redeemed at par plus accrued and unpaid interest for a total redemption price of approximately $233 million, which resulted in a realized loss on the extinguishment of debt of $43 million.
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 The weighted average stated interest rate and weighted average maturity, both on aggregate principal amount outstanding, of all our debt outstanding as of December 31, 2021 were 3.1% and 4.2 years, respectively, and as of December 31, 2020 were 3.4% and 4.2 years, respectively.
 
The ratio of total principal amount of debt outstanding to stockholders’ equity as of December 31, 2021 was 1.26:1.00 compared to 1.20:1.00 as of December 31, 2020.
 
Revolving Credit Facility
 
We are party to a senior secured revolving credit facility (as amended and restated, the “Revolving Credit Facility”), that allows us to borrow up to $4.2 billion at any one time outstanding. The Revolving Credit Facility consists of a $874 million term loan tranche and a $3.4 billion revolving tranche. For $824 million of the term loan tranche, the stated maturity date is March 31, 2026. For the remaining $50 million of the term loan tranche, the stated maturity date is March 30, 2025. For $3.2 billion of the revolving tranche, the end of the revolving period and the stated maturity date are March 31, 2025 and March 31, 2026, respectively. For the remaining $150 million of the revolving tranche, the end of the revolving period and the stated
maturity date are March 30, 2024 and March 30, 2025, respectively. The Revolving Credit Facility also provides for a feature that allows us, under certain circumstances, to increase the overall size of the Revolving Credit Facility to a maximum of $5.9 billion. The interest rate charged on the Revolving Credit Facility is based on LIBOR (or an alternative rate of interest for certain loans, commitments and/or other extensions of credit denominated in Sterling, Canadian Dollars, Euros and certain other foreign currencies) plus an applicable spread of either 1.75% or 1.875% or an “alternate base rate” (as defined in the agreements governing the Revolving Credit Facility) plus an applicable spread of either 0.75% or 0.875%, in each case, determined monthly based on the total amount of the borrowing base relative to the sum of (i) the greater of (a) the aggregate amount of revolving exposure and term loans outstanding under the Revolving Credit Facility and (b) 85% of the total commitments of the Revolving Credit Facility (or, if higher, the total revolving exposure) plus (ii) other debt, if any, secured by the same collateral as the Revolving Credit Facility. As of December 31, 2021, the interest rate in effect was LIBOR plus 1.75%. We are also required to pay a letter of credit fee of either 2.00% or 2.125% per annum on letters of credit issued, determined monthly based on the total amount of the borrowing base relative to the total commitments of the Revolving Credit Facility and other debt, if any, secured by the same collateral as the Revolving Credit Facility. Additionally, we are required to pay a commitment fee of 0.375% per annum on any unused portion of the Revolving Credit Facility. As of December 31, 2021, there was $1.5 billion outstanding under the Revolving Credit Facility and we were in compliance in all material respects with the terms of the Revolving Credit Facility.
 
Revolving Funding Facility
 
We and our consolidated subsidiary, Ares Capital CP Funding LLC (“Ares Capital CP”), are party to a revolving funding facility (as amended, the “Revolving Funding Facility”), that allows Ares Capital CP to borrow up to $1.5 billion at any one time outstanding. The Revolving Funding Facility is secured by all of the assets held by, and the membership interest in, Ares Capital CP. The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility are December 29, 2024 and December 29, 2026, respectively. The interest rate charged on the Revolving Funding Facility is based on LIBOR plus 1.90% per annum or a “base rate” (as defined in the agreements governing the Revolving Funding Facility) plus 1.00% per annum. Ares Capital CP is also required to pay a commitment fee of between 0.50% and 1.25% per annum depending on the size of the unused portion of the Revolving Funding Facility. As of December 31, 2021, there was $762 million outstanding under the Revolving Funding Facility and we and Ares Capital CP were in compliance in all material respects with the terms of the Revolving Funding Facility.

SMBC Funding Facility
 
We and our consolidated subsidiary, Ares Capital JB Funding LLC (“ACJB”), are party to a revolving funding facility (as amended, the “SMBC Funding Facility”), with ACJB, as the borrower, and Sumitomo Mitsui Banking Corporation, as the administrative agent and collateral agent, that allows ACJB to borrow up to $800 million at any one time outstanding. The SMBC Funding Facility also provides for a feature that allows ACJB, subject to receiving certain consents, to increase the overall size of the SMBC Funding Facility to $1.0 billion. The SMBC Funding Facility is secured by all of the assets held by ACJB. The end of the reinvestment period and the stated maturity date for the SMBC Funding Facility are May 28, 2024 and May 28, 2026, respectively. The reinvestment period and the stated maturity date are both subject to two one-year extensions by mutual agreement. The interest rate charged on the SMBC Funding Facility is based on an applicable spread of either 1.75% or 2.00% over LIBOR or 0.75% or 1.00% over a “base rate” (as defined in the agreements governing the SMBC Funding Facility), in each case, determined monthly based on the amount of the average borrowings outstanding under the SMBC Funding Facility. As of December 31, 2021, the interest rate in effect was LIBOR plus 1.75%. ACJB is also required to pay a
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commitment fee of between 0.50% and 1.00% per annum depending on the size of the unused portion of the SMBC Funding Facility. As of December 31, 2021, there was $401 million outstanding under the SMBC Funding Facility and we and ACJB were in compliance in all material respects with the terms of the SMBC Funding Facility.
  
BNP Funding Facility
 
We and our consolidated subsidiary, ARCC FB Funding LLC (“AFB”), are party to a revolving funding facility (as amended, the “BNP Funding Facility”) with AFB, as the borrower, and BNP Paribas, as the administrative agent and lender, that allows AFB to borrow up to $300 million at any one time outstanding. The BNP Funding Facility is secured by all of the assets held by AFB. The end of the reinvestment period and the stated maturity date for the BNP Funding Facility are June 11, 2023 and June 11, 2025, respectively. The reinvestment period and the stated maturity date are both subject to a one-year extension by mutual agreement. The interest rate charged on the BNP Funding Facility is based on three month LIBOR, or a “base rate” (as defined in the agreements governing the BNP Funding Facility) plus a margin of (i) 1.80% during the reinvestment period and (ii) 2.30% following the reinvestment period. Beginning on December 11, 2020, AFB is required to pay a commitment fee of between 0.00% and 1.25% per annum depending on the size of the unused portion of the BNP Funding Facility. As of December 31, 2021, there were no amounts outstanding under the BNP Funding Facility and we and AFB were in compliance in all material respects with the terms of the BNP Funding Facility.

Convertible Unsecured Notes
 
We have issued $388 million in aggregate principal amount of unsecured convertible notes that mature on February 1, 2022 (the “2022 Convertible Notes”) and $403 million in aggregate principal amount of unsecured convertible notes that mature on March 1, 2024 (the “2024 Convertible Notes” and together with the 2022 Convertible Notes, the “Convertible Unsecured Notes”). The Convertible Unsecured Notes mature upon their respective maturity dates unless previously converted or repurchased in accordance with their terms. We do not have the right to redeem the Convertible Unsecured Notes prior to maturity. The 2022 Convertible Notes and the 2024 Convertible Notes bear interest at a rate of 3.75% and 4.625%, respectively, per annum, payable semi-annually.

In certain circumstances, assuming the respective conversion date below has not already passed, the Convertible Unsecured Notes will be convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, at their respective conversion rates (listed below as of December 31, 2021) subject to customary anti-dilution adjustments and the requirements of their respective indenture (the “Convertible Unsecured Notes Indentures”). To the extent the 2022 Convertible Notes are converted, we have elected to settle in cash for all conversion dates after August 1, 2021. Prior to the close of business on the business day immediately preceding their respective conversion date (listed below), holders may convert their Convertible Unsecured Notes only under certain circumstances set forth in the Convertible Unsecured Notes Indentures. On or after their respective conversion dates until the close of business on the scheduled trading day immediately preceding the maturity date for the 2022 Convertible Notes and the second scheduled trading day immediately preceding the maturity date for the 2024 Convertible Notes, holders may convert their Convertible Unsecured Notes at any time. In addition, if we engage in certain corporate events as described in their respective Convertible Unsecured Notes Indenture, holders of the Convertible Unsecured Notes may require us to repurchase for cash all or part of the Convertible Unsecured Notes at a repurchase price equal to 100% of the principal amount of the Convertible Unsecured Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the required repurchase date.

Certain key terms related to the convertible features for each of the Convertible Unsecured Notes as of December 31, 2021 are listed below.
2022
Convertible Notes		2024
Convertible Notes
Conversion premium15.0 %15.0 %
Closing stock price at issuance$16.86 $17.29 
Closing stock price dateJanuary 23, 2017March 5, 2019
Conversion price(1)$18.99 $19.88 
Conversion rate (shares per one thousand dollar principal amount)(1)52.6455 50.2930 
Conversion datesAugust 1, 2021December 1, 2023
________________________________________

(1)Represents conversion price and conversion rate, as applicable, as of December 31, 2021, taking into account any applicable de minimis adjustments that will be made on the conversion date.
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See “Recent Developments,” as well as Note 15 to our consolidated financial statements for the year ended December 31, 2021 for a subsequent event relating to the 2022 Convertible Notes.

    Unsecured Notes
 
We issued certain unsecured notes (each issuance of which is referred to herein using the “defined term” set forth under the “Unsecured Notes” column of the table below and collectively referred to as the “Unsecured Notes”), that pay interest semi-annually and all principal amounts are due upon maturity. Each of the Unsecured Notes may be redeemed in whole or in part at any time at the Company’s option at a redemption price equal to par plus a “make whole” premium, if applicable, as determined pursuant to the indentures governing each of the Unsecured Notes, plus any accrued and unpaid interest. Certain key terms related to the features for the Unsecured Notes as of December 31, 2021 are listed below.

(dollar amounts in millions)
Unsecured Notes		Aggregate Principal Amount IssuedInterest RateOriginal Issuance DateMaturity Date
2023 Notes$750 3.500%August 10, 2017February 10, 2023
2024 Notes$900 4.200%June 10, 2019June 10, 2024
March 2025 Notes$600 4.250%January 11, 2018March 1, 2025
July 2025 Notes$1,250 3.250%January 15, 2020July 15, 2025
January 2026 Notes$1,150 3.875%July 15, 2020January 15, 2026
July 2026 Notes$1,000 2.150%January 13, 2021July 15, 2026
2028 Notes$1,250 2.875%June 10, 2021June 15, 2028
2031 Notes$700 3.200%November 4, 2021November 15, 2031

See Note 5 to our consolidated financial statements for the year ended December 31, 2021 for more information on our debt obligations. See “Recent Developments,” as well as Note 15 to our consolidated financial statements for the year ended December 31, 2021 for a subsequent event relating to an additional issuance of unsecured notes.

As of December 31, 2021, we were in compliance in all material respects with the terms of the Convertible Unsecured Notes Indentures and the indentures governing the Unsecured Notes.

The Convertible Unsecured Notes and the Unsecured Notes are our senior unsecured obligations and rank senior in right of payment to any future indebtedness that is expressly subordinated in right of payment to the Convertible Unsecured Notes and the Unsecured Notes; equal in right of payment to our existing and future unsecured indebtedness that is not expressly subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.
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RECENT DEVELOPMENTS

In January 2022, we issued $500 million in aggregate principal amount of unsecured notes, which bear interest at a rate of 2.875% per annum and mature on June 15, 2027 (the ‘‘2027 Notes’’). The 2027 Notes pay interest semi-annually and all principal is due upon maturity. The 2027 Notes may be redeemed in whole or in part at any time at our option at the redemption price determined pursuant to the indenture governing the 2027 Notes, and any accrued and unpaid interest. The 2027 Notes were issued at a discount to the principal amount.

In February 2022, we repaid in full the 2022 Convertible Notes upon their maturity, resulting in a realized loss on the extinguishment of debt of $48 million.

In January 2022, we completed a public equity offering pursuant to which we sold 11.2 million shares of common stock at a price of $21.06 per share to the participating underwriters, with net proceeds totaling $235.5 million, after giving effect to estimated offering expenses.

In February 2022, our board of directors authorized an amendment to our existing stock repurchase program to extend the expiration date of the program from February 15, 2022 to February 15, 2023. Under the stock repurchase program, we may repurchase up to $500 million in the aggregate of our outstanding common stock in the open market at a price per share that meets certain thresholds below our net asset value per share, in accordance with the guidelines specified in Rule 10b-18 of the Exchange Act. The timing, manner, price and amount of any share repurchases will be determined by us, in our discretion, based upon the evaluation of economic and market conditions, stock price, applicable legal and regulatory requirements and other factors.

From January 1, 2022 through February 2, 2022, we made new investment commitments of approximately $607 million, including $179 million of new investment commitments to IHAM, of which $385 million were funded. Of these new commitments, 68% were in first lien senior secured loans, 31% were in other equity and 1% were in preferred equity. Of the approximately $607 million of new investment commitments, 68% were floating rate, 2% were non-income producing, 1% were fixed rate and the remaining 29% was our equity investment in IHAM which generally pays a quarterly dividend. The weighted average yield of debt and other income producing securities funded during the period at amortized cost was 9.6% and the weighted average yield on total investments funded during the period at amortized cost was 9.3%. We may seek to sell all or a portion of these new investment commitments, although there can be no assurance that we will be able to do so.

From January 1, 2022 through February 2, 2022, we exited approximately $956 million of investment commitments, including $529 million of loans sold to IHAM or certain vehicles managed by IHAM. Of the total investment commitments exited, 89% were first lien senior secured loans, 8% were second lien senior secured loans, 2% were preferred equity and 1% were subordinated certificates of the SDLP. Of the approximately $956 million of exited investment commitments, 88% were floating rate, 11% were fixed rate and 1% were non-income producing. The weighted average yield of debt and other income producing securities exited or repaid during the period at amortized cost was 7.3% and the weighted average yield on total investments exited or repaid during the period at amortized cost was 7.2%. Of the approximately $956 million of investment commitments exited from January 1, 2022 through February 2, 2022, we recognized total net realized gains of approximately $20 million, including approximately $2 million of realized losses recognized from the sale of loans to IHAM or certain vehicles managed by IHAM.

In addition, as of February 2, 2022, we had an investment backlog and pipeline of approximately $1.2 billion and $125 million, respectively. Investment backlog includes transactions approved by our investment adviser’s investment committee and/or for which a formal mandate, letter of intent or a signed commitment have been issued, and therefore we believe are likely to close. Investment pipeline includes transactions where due diligence and analysis are in process, but no formal mandate, letter of intent or signed commitment have been issued. The consummation of any of the investments in this backlog and pipeline depends upon, among other things, one or more of the following: satisfactory completion of our due diligence investigation of the prospective portfolio company, our acceptance of the terms and structure of such investment and the execution and delivery of satisfactory transaction documentation. In addition, we may sell all or a portion of these investments and certain of these investments may result in the repayment of existing investments. We cannot assure you that we will make any of these investments or that we will sell all or any portion of these investments.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and
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any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting estimates, including those relating to the valuation of our investment portfolio, are described below. The critical accounting estimates should be read in conjunction with our risk factors as disclosed in “Item 1A. Risk Factors.” See Note 2 to our consolidated financial statements for the year ended December 31, 2021 for more information on our critical accounting policies.

Investments

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. Unrealized gains or losses primarily reflect the change in investment values, including the reversal of previously recorded unrealized gains or losses when gains or losses are realized.

Investments for which market quotations are readily available are typically valued at such market quotations. In order to validate market quotations, we look at a number of factors to determine if the quotations are representative of fair value, including the source and nature of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available (i.e., substantially all of our investments) are valued at fair value as determined in good faith by our board of directors, based on, among other things, the input of our investment adviser, audit committee and independent third‑party valuation firms that have been engaged at the direction of our board of directors to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing 12‑month period (with certain de minimis exceptions) and under a valuation policy and a consistently applied valuation process. The valuation process is conducted at the end of each fiscal quarter, and a portion of our investment portfolio at fair value is subject to review by an independent third-party valuation firm each quarter. In addition, our independent registered public accounting firm obtains an understanding of, and performs select procedures relating to, our investment valuation process within the context of performing the integrated audit.

As part of the valuation process, we may take into account the following types of factors, if relevant, in determining the fair value of our investments: the enterprise value of a portfolio company (the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time), the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, changes in the interest rate environment and the credit markets, which may affect the price at which similar investments would trade in their principal markets and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate our valuation.

Because there is not a readily available market value for most of the investments in our portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by our board of directors, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.

Our board of directors undertakes a multi‑step valuation process each quarter, as described below:

•Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals responsible for the portfolio investment in conjunction with our portfolio management team.

•Preliminary valuations are reviewed and discussed with our investment adviser’s management and investment professionals, and then valuation recommendations are presented to our board of directors.

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•The audit committee of our board of directors reviews these valuations, as well as the input of third parties, including independent third‑party valuation firms who have reviewed a portion of the investments in our portfolio at fair value.

•Our board of directors discusses valuations and ultimately determines the fair value of each investment in our portfolio without a readily available market quotation in good faith based on, among other things, the input of our investment adviser, audit committee and, where applicable, independent third‑party valuation firms.

Fair Value of Financial Instruments

We follow ASC 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASC 825-10”), which provides companies the option to report selected financial assets and liabilities at fair value. ASC 825-10 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect of the company’s choice to use fair value on its earnings. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the balance sheet. We have not elected the ASC 825-10 option to report selected financial assets and liabilities at fair value. With the exception of the line items entitled “other assets” and “debt,” which are reported at amortized cost, the carrying value of all other assets and liabilities approximate fair value.

We also follow ASC 820-10, which expands the application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure of fair value measurements. ASC 820-10 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires us to assume that the portfolio investment is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820-10, we have considered its principal market as the market in which we exit our portfolio investments with the greatest volume and level of activity. ASC 820-10 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC 820-10, these inputs are summarized in the three broad levels listed below:

•Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access.

•Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

•Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

In addition to using the above inputs in investment valuations, we continue to employ the net asset valuation policy approved by our board of directors that is consistent with ASC 820-10. Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. Our valuation policy considers the fact that because there is not a readily available market value for most of the investments in our portfolio, the fair value of the investments must typically be determined using unobservable inputs.

Our portfolio investments (other than as described below in the following paragraph) are typically valued using two different valuation techniques. The first valuation technique is an analysis of the enterprise value (“EV”) of the portfolio company. Enterprise value means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The primary method for determining EV uses a multiple analysis whereby appropriate multiples are applied to the portfolio company’s EBITDA (generally defined as net income before net interest expense, income tax expense, depreciation and amortization). EBITDA multiples are typically determined based upon review of market comparable transactions and publicly traded comparable companies, if any. We may also employ other valuation multiples to determine EV, such as revenues or, in the case of certain portfolio companies in the power generation industry, kilowatt capacity. The second method for determining EV uses a discounted cash flow analysis whereby future expected cash flows of the portfolio company are discounted to determine a present value using estimated discount rates (typically a weighted average cost of capital based on costs of debt and equity consistent with current market conditions). The EV analysis is performed to determine the value of equity investments, the value of debt investments in portfolio companies where we have control or could gain control through an option or warrant security, and to determine if
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there is credit impairment for debt investments. If debt investments are credit impaired, an EV analysis may be used to value such debt investments; however, in addition to the methods outlined above, other methods such as a liquidation or wind-down analysis may be utilized to estimate enterprise value. The second valuation technique is a yield analysis, which is typically performed for non-credit impaired debt investments in portfolio companies where we do not own a controlling equity position. To determine fair value using a yield analysis, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk. In the yield analysis, we consider the current contractual interest rate, the maturity and other terms of the investment relative to the risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the enterprise value of the portfolio company. As debt investments held by us are substantially illiquid with no active transaction market, we depend on primary market data, including newly funded transactions, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.

For other portfolio investments such as investments in the SDLP Certificates, discounted cash flow analysis is the primary technique utilized to determine fair value. Expected future cash flows associated with the investment are discounted to determine a present value using a discount rate that reflects estimated market return requirements.

The SEC recently adopted new Rule 2a-5 under the 1940 Act. This establishes requirements for determining fair value in good faith for purposes of the 1940 Act. We will comply with the new rule's valuation requirements on or before the SEC's compliance date in 2022.

See Note 8 to our consolidated financial statements for the year ended December 31, 2021 for more information on our valuation process.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates and the valuations of our investment portfolio. Uncertainty with respect to the economic effects of the COVID-19 pandemic introduced significant volatility in the financial markets, and the effects of this volatility has materially impacted and could continue to materially impact our market risks, including those listed below. For additional information concerning the COVID-19 pandemic and its potential impact on our business and our operating results, see “Risk Factors—The COVID-19 pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our portfolio companies and our business and operations.”

Investment valuation risk

Because there is not a readily available market value for most of the investments in our portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by our board of directors based on, among other things, the input of our management and audit committee and independent third-party valuation firms that have been engaged at the direction of our board of directors to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing 12-month period (with certain de minimis exceptions). Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” as well as Notes 2 and 8 to our consolidated financial statements for the year ended December 31, 2021 for more information relating to our investment valuation.

Interest Rate Risk
 
Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. See “Risk Factors—Risks Relating to Our Business—We are exposed to risks associated with changes in interest rates.”
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In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks had previously reduced certain interest rates and LIBOR has decreased. In addition, in a prolonged low interest rate environment, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net income and potentially adversely affecting our operating results. Conversely, in a rising interest rate environment, such difference could potentially increase thereby increasing our net income as indicated per the table below.

As of December 31, 2021, 77% of the investments at fair value in our portfolio bore interest and dividends at variable rates (including our investment in the SDLP Certificates which accounted for 5% of our total investments at fair value), 10% bore interest at fixed rates, 8% were non-income producing and the remaining 5% was our equity investment in IHAM which generally pays a quarterly dividend. Additionally, excluding our investment in the SDLP Certificates, 93% of the remaining variable rate investments at fair value contained interest rate floors. The Revolving Credit Facility, the Revolving Funding Facility, the SMBC Funding Facility and the BNP Funding Facility bear interest at variable rates with no interest rate floors. The Unsecured Notes and the Convertible Unsecured Notes bear interest at fixed rates.
 
We regularly measure our exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on that review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates.

Based on our December 31, 2021 balance sheet, the following table shows the annual impact on net income of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure:
(in millions)
Basis Point Change		Interest and Dividend
Income		Interest
Expense		Net
Income(1)
Up 300 basis points$347 $80 $267 
Up 200 basis points$195 $53 $142 
Up 100 basis points$45 $27 $18 
Down 100 basis points$5 $(4)$9 
Down 200 basis points$4 $(4)$8 
Down 300 basis points$6 $(4)$10 
________________________________________

(1)Excludes the impact of income based fees. See Note 3 to our consolidated financial statements for the year ended December 31, 2021 for more information on the income based fees.

Based on our December 31, 2020 balance sheet, the following table shows the annual impact on net income of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure:
(in millions)
Basis Point Change		Interest and Dividend
Income		Interest
Expense(1)		Net
Income(2)
Up 300 basis points$291 $72 $219 
Up 200 basis points$160 $48 $112 
Up 100 basis points$34 $24 $10 
Down 100 basis points$4 $(6)$10 
Down 200 basis points$4 $(6)$10 
Down 300 basis points$3 $(6)$9 
_______________________________________________________________________________

(1)Includes the impact of an interest rate swap as a result of changes in interest rates.

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(2)Excludes the impact of income based fees. See Note 3 to our consolidated financial statements for the year ended December 31, 2021 for more information on the income based fees.

Item 8.    Financial Statements and Supplementary Data

See the Index to Consolidated Financial Statements.

Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A.    Controls and Procedures

(a)    Evaluation of Disclosure Controls and Procedures.    We maintain disclosure controls and procedures (as that term is defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that, as of December 31, 2021, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

(b)    Management’s Report on Internal Control over Financial Reporting.    Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our consolidated financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our consolidated financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a material misstatement of our consolidated financial statements would be prevented or detected.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2021. The Company's independent registered public accounting firm, KPMG LLP, has issued an audit report on the effectiveness of the Company's internal control over financial reporting.

(c)    Attestation Report of the Registered Public Accounting Firm.    Our independent registered public accounting firm, KPMG LLP, has issued an attestation report on the effectiveness of our internal control over financial reporting which is set forth under the heading “Report of Independent Registered Public Accounting Firm” on page F-2.

(d)    Changes in Internal Control over Financial Reporting.    There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2021, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.    Other Information

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”) and Section 13(r) of the Exchange Act, require an issuer to disclose in its annual and quarterly reports whether it or any of its affiliates have knowingly engaged in specified activities or transactions relating to Iran. We are required to include certain disclosures in our periodic
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reports if we or any of our “affiliates” (as defined in Rule 12b-2 under the Exchange Act) knowingly engaged in certain specified activities, transactions or dealings relating to Iran or with certain individuals or entities targeted by United States' economic sanctions during the period covered by the report. Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance with applicable law. Neither we nor any of our controlled affiliates or subsidiaries knowingly engaged in any of the specified activities relating to Iran or otherwise engaged in any activities associated with Iran during the reporting period. However, because the SEC defines the term “affiliate” broadly, it includes any person or entity that is under common control with us as well as any entity that controls us or is controlled by us. The description that follows has been provided to us by Ares Management.

On January 31, 2019, funds and accounts managed by Ares Management’s European direct lending strategy (together, the “Ares funds”) collectively acquired a 32% equity stake in Daisy Group Limited (“Daisy”). Daisy is a provider of communication services to businesses based in the United Kingdom. The Ares funds do not hold a majority equity interest in Daisy and do not have the right to appoint a majority of directors to Daisy’s board of directors.

Subsequent to completion of the Ares funds’ investment in Daisy, in connection with Ares’s routine quarterly survey of its investment funds’ portfolio companies, Daisy informed the Ares funds that it has customer contracts with Melli Bank Plc, Persia International Bank Plc and Bank Saderat Plc. Melli Bank Plc, Persia International Bank Plc and Bank Saderat Plc have been designated by the Office of Foreign Assets Control within the U.S. Department of Treasury pursuant to Executive Order 13324. Daisy generated a total of £84,806 in annual revenues in 2021 (less than 0.02% of Daisy’s annual revenues) from its dealings with Melli Bank Plc, Persia International Bank Plc and Bank Saderat Plc and de minimis net profits. Daisy entered into the customer contracts with Melli Bank Plc, Persia International Bank Plc and Bank Saderat Plc prior to the Ares funds’ investment in Daisy.

Daisy terminated its contract with Bank Saderat Plc on November 24, 2021 and terminated its contract with Persia International Bank Plc on December 31, 2021. Daisy has given notice of termination of its contracts with Melli Bank Plc, and such contract is expected to terminate on February 26, 2022. Following termination of the contracts, Daisy has not and does not intend to engage in any further dealings or transactions with Melli Bank Plc, Persia International Bank Plc or Bank Saderat Plc.

Item 9C.    Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.
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PART III

Item 10.    Directors, Executive Officers and Corporate Governance

The information required by this item will be contained in the Company’s definitive Proxy Statement for its 2022 Annual Stockholder Meeting, to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference.

Item 11.    Executive Compensation

The information required by this item will be contained in the Company’s definitive Proxy Statement for its 2022 Annual Stockholder Meeting, to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item will be contained in the Company’s definitive Proxy Statement for its 2022 Annual Stockholder Meeting, to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference.

Item 13.    Certain Relationships and Related Transactions, and Director Independence

The information required by this item will be contained in the Company’s definitive Proxy Statement for its 2022 Annual Stockholder Meeting, to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference.

Item 14.    Principal Accountant Fees and Services

The information required by this item will be contained in the Company’s definitive Proxy Statement for its 2022 Annual Stockholder Meeting, to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference.


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PART IV

Item 15.    Exhibits, Financial Statement Schedules

The following documents are filed as part of this Annual Report:

1.    Financial Statements—See the Index to Consolidated Financial Statements on Page F-1.

2.    Financial Statement Schedules—None. We have omitted financial statement schedules because they are not required or are not applicable, or the required information is shown in the financial statements or notes to the financial statements.

3.    Exhibits.

NumberDocument
Articles of Amendment and Restatement, as amended(1)
Third Amended and Restated Bylaws, as amended(2)
Form of Stock Certificate(3)
Form of Subscription Certificate(4)
Indenture, dated as of October 21, 2010, between Ares Capital Corporation and U.S. Bank National Association, as trustee(5)
Seventh Supplemental Indenture, dated as of August 10, 2017, relating to the 3.500% Notes due 2023, between Ares Capital Corporation and U.S. Bank National Association, as trustee(9)
Form of 3.500% Notes due 2023(9)
Eighth Supplemental Indenture, dated as of January 11, 2018, relating to the 4.250% Notes due 2025, between Ares Capital Corporation and U.S. Bank National Association, as trustee(7)
Form of 4.250% Notes due 2025(7)
Ninth Supplemental Indenture, dated as of March 8, 2019, relating to the 4.625% Convertible Notes due 2024, between Ares Capital Corporation and U.S. Bank National Association, as trustee(8)
Form of 4.625% Convertible Senior Notes due 2024(8)
Tenth Supplemental Indenture, dated as of June 10, 2019, relating to the 4.200% Notes due 2024, between Ares Capital Corporation and U.S. Bank National Association, as trustee(9)
Form of 4.200% Notes due 2024(9)
Eleventh Supplemental Indenture, dated as of January 15, 2020, relating to the 3.250% Notes due 2025, between the Company and U.S. Bank National Association, as trustee(10)
Form of 3.250% Notes due 2025(10)
Twelfth Supplemental Indenture, dated as of July 15, 2020, relating to the 3.875% Notes due 2026, between the Company and U.S. Bank National Association, as trustee(11)
Form of 3.875% Notes due 2026 (11)
Thirteenth Supplemental Indenture, dated as of January 13, 2021, relating to the 2.150% Notes due 2026, between the Company and U.S. Bank National Association, as trustee(12)
Form of 2.150% Notes due 2026(12)
Fourteenth Supplemental Indenture, dated as of June 10, 2021, relating to the 2.875% Notes due 2028, between the Company and U.S. Bank National Association, as trustee(13)
Form of 2.875% Notes due 2028(13)
Fifteenth Supplemental Indenture, dated as of November 4, 2021, relating to the 3.200% Notes due 2031, between the Company and U.S. Bank National Association, as trustee(14)
Form of 3.200% Notes due 2031(14)
Sixteenth Supplemental Indenture, dated as of January 13, 2022, relating to the 2.875% Notes due 2027, between the Company and U.S. Bank National Association, as trustee (15)
Form of 2.875% due 2027(15)
Indenture, dated as of January 27, 2017, between Ares Capital Corporation and U.S. Bank National Association, as trustee(16)
Form of 3.75% Convertible Senior Notes due 2022(16)
Description of Securities(17)
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Dividend Reinvestment Plan of Ares Capital Corporation(18)
Second Amendment Restated Investment Advisory and Management Agreement between Ares Capital Corporation and Ares Capital Management LLC, dated as of June 6, 2019(19)
Amended and Restated Administration Agreement, dated as of June 1, 2007, between Ares Capital Corporation and Ares Operations LLC(20)
Amended and Restated Custodian Agreement, dated as of May 15, 2009, between Ares Capital Corporation and U.S. Bank National Association(21)
Amendment No. 1, dated as of December 19, 2014, to the Amended and Restated Custodian Agreement dated as of May 15, 2009, by and among Ares Capital Corporation and U.S. Bank National Association(22)
Trademark License Agreement between Ares Capital Corporation and Ares Management LLC(23)
Form of Indemnification Agreement between Ares Capital Corporation and directors and certain officers(24)
Form of Indemnification Agreement between Ares Capital Corporation and members of Ares Capital Management LLC investment committee(24)
Amended and Restated Purchase and Sale Agreement, dated as of January 22, 2010, among Ares Capital Corporation, as seller, and Ares Capital CP Funding Holdings LLC, as purchaser(25)
Amendment No. 1 to Amended and Restated Purchase and Sale Agreement, dated as of June 7, 2012, among Ares Capital Corporation, as seller, and Ares Capital CP Funding Holdings LLC, as purchaser(26)
Second Tier Purchase and Sale Agreement, dated as of January 22, 2010, among Ares Capital CP Funding Holdings LLC, as seller, and Ares Capital CP Funding LLC, as purchaser(27)
Amendment No. 1 to Second Tier Purchase and Sale Agreement, dated as of June 7, 2012, among Ares Capital CP Funding Holdings LLC, as seller, and Ares Capital CP Funding LLC, as purchaser(26)
Amended and Restated Sale and Servicing Agreement, dated as of January 22, 2010, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer, Wachovia Bank, National Association, as note purchaser, U.S. Bank National Association, as trustee and collateral custodian, and Wells Fargo Securities, LLC, as agent(25)
Amendment No. 1 to the Amended and Restated Sale and Servicing Agreement, dated as of May 6, 2010, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer, Wells Fargo Bank, National Association, as successor by merger to Wachovia Bank as note purchaser, U.S. Bank, National Association, as trustee and collateral custodian, and Wells Fargo Securities LLC, as agent(27)
Amendment No. 2 to the Amended and Restated Sale and Servicing Agreement, dated as of January 18, 2011, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer, Wells Fargo Bank, National Association, as successor by merger to Wachovia Bank as note purchaser, U.S. Bank National Association, as trustee and collateral custodian, and Wells Fargo Securities, LLC, as agent(28)
Amendment No. 3 to the Amended and Restated Sale and Servicing Agreement, dated as of October 13, 2011, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and as transferor, Wells Fargo Bank, National Association (as successor by merger to Wachovia Bank, National Association), as note purchaser, U.S. Bank National Association, as trustee, collateral custodian and bank and Wells Fargo Securities, LLC, as agent(29)
Amendment No. 4 to the Amended and Restated Sale and Servicing Agreement, dated as of January 18, 2012, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Wells Fargo Bank, National Association (as successor by merger to Wachovia Bank, National Association), as note purchaser, Wells Fargo Securities, LLC, as agent, and U.S. Bank National Association, as collateral custodian, trustee and bank(30)
Amendment No. 5 to the Amended and Restated Sale and Servicing Agreement, dated as of June 7, 2012, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Wells Fargo Bank, National Association (as successor by merger to Wachovia Bank, National Association), as note purchaser, Wells Fargo Securities, LLC, as agent, and U.S. Bank National Association, as collateral custodian, trustee and bank(26)
Amendment No. 6 to Loan and Servicing Agreement, dated as of January 25, 2013, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Wells Fargo Securities, LLC, as agent, Wells Fargo Bank, National Association, as swingline lender, and the other lenders party thereto (31)
Omnibus Amendment, dated as of May 14, 2014, among Ares Capital CP Funding LLC, Ares Capital CP Funding Holdings LLC, Ares Capital Corporation, Wells Fargo Bank, National Association, as swingline lender and as a lender, Wells Fargo Securities, LLC, as agent, and U.S. Bank National Association, as trustee, bank and collateral custodian (amending the Loan and Servicing Agreement, dated as of January 22, 2010, the Amended and Restated Purchase and Sale Agreement, dated as of January 22, 2010, and the Second Tier Purchase and Sale Agreement, dated as of January 22, 2010)(32)
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Amendment No. 8 to the Loan and Servicing Agreement, dated as of January 3, 2017, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Wells Fargo Securities, LLC, as agent, and Wells Fargo Bank, National Association, as swingline lender, and the other lenders party thereto(33)
Amendment No. 9 to Loan and Servicing Agreement, dated as of January 3, 2017, among Ares Capital CP Funding LLC, as borrower, the Company, as servicer, Wells Fargo Bank, National Association, as swingline lender, as a lender and as a successor agent, Wells Fargo Securities, LLC, as the resigning agent, Bank of America, N.A. as a lender, U.S. Bank National Association as collateral custodian, trustee and bank, and the other lenders party thereto*
Amendment No. 10 to Loan and Servicing Agreement, dated as of October 2, 2018, among Ares Capital CP Funding LLC, Ares Capital Corporation, Wells Fargo Bank National Association, as the agent and Wells Fargo Bank, National Association, as a lender and Bank of America, N.A.(34)
Amendment No. 11 to Loan and Servicing Agreement, dated as of December 14, 2018, among Ares Capital CP Funding LLC, Ares Capital Corporation, Wells Fargo Bank National Association, as the agent and Wells Fargo Bank, National Association, as a lender and Bank of America, N.A.(35)
Amendment No. 12 to Loan and Servicing Agreement, dated as of June 18, 2019, among Ares Capital CP Funding LLC, as the borrower, Ares Capital Corporation, as the servicer, Wells Fargo Bank, National Association, as the agent, Wells Fargo Bank, National Association, as a lender, Bank of America, N.A, as a lender and U.S. Bank National Association, as trustee, bank and collateral custodian(36)
Amendment No. 13 to Loan and Servicing Agreement, dated as of January 31, 2020, among Ares Capital CP Funding LLC, as the borrower, Ares Capital Corporation, as the servicer, Wells Fargo Bank, National Association, as the agent, Wells Fargo Bank, National Association, as a lender, Bank of America, N.A, as a lender, TIAA, FSB, as a lender, Sampension Livsforsikring A/S, as a lender, Arkitekternes Pensionskasse, as a lender, Pensionskassen for Jordbrugsakademikere og Dyrlæger, as a lender and U.S. Bank National Association, as trustee, bank and collateral custodian (37)
Amendment No. 14 to Loan and Servicing Agreement, dated as of November 13, 2020, among Ares Capital CP Funding LLC, as borrower, the Company, as servicer, Wells Fargo Bank, National Association, as agent, Wells Fargo Bank, National Association, as a lender, and Bank of America, N.A., as a lender, and U.S. Bank National Association, as trustee, bank and collateral custodian*
Amendment No. 15 to Loan and Servicing Agreement, dated as of December 29, 2021, among Ares Capital CP Funding LLC, as borrower, the Company as servicer, Wells Fargo Bank, National Association, as agent, the lenders named therein, and U.S. Bank National Association, as trustee, bank and collateral custodian(38)
Twelfth Amended and Restated Senior Secured Revolving Credit Agreement, dated as of March 31, 2021, among Ares Capital Corporation, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent(39)
Amendment No. 1 to the Twelfth Amended and Restated Senior Secured Credit Agreement, dated as of December 29, 2021, among Ares Capital Corporation, as the borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and as collateral agent(38)
Loan and Servicing Agreement, dated as of January 20, 2012, among Ares Capital JB Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Sumitomo Mitsui Banking Corporation, as administrative agent, collateral agent and lender, and U.S. Bank National Association, as collateral custodian and bank(40)
Purchase and Sale Agreement, dated as of January 20, 2012, between Ares Capital JB Funding LLC, as purchaser, and Ares Capital Corporation, as seller(40)
Revolving Credit and Security Agreement, dated as of June 11, 2020, among ARCC FB Funding LLC, as the borrower, BNP Paribas, as the administrative agent, Ares Capital Corporation as equity holder and servicer, and U.S. Bank National Association as collateral agent(41)
Purchase and Sale Agreement, dated as of June 11, 2020, between ARCC FB Funding LLC, as the purchaser and Ares Capital Corporation, as the seller(41)
Amendment No. 1, dated as of December 21, 2020, among ARCC FB Funding LLC, as the borrower, BNP Paribas, as the administrative agent, Ares Capital Corporation as equity holder and servicer, and U.S. Bank National Association as collateral agent(42)
Second Amendment to the Revolving Credit and Security Agreement, dated as of June 29, 2021, among ARCC FB Funding LLC, as borrower, the lenders from time to time parties thereto, BNP Paribas, as administrative agent and lender, Ares Capital Corporation, as equityholder and servicer, and U.S. Bank National Association, as collateral agent(43)
Omnibus Amendment No. 1, dated as of September 14, 2012, among Ares Capital JB Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Sumitomo Mitsui Banking Corporation, as administrative agent, lender and collateral agent, and U.S. Bank National Association, as collateral custodian and bank (amending the Loan and Servicing Agreement, dated as of January 20, 2012, and the Purchase and Sale Agreement, dated as of January 20, 2012)(44)
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Omnibus Amendment No. 2, dated as of December 20, 2013, among Ares Capital JB Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Sumitomo Mitsui Banking Corporation, as administrative agent, lender and collateral agent, and U.S. Bank National Association, as collateral custodian and bank (amending the Loan and Servicing Agreement, dated as of January 20, 2012, and the Purchase and Sale Agreement, dated as of January 20, 2012)(45)
Omnibus Amendment No. 3, dated as of June 30, 2015, among Ares Capital JB Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Sumitomo Mitsui Banking Corporation, as administrative agent, lender and collateral agent, and U.S. Bank National Association, as collateral custodian and bank (amending the Loan and Servicing Agreement, dated as of January 20, 2012, and the Purchase and Sale Agreement, dated as of January 20, 2012)(46)
Omnibus Amendment No. 4, dated as of August 24, 2017, among Ares Capital JB Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Sumitomo Mitsui Banking Corporation, as administrative agent, lender and collateral agent, and U.S. Bank National Association, as collateral custodian and bank (amending the Loan and Servicing Agreement, dated as of January 20, 2012)(47)
Omnibus Amendment No. 5, dated as of September 12, 2018, among Ares Capital JB Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Sumitomo Mitsui Banking Corporation, as administrative agent, lender and collateral agent, and U.S. Bank National Association, as collateral custodian and bank (amending the Loan and Servicing Agreement, dated as of January 20, 2012)(48)
Omnibus Amendment No. 6, dated as of September 10, 2019, among Ares Capital JB Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Sumitomo Mitsui Banking Corporation, as administrative agent, lender and collateral agent, and U.S. Bank National Association, as collateral custodian and bank (amending the Loan and Servicing Agreement, dated as of January 20, 2012 and the Purchase and Sale Agreement, dated as of January 20, 2012)(49)
Omnibus Amendment No. 7, dated as of December 31, 2019, among Ares Capital JB Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Sumitomo Mitsui Banking Corporation, as administrative agent, lender and collateral agent, and U.S. Bank National Association, as collateral custodian and bank (amending the Loan and Servicing Agreement, dated as of January 20, 2012 and the Purchase and Sale Agreement, dated as of January 20, 2012)(50)
Amendment No. 8, dated as of May 28, 2021, among Ares Capital JB Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Sumitomo Mitsui Banking Corporation, as administrative agent, lender and collateral agent, and U.S. Bank National Association, as collateral custodian and bank (amending the Loan and Servicing Agreement, dated as of January 20, 2012)(51)
Amended and Restated Equity Distribution Agreement, dated as of October 26, 2021, among Ares Capital Corporation, Ares Capital Management LLC, Ares Operations LLC and Truist Securities, Inc.(52)
Amended and Restated Equity Distribution Agreement, dated as of October 26, 2021, among Ares Capital Corporation, Ares Capital Management LLC, Ares Operations LLC and Regions Securities LLC(52)
Equity Distribution Agreement, dated as of October 26, 2021, among Ares Capital Corporation, Ares Capital Management LLC, Ares Operations LLC and SMBC Nikko Securities America, Inc.(52)
Statement of Computation of Per Share Earnings(53)
Code of Ethics(54)
Subsidiaries of Ares Capital Corporation*
Consent of Independent Registered Public Accounting Firm*
Certification by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002*
Certification by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002*
Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
Report of Independent Registered Public Accounting Firm on Supplemental Information*
________________________________________
*Filed herewith
**Furnished herewith
(1)
Incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q (File No. 814-00663), for the quarter ended September 30, 2020, filed on October 27, 2020.
(2)Incorporated by reference to Exhibit 3.2 to the Company’s Form 10-K (File No. 814-00663) for the year ended December 31, 2018, filed on February 12, 2019..
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(3)Incorporated by reference to Exhibit (d) to the Company’s pre effective Amendment No. 2 to the Registration Statement under the Securities Act of 1933, as amended, on Form N 2 (File No. 333 114656), filed on September 28, 2004.
(4)Incorporated by reference to Exhibit (d)(4) to the Company’s pre effective Amendment No. 2 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-149139), filed on April 9, 2008.
(5)Incorporated by reference to Exhibit 4.1 to the Company’s Form 8 K (File No. 814 00663), filed on October 22, 2010.
(6)Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Company’s Form 8-K (File No. 814-00663), filed on August 10, 2017.
(7)Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Company’s Form 8-K (File No. 814-00663), filed on January 11, 2018.
(8)Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Company’s Form 8 K (File No. 814 00663), filed on March 8, 2019.
(9)Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Company’s Form 8 K (File No. 814 00663), filed on June 10, 2019.
(10)Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Company’s Form 8 K (File No. 814 00663), filed on January 15, 2020.
(11)Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Company’s Form 8-K (File No. 814-00663), filed July 15, 2020.
(12)Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Company’s Form 8 K (File No. 814-00663), filed on January 13, 2021.
(13)Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Company’s Form 8-K (File No. 814-00663), filed on June 10, 2021.
(14)Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Company’s Form 8-K (File No. 814-00663), filed on November 4, 2021.
(15)Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Company’s Form 8-K (File No. 814-00663), filed on January 13, 2022.
(16)Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Company’s Form 8 K (File No. 814-00663), filed on January 27, 2017.
(17)Incorporated by reference to Exhibit 4.23 to the Company’s Form 10-K (File No. 814-00663) for the year ended December 31, 2019, filed on February 12, 2020.
(18)Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-K (File No. 814-00663) for the year ended December 31, 2018, filed on February 12, 2019.
(19)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on June 7, 2019.
(20)Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q (File No. 814-00663) for the quarter ended June 30, 2007, filed on August 9, 2007.
(21)Incorporated by reference to Exhibit (j) to the Company’s pre effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-158211), filed on May 28, 2009.
(22)Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-K (File No. 814-00663) for the year ended December 31, 2014, filed on February 26, 2015.
(23)Incorporated by reference to Exhibit 99(K)(3) to the Company’s pre-effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-114656), filed on September 17, 2004.
(24)Incorporated by reference to Exhibits (k)(3) and (k)(4), as applicable, to the Company’s Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-188175), filed on April 26, 2013.
(25)Incorporated by reference to Exhibits 10.2 through 10.4, as applicable, to the Company’s Form 8-K (File No. 814-00663), filed on January 25, 2010.
(26)Incorporated by reference to Exhibits 10.1 through 10.3, as applicable, to the Company’s Form 8-K (File No. 814-0663), filed on June 8, 2012.
(27)Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q (File No. 814-00663) for the quarter ended March 30, 2010, filed on May 10, 2010.
(28)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on January 19, 2011.
(29)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on October 14, 2011.
(30)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on January 19, 2012.
(31)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on January 28, 2013.
(32)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on May 15, 2014.
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(33)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on January 4, 2017.
(34)Incorporated by reference to Exhibits 10.1 and 10.2, as applicable, to the Company’s Form 8-K (File No. 814-00663), filed on October 3, 2018.
(35)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on December 17, 2018.
(36)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on June 19, 2019.
(37)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on February 3, 2020.
(38)Incorporated by reference to Exhibits 10.1 and 10.2, as applicable, to the Company’s Form 8‑K (File No. 814‑00663), filed on January 3, 2022.
(39)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8‑K (File No. 814‑00663), filed on April 1, 2021.
(40)Incorporated by reference to Exhibits 10.1 and 10.2, as applicable, to the Company’s Form 8-K (File No. 814-00663), filed on January 24, 2012.
(41)Incorporated by reference to Exhibits 10.1 and 10.2, as applicable, to the Company’s Form 8-K (File No. 814-00663), filed on June 16, 2020.
(42)Incorporated by reference to Exhibit 10.31 to the Company’s Form 10-K (File No. 814-00663), for the year ended December 30, 2020, filed on February 10, 2021.
(43)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on July 1, 2021.
(44)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on September 17, 2012.
(45)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on December 23, 2013.
(46)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on July 1, 2015.
(47)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on August 28, 2017.
(48)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on September 13, 2018.
(49)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on September 10, 2019.
(50)Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 814-00663), filed on January 2, 2020.
(51)Incorporated by reference to Exhibit 10.1 and 10.2 to the Company’s Form 8-K (File No. 814-00663), filed on May 28, 2021.
(52)Incorporated by reference to Exhibits 10.1, 10.2 and 10.3 to the Company’s Form 8‑K (File No. 814‑00663), filed on October 26, 2021.
(53)Included in Note 10 to the Company’s Notes to Consolidated Financial Statements filed herewith.
(54)Incorporated by reference to Exhibit (r) to the Registrant’s pre-effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-212142), filed on June 14, 2017.

Item 16.    Form 10-K Summary

None.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



F-1

Report of Independent Registered Public Accounting Firm
To the stockholders and board of directors
Ares Capital Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Ares Capital Corporation and subsidiaries (the “Company”), including the consolidated schedules of investments, as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 9, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Such procedures also included confirmation of investments owned as of December 31, 2021 and 2020 by correspondence with custodians, portfolio companies, agents, or other appropriate audit procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Fair value of investments
As discussed in Notes 2 and 4 to the consolidated financial statements, consistent with the Company’s valuation policy and in consideration of the fact that there is not a readily available market value for most of the investments in the Company’s portfolio, the Company measures substantially all of its investments at fair value using unobservable inputs and assumptions.
We identified the evaluation of the fair value of investments as a critical audit matter. Due to inherent estimation uncertainty, assessment of the Company’s judgments regarding the use of specific valuation assumptions involved a high degree of subjective auditor judgment. Changes in these assumptions could have a significant impact on the fair value of investments. In particular, the Company made judgments relating to market yields used in yield analyses for debt and other interest-bearing investments, market multiples used in determining enterprise values, and discount rates used in discounted cash flow analyses. Additionally, specialized skills and knowledge were required to evaluate these assumptions.
F-2

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company's process to measure the fair value of its investments. These included controls related to the development of the market yield, market multiples, and discount rate assumptions used in the Company’s valuations. We also evaluated the Company’s ability to estimate fair value by comparing a selection of prior period fair values to transaction prices of transactions occurring subsequent to the prior period valuation date. To assess management’s use of the market yield, market multiples, and discount rate assumptions to measure fair value of its investments, for a selection of investments, we assessed these assumptions by using third-party market and industry data. For a selection of the Company’s investments, we involved valuation professionals with specialized skills and knowledge, who assisted in:
•developing a range of market yields, market multiples, and discount rate assumptions using market information and comparing them to the assumptions used by the Company.
•evaluating the Company’s estimate of fair value by developing an independent estimate of fair value based upon independently developed ranges for market yields, market multiples, and discount rate assumptions.

kpmgsiga01a42.jpg

We have served as the Company’s auditor since 2004.
Los Angeles, California
February 9, 2022




F-3

Report of Independent Registered Public Accounting Firm
To the stockholders and board of directors
Ares Capital Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited Ares Capital Corporation and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company, including the consolidated schedules of investments, as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated February 9, 2022, expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
kpmgsiga01a42.jpg

Los Angeles, California
February 9, 2022
F-4

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions, except per share data)

 As of December 31,
 20212020
ASSETS
Investments at fair value  
Non-controlled/non-affiliate company investments$17,056 $12,780 
Non-controlled affiliate company investments373 296 
Controlled affiliate company investments2,580 2,439 
Total investments at fair value (amortized cost of $19,810 and $15,914, respectively)20,009 15,515 
Cash and cash equivalents372 254 
Restricted cash114 72 
Interest receivable142 112 
Receivable from participants— 38 
Receivable for open trades80 73 
Other assets99 94 
Operating lease right-of-use asset27 38 
Total assets$20,843 $16,196 
LIABILITIES 
Debt$11,020 $8,491 
Base management fees payable69 56 
Income based fees payable67 140 
Capital gains incentive fees payable161 — 
Interest and facility fees payable100 83 
Payable to participants114 72 
Payable for open trades216 6 
Accounts payable and other liabilities111 90 
Secured borrowings74 23 
Operating lease liabilities43 59 
Total liabilities11,975 9,020 
Commitments and contingencies (Note 7)
STOCKHOLDERS’ EQUITY 
Common stock, par value $0.001 per share, 600 common shares authorized; 468 and 423 common shares issued and outstanding, respectively
— — 
Capital in excess of par value8,553 7,656 
Accumulated undistributed (overdistributed) earnings315 (480)
Total stockholders’ equity8,868 7,176 
Total liabilities and stockholders’ equity$20,843 $16,196 
NET ASSETS PER SHARE$18.96 $16.97 

See accompanying notes to consolidated financial statements.

F-5

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
 For the Years Ended December 31,
 202120202019
INVESTMENT INCOME:   
From non-controlled/non-affiliate company investments:   
Interest income (excluding payment-in-kind (“PIK”) interest income)$911 $844 $941 
PIK interest income133 116 57 
Capital structuring service fees285 128 138 
Dividend income122 74 75 
Other income40 50 28 
Total investment income from non-controlled/non-affiliate company investments1,491 1,212 1,239 
From non-controlled affiliate company investments:  
Interest income (excluding PIK interest income)7 9 13 
PIK interest income4 3 5 
Capital structuring service fees— 1 2 
Dividend income— — 8 
Other income1 — — 
Total investment income from non-controlled affiliate company investments12 13 28 
From controlled affiliate company investments:  
Interest income (excluding PIK interest income)164 156 147 
PIK interest income28 31 17 
Capital structuring service fees21 20 22 
Dividend income100 75 69 
Other income4 4 6 
Total investment income from controlled affiliate company investments317 286 261 
Total investment income1,820 1,511 1,528 
EXPENSES:  
Interest and credit facility fees372 317 291 
Base management fees253 217 205 
Income based fees225 184 194 
Capital gains incentive fees 161 (58)(4)
Administrative fees15 13 14 
Other general and administrative24 25 31 
Total expenses1,050 698 731 
Waiver of income based fees— — (30)
Total expenses, net of waiver of income based fees1,050 698 701 
NET INVESTMENT INCOME BEFORE INCOME TAXES770 813 827 
Income tax expense, including excise tax29 19 16 
NET INVESTMENT INCOME741 794 811 
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS, FOREIGN CURRENCY AND OTHER TRANSACTIONS:  
Net realized gains (losses):  
Non-controlled/non-affiliate company investments129 (159)(113)
Non-controlled affiliate company investments68 16 (34)
Controlled affiliate company investments61 (5)20 
Foreign currency and other transactions25 (18)62 
Net realized gains (losses)283 (166)(65)
Net unrealized gains (losses):  
Non-controlled/non-affiliate company investments556 (284)17 
Non-controlled affiliate company investments(16)(2)41 
Controlled affiliate company investments62 142 3 
Foreign currency and other transactions(16)— (14)
Net unrealized gains (losses)586 (144)47 
Net realized and unrealized gains (losses) on investments, foreign currency and other transactions869 (310)(18)
REALIZED LOSS ON EXTINGUISHMENT OF DEBT(43)— — 
NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS$1,567 $484 $793 
BASIC AND DILUTED NET INCOME PER COMMON SHARE (see Note 10)$3.51 $1.14 $1.86 
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING (see Note 10)446 424 427 
See accompanying notes to consolidated financial statements.
F-6
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Software & Services
2U, Inc. Provider of course design and learning management system to educational institutionsFirst lien senior secured loan ($55.0 par due 12/2024)6.50% (Libor + 5.75%/M)6/28/2021$54.1 $55.0 (2)(6)(12)
AffiniPay Midco, LLC and AffiniPay Intermediate Holdings, LLC (16)Payment processing solution providerFirst lien senior secured loan ($64.0 par due 3/2026)6.25% (Libor + 5.00%/Q)2/28/202064.0 64.0 (12)
Senior subordinated loan ($27.5 par due 2/2028)12.75% PIK 2/28/202027.5 27.5 (2)
91.5 91.5 
Anaqua Parent Holdings, Inc. & Astorg VII Co-Invest Anaqua (16)Provider of intellectual property management lifecycle softwareFirst lien senior secured loan ($4.7 par due 4/2026)6.25% (Euribor + 6.25%/Q)4/10/20194.6 4.7 
First lien senior secured loan ($16.0 par due 4/2026)7.00% (Libor + 6.00%/Q)6/24/202116.0 16.0 (2)(12)
Limited partnership units (4,400,000 units)6/13/20194.2 7.6 (2)(6)
24.8 28.3 
APG Intermediate Holdings Corporation and APG Holdings, LLC (4)(16)Aircraft performance software providerFirst lien senior secured loan ($13.5 par due 1/2025)6.75% (Libor + 5.25%/Q)1/3/202013.5 13.5 (2)(12)
Class A membership units (9,750,000 units)1/3/20209.8 11.5 (2)
23.3 25.0 
Appriss Health, LLC and Appriss Health Intermediate Holdings, Inc. (16)Software platform for identification, prevention and management of substance use disorderFirst lien senior secured loan ($13.4 par due 5/2027)8.25% (Libor + 7.25%/Q)5/6/202113.4 13.4 (2)(12)
Series A preferred shares (32,236 shares)11.00% PIK 5/6/202134.6 34.6 (2)
48.0 48.0 
Apptio, Inc. (16)Provider of cloud-based technology business management solutionsFirst lien senior secured revolving loan ($1.7 par due 1/2025)8.25% (Libor + 7.25%/Q)1/10/20191.7 1.7 (2)(12)
First lien senior secured loan ($62.2 par due 1/2025)8.25% (Libor + 7.25%/Q)1/10/201962.2 62.2 (12)
63.9 63.9 
Avetta, LLC (16)Supply chain risk management SaaS platform for global enterprise clientsFirst lien senior secured loan ($11.8 par due 4/2024)7.25% (Libor + 6.25%/Q)7/15/202111.8 11.8 (2)(12)
AxiomSL Group, Inc. and Calypso Group, Inc. (16)Provider of risk data management and regulatory reporting softwareFirst lien senior secured loan ($21.4 par due 12/2027)7.00% (Libor + 6.00%/Q)7/21/202121.0 21.2 (2)(12)
Banyan Software Holdings, LLC and Banyan Software, LP (16)Vertical software businesses holding companyFirst lien senior secured loan ($6.7 par due 10/2026)7.75% (Libor + 6.75%/Q)12/16/20216.7 6.7 (2)(12)
First lien senior secured loan ($7.7 par due 10/2026)7.75% (Libor + 6.75%/Q)10/30/20207.7 7.7 (2)(12)
First lien senior secured loan ($5.0 par due 10/2026)8.50% (Libor + 7.50%/Q)10/30/20205.0 5.0 (2)(12)
19.4 19.4 
Borrower R365 Holdings LLC (16)Provider of restaurant ERP systemsFirst lien senior secured loan ($15.5 par due 6/2027)7.50% (Libor + 3.50% Cash + 3.00% PIK/Q)6/10/202115.2 15.5 (2)(12)
Businessolver.com, Inc. (16)Provider of SaaS-based benefits solutions for employers and employeesFirst lien senior secured loan ($70.2 par due 12/2027)6.50% (Libor + 5.75%/M)12/1/202170.2 69.5 (2)(12)
CallMiner, Inc. Provider of cloud-based conversational analytics solutionsWarrant to purchase up to 2,350,636 shares of Series 1 preferred stock (expires 7/2024)7/23/2014— — (2)
Cardinal Parent, Inc. and Packers Software Intermediate Holdings, Inc. (16)Provider of software and technology-enabled content and analytical solutions to insurance brokersFirst lien senior secured revolving loan ($0.6 par due 11/2025)6.75% (Base Rate + 3.50%/Q)11/12/20200.6 0.6 (2)(12)
Second lien senior secured loan ($59.9 par due 11/2028)8.50% (Libor + 7.75%/Q)11/12/202059.9 59.9 (2)(12)
Series A-2 preferred shares (8,963 shares)11.25% PIK (Libor + 11.00%/Q)12/23/202010.0 10.1 (2)
Series A-3 preferred shares (11,952 shares)11.00% PIK 11/24/202112.1 13.4 (2)
Series A preferred shares (24,898 shares)11.21% PIK (Libor + 11.00%/Q)11/12/202028.3 28.0 (2)
F-7
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
110.9 112.0 
Consilio Midco Limited and Consilio Investment Holdings, L.P. (16)Provider of sales software for the interior design industryFirst lien senior secured loan ($27.8 par due 5/2028)6.25% (Euribor + 6.25%/Q)11/30/202127.7 27.5 (2)(6)
First lien senior secured loan ($32.9 par due 5/2028)6.75% (Libor + 5.75%/Q)5/28/202132.9 32.6 (2)(6)(12)
First lien senior secured loan ($3.9 par due 5/2028)8.00% (Base Rate + 4.75%/Q)5/28/20213.9 3.8 (2)(6)(12)
First lien senior secured loan ($11.3 par due 5/2028)6.75% (Libor + 5.75%/Q)5/28/202111.3 11.2 (2)(6)(12)
Common units (4,799,000 units)5/28/20214.8 6.0 (2)(6)
80.6 81.1 
CoreLogic, Inc. and T-VIII Celestial Co-Invest LP (16)Provider of information, insight, analytics, software and other outsourced services primarily to the mortgage, real estate and insurance sectorsSecond lien senior secured loan ($155.7 par due 6/2029)7.00% (Libor + 6.50%/M)6/3/2021155.7 155.7 (2)(12)
Limited partnership units (59,665,989 units)4/29/202159.7 77.9 (2)
215.4 233.6 
Cority Software Inc., IQS, Inc. and Cority Parent, Inc. (16)Provider of environmental, health and safety software to track compliance dataFirst lien senior secured loan ($6.3 par due 7/2026)6.00% (Libor + 5.00%/Q)7/2/20196.3 6.3 (6)(12)
First lien senior secured loan ($4.4 par due 7/2026)6.00% (Libor + 5.00%/Q)10/15/20194.4 4.4 (6)(12)
First lien senior secured loan ($1.1 par due 7/2026)8.00% (Libor + 7.00%/Q)9/3/20201.1 1.1 (2)(6)(12)
Preferred equity (198 shares)9.00% PIK 7/2/20190.2 0.6 (2)(6)
Common equity (190,143 shares)7/2/2019— — (2)(6)
12.0 12.4 
Cornerstone OnDemand, Inc. and Sunshine Software Holdings, Inc. (16)Provider of a cloud-based, SaaS platform for talent managementFirst lien senior secured revolving loan—%10/15/2021— — (14)
Second lien senior secured loan ($137.5 par due 10/2029)7.00% (Libor + 6.50%/Q)10/15/2021137.5 135.4 (12)
Series A preferred shares (116,413 shares)10.50% PIK10/15/2021119.0 119.0 (2)
Class A-1 common stock (1,360,100 shares)10/15/202113.6 13.3 (2)
270.1 267.7 
Datix Bidco Limited Global healthcare software company that provides software solutions for patient safety and risk managementFirst lien senior secured loan ($0.1 par due 4/2025)4.18% (Libor + 4.00%/Q)10/7/2019— 0.1 (2)(6)
DCert Preferred Holdings, Inc. and Destiny Digital Holdings, L.P. Provider of internet security tools and solutionsSeries A preferred shares (129,822 shares)10.50% PIK5/25/2021138.1 138.1 (2)
Series A units (817,194 units)5/27/202113.3 13.4 (2)
151.4 151.5 
Denali Holdco LLC and Denali Topco LLC (16)Provider of cybersecurity audit and assessment servicesFirst lien senior secured loan ($37.3 par due 9/2027)7.00% (Libor + 6.00%/Q)9/15/202137.3 36.9 (2)(12)
Class A units (2,549,000)9/15/20212.5 2.5 (2)
39.8 39.4 
Diligent Corporation and Diligent Preferred Issuer, Inc. (16)Provider of secure SaaS solutions for board and leadership team documentsFirst lien senior secured revolving loan—%8/4/2020— — (14)
First lien senior secured loan ($33.0 par due 8/2025)7.25% (Libor + 6.25%/Q)8/4/202032.4 33.0 (12)
First lien senior secured loan ($8.9 par due 8/2025)6.75% (Libor + 5.75%/Q)3/4/20218.9 8.9 (2)(12)
First lien senior secured loan ($11.4 par due 8/2025)6.75% (Libor + 5.75%/Q)4/6/202111.3 11.4 (2)(12)
First lien senior secured loan ($2.0 par due 8/2025)7.25% (Libor + 6.25%/Q)7/30/20212.0 2.0 (2)(12)
Preferred stock (13,140 shares)10.50% PIK4/6/202113.5 13.8 (2)
68.1 69.1 
F-8
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Drilling Info Holdings, Inc. and Titan DI Preferred Holdings, Inc. SaaS based business analytics company focused on oil and gas industrySecond lien senior secured loan ($25.0 par due 7/2026)8.35% (Libor + 8.25%/M)2/11/202025.0 25.0 
Preferred stock (29.53 shares)13.50% PIK 2/11/202037.0 37.9 (2)
62.0 62.9 
DS Admiral Bidco, LLC (16)Tax return software provider for government institutionsFirst lien senior secured loan ($11.9 par due 3/2028)6.75% (Libor + 5.75%/Q)3/16/202111.6 11.9 (2)(12)
Dye & Durham Corporation (16)Provider of cloud-based software and technology solutions for the legal industryFirst lien senior secured loan ($72.0 par due 12/2027)6.50% (CDOR + 5.75%/Q)12/3/202170.9 70.9 (2)(6)(12)
Elemica Parent, Inc. & EZ Elemica Holdings, Inc. (16)SaaS based supply chain management software provider focused on chemical marketsFirst lien senior secured revolving loan ($2.3 par due 9/2025)6.50% (Libor + 5.50%/Q)9/18/20192.3 2.3 (2)(12)
First lien senior secured loan ($62.0 par due 9/2025)6.50% (Libor + 5.50%/Q)9/18/201961.9 61.9 (12)
First lien senior secured loan ($20.5 par due 9/2025)6.50% (Libor + 5.50%/Q)12/15/202020.5 20.5 (2)(12)
Preferred equity (4,599 shares)9/18/20194.6 5.5 
89.3 90.2 
EP Purchaser, LLC and TPG VIII EP Co-Invest II, L.P. Provider of entertainment workforce and production management solutionsSecond lien senior secured loan ($177.9 par due 11/2029)7.00% (Libor + 6.50%/Q)11/4/2021177.9 176.1 (2)(12)
Partnership units (5,034,483 units)5/10/20193.2 9.8 (2)(6)
181.1 185.9 
EpiServer Inc. and Episerver Sweden Holdings AB (16)Provider of web content management and digital commerce solutionsFirst lien senior secured loan ($4.6 par due 4/2026)6.50% (Libor + 5.50%/Q)12/21/20214.6 4.6 (2)(12)
First lien senior secured loan ($6.0 par due 4/2026)5.75% (Euribor + 5.75%/Q)3/22/20196.0 6.0 (2)
First lien senior secured loan ($0.1 par due 4/2026)6.50% (Libor + 5.50%/Q)10/9/20180.1 0.1 (2)(12)
10.7 10.7 
eResearch Technology, Inc. and Astorg VII Co-Invest ERT (16)Provider of mission-critical, software-enabled clinical research solutionsSecond lien senior secured loan ($22.5 par due 2/2028)8.50% (Libor + 8.00%/M)2/4/202022.0 22.4 (12)
Second lien senior secured loan ($30.6 par due 2/2028)8.50% (Libor + 8.00%/M)4/27/202129.6 30.6 (2)(12)
Limited partnership interest (3,988,000 shares)1/31/20204.5 5.4 (2)(6)
56.1 58.4 
ExtraHop Networks, Inc. (16)Provider of real-time wire data analytics solutions for application and infrastructure monitoringFirst lien senior secured loan ($16.6 par due 7/2027)8.50% (Libor + 7.50%/Q)7/22/202116.6 16.4 (2)(12)
First lien senior secured loan ($1.1 par due 7/2027)8.50% (Libor + 7.50%/Q)7/20/20211.1 1.0 (2)(12)
17.7 17.4 
First Insight, Inc. Software company providing merchandising and pricing solutions to companies worldwideWarrant to purchase up to 122,827 units of Series C preferred stock (expires 3/2024)3/20/2014— — (2)
FM:Systems Group, LLC (16)Provider of facilities and space management software solutionsFirst lien senior secured revolving loan ($1.5 par due 12/2024)7.50% (Libor + 6.50%/Q)2/8/20181.5 1.5 (2)(12)
First lien senior secured loan ($3.2 par due 12/2024)7.50% (Libor + 6.50%/Q)12/2/20193.2 3.2 (2)(12)
First lien senior secured loan ($1.4 par due 12/2024)7.50% (Libor + 6.50%/Q)6/15/20211.4 1.4 (2)(12)
6.1 6.1 
Forescout Technologies, Inc. (16)Network access control solutions providerFirst lien senior secured loan ($18.7 par due 8/2026)10.50% PIK (Libor + 9.50%/Q)8/17/202018.4 18.5 (2)(12)
Frontline Technologies Group Holding LLC, Frontline Technologies Blocker Buyer, Inc., Frontline Technologies Holdings, LLC and Frontline Technologies Parent, LLC Provider of human capital management and SaaS-based software solutions to employees and administrators of K-12 school organizationsFirst lien senior secured loan ($14.9 par due 9/2023)6.25% (Libor + 5.25%/Q)12/30/202014.9 14.9 (12)
First lien senior secured loan ($0.1 par due 9/2023)6.25% (Libor + 5.25%/Q)6/15/20210.1 0.1 (2)(12)
F-9
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Class A preferred units (4,574 units)9.00% PIK 9/18/20176.2 6.7 
Class B common units (499,050 units)9/18/2017— 7.9 
21.2 29.6 
Genesis Acquisition Co. and Genesis Ultimate Holding Co. (16)Child care management software and services providerFirst lien senior secured revolving loan ($1.5 par due 7/2024)4.22% (Libor + 4.00%/Q)7/31/20181.5 1.5 (2)
First lien senior secured loan ($9.1 par due 7/2024)5.25% (Libor + 4.50%/Q)11/16/20219.1 9.0 (2)(12)
First lien senior secured loan ($0.2 par due 7/2024)4.22% (Libor + 4.00%/Q)7/31/20180.2 0.2 (2)
Second lien senior secured loan ($21.1 par due 7/2025)8.25% (Libor + 7.50%/Q)11/16/202121.1 20.7 (2)(12)
Second lien senior secured loan ($32.4 par due 7/2025)7.63% (Libor + 7.50%/Q)7/31/201832.4 31.4 (2)
Second lien senior secured loan ($7.5 par due 7/2025)7.70% (Libor + 7.50%/Q)6/9/20217.5 7.3 (2)
Class A common stock (8.39 shares)7/31/20180.8 0.9 (2)
72.6 71.0 
GI Ranger Intermediate LLC (16)Provider of payment processing services and software to healthcare providersFirst lien senior secured loan ($35.1 par due 10/2028)6.75% (Libor + 6.00%/Q)10/29/202135.1 34.8 (2)(12)
Heavy Construction Systems Specialists, LLC (16)Provider of construction softwareFirst lien senior secured loan ($40.9 par due 11/2028)6.50% (Libor + 5.75%/Q)11/16/202140.9 40.5 (2)(12)
Huskies Parent, Inc., GI Insurity Parent LLC, and GI Insurity Topco LP (16)Insurance software providerFirst lien senior secured revolving loan ($1.6 par due 11/2027)6.25% (Libor + 5.50%/Q)11/3/20211.6 1.4 (2)(12)
First lien senior secured loan ($105.8 par due 11/2028)6.25% (Libor + 5.50%/Q)11/3/2021105.8 104.8 (2)(12)
Senior subordinated loan ($90.2 par due 11/2031)10.00% PIK 11/3/202190.2 88.8 (2)
Company units (4,243,657 units)11/3/20218.8 8.8 (2)
206.4 203.8 
IfByPhone Inc. Voice-based marketing automation software providerWarrant to purchase up to 124,300 shares of Series C preferred stock (expires 10/2022)10/15/20120.1 — (2)
Inmar Technology-driven solutions provider for retailers, wholesalers and manufacturersSecond lien senior secured loan ($28.3 par due 5/2025)9.00% (Libor + 8.00%/Q)4/25/201728.1 28.3 (2)(12)
Insightful Science Provider of data analysis, statistics, and visualization software solutions for scientific research applicationsFirst lien senior secured loan ($0.5 par due 4/2027)7.00% (Libor + 6.00%/Q)12/21/20170.5 0.5 (2)(12)
First lien senior secured loan ($16.2 par due 4/2027)6.50% (Libor + 5.50%/Q)4/28/202116.2 16.0 (2)(12)
First lien senior secured loan ($7.9 par due 4/2027)6.50% (Libor + 5.50%/Q)10/14/20217.9 7.9 (2)(12)
First lien senior secured loan ($7.6 par due 4/2027)6.50% (Libor + 5.50%/Q)11/29/20217.6 7.5 (2)(12)
Senior subordinated loan ($39.2 par due 4/2032)10.50% PIK4/28/202139.2 38.8 (2)
Preferred units (1,828,645 units)14.00% PIK4/28/202150.5 50.5 
121.9 121.2 
IV Rollover Holdings, LLC Provider of cloud based IT solutions, infrastructure and servicesClass B units (170,490 units)5/31/2017— 0.1 (2)
Class X units (5,000,000 units)5/31/20172.1 2.2 (2)
2.1 2.3 
Majesco and Magic Topco, L.P. (16)Insurance software providerFirst lien senior secured loan ($42.2 par due 9/2027)8.25% (Libor + 7.25%/Q)9/21/202042.2 42.2 (2)(12)
Class A units (2,539 units)9.00% PIK 9/21/20202.8 4.0 (2)
Class B units (570,625 units)9/21/2020— — (2)
45.0 46.2 
Ministry Brands Holdings, LLC and RCP MB Investments B, L.P. (16)Software and payment services provider to faith-based institutionsFirst lien senior secured loan ($72.7 par due 12/2028)6.25% (Libor + 5.50%/Q)12/30/202172.7 72.0 (2)(12)
F-10
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Limited partner interests (9,574,000 interests)12/30/20219.6 9.6 (2)
82.3 81.6 
Ministry Brands, LLC and MB Parent HoldCo, L.P. (dba Community Brands) (16)Software and payment services provider to non-profit institutionsFirst lien senior secured revolving loan ($5.0 par due 12/2022)7.25% (Base Rate + 4.00%/Q)12/2/20165.0 5.0 (12)
First lien senior secured loan ($9.2 par due 12/2022)5.00% (Libor + 4.00%/M)4/6/20179.2 9.2 (12)
First lien senior secured loan ($4.7 par due 12/2022)5.00% (Libor + 4.00%/M)8/22/20174.7 4.7 (12)
Second lien senior secured loan ($106.6 par due 6/2023)10.25% (Libor + 9.25%/M)12/2/2016106.4 106.6 (12)
Second lien senior secured loan ($13.9 par due 6/2023)10.25% (Libor + 9.25%/M)4/6/201713.9 13.9 (2)(12)
Second lien senior secured loan ($17.9 par due 6/2023)10.25% (Libor + 9.25%/M)8/22/201717.9 17.9 (2)(12)
Second lien senior secured loan ($48.9 par due 6/2023)9.00% (Libor + 8.00%/M)4/18/201848.9 48.9 (2)(12)
Class A units (500,000 units)12/2/20165.0 7.2 (2)
211.0 213.4 
Mitchell International, Inc. Provider of technology, connectivity, and information solutions to the property and casualty insurance industrySecond lien senior secured loan ($91.2 par due 10/2029)7.00% (Libor + 6.50%/M)10/1/202190.3 91.6 (2)(12)(19)
MMIT Holdings, LLC (16)Provider of market intelligence and analysis for the pharmaceutical industryFirst lien senior secured revolving loan ($0.6 par due 9/2027)7.25% (Libor + 6.25%/Q)9/15/20210.6 0.6 (2)(12)
First lien senior secured loan ($18.2 par due 9/2027)7.25% (Libor + 6.25%/Q)9/15/202118.2 18.0 (2)(12)
First lien senior secured loan ($13.7 par due 9/2027)7.25% (Libor + 6.25%/Q)10/21/202113.7 13.6 (2)(12)
32.5 32.2 
MRI Software LLC (16)Provider of real estate and investment management softwareFirst lien senior secured loan ($51.5 par due 2/2026)6.50% (Libor + 5.50%/Q)2/10/202051.5 51.5 (12)
First lien senior secured loan ($4.5 par due 2/2026)6.50% (Libor + 5.50%/Q)8/28/20204.5 4.5 (2)(12)
56.0 56.0 
OpenMarket Inc. Provider of cloud-based mobile engagement platformFirst lien senior secured loan ($50.7 par due 9/2026)7.00% (Libor + 6.25%/Q)9/17/202150.7 50.1 (2)(6)(12)
Paya, Inc and GTCR-Ultra Holdings LLC (16)Provider of payment processing and merchant acquiring solutionsClass B units (2,878,372 units)8/1/2017— 2.1 (2)
PayNearMe, Inc. Electronic cash payment system providerWarrant to purchase up to 195,726 shares of Series E preferred stock (expires 3/2023)3/11/20160.2 — (2)
PDI TA Holdings, Inc., Peachtree Parent, Inc. and Insight PDI Holdings, LLC (16)Provider of enterprise management software for the convenience retail and petroleum wholesale marketFirst lien senior secured loan ($53.5 par due 10/2024)5.50% (Libor + 4.50%/Q)3/19/201953.5 53.5 (12)
Second lien senior secured loan ($7.2 par due 10/2025)9.50% (Libor + 8.50%/Q)12/7/20217.2 7.2 (2)(12)
Second lien senior secured loan ($70.1 par due 10/2025)9.50% (Libor + 8.50%/Q)3/19/201970.1 70.1 (2)(12)
Second lien senior secured loan ($8.3 par due 10/2025)9.50% (Libor + 8.50%/Q)12/17/20208.3 8.3 (2)(12)
Second lien senior secured loan ($8.7 par due 10/2025)9.50% (Libor + 8.50%/B)4/27/20218.7 8.7 (2)(12)
Series A preferred stock (13,656 shares)13.25% PIK 3/19/201919.5 19.7 (2)
Class A units (2,062,493 units)3/19/20192.1 2.9 (2)
169.4 170.4 
Pegasus Global Enterprise Holdings, LLC, Mekone Blocker Acquisition, Inc. and Mekone Parent, LLC (16)Provider of plant maintenance and scheduling softwareFirst lien senior secured loan ($0.2 par due 5/2025)6.25% (Libor + 5.25%/Q)5/29/20190.2 0.2 (2)(12)
First lien senior secured loan ($0.1 par due 5/2025)6.75% (Libor + 5.75%/Q)6/24/20200.1 0.1 (2)(12)
First lien senior secured loan ($29.9 par due 5/2025)6.75% (Libor + 5.75%/Q)10/16/202029.9 29.9 (2)(12)
Class A units (5,000 units)5/29/20195.0 12.3 
35.2 42.5 
F-11
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Pluralsight, Inc. (16)Online education learning platformFirst lien senior secured loan ($117.7 par due 4/2027)9.00% (Libor + 8.00%/Q)4/6/2021117.7 117.7 (2)(12)
Poplicus Incorporated Business intelligence and market analytics platform for companies that sell to the public sectorWarrant to purchase up to 2,402,991 shares of Series C preferred stock (expires 6/2025)6/25/20150.1 — (2)
PracticeTek Purchaser, LLC and GSV PracticeTek Holdings, LLC Software provider for medical practitionersClass A units (11,804,000 units)8.00% PIK 3/31/2021— 8.2 (2)
ProfitSolv Purchaser, Inc. and PS Co-Invest, L.P. (16)Provider of practice management software to law firmsFirst lien senior secured loan ($3.9 par due 3/2027)6.25% (Libor + 5.25%/M)3/5/20213.9 3.9 (2)(12)
Limited partnership units (1,624,000 units)3/5/20211.6 1.6 (2)
5.5 5.5 
Project Alpha Intermediate Holding, Inc. and Qlik Parent, Inc. Provider of data visualization software for data analyticsClass A common stock (7,445 shares)8/22/20167.4 16.8 (2)
Class B common stock (1,841,609 shares)8/22/20160.1 0.2 (2)
7.5 17.0 
Project Essential Bidco, Inc. and Project Essential Super Parent, Inc. (16)Saas provider of automated crew callout and scheduling software for the utility industryFirst lien senior secured loan ($36.6 par due 4/2028)6.75% (Libor + 5.75%/Q)4/20/202136.6 35.8 (2)(12)
Preferred shares (26,436 shares)10.50% PIK (Libor + 9.50%/Q)4/20/202128.5 28.5 (2)(12)
65.1 64.3 
Project Potter Buyer, LLC and Project Potter Parent, L.P. (16)Software solutions provider to the ready-mix concrete industryFirst lien senior secured revolving loan ($0.8 par due 4/2026)10.50% (Base Rate + 7.25%/Q)4/23/20200.7 0.8 (2)(12)(15)
First lien senior secured loan ($44.1 par due 4/2027)9.25% (Libor + 8.25%/M)4/23/202044.1 44.1 (12)
First lien senior secured loan ($12.9 par due 4/2027)9.25% (Libor + 8.25%/M)10/30/202012.9 12.9 (2)(12)
First lien senior secured loan ($19.4 par due 4/2027)9.25% (Libor + 8.25%/M)11/18/202019.4 19.4 (2)(12)
Class A units (1,599 units)9.00% PIK 4/23/20201.9 1.9 (2)
Class B units (588,636 units)4/23/2020— 0.8 (2)
79.0 79.9 
Proofpoint, Inc. (16)Cybersecurity solutions providerFirst lien senior secured loan ($1.0 par due 8/2028)3.75% (Libor + 3.25%/Q)6/9/20211.0 1.0 (2)(12)(19)
Second lien senior secured loan ($34.6 par due 8/2029)6.75% (Libor + 6.25%/Q)6/9/202134.4 34.6 (2)(12)
35.4 35.6 
QF Holdings, Inc. (16)SaaS based electronic health record software providerFirst lien senior secured loan ($8.1 par due 12/2027)7.25% (Libor + 6.25%/Q)12/15/20218.1 8.1 (2)(12)
First lien senior secured loan ($15.5 par due 12/2027)7.50% (Libor + 6.50%/Q)9/19/201915.5 15.5 (2)(12)
23.6 23.6 
Raptor Technologies, LLC, Sycamore Bidco LTD and Rocket Parent, LLC (16)Provider of SaaS-based safety and security software to the K-12 school marketFirst lien senior secured loan ($28.5 par due 10/2028)7.00% (Libor + 6.00%/Q)10/5/202128.5 28.2 (2)(6)(12)
Class A common units (2,880,582 units)12/17/20183.5 4.8 
32.0 33.0 
RealPage, Inc. Provider of enterprise software solutions to the residential real estate industrySecond lien senior secured loan ($84.1 par due 4/2029)7.25% (Libor + 6.50%/M)4/22/202182.9 84.1 (2)(12)
Regent Education, Inc. Provider of software solutions designed to optimize the financial aid and enrollment processesWarrant to purchase up to 5,393,194 shares of common stock (expires 12/2026)12/23/2016— — (2)
Warrant to purchase up to 987 shares of common stock (expires 12/2026)12/23/2016— — (2)
— — 
Relativity ODA LLC (16)Electronic discovery document review software platform for use in litigations and investigationsFirst lien senior secured loan ($59.8 par due 5/2027)8.50% PIK (Libor + 7.50%/M)5/12/202159.8 59.8 (2)(12)
RMS Holdco II, LLC & RMS Group Holdings, Inc. (16)Developer of revenue cycle management solutions, process automation, analytics and integration for the healthcare industryFirst lien senior secured loan ($23.5 par due 12/2027)6.50% (Libor + 5.75%/Q)12/16/202123.5 23.3 (2)(12)
F-12
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Class A common stock (464.9 shares)12/16/20214.6 4.6 (2)
28.1 27.9 
Smarsh Inc., MobileGuard, LLC, Actiance, Inc. and Skywalker TopCo, LLC SaaS based communication archival service providerFirst lien senior secured loan ($13.3 par due 11/2025)9.25% (Libor + 8.25%/M)11/20/202013.3 13.3 (2)(12)
Common units (1,432,835 units)11/20/20204.8 5.1 (2)
18.1 18.4 
SocialFlow, Inc. Social media optimization platform providerWarrant to purchase up to 215,331 shares of Series C preferred stock (expires 1/2026)1/13/2016— — (2)
Sophia, L.P. Provider of ERP software and services for higher education institutionsSecond lien senior secured loan ($105.9 par due 10/2028)9.00% (Libor + 8.00%/Q)10/7/2020105.9 105.9 (2)(12)
SoundCloud Limited Platform for receiving, sending, and distributing musicCommon stock (73,422 shares)8/15/20170.4 0.7 (2)(6)
Stamps.com Inc. Provider of mailing and shipping solutionsFirst lien senior secured loan ($197.9 par due 10/2028)6.50% (Libor + 5.75%/Q)10/5/2021197.9 193.9 (2)(12)
Storable, Inc. and EQT IX Co-Investment (E) SCSP PMS solutions and web services for the self-storage industrySecond lien senior secured loan ($42.8 par due 4/2029)7.50% (Libor + 6.75%/Q)4/16/202142.8 42.8 (2)(12)
Limited partnership interests (614,950 interests)4/16/20216.2 6.8 (2)(6)
49.0 49.6 
Sundance Group Holdings, Inc. (16)Provider of cloud-based document management and collaboration solutionsFirst lien senior secured revolving loan ($0.9 par due 7/2027)7.75% (Libor + 6.75%/Q)7/2/20210.8 0.9 (2)(12)
First lien senior secured loan ($15.4 par due 7/2027)7.75% (Libor + 6.75%/Q)7/2/202115.2 15.3 (2)(12)
16.0 16.2 
TCP Hawker Intermediate LLC (16)Workforce management solutions providerFirst lien senior secured loan ($6.6 par due 8/2026)6.50% (Libor + 5.50%/Q)12/1/20206.6 6.6 (12)
First lien senior secured loan ($4.0 par due 8/2026)6.50% (Libor + 5.50%/Q)10/19/20214.0 4.0 (2)(12)
First lien senior secured loan ($34.8 par due 8/2026)6.50% (Libor + 5.50%/Q)8/30/201934.8 34.8 (12)
45.4 45.4 
The Ultimate Software Group, Inc. and H&F Unite Partners, L.P. (16)Provider of cloud based HCM solutions for businessesFirst lien senior secured revolving loan—%5/3/2019— — (6)(14)
Limited partnership interests (12,583,556 interests)5/3/201912.6 15.1 (2)(6)
12.6 15.1 
Verscend Holding Corp. (16)Healthcare analytics solutions providerFirst lien senior secured revolving loan—%8/27/2018— — (14)
WebPT, Inc. (16)Electronic medical record software providerFirst lien senior secured loan ($48.1 par due 8/2024)7.75% (Libor + 6.75%/Q)8/28/201948.1 48.1 (2)(12)
Wellness AcquisitionCo, Inc. (16)Provider of retail consumer insights and analytics for manufacturers and retailers in the natural, organic and specialty products industryFirst lien senior secured loan ($0.1 par due 1/2027)6.50% (Libor + 5.50%/Q)1/20/20210.1 0.1 (2)(12)
WorkWave Intermediate II, LLC (16)Provider of cloud-based field services and fleet management solutionsFirst lien senior secured loan ($61.6 par due 6/2027)8.00% PIK (Libor + 7.25%/Q)6/29/202161.6 61.6 (2)(12)
4,308.2 4,378.1 49.37%
Health Care Services
Absolute Dental Group LLC and Absolute Dental Equity, LLC (5)(16)Dental services providerFirst lien senior secured revolving loan ($4.0 par due 6/2024)11.25% (Base rate + 3.00% Cash + 5.00% PIK/Q)6/1/20214.0 4.0 (2)(12)
First lien senior secured loan ($49.5 par due 6/2024)10.00% (Libor + 4.00% Cash, 5.00% PIK/Q)6/1/202149.5 49.5 (2)(12)
Class A common units (7,617,280 units)6/1/20214.7 10.4 (2)
58.2 63.9 
ADG, LLC and RC IV GEDC Investor LLC (16)Dental services providerFirst lien senior secured revolving loan ($9.6 par due 9/2022)7.50% (Base rate + 3.75% Cash + .50% PIK/A)9/28/20169.6 9.5 (2)(12)
F-13
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured revolving loan ($2.3 par due 9/2022)5.75% (Libor + 4.25% Cash, 0.50% PIK/Q)9/28/20162.3 2.3 (2)(12)
Second lien senior secured loan ($115.3 par due 3/2024)11.00% PIK (Libor + 10.00%/Q)9/28/201695.2 103.7 (2)(12)
Membership units (3,000,000 units)9/28/20163.0 — (2)
110.1 115.5 
Alteon Health, LLC Provider of physician management servicesFirst lien senior secured loan ($2.8 par due 9/2023)7.50% (Libor + 6.50%/Q)5/15/20172.8 2.8 (2)(12)
Athenahealth, Inc., VVC Holding Corp., Virence Intermediate Holding Corp., and Virence Holdings LLC (16)Revenue cycle management provider to the physician practices and acute care hospitalsClass A interests (0.39% interest)2/11/20199.0 49.3 (2)
Bambino Group Holdings, LLC Dental services providerClass A preferred units (1,000,000 units)12/21/20161.0 1.1 (2)
Bearcat Buyer, Inc. and Bearcat Parent, Inc. (16)Provider of central institutional review boards over clinical trialsSecond lien senior secured loan ($69.5 par due 7/2027)9.25% (Libor + 8.25%/Q)7/9/201969.5 69.5 (2)(12)
Second lien senior secured loan ($12.7 par due 7/2027)9.25% (Libor + 8.25%/Q)9/10/201912.7 12.7 (2)(12)
Class B common units (4,211 units)7/9/20194.2 10.8 (2)
86.4 93.0 
CCS-CMGC Holdings, Inc. (16)Correctional facility healthcare operatorFirst lien senior secured revolving loan—%10/1/2018— — (14)
First lien senior secured loan ($34.0 par due 10/2025)5.63% (Libor + 5.50%/Q)9/25/201833.8 33.3 
33.8 33.3 
Center for Autism and Related Disorders, LLC (16)Autism treatment and services provider specializing in applied behavior analysis therapyFirst lien senior secured revolving loan ($6.8 par due 11/2023)5.65% (Libor + 5.50%/Q)11/21/20186.8 6.2 (2)(15)
Comprehensive EyeCare Partners, LLC (16)Vision care practice management companyFirst lien senior secured revolving loan ($0.3 par due 2/2024)7.00% (Libor + 5.75%/Q)2/14/20180.3 0.3 (2)(12)
First lien senior secured loan ($2.6 par due 2/2024)7.00% (Libor + 5.75%/Q)2/14/20182.6 2.6 (2)(12)
First lien senior secured loan ($0.1 par due 2/2024)8.00% (Base Rate + 4.75%/Q)4/19/20210.1 0.1 (2)(12)
First lien senior secured loan ($0.6 par due 2/2024)7.00% (Libor + 5.75%/Q)4/19/20210.6 0.6 (2)(12)
3.6 3.6 
Convey Health Solutions, Inc. Healthcare workforce management software providerFirst lien senior secured loan ($2.7 par due 9/2026)5.50% (Libor + 4.75%/M)9/4/20192.7 2.7 (12)
CVP Holdco, Inc. and OMERS Wildcats Investment Holdings LLC (16)Veterinary hospital operatorFirst lien senior secured revolving loan ($0.4 par due 10/2024)8.00% (Base Rate + 4.75%/Q)10/31/20190.4 0.4 (2)(12)(15)
First lien senior secured loan ($39.4 par due 10/2025)6.25% (Libor + 5.25%/Q)10/31/201939.4 39.4 (12)
First lien senior secured loan ($49.2 par due 10/2025)6.75% (Libor + 5.75%/Q)4/26/202149.2 49.2 (2)(12)
Common stock (32,429 shares)10/31/201910.0 15.9 (2)
99.0 104.9 
GHX Ultimate Parent Corporation, Commerce Parent, Inc. and Commerce Topco, LLC On-demand supply chain automation solutions provider to the healthcare industrySecond lien senior secured loan ($114.0 par due 5/2029)7.50% (Libor + 6.75%/Q)5/26/2021114.0 114.0 (2)(12)
Class A units (14,013,303 units)6/30/201714.0 32.2 (2)
128.0 146.2 
Global Medical Response, Inc. and GMR Buyer Corp. Emergency air medical services providerSecond lien senior secured loan ($95.4 par due 12/2029)7.50% (Libor + 6.75%/Q)12/17/202195.4 94.5 (2)(12)
Warrant to purchase up to 115,733 units of common stock (expires 3/2028)3/14/20180.9 3.0 (2)
Warrant to purchase up to 1,926.57 units of common stock (expires 12/2031)12/17/20210.1 — (2)
96.4 97.5 
F-14
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
HealthEdge Software, Inc. (16)Provider of financial, administrative and clinical software platforms to the healthcare industryFirst lien senior secured revolving loan—%12/16/2021— — (14)
First lien senior secured loan ($79.2 par due 4/2026)7.25% (Libor + 6.25%/Q)12/16/202179.2 79.2 (2)(12)
79.2 79.2 
Honor Technology, Inc. Nursing and home care providerFirst lien senior secured loan ($2.5 par due 8/2026)11.00% (Libor + 10.00%/M)8/6/20212.4 2.5 (2)(12)
Warrant to purchase up to 133,333 shares of series D-2 preferred stock (expires 8/2031)8/6/20210.1 0.1 (2)
2.5 2.6 
JDC Healthcare Management, LLC (16)Dental services providerFirst lien senior secured revolving loan ($4.4 par due 4/2022)4/10/20173.8 3.1 (2)(11)
First lien senior secured loan ($37.2 par due 4/2023)4/10/201731.7 26.5 (2)(11)
35.5 29.6 
KBHS Acquisition, LLC (d/b/a Alita Care, LLC) (16)Provider of behavioral health servicesFirst lien senior secured revolving loan ($0.8 par due 3/2024)6% (Libor + 4.00% Cash + 1% PIK/M)3/17/20170.8 0.8 (2)(12)
MCH Holdings, Inc., MC Acquisition Holdings I, LLC and Privia Health Group, Inc. Healthcare professional providerFirst lien senior secured loan ($110.2 par due 7/2022)8.50% (Libor + 7.00%/M)7/26/2017110.2 110.2 (12)
Class A units (1,438,643 shares)1/17/2014— 0.6 (2)
110.2 110.8 
Napa Management Services Corporation and ASP NAPA Holdings, LLC Anesthesia management services providerSecond lien senior secured loan ($72.8 par due 10/2023)11.00% (Libor + 10.00%/Q)4/19/201672.8 72.8 (2)(12)
Preferred units (1,842 units)15.00% PIK 6/29/20200.1 0.1 (2)
Senior preferred units (5,320 units)8.00% PIK 6/29/20200.3 0.3 (2)
Class A units (25,277 units)4/19/20162.5 4.1 (2)
75.7 77.3 
NMN Holdings III Corp. and NMN Holdings LP (16)Provider of complex rehabilitation technology solutions for patients with mobility lossFirst lien senior secured revolving loan—%11/13/2018— — (14)
Partnership units (30,000 units)11/13/20183.0 2.8 (2)
3.0 2.8 
NueHealth Performance, LLC (16)Developer, builder and manager of specialty surgical hospitals and ambulatory surgery centersFirst lien senior secured revolving loan ($3.3 par due 9/2023)8.25% (Libor + 7.25%/M)9/27/20183.3 3.3 (2)(12)
First lien senior secured loan ($12.4 par due 9/2023)8.25% (Libor + 7.25%/M)9/27/201812.4 12.4 (12)
First lien senior secured loan ($3.0 par due 9/2023)8.25% (Libor + 7.25%/M)2/1/20203.0 3.0 (2)(12)
18.7 18.7 
Olympia Acquisition, Inc. and Olympia TopCo, L.P. (16)Behavioral health and special education platform providerFirst lien senior secured revolving loan ($10.1 par due 9/2024)8.50% (Libor + 5.50% Cash + 2.00% PIK/M)9/24/201910.1 8.3 (2)(12)
First lien senior secured revolving loan ($0.2 par due 9/2024)8.50% (Libor + 5.50% Cash + 2.00% PIK/M)12/17/20200.2 0.2 (2)(12)
First lien senior secured loan ($42.1 par due 9/2026)8.50% (Libor + 5.50% Cash + 2.00% PIK/M)9/24/201942.1 34.5 (12)
First lien senior secured loan ($0.9 par due 9/2026)8.50% (Libor + 5.50% Cash + 2.00% PIK/M)12/31/20200.9 0.8 (12)
Preferred units (417,189)15.00% PIK 7/28/20210.3 0.3 (2)
Class A common units (9,549,000 units)9/24/20199.5 — (2)
63.1 44.1 
OMH-HealthEdge Holdings, LLC Revenue cycle management provider to the healthcare industryFirst lien senior secured loan ($26.1 par due 10/2025)6.50% (Libor + 5.50%/Q)10/24/201926.1 26.1 (12)
First lien senior secured loan ($15.4 par due 10/2025)6.50% (Libor + 5.50%/Q)3/10/202115.4 15.4 (12)
41.5 41.5 
F-15
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Pathway Vet Alliance LLC and Jedi Group Holdings LLC (16)Veterinary hospital operatorFirst lien senior secured revolving loan—%3/31/2020— — (14)
Second lien senior secured loan ($76.3 par due 3/2028)8.75% (Libor + 7.75%/M)3/31/202076.3 76.3 (2)(12)
Class R common units (6,004,768 units)3/31/20206.0 7.9 (2)
82.3 84.2 
PhyMED Management LLC Provider of anesthesia servicesSecond lien senior secured loan ($55.7 par due 9/2022)15% (Libor + 3.51% Cash + 10.49% PIK/Q)12/18/201555.6 52.4 (2)(12)
Premise Health Holding Corp. and OMERS Bluejay Investment Holdings LP (16)Provider of employer-sponsored onsite health and wellness clinics and pharmaciesFirst lien senior secured revolving loan ($12.0 par due 7/2023)3.41% (Libor + 3.25%/Q)7/10/201812.0 12.0 (2)(15)
First lien senior secured loan ($8.6 par due 7/2025)3.72% (Libor + 3.50%/Q)7/10/20188.6 8.6 
Second lien senior secured loan ($67.1 par due 7/2026)7.72% (Libor + 7.50%/Q)7/10/201866.7 67.1 (2)
Class A units (9,775 units)7/10/20189.8 17.5 (2)
97.1 105.2 
Project Ruby Ultimate Parent
Corp. (dba Wellsky)		Provider of care coordination and transition management software solutionsSecond lien senior secured loan ($193.1 par due 3/2029)7.25% (Libor + 6.50%/M)3/10/2021193.1 193.1 (2)(12)
Respicardia, Inc. Developer of implantable therapies to improve cardiovascular healthWarrant to purchase up to 99,094 shares of Series C preferred stock (expires 6/2022)6/28/2012— — (2)
RTI Surgical, Inc. and Pioneer Surgical Technology, Inc. (16)Manufacturer of biologic, metal and synthetic implants/devicesFirst lien senior secured revolving loan ($5.0 par due 7/2026)8.25% (Libor + 6.75%/M)7/20/20205.0 5.0 (2)(12)
First lien senior secured loan ($28.5 par due 7/2026)8.25% (Libor + 6.75%/Q)7/20/202028.5 28.5 (12)
33.5 33.5 
SiroMed Physician Services, Inc. and SiroMed Equity Holdings, LLC (16)Outsourced anesthesia providerFirst lien senior secured loan ($11.5 par due 3/2024)5.75% (Libor + 4.75%/M)3/26/201811.5 9.9 (12)
Common units (684,854 units)3/26/20184.8 0.7 (2)
16.3 10.6 
SM Wellness Holdings, Inc. and SM Holdco, Inc. (16)Breast cancer screening providerSeries A units (8,041 units)8/1/20188.0 9.6 (2)
Series B units (804,142 units)8/1/2018— — (2)
8.0 9.6 
Symplr Software Inc. and Symplr Software Intermediate Holdings, Inc. (16)SaaS based healthcare compliance platform providerSecond lien senior secured loan ($69.9 par due 12/2028)8.63% (Libor + 7.88%/Q)12/22/202069.9 69.9 (2)(12)
Series C-1 preferred shares (75,939 shares)11.00% PIK 6/18/202185.0 85.0 (2)
Series C-2 preferred shares (40,115 shares)11.00% PIK 6/18/202142.6 42.6 (2)
Series C-3 preferred shares (16,201 shares)11.00% PIK 10/12/202116.6 16.6 (2)
214.1 214.1 
Synergy HomeCare Franchising, LLC and NP/Synergy Holdings, LLC (16)Franchisor of private pay home care for the elderlyFirst lien senior secured loan ($15.3 par due 4/2024)6.75% (Libor + 5.75%/Q)4/2/201815.3 15.3 (12)
Common units (550 units)4/2/20180.5 1.0 
15.8 16.3 
Teligent, Inc (16)Pharmaceutical company that develops, manufactures and markets injectable pharmaceutical productsSecond lien senior secured loan ($8.8 par due 1/2022)10/15/20218.1 8.8 (2)(11)
Second lien senior secured loan ($1.4 par due 12/2022)1/27/20211.3 0.5 (2)(11)
Second lien senior secured loan ($77.8 par due 12/2022)12/13/201867.6 29.5 (2)(11)
Series D preferred stock (77,725 shares)1/27/2021— — (2)
Warrant to purchase up to 490,492 shares of common stock (expires 4/2025)4/6/2020— — (2)
F-16
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Warrant to purchase up to 122,548 shares of common stock (expires 7/2025)7/20/2020— — (2)
77.0 38.8 
Therapy Brands Holdings LLC (16)Provider of software solutions for the mental and behavioral health market segmentsSecond lien senior secured loan ($20.5 par due 5/2029)7.50% (Libor + 6.75%/Q)6/2/202120.3 20.5 (2)(12)
Touchstone Acquisition, Inc. and Touchstone Holding, L.P. Manufacturer of consumable products in the dental, medical, cosmetic and consumer/industrial end-marketsClass A preferred units (2,149 units)8.00% PIK 11/15/20182.7 2.8 (2)
U.S. Anesthesia Partners, Inc. & U.S. Anesthesia Partners Holdings, Inc. Anesthesiology service providerSecond lien senior secured loan ($147.8 par due 10/2029)8.00% (Libor + 7.50%/Q)10/1/2021147.8 146.3 (2)(12)
Common stock (3,671,429 shares)12/3/202112.9 12.9 (2)
160.7 159.2 
VPP Intermediate Holdings, LLC and VPP Group Holdings, L.P. (16)Veterinary hospital operatorFirst lien senior secured loan ($6.4 par due 12/2027)6.75% (Libor + 5.75%/Q)12/1/20216.4 6.4 (2)(12)
Class A-2 units (7,524 units)12/1/20217.5 7.5 (2)
13.9 13.9 
WSHP FC Acquisition LLC (16)Provider of biospecimen products for pharma researchFirst lien senior secured revolving loan ($1.5 par due 3/2027)7.00% (Libor + 6.00%/Q)3/30/20181.5 1.5 (2)(12)
First lien senior secured loan ($4.9 par due 3/2027)7.00% (Libor + 6.00%/Q)10/14/20214.9 4.9 (2)(12)
First lien senior secured loan ($33.4 par due 3/2027)7.00% (Libor + 6.00%/Q)3/30/201833.4 33.4 (12)
First lien senior secured loan ($4.5 par due 3/2027)7.00% (Libor + 6.00%/Q)2/11/20194.5 4.5 (12)
First lien senior secured loan ($11.4 par due 3/2027)7.00% (Libor + 6.00%/M)8/30/201911.4 11.4 (12)
First lien senior secured loan ($10.8 par due 3/2027)7.00% (Libor + 6.00%/Q)10/31/201910.8 10.8 (12)
First lien senior secured loan ($9.0 par due 3/2027)7.00% (Libor + 6.00%/Q)11/23/20219.0 9.0 (2)(12)
75.5 75.5 
2,133.9 2,157.1 24.33%
Commercial & Professional Services
Accommodations Plus Technologies LLC and Accommodations Plus Technologies Holdings LLC (16)Provider of outsourced crew accommodations and logistics management solutions to the airline industryFirst lien senior secured revolving loan ($4.1 par due 5/2023)10.00% (Libor + 9.00%/Q)5/11/20184.1 3.9 (2)(12)
Class A common units (236,358 units)5/11/20184.3 4.0 
8.4 7.9 
Aero Operating LLC Provider of snow removal and melting service for airports and marine terminalsFirst lien senior secured loan ($36.6 par due 2/2026)8.00% (Libor + 6.50%/M)2/7/202036.6 36.6 (12)
First lien senior secured loan ($1.2 par due 2/2026)8.00% (Libor + 6.50%/Q)12/31/20211.2 1.2 (2)(12)
37.8 37.8 
Argenbright Holdings V, LLC Provider of outsourced security guard services, outsourced facilities management and outsourced aviation servicesFirst lien senior secured loan ($21.1 par due 11/2026)7.00% (Libor + 6.00%/M)11/30/202121.1 20.9 (2)(12)
Capstone Acquisition Holdings, Inc. and Capstone Parent Holdings, LP (16)Outsourced supply chain solutions provider to operators of distribution centersFirst lien senior secured revolving loan ($2.3 par due 11/2025)7.00% (Base Rate + 3.75%/Q)11/12/20202.3 2.3 (2)(12)(15)
First lien senior secured loan ($0.3 par due 11/2027)5.75% (Libor + 4.75%/M)11/12/20200.3 0.3 (2)(12)
Second lien senior secured loan ($68.3 par due 11/2028)9.75% (Libor + 8.75%/M)11/12/202068.3 68.3 (2)(12)
Class A units (10,581 units)11/12/202010.6 14.4 (2)
81.5 85.3 
Cozzini Bros., Inc. and BH-Sharp Holdings LP (16)Provider of commercial knife sharpening and cutlery services in the restaurant industryFirst lien senior secured loan ($12.4 par due 3/2023)8.5% (Libor + 3.00% Cash + 4.50% PIK/Q)3/10/201712.4 11.4 (2)(12)
F-17
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Common units (2,950,000 units)3/10/20173.0 1.4 (2)
15.4 12.8 
DTI Holdco, Inc. and OPE DTI Holdings, Inc. (16)Provider of legal process outsourcing and managed servicesFirst lien senior secured revolving loan ($0.3 par due 6/2023)6.75% (Base Rate + 3.50%/Q)9/23/20160.3 0.3 (2)(15)
First lien senior secured revolving loan ($4.8 par due 6/2023)4.65% (Libor + 4.50%/Q)9/23/20164.8 4.8 (2)(15)
Class A common stock (7,500 shares)8/19/20147.5 4.2 (2)
Class B common stock (7,500 shares)8/19/2014— — (2)
12.6 9.3 
Elevation Services Parent Holdings, LLC Elevator service platformFirst lien senior secured loan ($8.7 par due 12/2026)7.00% (Libor + 6.00%/Q)12/18/20208.7 8.7 (2)(12)
First lien senior secured loan ($0.3 par due 12/2026)6.50% (Libor + 5.50%/Q)12/18/20200.3 0.3 (2)(12)
First lien senior secured loan ($5.2 par due 12/2026)7.00% (Libor + 6.00%/Q)12/18/20205.2 5.2 (2)(12)
14.2 14.2 
HAI Acquisition Corporation and Aloha Topco, LLC (16)Professional employer organization offering human resources, compliance and risk management servicesFirst lien senior secured loan ($61.0 par due 11/2025)6.00% (Libor + 5.25%/M)11/1/201761.0 61.0 (12)
First lien senior secured loan ($0.1 par due 11/2025)6.00% (Libor + 5.25%/Q)9/28/20210.1 0.1 (2)(12)
Class A units (16,980 units)11/1/20171.7 2.3 (2)
62.8 63.4 
HH-Stella, Inc. and Bedrock Parent Holdings, LP (16)Provider of municipal solid waste transfer management servicesFirst lien senior secured revolving loan ($0.5 par due 4/2027)6.50% (Libor + 5.50%/M)4/22/20210.5 0.5 (2)(12)
First lien senior secured loan ($2.6 par due 4/2028)6.50% (Libor + 5.50%/M)4/22/20212.6 2.6 (2)(12)
Class A units (25,490 units)4/22/20212.5 2.9 (2)
5.6 6.0 
IRI Holdings, Inc., IRI Group Holdings, Inc. and IRI Parent, L.P. Market research company focused on the consumer packaged goods industryFirst lien senior secured loan ($42.3 par due 12/2025)4.35% (Libor + 4.25%/M)11/30/201841.9 42.3 
Second lien senior secured loan ($86.8 par due 11/2026)8.10% (Libor + 8.00%/M)11/30/201885.9 86.8 (2)
Series A-1 preferred shares (46,900 shares)11.50% PIK (Libor + 10.50%/M)11/30/201865.3 66.0 (2)(12)
Class A-1 common units (90,500 units)11/30/20189.1 26.1 (2)
202.2 221.2 
Kellermeyer Bergensons Services, LLC (16)Provider of janitorial and facilities management servicesFirst lien senior secured loan ($60.8 par due 11/2026)6.75% (Libor + 5.75%/A)11/7/201960.5 60.8 (2)(12)
First lien senior secured loan ($21.1 par due 11/2026)6.75% (Libor + 5.75%/Q)7/2/202121.1 21.1 (2)(12)
81.6 81.9 
KPS Global LLC and Cool Group LLC Manufacturer of walk-in cooler and freezer systemsFirst lien senior secured loan ($12.6 par due 4/2024)7.00% (Libor + 6.00%/M)4/5/201712.6 12.3 (12)
First lien senior secured loan ($3.4 par due 4/2024)7.00% (Libor + 6.00%/M)11/16/20183.4 3.3 (12)
Class A units (13,292 units)9/21/20181.1 0.9 
17.1 16.5 
Laboratories Bidco LLC and Laboratories Topco LLC (16)Lab testing services for nicotine containing productsFirst lien senior secured loan ($21.6 par due 7/2027)6.75% (Libor + 5.75%/Q)10/4/201921.6 21.6 (12)
First lien senior secured loan ($25.5 par due 7/2027)6.75% (Libor + 5.75%/Q)10/4/201924.3 25.5 (12)
First lien senior secured loan ($0.1 par due 7/2027)6.75% (Libor + 5.75%/Q)10/30/20200.1 0.1 (2)(12)
First lien senior secured loan ($10.7 par due 7/2027)6.75% (Libor + 5.75%/Q)7/23/202110.7 10.7 (2)(12)
Class A units (3,099,335 units)7/23/20214.6 4.1 (2)
61.3 62.0 
F-18
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Lakers Buyer, Inc. and Lakers Parent LLC (16)Provider of fire safety and life safety servicesFirst lien senior secured revolving loan ($3.6 par due 3/2027)6.75% (Libor + 5.75%/Q)3/22/20213.6 3.6 (2)(12)
First lien senior secured loan ($51.2 par due 3/2027)6.75% PIK (Libor + 5.75%/Q)3/22/202151.2 51.2 (2)(12)
Second lien senior secured loan ($40.1 par due 9/2027)11.75% PIK (Libor + 10.75%/Q)3/22/202140.1 40.1 (2)(12)
Common units (46,990 units)3/22/20214.7 6.2 (2)
99.6 101.1 
Marmic Purchaser, LLC and Marmic Topco, L.P. Provider of recurring fire protection servicesFirst lien senior secured loan ($34.4 par due 3/2027)7.00% (Libor + 6.00%/Q)3/5/202134.4 34.4 (2)(12)
Limited partnership units (1,929,237 units)8.00% PIK 3/5/20212.1 2.4 (2)
36.5 36.8 
Microstar Logistics LLC, Microstar Global Asset Management LLC, MStar Holding Corporation and Kegstar USA Inc. Keg management solutions providerSecond lien senior secured loan ($153.5 par due 7/2023)10.00% PIK (Libor + 9.00%/Q)8/13/2020153.5 150.4 (12)
Series A preferred stock (1,507 shares)8/13/20201.5 2.0 (2)
Common stock (54,710 shares)12/14/20124.9 4.5 (2)
159.9 156.9 
NAS, LLC and Nationwide Marketing Group, LLC (16)Buying and marketing services organization for appliance, furniture and consumer electronics dealersFirst lien senior secured revolving loan ($0.6 par due 6/2024)8.75% (Base Rate + 5.50%/Q)11/3/20200.6 0.6 (2)(12)
First lien senior secured loan ($2.4 par due 6/2024)7.50% (Libor + 6.50%/Q)12/17/20212.4 2.4 (2)(12)
First lien senior secured loan ($6.4 par due 6/2024)7.00% (Libor + 6.00%/B)11/3/20206.4 6.4 (2)(12)
9.4 9.4 
Nest Topco Borrower Inc., KKR Nest Co-Invest L.P., and NBLY 2021-1 (16)Operator of multiple franchise concepts primarily related to home maintenance or repairsSenior subordinated loan ($119.1 par due 8/2029)9.00% (Libor + 8.50%/Q)9/1/2021119.1 117.9 (2)(12)
Limited partner interest (9,725,000 interests)9/28/20219.7 9.7 (2)
128.8 127.6 
NM GRC Holdco, LLC Regulatory compliance services provider to financial institutionsFirst lien senior secured loan ($45.4 par due 2/2024)8.5% (Libor + 6.00% Cash + 1.50% PIK/M)2/9/201845.2 45.4 (12)
North American Fire Holdings, LLC and North American Fire Ultimate Holdings, LLC (16)Provider of fire safety and life safety servicesFirst lien senior secured loan ($20.1 par due 5/2027)7.00% (Libor + 6.00%/Q)5/19/202120.1 20.1 (12)
Common units (884,916 units)5/19/20210.9 1.2 (2)
21.0 21.3 
North Haven Stack Buyer, LLC (16)Provider of environmental testing servicesFirst lien senior secured loan ($11.1 par due 7/2027)6.50% (Libor + 5.50%/Q)7/15/202110.8 11.0 (2)(12)
Petroleum Service Group LLC (16)Provider of operational services for US petrochemical and refining companiesFirst lien senior secured revolving loan ($2.2 par due 7/2025)7.00% (Libor + 6.00%/Q)7/23/20192.2 2.2 (2)(12)(15)
First lien senior secured loan ($8.1 par due 7/2025)7.00% (Libor + 6.00%/Q)12/3/20218.1 8.1 (2)(12)
First lien senior secured loan ($0.2 par due 7/2025)1.00% (Libor + 0.00%/Q)12/3/20210.2 0.2 (2)(12)
First lien senior secured loan ($34.2 par due 7/2025)7.00% (Libor + 6.00%/Q)7/23/201934.2 34.2 (12)
First lien senior secured loan ($0.7 par due 7/2025)7.00% (Libor + 6.00%/Q)7/23/20190.7 0.7 (2)(12)
45.4 45.4 
Pritchard Industries, LLC and LJ Pritchard TopCo Holdings, LLC Provider of janitorial and facilities management servicesFirst lien senior secured loan ($93.8 par due 10/2027)6.25% (Libor + 5.50%/Q)10/13/202193.8 92.8 (2)(12)
Class A units (7,900,000 units)10/13/20217.9 7.9 (2)
101.7 100.7 
PS Operating Company LLC and PS OP Holdings LLC (fka QC Supply, LLC) (5)(16)Specialty distributor and solutions provider to the swine and poultry marketsFirst lien senior secured revolving loan ($2.8 par due 12/2024)7.00% (Libor + 6.00%/Q)12/21/20212.8 2.8 (2)(12)
F-19
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($14.9 par due 12/2024)7.00% (Libor + 6.00%/Q)12/21/202114.9 14.9 (2)(12)
Common unit (279,200 units)12/21/20217.4 7.4 (2)
25.1 25.1 
R2 Acquisition Corp. Marketing servicesCommon stock (250,000 shares)5/29/20070.2 0.5 (2)
RC V Tecmo Investor LLC Technology based aggregator for facility maintenance servicesCommon member units (9,624,000 units)8/14/20208.3 19.3 (2)
RE Community Holdings GP, LLC and RE Community Holdings, LP Operator of municipal recycling facilitiesLimited partnership interest (2.86% interest)3/1/2011— — (2)
Limited partnership interest (2.49% interest)3/1/2011— — (2)
— — 
Registrar Intermediate, LLC and PSP Registrar Co-Investment Fund, L.P. (16)Provider of FDA registration and consulting servicesFirst lien senior secured loan ($37.9 par due 8/2027)6.50% (Libor + 5.50%/Q)8/26/202137.9 37.5 (2)(12)
Limited partner interests (1.13% interest)8/26/20212.7 2.6 (2)
40.6 40.1 
Rodeo AcquisitionCo LLC (16)Provider of food inspection and recovery servicesFirst lien senior secured revolving loan ($0.4 par due 7/2027)7.00% (Libor + 6.00%/Q)7/26/20210.4 0.3 (2)(12)
First lien senior secured loan ($17.1 par due 7/2027)7.00% (Libor + 6.00%/Q)7/26/202117.1 16.9 (2)(12)
17.5 17.2 
Schill Landscaping and Lawn Care Services LLC and Landscape Parallel Partners, L.P. (16)Provider of landscape design and planning, and snow removal servicesFirst lien senior secured loan ($5.8 par due 12/2027)6.75% (Libor + 5.75%/Q)12/16/20215.8 5.8 (2)(12)
Class A units (3,840.5 units)12/16/20219.5 9.5 (2)
15.3 15.3 
SSE Buyer, Inc., Supply Source Enterprises, Inc., Impact Products LLC, The Safety Zone, LLC and SSE Parent, LP Manufacturer and distributor of personal protection equipment, commercial cleaning, maintenance and safety productsFirst lien senior secured loan ($21.4 par due 6/2026)10.22% (Libor + 9.22%/Q)6/30/202021.4 19.9 (2)(12)
Limited partnership class A-1 units (2,173 units)6/30/20201.1 0.6 (2)
Limited partnership class A-2 units (2,173 units)6/30/20201.1 0.6 (2)
23.6 21.1 
Startec Equity, LLC (5)Communication servicesMember interest4/1/2010— — 
Stealth Holding LLC and UCIT Online Security Inc. (16)Live video monitoring solutions providerFirst lien senior secured loan ($50.5 par due 3/2026)7.75% (Libor + 6.75%/Q)3/1/202150.5 50.5 (6)(12)
First lien senior secured loan ($0.8 par due 3/2026)9.00% (Base Rate + 5.75%/Q)3/1/20210.8 0.8 (2)(6)(12)
51.3 51.3 
Thermostat Purchaser III, Inc. (16)Provider of commercial HVAC equipment maintenance and repair servicesSecond lien senior secured loan ($23.0 par due 8/2029)8.00% (Libor + 7.25%/M)8/31/202123.0 22.8 (2)(12)
Tyden Group Holding Corp. Producer and marketer of global cargo security, product identification and traceability products and utility meter productsPreferred stock (46,276 shares)1/3/20170.4 0.4 (6)
Common stock (5,521,203 shares)1/3/20172.0 3.9 (6)
2.4 4.3 
Visual Edge Technology, Inc. Provider of outsourced office solutions with a focus on printer and copier equipment and other parts and suppliesFirst lien senior secured loan ($32.5 par due 8/2022)9.75% (Libor + 7.00% Cash + 1.25% PIK/Q)8/31/201732.5 30.9 (2)(12)
Senior subordinated loan ($88.6 par due 9/2024)12.50% PIK 8/31/201786.1 79.7 (2)
Warrant to purchase up to 10,358,572 shares of common stock (expires 8/2027)8/31/20173.9 — (2)
122.5 110.6 
F-20
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
VLS Recovery Services, LLC (16)Provider of commercial and industrial waste processing and disposal servicesFirst lien senior secured revolving loan ($1.3 par due 10/2024)6.50% (Libor + 5.50%/M)10/17/20171.3 1.3 (2)(12)(15)
First lien senior secured loan ($8.8 par due 10/2024)6.50% (Libor + 5.50%/Q)7/1/20198.8 8.8 (2)(12)
First lien senior secured loan ($5.2 par due 10/2024)6.50% (Libor + 5.50%/Q)8/31/20215.2 5.2 (2)(12)
15.3 15.3 
Wash Encore Holdings, LLC Provider of outsourced healthcare linen management solutionsFirst lien senior secured loan ($135.6 par due 7/2027)6.75% (Libor + 5.75%/Q)7/30/2021135.6 134.2 (2)(12)
XIFIN, Inc. and ACP Charger Co-Invest LLC (16)Revenue cycle management provider to labsFirst lien senior secured revolving loan ($1.1 par due 2/2026)6.75% (Libor + 5.75%/M)2/6/20201.1 1.1 (2)(12)
First lien senior secured loan ($16.3 par due 2/2026)6.75% (Libor + 5.75%/Q)7/20/202116.3 16.1 (2)(12)
First lien senior secured loan ($39.3 par due 2/2026)6.75% (Libor + 5.75%/M)12/8/202139.3 39.0 (2)(12)
Class A units (180,000 units)2/6/20201.8 4.2 (2)
Class B units (46,363.16 units)12/8/20210.9 1.1 (2)
59.4 61.5 
1,820.0 1,833.4 20.68%
Diversified Financials
BCC Blueprint Holdings I, LLC and BCC Blueprint Investments, LLC Provider of comprehensive suite of investment management and wealth planning solutionsFirst lien senior secured loan ($0.2 par due 9/2027)7.00% (Libor + 6.25%/Q)9/15/20210.2 0.2 (2)(12)
Senior subordinated loan ($4.5 par due 9/2026)9.30% PIK9/15/20214.5 4.5 (2)
Common units (4,220,159 units)9/15/20214.2 4.1 (2)
8.9 8.8 
Beacon Pointe Harmony, LLC (16)Provider of comprehensive wealth management servicesFirst lien senior secured loan ($14.5 par due 12/2028)6.00% (Libor + 5.25%/Q)12/29/202114.5 14.4 (6)(12)
CrossCountry Mortgage, LLC (16)Mortgage company originating loans in the retail and consumer direct channelsFirst lien senior secured loan ($93.8 par due 11/2027)7.50% (Libor + 7.00%/Q)11/10/202193.8 92.8 (2)(12)
DFC Global Facility Borrower III LLC (16)Non-bank provider of alternative financial servicesFirst lien senior secured revolving loan ($146.4 par due 6/2026)8.50% (CDOR + 8.00%/B)6/10/2021149.9 146.4 (2)(6)(10)(12)
eCapital Finance Corp. Consolidator of commercial finance businessesSenior subordinated loan ($56.0 par due 1/2025)9.00% (Libor + 7.50%/M)1/31/202056.0 56.0 (2)(12)
Senior subordinated loan ($5.4 par due 1/2025)9.00% (Libor + 7.50%/M)11/24/20205.4 5.4 (2)(12)
61.4 61.4 
EP Wealth Advisors, LLC (16)Wealth management and financial planning firmFirst lien senior secured revolving loan ($0.2 par due 9/2026)5.50% (Libor + 4.50%/Q)9/4/20200.2 0.2 (2)(12)
First lien senior secured loan ($0.2 par due 9/2026)5.50% (Libor + 4.50%/Q)9/4/20200.2 0.2 (2)(12)
First lien senior secured loan ($0.3 par due 9/2026)6.25% (Libor + 5.25%/Q)11/19/20210.3 0.3 (2)(12)
0.7 0.7 
Green Street Parent, LLC and Green Street Intermediate Holdings, LLC (16)Provider of REIT research data and analyticsFirst lien senior secured loan ($23.7 par due 8/2026)6.50% (Libor + 5.75%/Q)12/14/202123.7 23.7 (2)(12)
Ivy Hill Asset Management, L.P. (5)Asset management servicesSenior subordinated loan ($16.0 par due 5/2023)7.25% (Libor + 6.50%/M)2/8/201816.0 16.0 (6)(12)
Member interest (100.00% interest)6/15/2009765.0 919.8 (6)
781.0 935.8 
Javlin Three LLC, Javlin Four LLC, and Javlin Five LLC Asset-backed financial services companyFirst lien senior secured loan ($15.7 par due 6/2017)6/24/201412.6 0.4 (2)(6)(11)
Joyce Lane Capital LLC and Joyce Lane Financing SPV LLC (fka Ciena Capital LLC) (5)(16)Specialty finance companyFirst lien senior secured loan ($0.3 par due 12/2022)4.13% (Libor + 4.00%/Q)12/27/20180.3 0.3 (2)(6)
Equity interests11/29/2010— — (2)(6)
0.3 0.3 
F-21
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
LS DE LLC and LM LSQ Investors LLC Asset based lenderSenior subordinated loan ($37.0 par due 3/2024)10.50%6/25/201537.0 37.0 (2)(6)
Senior subordinated loan ($3.0 par due 6/2021)10.50%6/15/20173.0 3.0 (2)(6)
Membership units (3,275,000 units)6/25/20153.3 3.5 (6)
43.3 43.5 
Monica Holdco (US) Inc. (16)Investment technology and advisory firmFirst lien senior secured revolving loan—%1/8/2021— — (14)
First lien senior secured loan ($2.6 par due 1/2028)7.25% (Libor + 6.25%/Q)1/8/20212.6 2.6 (2)(12)
2.6 2.6 
Priority Holdings, LLC and Priority Technology Holdings, Inc. Provider of merchant acquiring and payment processing solutionsFirst lien senior secured loan ($35.8 par due 4/2027)6.75% (Libor + 5.75%/M)4/27/202135.8 35.8 (2)(6)(12)
Senior preferred stock (65,761 shares)13.00% PIK (Libor + 12.00%/Q)4/27/202164.4 68.3 (2)(6)(12)
Warrant to purchase up to 527,226 shares of common stock (expires 4/2031)4/27/20214.0 3.4 (2)(6)
104.2 107.5 
Rialto Management Group, LLC (16)Investment and asset management platform focused on real estateFirst lien senior secured revolving loan—%11/30/2018— — (6)(14)
First lien senior secured loan ($9.5 par due 12/2025)6.50% (Libor + 5.75%/Q)12/22/20219.5 9.5 (2)(6)(12)
First lien senior secured loan ($0.7 par due 12/2025)4.34% (Libor + 4.25%/M)11/30/20180.7 0.7 (6)
First lien senior secured loan ($7.7 par due 12/2025)4.35% (Libor + 4.25%/M)4/30/20217.7 7.7 (2)(6)
17.9 17.9 
TA/WEG Holdings, LLC (16)Wealth management and financial planning firmFirst lien senior secured revolving loan ($0.8 par due 10/2027)6.75% (Libor + 5.75%/Q)10/2/20190.8 0.8 (2)(12)(15)
First lien senior secured loan ($0.1 par due 10/2027)6.75% (Libor + 5.75%/Q)10/2/20190.1 0.1 (2)(12)
First lien senior secured loan ($0.1 par due 10/2027)6.75% (Libor + 5.75%/Q)11/6/20200.1 0.1 (2)(12)
First lien senior secured loan ($0.1 par due 10/2027)6.75% (Libor + 5.75%/B)6/3/20210.1 0.1 (2)(12)
First lien senior secured loan ($8.3 par due 10/2027)6.75% (Libor + 5.75%/Q)8/13/20218.3 8.3 (2)(12)
9.4 9.4 
The Ultimus Group Midco, LLC, The Ultimus Group, LLC, and The Ultimus Group Aggregator, LP (16)Provider of asset-servicing capabilities for fund managersFirst lien senior secured loan ($37.8 par due 2/2026)5.75% (Libor + 4.75%/Q)2/1/201937.8 37.8 (12)
Class A units (1,443 units)9/16/20191.6 1.9 
Class A units (245 units)2/1/20190.2 — 
Class B units (2,167,424 units)2/1/2019— — 
Class B units (245,194 units)2/1/2019— — 
39.6 39.7 
1,363.8 1,505.3 16.98%
Insurance Services
Alera Group, Inc. (16)Insurance service providerFirst lien senior secured loan ($96.6 par due 10/2028)6.25% (Libor + 5.50%/M)9/30/202196.6 95.6 (2)(12)
Amynta Agency Borrower Inc. and Amynta Warranty Borrower Inc. Insurance service providerFirst lien senior secured loan ($1.0 par due 2/2025)4.60% (Libor + 4.50%/M)12/21/20181.0 1.0 (2)
AQ Sunshine, Inc. (16)Specialized insurance brokerFirst lien senior secured revolving loan ($0.3 par due 4/2024)7.00% (Libor + 6.00%/Q)4/15/20190.3 0.3 (2)(12)(15)
First lien senior secured loan ($8.6 par due 4/2025)7.00% (Libor + 6.00%/Q)4/15/20198.6 8.6 (12)
First lien senior secured loan ($13.3 par due 4/2025)7.00% (Libor + 6.00%/Q)10/29/202013.3 13.3 (2)(12)
First lien senior secured loan ($20.2 par due 4/2025)7.00% (Libor + 6.00%/Q)6/28/202120.2 20.2 (2)(12)
F-22
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
42.4 42.4 
Ardonagh Midco 2 plc and Ardonagh Midco 3 plc Insurance broker and underwriting servicerFirst lien senior secured loan ($69.5 par due 7/2026)8.21% (GBP Libor + 7.46%/Q)6/26/202064.8 69.5 (2)(6)(12)
First lien senior secured loan ($14.5 par due 7/2026)7.50% (GBP Libor + 6.75%/Q)6/26/202014.8 14.5 (2)(6)(12)
First lien senior secured loan ($7.5 par due 7/2026)7.75% (Euribor + 6.75%/Q)6/26/20207.5 7.5 (2)(6)(12)
First lien senior secured loan ($111.2 par due 7/2026)6.75% (Libor + 6.00%/Q)8/19/2021111.2 111.2 (2)(6)(12)
Senior subordinated loan ($1.3 par due 1/2027)11.50% PIK6/26/20201.2 1.4 (2)(6)(19)
199.5 204.1 
Benecon Midco II LLC and Locutus Holdco LLC (16)Employee benefits provider for small and mid-size employersCommon units (9,803,682 units)12/4/202010.0 15.5 
Benefytt Technologies, Inc. Health insurance sales platform providerFirst lien senior secured loan ($23.4 par due 8/2027)6.75% (Libor + 6.00%/Q)8/12/202123.4 23.2 (2)(12)
Foundation Risk Partners, Corp. (16)Full service independent insurance agencyFirst lien senior secured loan ($169.5 par due 10/2028)6.50% (Libor + 5.75%/Q)10/29/2021169.5 167.7 (2)(12)
Galway Borrower LLC (16)Insurance service providerFirst lien senior secured revolving loan—%9/30/2021— — (14)
First lien senior secured loan ($59.1 par due 9/2028)6.00% (Libor + 5.25%/Q)9/30/202159.1 58.5 (2)(12)
59.1 58.5 
High Street Buyer, Inc. and High Street Holdco LLC (16)Insurance brokerage platformFirst lien senior secured loan ($55.0 par due 4/2028)6.75% (Libor + 6.00%/Q)4/16/202155.0 54.5 (2)(12)
First lien senior secured loan ($10.4 par due 4/2028)6.75% (Libor + 6.00%/Q)8/11/202110.4 10.3 (2)(12)
Series A preferred units (96,763,329 units)10.00% PIK 4/16/2021101.1 101.2 (2)
Series A common units (4,649,000 units)10.00% PIK 4/16/20215.0 11.1 (2)
Series C common units (4,979,318 units)10.00% PIK 4/16/20210.2 11.9 (2)
171.7 189.0 
K2 Insurance Services, LLC and K2 Holdco LP (16)Specialty insurance and managing general agencyFirst lien senior secured revolving loan—%7/1/2019— — (14)
First lien senior secured loan ($0.6 par due 7/2026)6.00% (Libor + 5.00%/Q)12/29/20210.6 0.6 (2)(12)
First lien senior secured loan ($51.0 par due 7/2026)6.00% (Libor + 5.00%/Q)7/1/201951.0 51.0 (12)
First lien senior secured loan ($0.2 par due 7/2026)6.00% (Libor + 5.00%/Q)8/16/20210.2 0.2 (2)(12)
Common units (799,000 units)7/1/20190.8 1.6 (2)
52.6 53.4 
NSM Insurance Group, LLC (16)Insurance program administratorFirst lien senior secured revolving loan ($0.5 par due 11/2025)7.00% (Base Rate + 3.75%/Q)6/2/20210.5 0.5 (2)(12)(15)
First lien senior secured loan ($12.8 par due 5/2026)6.00% (Libor + 4.75%/M)5/11/201812.8 12.8 (12)
13.3 13.3 
OneDigital Holdings, Achilles Holdco (16)Benefits broker and outsourced workflow automation platform provider for brokersFirst lien senior secured revolving loan—%11/16/2020— — (14)
Patriot Growth Insurance Services, LLC (16)National retail insurance agencyFirst lien senior secured loan ($11.6 par due 10/2028)6.25% (Libor + 5.50%/Q)10/14/202111.4 11.5 (2)(12)
People Corporation (16)Provider of group benefits, group retirement and human resources servicesFirst lien senior secured revolving loan ($2.9 par due 2/2027)7.25% (CDOR + 6.25%/Q)2/18/20212.8 2.9 (2)(6)(12)
First lien senior secured loan ($1.4 par due 2/2028)6.25% (CDOR + 5.50%/B)9/8/20211.3 1.4 (2)(6)(12)
First lien senior secured loan ($44.3 par due 2/2028)7.25% (CDOR + 6.25%/Q)2/18/202144.1 44.3 (2)(6)(12)
First lien senior secured loan ($13.8 par due 2/2028)7.25% (CDOR + 6.25%/Q)2/18/202114.1 13.8 (6)(12)
62.3 62.4 
RSC Acquisition, Inc. and RSC Insurance Brokerage, Inc. (16)Insurance brokerFirst lien senior secured revolving loan ($0.3 par due 10/2026)7.75% (Base Rate + 4.50%/Q)11/1/20190.3 0.3 (2)(12)(15)
F-23
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($33.1 par due 10/2026)6.25% (Libor + 5.50%/Q)11/1/201933.1 33.1 (12)
33.4 33.4 
SCM Insurance Services Inc. (16)Provider of claims management, claims investigation & support and risk management solutions for the Canadian property and casualty insurance industryFirst lien senior secured loan ($20.4 par due 8/2024)6.00% (CDOR + 5.00%/M)8/29/201720.6 20.4 (2)(6)(12)
Second lien senior secured loan ($60.0 par due 3/2025)10.00% (CDOR + 9.00%/M)8/29/201760.5 60.0 (2)(6)(12)
81.1 80.4 
SelectQuote, Inc. Direct to consumer insurance distribution platformFirst lien senior secured loan ($22.6 par due 11/2024)5.75% (Libor + 5.00%/M)11/5/201922.6 22.6 (2)(12)
SG Acquisition, Inc. Provider of insurance solutions for car salesFirst lien senior secured loan ($35.6 par due 1/2027)5.50% (Libor + 5.00%/M)1/27/202035.6 35.6 (12)
Spring Insurance Solutions, LLC (16)Technology-based direct to consumer sales and marketing platform for insurance productsFirst lien senior secured loan ($19.7 par due 11/2025)7.50% (Libor + 6.50%/Q)11/23/202019.7 18.9 (12)
THG Acquisition, LLC (16)Multi-line insurance brokerFirst lien senior secured revolving loan—%12/2/2019— — (14)
First lien senior secured loan ($0.6 par due 12/2026)6.25% (Libor + 5.50%/Q)12/10/20210.6 0.6 (2)(12)
First lien senior secured loan ($0.1 par due 12/2026)6.75% (Libor + 5.75%/Q)12/2/20190.1 0.1 (2)(12)
First lien senior secured loan ($23.2 par due 12/2026)6.50% (Libor + 5.75%/Q)12/15/202023.2 23.2 (2)(12)
First lien senior secured loan ($14.9 par due 12/2026)6.50% (Libor + 5.75%/Q)12/15/202014.9 14.9 (12)
38.8 38.8 
1,144.0 1,167.3 13.16%
Investment Funds and Vehicles
ACAS Equity Holdings Corporation (5)Investment companyCommon stock (589 shares)1/3/20170.4 0.4 (6)
Ares IIIR/IVR CLO Ltd. Investment vehicleSubordinated notes ($20.0 par due 4/2021)1/3/2017— — (6)
Blue Wolf Capital Fund II, L.P. (4)Investment partnershipLimited partnership interest (8.50% interest)1/3/2017— 0.2 (6)(19)
CoLTs 2005-1 Ltd. (5)Investment vehiclePreferred shares (360 shares)1/3/2017— — (6)
CREST Exeter Street Solar 2004-1 Investment vehiclePreferred shares (3,500,000 shares) 1/3/2017— — (6)
European Capital UK SME Debt LP (4)Investment partnershipLimited partnership interest (45% interest)1/3/201718.8 26.9 (6)(17)
HCI Equity, LLC (5)Investment companyMember interest (100.00% interest)4/1/2010— — (6)(19)
Partnership Capital Growth Investors III, L.P. Investment partnershipLimited partnership interest (2.50% interest)10/5/20111.8 3.6 (6)(19)
PCG-Ares Sidecar Investment II, L.P. (4)Investment partnershipLimited partnership interest (100.00% interest)10/31/20147.0 11.1 (2)(6)(17)
PCG-Ares Sidecar Investment, L.P. (4)Investment partnershipLimited partnership interest (100.00% interest)5/22/20144.3 1.3 (6)(17)
Piper Jaffray Merchant Banking Fund I, L.P. Investment partnershipLimited partnership interest (2.00% interest)8/16/20120.1 1.0 (6)(19)
Senior Direct Lending Program, LLC (5)(18)Co-investment vehicleSubordinated certificates ($987.3 par due 12/2036)8.21% (Libor + 8.00%/Q)(13)7/27/2016987.3 987.3 (6)
Member interest (87.50% interest)7/27/2016— — (6)
987.3 987.3 
VSC Investors LLC Investment companyMembership interest (1.95% interest)1/24/20080.3 0.6 (2)(6)(19)
1,020.0 1,032.4 11.64%
Capital Goods
AI Aqua Merger Sub, Inc.End to end provider of water solutions to a wide range of customer basesFirst lien senior secured loan ($0.9 par due 7/2028)4.50% (Libor + 4.00%/M)6/17/20210.9 0.9 (2)(12)(19)
F-24
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Arrowhead Holdco Company and Arrowhead GS Holdings, Inc. (16)Distributor of non-discretionary, mission-critical aftermarket replacement partsFirst lien senior secured revolving loan ($3.7 par due 8/2027)5.25% (Libor + 4.50%/Q)8/31/20213.7 3.6 (2)(12)(15)
First lien senior secured loan ($27.6 par due 8/2028)5.25% (Libor + 4.50%/M)8/31/202127.6 27.2 (2)(12)
Common stock (4,900 shares)8/31/20214.9 6.7 (2)
36.2 37.5 
Cadence Aerospace, LLC (16)Aerospace precision components manufacturerFirst lien senior secured revolving loan ($7.9 par due 11/2022)9.50% (Libor + 3.25% Cash + 5.25% PIK/Q)11/14/20177.9 7.6 (2)(12)(15)
First lien senior secured revolving loan ($3.0 par due 11/2022)8.75% (Base Rate + 5.50%/Q)11/14/20173.0 2.9 (12)
First lien senior secured revolving loan ($0.7 par due 11/2023)9.50% (Libor + 3.25% Cash + 5.25% PIK/Q)7/22/20200.7 0.7 (2)(12)
First lien senior secured loan ($31.4 par due 11/2023)9.50% (Libor + 3.25% Cash + 5.25% PIK/Q)11/14/201731.3 30.5 (12)
First lien senior secured loan ($9.8 par due 11/2023)9.50% (Libor + 3.25% Cash + 5.25% PIK/Q)7/5/20189.8 9.5 (2)(12)
First lien senior secured loan ($12.0 par due 11/2023)9.50% (Libor + 3.25% Cash + 5.25% PIK/Q)10/31/201912.0 11.6 (2)(12)
First lien senior secured loan ($7.9 par due 11/2023)9.50% (Libor + 3.25% Cash + 5.25% PIK/Q)2/12/20207.9 7.6 (2)(12)
First lien senior secured loan ($4.0 par due 11/2023)9.50% (Libor + 3.25% Cash + 5.25% PIK/Q)7/31/20203.7 3.9 (12)
76.3 74.3 
DFS Holding Company, Inc. Distributor of maintenance, repair, and operations parts, supplies, and equipment to the foodservice industryFirst lien senior secured loan ($166.7 par due 8/2023)8.50% (Libor + 6.00% Cash + 1.50% PIK/M)7/26/2017166.7 158.4 (12)
First lien senior secured loan ($4.3 par due 8/2023)8.50% (Libor + 6.00% Cash + 1.50% PIK/M)3/1/20174.3 4.1 (2)(12)
First lien senior secured loan ($5.0 par due 8/2023)8.50% (Libor + 6.00% Cash + 1.50% PIK/M)5/22/20205.0 4.7 (12)
First lien senior secured loan ($0.7 par due 2/2022)8.50% (Libor + 6.00% Cash + 1.50% PIK/M)5/22/20200.7 0.6 (12)
176.7 167.8 
Dynamic NC Aerospace Holdings, LLC and Dynamic NC Investment Holdings, LP (16)Provider of aerospace technology and equipmentFirst lien senior secured loan ($25.7 par due 12/2026)7.50% (Libor + 6.50%/Q)12/30/202025.7 25.4 (12)
Common units (9,773,000 units)12/30/20209.8 8.6 
35.5 34.0 
EPS NASS Parent, Inc. (16)Provider of maintenance and engineering services for electrical infrastructureFirst lien senior secured revolving loan ($0.9 par due 4/2026)6.75% (Libor + 5.75%/M)4/19/20210.9 0.9 (2)(12)(15)
First lien senior secured loan ($30.5 par due 4/2028)6.75% (Libor + 5.75%/Q)4/19/202130.5 30.5 (2)(12)
31.4 31.4 
ESCP PPG Holdings, LLC (4)Distributor of new equipment and aftermarket parts to the heavy-duty truck industryClass A units (3,500,000 units)12/14/20163.5 2.8 (2)
Flow Control Solutions, Inc. (16)Distributor and manufacturer of flow control systems componentsFirst lien senior secured loan ($10.8 par due 11/2024)6.50% (Libor + 5.50%/Q)11/21/201810.8 10.8 (12)
Harvey Tool Company, LLC (16)Manufacturer of cutting tools used in the metalworking industryFirst lien senior secured revolving loan ($5.9 par due 10/2027)6.25% (Libor + 5.50%/Q)10/26/20215.9 5.8 (2)(12)(15)
First lien senior secured loan ($22.7 par due 10/2027)6.25% (Libor + 5.50%/Q)10/26/202122.7 22.5 (2)(12)
28.6 28.3 
F-25
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Imaging Business Machines, L.L.C. and Scanner Holdings Corporation (5)Provider of high-speed intelligent document scanning hardware and softwareSenior subordinated loan ($16.6 par due 6/2022)14.00%1/3/201716.6 16.6 (2)
Series A preferred stock (73,804,135 shares)1/3/20171.2 34.8 
Class A common stock (48,082 shares)1/3/2017— 0.2 
Class B common stock (431,055 shares)1/3/20170.1 1.4 
17.9 53.0 
Kene Acquisition, Inc. and Kene Holdings, L.P. (16)National utility services firm providing engineering and consulting services to natural gas, electric power and other energy and industrial end marketsFirst lien senior secured revolving loan—%8/8/2019— — (14)
First lien senior secured loan ($41.1 par due 8/2026)5.25% (Libor + 4.25%/Q)8/8/201941.1 41.1 (12)
Class A units (4,549,000 units)8/8/20194.5 5.3 (2)
45.6 46.4 
LTG Acquisition, Inc. Designer and manufacturer of display, lighting and passenger communication systems for mass transportation marketsClass A membership units (5,000 units)1/3/20175.1 — 
Maverick Acquisition, Inc. (16)Manufacturer of precision machined components for defense and high-tech industrial platformsFirst lien senior secured loan ($57.8 par due 6/2027)7.00% (Libor + 6.00%/Q)6/1/202157.8 57.3 (2)(12)
MB Aerospace Holdings II Corp. Aerospace engine components manufacturerFirst lien senior secured loan ($11.7 par due 1/2025)4.50% (Libor + 3.50%/Q)6/24/202111.0 10.9 (2)(12)
Second lien senior secured loan ($68.5 par due 1/2026)10.00% (Libor + 9.00%/Q)1/22/201868.5 61.6 (2)(12)
Second lien senior secured loan ($23.6 par due 1/2026)10.00% (Libor + 9.00%/Q)5/28/201923.6 21.3 (2)(12)
103.1 93.8 
NCWS Intermediate, Inc. and NCWS Holdings LP (16)Manufacturer and supplier of car wash equipment, parts and supplies to the conveyorized car wash marketFirst lien senior secured loan ($12.1 par due 12/2026)6.75% (Libor + 6.00%/Q)12/29/202012.1 12.0 (2)(12)
First lien senior secured loan ($176.4 par due 12/2026)6.75% (Libor + 6.00%/Q)11/4/2021176.4 174.7 (2)(12)
Class A-2 common units (12,296,000 units)12/29/202012.9 18.5 (2)
201.4 205.2 
Osmose Utilities Services, Inc. and Pine Intermediate Holding LLC Provider of structural integrity management services to transmission and distribution infrastructureSecond lien senior secured loan ($55.3 par due 6/2029)7.25% (Libor + 6.75%/M)6/23/202155.3 54.7 (2)(12)
Precinmac (US) Holdings Inc., Trimaster Manufacturing Inc. and Blade Group Holdings, LP. (16)Manufacturer of high-tolerance precision machined components and assemblies for the aerospace and defense industryFirst lien senior secured loan ($45.8 par due 8/2027)7.00% (Libor + 6.00%/M)8/31/202145.8 45.4 (2)(6)(12)
Class A units (88,420 units)8/31/202113.4 13.4 (2)
59.2 58.8 
Sunk Rock Foundry Partners LP, Hatteras Electrical Manufacturing Holding Company and Sigma Electric Manufacturing Corporation, Diecast Beacon (16)Manufacturer of metal castings, precision machined components and sub-assemblies in the electrical products, power transmission and distribution and general industrial marketsFirst lien senior secured revolving loan—%10/31/2017— — (14)
945.3 957.0 10.79%
Automobiles & Components
Automotive Keys Group, LLC and Automotive Keys Investor, LLC Provider of replacement wireless keys for automotive marketFirst lien senior secured loan ($10.0 par due 11/2025)6.00% (Libor + 5.00%/Q)12/17/202110.0 10.0 (2)(12)
Preferred units (4,113,113 units)9.00% PIK 11/6/20204.5 4.5 
Class A common units (4,113,113 units)11/6/2020— 0.6 (2)
14.5 15.1 
F-26
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Continental Acquisition Holdings, Inc. Distributor of aftermarket batteries to the electric utility vehicle, automotive, commercial, marine and industrial marketsFirst lien senior secured loan ($36.5 par due 1/2027)7.75% (Libor + 6.75%/Q)1/20/202136.5 36.5 (2)(12)
First lien senior secured loan ($33.2 par due 1/2027)7.75% (Libor + 6.75%/Q)12/22/202133.2 33.2 (2)(12)
69.7 69.7 
Eckler Industries, Inc. and Eckler Purchaser LLC (5)(16)Restoration parts and accessories provider for classic automobilesFirst lien senior secured revolving loan ($6.7 par due 5/2022)7/12/20126.5 4.7 (2)(11)
First lien senior secured loan ($26.3 par due 5/2022)7/12/201225.5 18.4 (2)(11)
Class A common units (67,972 units)7/12/201216.4 — (2)
48.4 23.1 
Faraday&Future Inc., FF Inc., Faraday SPE, LLC and Faraday Future Intelligent Electric Inc. Electric vehicle manufacturerSecond lien senior secured loan ($80.3 par due 3/2022)14.00% PIK3/1/202179.9 80.3 (2)
Warrant to purchase up to 633,008 shares of Class A common stock (expires 8/2027)8/5/20212.3 1.2 (2)
82.2 81.5 
Highline Aftermarket Acquisition, LLC, Highline Aftermarket SC Acquisition, Inc. and Highline PPC Blocker LLC (16)Manufacturer and distributor of automotive fluidsFirst lien senior secured revolving loan ($5.9 par due 11/2025)3.85% (Libor + 3.75%/M)11/9/20205.9 5.8 (2)(15)
Second lien senior secured loan ($70.4 par due 11/2028)8.75% (Libor + 8.00%/Q)11/9/202070.4 66.1 (2)(12)
Co-invest units (59,230 units)11/4/20205.9 3.5 (2)
82.2 75.4 
Mac Lean-Fogg Company and MacLean-Fogg Holdings, L.L.C. Manufacturer and supplier for the power utility and automotive markets worldwideFirst lien senior secured loan ($123.8 par due 12/2025)5.88% (Libor + 5.25%/M)12/21/2018123.5 123.8 (12)
First lien senior secured loan ($19.1 par due 12/2025)5.88% (Libor + 5.25%/M)12/21/201819.1 19.1 (2)(12)
Preferred units (59,453 units)13.75% (4.50% Cash + 9.25% PIK)10/9/201575.0 75.0 
217.6 217.9 
Mavis Tire Express Services Topco Corp., Metis HoldCo, Inc., and Metis TopCo, LP (16)Auto parts retailerFirst lien senior secured revolving loan ($15.6 par due 5/2026)3.85% (Libor + 3.75%/M)5/4/202115.6 15.3 (2)(15)
Series A preferred stock (68,601 shares)7.00% PIK 5/4/202171.8 71.8 (2)
Class A-1 units (24,586 units)5/4/202124.6 26.8 (2)
112.0 113.9 
McLaren Group Limited Automobile manufacturer and retailerSenior preference shares (200,000 shares)12.5% PIK8/2/202120.7 27.1 (2)(6)
Warrant to purchase up to 49,181 ordinary shares (expires 8/2028)8/2/20215.5 5.1 (2)(6)
Warrant to purchase up to 13,776 ordinary shares (expires 8/2028)8/2/20211.6 1.4 (2)(6)
27.8 33.6 
SK SPV IV, LLC Collision repair site operatorSeries A common stock (12,500 units)8/18/20140.6 — (2)
Series B common stock (12,500 units)8/18/20140.6 — (2)
1.2 — 
Sun Acquirer Corp. and Sun TopCo, LP (16)Automotive parts and repair services retailerFirst lien senior secured loan ($17.4 par due 9/2028)6.50% (Libor + 5.75%/Q)11/18/202117.4 17.2 (2)(12)
First lien senior secured loan ($74.4 par due 9/2028)6.50% (Libor + 5.75%/Q)9/8/202174.4 73.7 (2)(12)
Class A units (74,896 units)9/8/20217.5 9.2 (2)
99.3 100.1 
F-27
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Wand Newco 3, Inc.Collision repair companySecond lien senior secured loan ($180.2 par due 2/2027)7.43% (Libor + 7.25%/Q)2/5/2019178.2 180.2 (2)
933.1 910.5 10.27%
Power Generation
Apex Clean Energy TopCo, LLC (4)Developer, builder and owner of utility-scale wind and solar power facilitiesClass A common units (1,335,609.89 units)11/17/202180.5 79.1 
Ferrellgas, L.P. Distributor of propane and related accessoriesSenior preferred units (55,708 units)8.96%3/30/202155.7 55.7 
Heelstone Renewable Energy, LLC (5)Provider of cloud based IT solutions, infrastructure and servicesFirst lien senior secured loan ($39.0 par due 4/2024)8.00% (Libor + 7.00%/Q)4/14/202139.0 39.0 (2)(12)
Class A1 units (100 units)4/14/202123.5 30.4 
62.5 69.4 
Navisun LLC and Navisun Holdings LLC (5)Owner and operater of commercial and industrial solar projectsFirst lien senior secured loan ($54.4 par due 11/2023)8.00% PIK 11/15/201754.4 54.4 (2)
First lien senior secured loan ($15.2 par due 11/2023)9.00% PIK 3/7/201915.2 15.2 (2)
First lien senior secured loan ($46.5 par due 11/2023)8% (5.00% Cash + 3.00%PIK/Q) 8/15/201946.5 46.5 (2)
Series A preferred units (1,000 units)10.50% PIK11/15/201714.7 15.8 
Class A units (550 units)11/15/2017— 11.8 
130.8 143.7 
Opal Fuels LLC Owner of natural gas facilitiesSenior subordinated loan ($52.7 par due 12/2026)8.00% PIK 5/1/202143.8 47.8 
PosiGen, Inc. Seller and leaser of solar power systems for residential and commercial customersWarrant to purchase up to 101,555 shares of series D-1 preferred stock (expires 6/2028)6/10/2021— — (2)
Warrant to purchase up to 1,112,022 shares of common stock (expires 1/2027)1/29/2020— — (2)
— — 
Potomac Intermediate Holdings II LLC (5)Gas turbine power generation facilities operatorSeries A units (220,884,442 units)11/9/2021179.7 179.7 
Riverview Power LLC Operator of natural gas and oil fired power generation facilitiesFirst lien senior secured loan ($54.2 par due 6/2024)10.00% (Libor + 9.00%/Q)8/30/202153.7 54.2 (2)(12)
SE1 Generation, LLC Solar power developerSenior subordinated loan ($58.8 par due 12/2022)10.25% (4.75% Cash + 5.50% PIK/Q) 12/17/201958.8 57.0 (2)
Sunrun Atlas Depositor 2019-2, LLC and Sunrun Atlas Holdings 2019-2, LLC Residential solar energy providerFirst lien senior secured loan ($0.1 par due 2/2055)3.61%10/28/20190.1 0.1 (2)
Senior subordinated loan ($142.5 par due 11/2025)8.75% (Libor + 2.75% Cash + 4.00% PIK/Q)11/26/2019142.5 142.5 (2)(12)
142.6 142.6 
Sunrun Xanadu Issuer 2019-1, LLC and Sunrun Xanadu Holdings 2019-1, LLC Residential solar energy providerFirst lien senior secured loan ($0.4 par due 6/2054)3.98%6/7/20190.4 0.4 (2)
Senior subordinated loan ($69.3 par due 7/2030)8.75% (Libor + 3.98% Cash + 2.77% PIK/Q)6/27/201969.3 69.3 (12)
69.7 69.7 
877.8 898.9 10.14%
Consumer Durables & Apparel
Badger Sportswear Acquisition, Inc. Provider of team uniforms and athletic wearSecond lien senior secured loan ($56.8 par due 3/2024)10.25% (Libor + 9.00%/Q)9/6/201656.8 56.8 (2)(12)
Bowhunter Holdings, LLC Provider of branded archery and bowhunting accessoriesCommon units (421 units)4/24/20144.2 — 
Centric Brands LLC and Centric Brands GP LLC (16)Designer, marketer and distributor of licensed and owned apparelFirst lien senior secured revolving loan ($2.3 par due 10/2024)6.50% (Libor + 5.50%/Q)5/20/20202.3 2.3 (2)(12)
F-28
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($67.9 par due 10/2025)10% PIK (Libor + 9%/Q)10/29/201867.8 67.3 (2)(12)
Membership interests (279,392 interests)10/29/20182.9 11.5 (2)
73.0 81.1 
DRS Holdings III, Inc. and DRS Holdings I, Inc. (16)Footwear and orthopedic foot-care brandFirst lien senior secured loan ($29.8 par due 11/2025)6.75% (Libor + 5.75%/Q)11/1/201929.8 29.8 (12)
First lien senior secured loan ($46.7 par due 11/2025)6.75% (Libor + 5.75%/Q)6/1/202146.7 46.7 (12)
Common stock (8,549 shares)11/1/20198.5 11.3 (2)
85.0 87.8 
Implus Footcare, LLC Provider of footwear and other accessoriesFirst lien senior secured loan ($103.3 par due 4/2024)8.75% (Libor + 7.75%/Q)6/1/2017103.3 95.1 (2)(12)
First lien senior secured loan ($14.1 par due 4/2024)8.75% (Libor + 7.75%/Q)6/1/201714.1 13.0 (2)(12)
First lien senior secured loan ($1.3 par due 4/2024)8.75% (Libor + 7.75%/Q)6/30/20161.3 1.2 (2)(12)
First lien senior secured loan ($5.0 par due 4/2024)8.75% (Libor + 7.75%/Q)7/17/20185.0 4.6 (2)(12)
123.7 113.9 
Lew's Intermediate Holdings, LLC (16)Outdoor brand holding companyFirst lien senior secured revolving loan ($1.8 par due 2/2026)4.14% (Libor + 4.00%/Q)2/11/20211.8 1.8 (2)
First lien senior secured loan ($1.0 par due 2/2028)5.75% (Libor + 5.00%/Q)2/11/20211.0 1.0 (2)(12)
2.8 2.8 
Pelican Products, Inc. (16)Flashlights manufacturerSecond lien senior secured loan ($60.0 par due 12/2029)8.25% (Libor + 7.75%/Q)12/31/202160.0 59.4 (2)(12)
Rawlings Sporting Goods Company, Inc. and Easton Diamond Sports, LLC Sports equipment manufacturing companyFirst lien senior secured loan ($93.2 par due 12/2026)7.75% (Libor + 6.75%/Q)12/31/202093.2 93.2 (2)(12)
First lien senior secured loan ($8.8 par due 12/2026)7.75% (Libor + 6.75%/Q)11/3/20218.8 8.8 (2)(12)
102.0 102.0 
Reef Lifestyle, LLC (16)Apparel retailerFirst lien senior secured revolving loan ($12.1 par due 10/2024)8.5% (Libor + 5.50% Cash + 2.00% PIK/M)10/26/201812.1 12.1 (2)(12)(15)
First lien senior secured revolving loan ($0.6 par due 10/2024)8.5% (Libor + 5.50% Cash + 2.00% PIK/M)7/31/20200.6 0.6 (2)(12)
First lien senior secured loan ($25.0 par due 10/2024)8.5% (Libor + 5.50% Cash + 2.00% PIK/Q)10/26/201825.0 25.0 (12)
First lien senior secured loan ($1.1 par due 10/2024)8.50% (Libor + 7.50%/Q)7/31/20201.1 1.1 (12)
38.8 38.8 
S Toys Holdings LLC (fka The Step2 Company, LLC) (5)Toy manufacturerClass B common units (126,278,000 units)10/30/2014— 0.2 
Common units (1,116,879 units)4/1/2011— — 
Warrant to purchase up to 3,157,895 units4/1/2010— — 
— 0.2 
SHO Holding I Corporation Manufacturer and distributor of slip resistant footwearSecond lien senior secured loan ($116.2 par due 10/2024)9.54% PIK (Libor + 8.54%/M)10/27/2015115.6 98.9 (2)(12)
Shock Doctor, Inc. and Shock Doctor Holdings, LLC (4)(16)Developer, marketer and distributor of sports protection equipment and accessoriesFirst lien senior secured revolving loan ($1.1 par due 5/2024)7.25% (Base Rate + 4.00%/M)5/21/20191.1 1.1 (2)(12)(15)
First lien senior secured revolving loan ($0.1 par due 5/2024)6.50% (Libor + 5.50%/M)5/21/20190.1 0.1 (2)(12)(15)
First lien senior secured loan ($19.2 par due 5/2024)6.00% (Libor + 5.00%/Q)5/21/201919.1 19.1 (2)(12)
Class A preferred units (50,000 units)3/14/20145.0 0.4 (2)
Class C preferred units (50,000 units)4/22/20155.0 0.4 (2)
Preferred units (14,591 units)5/14/20191.6 2.0 (2)
31.9 23.1 
F-29
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
SVP-Singer Holdings Inc. and SVP-Singer Holdings LP Manufacturer of consumer sewing machinesFirst lien senior secured loan ($44.9 par due 7/2028)7.50% (Libor + 6.75%/Q)7/30/202143.7 42.3 (2)(12)
Class A common units (6,264,706 units)7/30/202126.1 24.5 (2)
69.8 66.8 
Totes Isotoner Corporation and Totes Ultimate Holdco, Inc. (4)Designer, marketer, and distributor of rain and cold weather productsFirst lien senior secured loan ($2.2 par due 12/2024)7.00% (Libor + 6.00%/Q)12/23/20192.2 1.9 (2)(12)
First lien senior secured loan ($1.6 par due 6/2024)5.00% (Libor + 4.00%/Q)12/23/20191.6 1.6 (2)(12)
Common stock (861,000 shares)12/23/20196.0 0.4 (2)
9.8 3.9 
Varsity Brands Holding Co., Inc. and BCPE Hercules Holdings, LP Leading manufacturer and distributor of textiles, apparel & luxury goodsSecond lien senior secured loan ($21.1 par due 12/2025)9.25% (Libor + 8.25%/M)7/30/201821.1 20.3 (2)(12)
Second lien senior secured loan ($122.7 par due 12/2025)9.25% (Libor + 8.25%/M)12/15/2017122.8 117.9 (12)
Class A units (1,400 units)7/30/20181.4 0.7 (2)
145.3 138.9 
918.7 874.4 9.86%
Consumer Services
ADF Capital, Inc., ADF Restaurant Group, LLC, and ARG Restaurant Holdings, Inc. (5)Restaurant owner and operatorFirst lien senior secured loan ($111.4 par due 12/2022)11/27/2006— — (2)(11)
Aimbridge Acquisition Co., Inc. Hotel operatorSecond lien senior secured loan ($22.5 par due 2/2027)7.60% (Libor + 7.50%/M)2/1/201922.2 21.4 (2)
American Residential Services L.L.C. and Aragorn Parent Holdings LP (16)Heating, ventilation and air conditioning services providerSecond lien senior secured loan ($56.4 par due 10/2028)9.50% (Libor + 8.50%/Q)10/15/202056.4 56.4 (2)(12)
Series A preferred units (2,531,500 units)10.00% PIK 10/15/20202.8 3.7 (2)
59.2 60.1 
ATI Restoration, LLC (16)Provider of disaster recovery servicesFirst lien senior secured revolving loan ($8.1 par due 7/2026)6.00% (Libor + 5.00%/Q)7/31/20208.1 8.1 (2)(12)(15)
First lien senior secured revolving loan ($2.5 par due 7/2026)7.25% (Base Rate + 4.00%/Q)7/31/20202.5 2.5 (12)
First lien senior secured loan ($33.3 par due 7/2026)6.00% (Libor + 5.00%/Q)7/31/202033.3 33.3 (12)
43.9 43.9 
Belfor Holdings, Inc. (16)Disaster recovery services providerFirst lien senior secured revolving loan ($0.0 par due 4/2024)5.50% (Base Rate + 2.25%/Q)4/4/2019— — (2)(15)
Cipriani USA, Inc. and Cipriani Group Holding S.A.R.L. Manager and operator of banquet facilities, restaurants, hotels and other leisure propertiesFirst lien senior secured loan ($68.2 par due 5/2023)11.75% (Libor + 10.75%/Q)5/30/201867.4 61.4 (2)(12)
First lien senior secured loan ($15.2 par due 5/2023)11.75% (Libor + 10.75%/Q)11/5/201815.2 13.6 (2)(12)
First lien senior secured loan ($15.5 par due 5/2023)11.75% PIK (Libor + 10.75%/M)7/3/201915.3 13.9 (2)(12)
First lien senior secured loan ($20.0 par due 5/2023)11.75% (Libor + 10.75%/Q)12/27/201918.9 18.0 (2)(12)
First lien senior secured loan ($3.0 par due 5/2023)11.75% (Libor + 10.75%/Q)8/20/20183.0 2.7 (2)(12)
First lien senior secured loan ($4.9 par due 5/2023)11.75% (Libor + 10.75%/Q)6/30/20204.9 4.4 (2)(12)
First lien senior secured loan ($30.0 par due 5/2023)11.75% PIK (Libor + 10.75%/Q)12/22/202028.8 27.0 (2)(12)
Warrant to purchase up to 718.66 shares (expires 3/2041)3/21/20212.1 3.4 (2)(6)
155.6 144.4 
Concert Golf Partners Holdco LLC (16)Golf club owner and operatorFirst lien senior secured revolving loan ($0.1 par due 8/2025)5.50% (Libor + 4.50%/Q)8/20/20190.1 0.1 (2)(12)
F-30
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Essential Services Holding Corporation and OMERS Mahomes Investment Holdings LLC (16)Provider of plumbing and HVAC servicesFirst lien senior secured revolving loan—%11/16/2020— — (14)
First lien senior secured loan ($72.7 par due 11/2026)6.75% (Libor + 5.75%/Q)11/16/202072.7 72.7 (2)(12)
First lien senior secured loan ($80.4 par due 11/2026)6.75% (Libor + 5.75%/Q)4/2/202180.4 80.4 (2)(12)
Class A units (6,099 units)11/16/202020.9 34.4 (2)
174.0 187.5 
Garden Fresh Restaurant Corp. and GFRC Holdings LLC (16)Restaurant owner and operatorFirst lien senior secured revolving loan ($7.5 par due 2/2022)2/1/2017— — (2)(11)
First lien senior secured loan ($21.6 par due 2/2022)2/1/2017— — (2)(11)
— — 
Jenny C Acquisition, Inc. Health club franchisorSenior subordinated loan ($1.4 par due 4/2025)8.00% PIK 4/5/20191.4 1.4 (2)
Jim N Nicks Management, LLC (16)Restaurant owner and operatorFirst lien senior secured revolving loan ($2.8 par due 7/2023)6.25% (Libor + 5.25%/Q)7/10/20172.8 2.8 (2)(12)
First lien senior secured loan ($14.7 par due 7/2023)6.25% (Libor + 5.25%/Q)7/10/201714.7 14.7 (12)
17.5 17.5 
KeyStone Sub-debt HoldCo, LLC Planet Fitness franchiseeSenior subordinated loan ($54.3 par due 1/2027)10.00% PIK 1/20/202151.2 52.7 (2)
Senior subordinated loan ($7.2 par due 1/2027)10.00% PIK 9/30/20217.2 7.0 (2)
Warrant to purchase up to 24.7581 Class C interests (expires 1/2027)1/20/20213.6 4.2 (2)
62.0 63.9 
Len the Plumber, LLC, LTP Neffsville, LLC, LTP of NJ, LLC, and LTP LSI, LLC Provider of plumbing servicesFirst lien senior secured loan ($9.1 par due 2/2026)7.00% (Libor + 6.00%/Q)10/14/20219.1 9.0 (2)(12)
LSP Holdco, LLC and ZBS Mechanical Group Co-Invest Fund 2, LLC (16)Provider of residential HVAC and plumbing servicesFirst lien senior secured loan ($6.9 par due 10/2026)7.00% (Libor + 6.00%/Q)10/7/20216.9 6.8 (2)(12)
Membership interest (2,771,000 interests)10/7/20212.8 2.8 
9.7 9.6 
ME Equity LLC Franchisor in the massage industryCommon stock (3,000,000 shares)9/27/20123.0 3.1 (2)
Movati Athletic (Group) Inc. Premier health club operatorFirst lien senior secured loan ($0.2 par due 10/2024)7.45% (Base rate + 3.70% Cash + .50% PIK/Q)10/5/20170.2 0.2 (2)(6)(12)
First lien senior secured loan ($2.9 par due 10/2024)7.50% (CDOR + 5.50% Cash, 0.50% PIK/Q)10/5/20173.0 2.7 (2)(6)(12)
First lien senior secured loan ($2.3 par due 10/2024)7.50% (CDOR + 5.50% Cash + .50% PIK/Q)10/5/20172.2 2.1 (6)(12)
5.4 5.0 
OTG Management, LLC Airport restaurant operatorClass A preferred units (3,000,000 units)8/26/201625.3 15.8 
Common units (3,000,000 units)1/5/20113.0 — 
Warrant to purchase up to 7.73% of common units6/19/20080.1 — 
28.4 15.8 
Pyramid Management Advisors, LLC and Pyramid Investors, LLC (16)Hotel operatorFirst lien senior secured revolving loan ($9.6 par due 7/2023)8% (Libor + 5.75% Cash + 1.25% PIK/Q)4/12/20189.6 8.8 (2)(12)(15)
First lien senior secured loan ($18.2 par due 7/2023)8% (Libor + 5.75% Cash + 1.25% PIK/Q)4/12/201818.2 16.8 (12)
First lien senior secured loan ($6.4 par due 7/2023)8% (Libor + 5.75% Cash + 1.25% PIK/Q)12/27/20196.4 5.8 (2)(12)
Preferred membership units (996,833 units)7/15/20161.0 0.5 
35.2 31.9 
F-31
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Redwood Services, LLC and Redwood Services Holdco, LLC (16)Provider of residential HVAC and plumbing servicesFirst lien senior secured loan ($1.0 par due 12/2025)8.00% (Libor + 7.00%/Q)12/22/20211.0 1.0 (2)(12)
First lien senior secured loan ($12.5 par due 12/2025)8.00% (Libor + 7.00%/Q)12/31/202012.5 12.5 (2)(12)
Series D units (5,291,723 units)8.00% PIK 12/31/20205.7 11.6 
19.2 25.1 
Safe Home Security, Inc., Security Systems Inc., Safe Home Monitoring, Inc., National Protective Services, Inc., Bright Integrations LLC and Medguard Alert, Inc. Provider of safety systems for business and residential customersFirst lien senior secured loan ($46.2 par due 8/2024)8.25% (Libor + 7.25%/M)8/4/202046.2 46.2 (2)(12)
SV-Burton Holdings, LLC & LBC Breeze Holdings LLC (16)Provider of HVAC and plumbing services to residential and commercial customersFirst lien senior secured loan ($11.0 par due 12/2027)6.50% (Libor + 5.50%/Q)12/6/202111.0 10.9 (2)(12)
Class A units (4,296 units)12/6/20214.3 4.3 
15.3 15.2 
Taymax Group, L.P., Taymax Group G.P., LLC, PF Salem Canada ULC and TCP Fit Parent, L.P. (16)Planet Fitness franchiseeFirst lien senior secured revolving loan ($0.5 par due 7/2024)6.75% (Libor + 5.25% Cash + .50 PIK/Q)7/31/20180.5 0.5 (2)(12)
First lien senior secured loan ($1.1 par due 7/2025)6.25% (Libor + 4.75% Cash + .50 PIK/Q)3/5/20201.1 1.1 (2)(12)
Class A units (37,020 units)7/31/20183.8 2.0 
5.4 3.6 
The Alaska Club Partners, LLC, Athletic Club Partners LLC and The Alaska Club, Inc. (16)Premier health club operatorFirst lien senior secured loan ($15.5 par due 12/2024)10.25% (Base rate + 5.00% Cash + 2.00% PIK/Q)12/16/201915.5 14.1 (2)(12)
The Arcticom Group, LLC and AMCP Mechanical Holdings, LP (16)Refrigeration, heating, ventilation and air conditioning services providerFirst lien senior secured revolving loan ($2.0 par due 12/2027)8.25% (Base Rate + 5.00%/Q)12/22/20212.0 2.0 (2)(12)
First lien senior secured loan ($47.2 par due 12/2027)6.75% (Libor + 6.00%/Q)12/22/202147.2 46.7 (2)(12)
Class A units (4,897,000 units)12/22/20214.9 4.9 
54.1 53.6 
YE Brands Holdings, LLC (16)Sports camp operatorFirst lien senior secured loan ($8.0 par due 10/2027)6.25% (Libor + 5.50%/Q)10/18/20218.0 7.9 (2)(12)
790.4 780.3 8.80%
Retailing and Distribution
Atlas Intermediate III, L.L.C. (16)Specialty chemicals distributorFirst lien senior secured loan ($0.2 par due 4/2025)6.50% (Libor + 5.50%/Q)3/31/20210.2 0.2 (2)(12)
First lien senior secured loan ($2.1 par due 4/2025)6.50% (Libor + 5.50%/Q)11/19/20212.1 2.1 (2)(12)
2.3 2.3 
Bamboo Purchaser, Inc. (16)Provider of nursery, garden, and greenhouse productsFirst lien senior secured loan ($39.1 par due 11/2027)6.75% (Libor + 6.00%/Q)11/5/202139.1 38.6 (2)(12)
Display Holding Company, Inc., Saldon Holdings, Inc. and Fastsigns Holdings Inc. (16)Provider of visual communications solutionsFirst lien senior secured loan ($16.0 par due 3/2025)6.65% (Libor + 5.65%/M)3/13/201916.0 16.0 (12)
First lien senior secured loan ($0.1 par due 3/2025)6.65% (Libor + 5.65%/M)8/27/20190.1 0.1 (2)(12)
First lien senior secured loan ($0.1 par due 3/2025)6.65% (Libor + 5.65%/M)6/25/20210.1 0.1 (2)(12)
Common units (600 units)3/13/20190.6 1.0 (2)
16.8 17.2 
GPM Investments, LLC and ARKO Corp. Convenience store operatorCommon stock (2,088,478 shares)12/22/202019.8 18.3 
Warrant to purchase up to 1,088,780 common stock (expires 12/2025)12/22/20201.6 1.9 (2)
21.4 20.2 
Marcone Yellowstone Buyer Inc. and Marcone Yellowstone Holdings, LLC Distributor of OEM appliance aftermarket partsFirst lien senior secured loan ($18.7 par due 6/2028)6.25% (Libor + 5.50%/Q)6/23/202118.7 18.5 (2)(12)
First lien senior secured loan ($2.1 par due 6/2028)6.25% (Libor + 5.50%/Q)12/31/20212.1 2.1 (12)
F-32
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($6.6 par due 6/2028)6.00% (Libor + 5.25%/Q)12/31/20216.6 6.5 (12)
First lien senior secured loan ($35.0 par due 6/2028)6.25% (Libor + 5.50%/Q)6/23/202135.0 34.6 (2)(12)
Class A common units (5,578 units)6/23/20215.8 9.3 (2)
68.2 71.0 
McKenzie Creative Brands, LLC (16)Designer, manufacturer and distributor of hunting-related suppliesFirst lien senior secured loan ($84.5 par due 9/2023)6.75% (Libor + 5.75%/Q)9/18/201484.5 84.5 (8)(12)
First lien senior secured loan ($5.5 par due 9/2023)6.75% (Libor + 5.75%/A)9/18/20145.5 5.5 (12)
90.0 90.0 
Moon Valley Nursery of Arizona Retail, LLC, Moon Valley Nursery Farm Holdings, LLC, Moon Valley Nursery RE Holdings LLC, and Stonecourt IV Partners, LP (16)Operator of retail and wholesale tree and plant nurseriesFirst lien senior secured loan ($79.0 par due 10/2027)6.75% (Libor + 5.75%/Q)10/8/202179.0 78.2 (12)
Limited partnership interests (96,939,151.71 interests)10/8/202196.9 96.9 
175.9 175.1 
North Haven Falcon Buyer, LLC and North Haven Falcon Holding Company, LLC (16)Manufacturer of aftermarket golf cart parts and accessoriesFirst lien senior secured loan ($22.3 par due 5/2027)7.00% (Libor + 6.00%/Q)5/19/202122.3 22.1 (2)(12)
Class A units (50,000 units)5/19/20215.0 4.1 
27.3 26.2 
Reddy Ice LLC (16)Packaged ice manufacturer and distributorFirst lien senior secured revolving loan—%7/1/2019— — (14)
First lien senior secured loan ($61.9 par due 7/2025)7.50% (Libor + 6.50%/Q)7/1/201961.9 61.9 (12)
First lien senior secured loan ($4.3 par due 7/2025)7.50% (Libor + 6.50%/B)11/16/20204.3 4.3 (2)(12)
First lien senior secured loan ($13.0 par due 7/2025)7.50% (Libor + 6.50%/B)10/20/202113.0 13.0 (2)(12)
79.2 79.2 
SCIH Salt Holdings Inc. (16)Salt and packaged ice melt manufacturer and distributorFirst lien senior secured revolving loan ($2.1 par due 3/2025)5.00% (Libor + 4.00%/M)3/16/20202.0 1.9 (2)(12)(15)
US Salt Investors, LLC and Emerald Lake Pearl Acquisition-A, L.P. (16)Producer and packager of compressed, household, and packaged saltFirst lien senior secured loan ($40.1 par due 7/2028)6.25% (Libor + 5.50%/Q)7/19/202140.1 39.7 (2)(12)
Limited partner interests (0.4% interest)7/19/20210.8 0.8 (2)
40.9 40.5 
563.1 562.2 6.34%
Media & Entertainment
Aventine Intermediate LLC & Aventine Holdings II LLC (16)Media and production companyFirst lien senior secured loan ($6.6 par due 6/2027)6.75% (Libor + 6.00%/Q)12/22/20216.6 6.5 (2)(12)
Senior subordinated loan ($35.6 par due 12/2030)10.25%12/22/202135.6 35.3 (2)
42.2 41.8 
CMW Parent LLC (fka Black Arrow, Inc.) Multiplatform media firmSeries A units (32 units)9/11/2015— — (2)
Global Music Rights, LLC (16)Music right management companyFirst lien senior secured loan ($22.3 par due 8/2028)6.50% (Libor + 5.75%/Q)8/27/202122.3 22.1 (2)(12)
Miami Beckham United LLC American professional soccer clubClass A preferred units (85,000 units)8.50% PIK 9/17/202187.1 87.1 
MMax Investment Partners, Inc. (d/b/a Professional Fighters League) and PFL MMA, Inc. Mixed martial arts leagueFirst lien senior secured loan ($15.4 par due 1/2026)10.00% PIK 1/20/202114.0 13.9 (2)
Warrant to purchase up to 3,223,122 shares of common stock (expires 1/2027)1/20/20211.7 1.9 (2)
15.7 15.8 
OUTFRONT Media Inc. Provider of out-of-home advertisingSeries A convertible perpetual preferred stock(25,000 shares)7.00%4/20/202025.0 44.4 (2)(6)
F-33
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Padres L.P. (16)Sports and entertainmentFirst lien senior secured loan ($92.8 par due 3/2027)6.00% (Libor + 5.00%/M)3/18/202192.8 92.8 (2)(12)
Production Resource Group, L.L.C. and PRG III, LLC (4)Provider of rental equipment, labor, production management, scenery, and other products to various entertainment end-marketsFirst lien senior secured loan ($15.0 par due 8/2024)6% (Libor + 1.90% Cash + 3.10% PIK/Q)7/31/202014.9 15.0 (2)(12)
First lien senior secured loan ($34.9 par due 8/2024)9.75% PIK (Libor + 8.5%/Q)8/21/201834.9 34.9 (2)(12)
First lien senior secured loan ($0.8 par due 8/2024)8.5% (Libor + 5.00% Cash + 2.50% PIK/Q)6/22/20210.8 0.8 (2)(12)
First lien senior secured loan ($5.0 par due 8/2024)6% PIK (Libor + 5%/Q)8/5/20215.0 5.0 (2)(12)
Class A units (113,617 units)10/6/20204.9 0.6 (2)
60.5 56.3 
Storm Investment S.a.r.l. Spanish soccer clubFirst lien senior secured loan ($70.2 par due 6/2029)3.88% (Euribor + 3.75%/A)6/24/202173.6 70.3 (2)(6)
Class A redeemable shares (3,297,791 shares)6/24/20211.6 1.5 (2)(6)
Class B redeemable shares (3,297,791 shares)6/24/20211.6 1.5 (2)(6)
Class C redeemable shares (3,297,791 shares)6/24/20211.6 1.5 (2)(6)
Class D redeemable shares (3,297,791 shares)6/24/20211.6 1.5 (2)(6)
Class E redeemable shares (3,297,791 shares)6/24/20211.6 1.5 (2)(6)
Class F redeemable shares (3,297,791 shares)6/24/20211.6 1.5 (2)(6)
Class G redeemable shares (3,297,791 shares)6/24/20211.6 1.5 (2)(6)
Class H redeemable shares (3,297,791 shares)6/24/20211.6 1.5 (2)(6)
Class I redeemable shares (3,297,791 shares)6/24/20211.6 1.5 (2)(6)
Ordinary shares (3,958 shares)6/24/2021— — (2)(6)
88.0 83.8 
The Teaching Company Holdings, Inc. Education publications providerPreferred stock (10,663 shares)9/29/20061.1 2.9 (2)
Common stock (15,393 shares)9/29/2006— 1.2 (2)
1.1 4.1 
434.7 448.2 5.05%
Food and Beverage
American Seafoods Group LLC and American Seafoods Partners LLC Harvester and processor of seafoodClass A units (77,922 units)8/19/20150.1 0.2 (2)
Warrant to purchase up to 7,422,078 Class A units (expires 8/2035)8/19/20157.4 18.9 (2)
7.5 19.1 
Berner Food & Beverage, LLC (16)Supplier of dairy-based food and beverage productsFirst lien senior secured revolving loan ($0.4 par due 7/2026)8.75% (Base Rate + 5.50%/Q)7/30/20210.4 0.4 (2)(12)
First lien senior secured revolving loan ($0.3 par due 7/2026)7.50% (Libor + 6.50%/Q)7/30/20210.3 0.3 (2)(12)
0.7 0.7 
Bragg Live Food Products, LLC and SPC Investment Co., L.P. (4)(16)Health food companyFirst lien senior secured revolving loan ($1.7 par due 12/2025)7.25% (Libor + 6.25%/Q)3/11/20191.7 1.6 (2)(12)
First lien senior secured loan ($39.4 par due 12/2025)7.25% (Libor + 6.25%/Q)12/28/202039.4 37.4 (12)
Common units (14,850 units)3/11/201911.5 8.8 (2)
52.6 47.8 
CHG PPC Parent LLC & PPC CHG Blocker LLC Diversified food products manufacturerSecond lien senior secured loan ($94.6 par due 12/2029)7.25% (Libor + 6.75%/M)12/8/202194.6 93.7 (2)(12)
F-34
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Common units (58.56 units)12/10/20213.0 3.0 (2)
97.6 96.7 
Florida Food Products, LLC Provider of plant extracts and juicesFirst lien senior secured loan ($4.3 par due 10/2028)5.75% (Libor + 5.00%/M)10/18/20214.3 4.3 (2)(12)
Second lien senior secured loan ($71.8 par due 10/2029)8.75% (Libor + 8.00%/Q)10/18/202171.8 71.1 (2)(12)
76.1 75.4 
Gehl Foods, LLC and GF Parent LLC Producer of low-acid, aseptic food and beverage productsClass A preferred units (2,940 units)5/13/20152.9 — (2)
Class A common units (60,000 units)5/13/20150.1 — (2)
Class B common units (0.26 units)5/13/2015— — (2)
3.0 — 
KC Culinarte Intermediate, LLC Manufacturer of fresh refrigerated and frozen food productsFirst lien senior secured loan ($29.1 par due 8/2025)4.75% (Libor + 3.75%/M)1/24/202028.9 27.6 (12)
Second lien senior secured loan ($35.7 par due 8/2026)8.75% (Libor + 7.75%/M)8/24/201835.7 32.0 (2)(12)
64.6 59.6 
Manna Pro Products, LLC (16)Manufacturer and supplier of specialty nutrition and care products for animalsFirst lien senior secured revolving loan ($1.9 par due 12/2026)7.00% (Libor + 6.00%/M)12/10/20201.9 1.9 (2)(12)
RF HP SCF Investor, LLC Branded specialty food companyMembership interest (10.08% interest)12/22/201612.5 19.0 (2)(6)
Teasdale Foods, Inc. and Familia Group Holdings Inc. Provider of beans, sauces and hominy to the retail, foodservice and wholesale channelsFirst lien senior secured loan ($78.3 par due 12/2025)8.00% (Libor + 6.60% Cash + .40 PIK/Q)12/18/202078.3 73.6 (2)(12)
Warrant to purchase up to 57,827 shares of common stock (expires 2/2034)2/4/2019— — (2)
78.3 73.6 
Triton Water Holdings, Inc.Producer and provider of bottled water brandsFirst lien senior secured loan ($1.0 par due 3/2028)4.00% (Libor + 3.50%/Q)3/17/20211.0 1.0 (2)(12)(19)
Senior subordinated loan ($0.1 par due 4/2029)6.25%3/17/20210.1 0.1 (2)(19)
1.1 1.1 
Watermill Express, LLC and Watermill Express Holdings, LLC (16)Owner and operator of self-service water and ice stationsFirst lien senior secured revolving loan—%4/20/2021— — (14)
First lien senior secured loan ($19.4 par due 4/2027)6.25% (Libor + 5.25%/Q)4/20/202119.4 19.4 (12)
Class A units (282,200 units)8.00% PIK 4/20/20213.0 2.7 
22.4 22.1 
Winebow Holdings, Inc. and The Vintner Group, Inc. Importer and distributor of wineFirst lien senior secured loan ($28.3 par due 7/2025)7.25% (Libor + 6.25%/M)4/19/202128.3 28.3 (12)
446.6 445.3 5.02%
Materials
ASP-r-pac Acquisition Co LLC and ASP-r-pac Holdings LP (16)Manufacturer and supplier of printed packaging and trimmingsFirst lien senior secured revolving loan ($1.2 par due 12/2027)6.75% (Libor + 6.00%/Q)12/29/20211.2 1.2 (2)(12)
First lien senior secured loan ($46.3 par due 12/2027)6.75% (Libor + 6.00%/Q)12/29/202146.3 45.8 (2)(12)
Class A units (195,990 units)12/29/202119.6 19.6 (2)
67.1 66.6 
Genomatica, Inc. Developer of a biotechnology platform for the production of chemical productsWarrant to purchase 322,422 shares of Series D preferred stock (expires 3/2023)3/28/2013— — 
Halex Holdings, Inc. (5)Manufacturer of flooring installation productsCommon stock (51,853 shares)1/3/2017— — 
H-Food Holdings, LLC and Matterhorn Parent, LLC Food contract manufacturerFirst lien senior secured loan ($75.0 par due 5/2025)6.00% (Libor + 5.00%/M)12/29/202174.6 75.0 (2)(12)
Second lien senior secured loan ($73.0 par due 3/2026)7.10% (Libor + 7.00%/M)11/25/201873.0 73.0 (2)
Common units (5,827 units)11/25/20185.8 6.8 
153.4 154.8 
IntraPac International LLC and IntraPac Canada Corporation (16)Manufacturer of diversified packaging solutions and plastic injection molded productsFirst lien senior secured revolving loan ($6.2 par due 1/2025)6.25% (Libor + 5.50%/Q)1/11/20196.2 6.2 (2)(6)(12)
F-35
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($14.8 par due 1/2026)6.25% (Libor + 5.50%/Q)1/11/201914.8 14.8 (6)(12)
First lien senior secured loan ($10.8 par due 1/2026)6.25% (Libor + 5.50%/Q)6/4/202110.8 10.8 (2)(6)(12)
31.8 31.8 
Nelipak Holding Company, Nelipak European Holdings Cooperatief U.A., KNPAK Holdings, LP and PAKNK Netherlands Treasury B.V. (16)Manufacturer of thermoformed packaging for medical devicesFirst lien senior secured revolving loan ($0.2 par due 7/2024)5.25% (Libor + 4.25%/Q)7/2/20190.2 0.2 (2)(6)(12)
First lien senior secured loan ($15.0 par due 7/2026)5.25% (Libor + 4.25%/Q)7/2/201915.0 15.0 (6)(12)
First lien senior secured loan ($5.2 par due 7/2026)4.50% (Euribor + 4.50%/Q)7/2/20195.1 5.2 (2)(6)
First lien senior secured loan ($24.4 par due 7/2026)4.50% (Euribor + 4.50%/Q)8/8/201924.0 24.4 (2)(6)
Class A units (6,762,668 units)7/2/20196.8 7.1 (2)(6)
51.1 51.9 
Novipax Buyer, L.L.C. and Novipax Parent Holding Company, L.L.C. Developer and manufacturer of absorbent pads for food productsFirst lien senior secured loan ($23.9 par due 12/2026)6.75% (Libor + 5.75%/Q)12/1/202023.9 23.9 (12)
Class A preferred units (4,772 units)10.00% PIK 12/1/20205.2 6.3 (2)
Class C units (4,772 units)12/1/2020— — (2)
29.1 30.2 
Plaskolite PPC Intermediate II LLC and Plaskolite PPC Blocker LLC Manufacturer of specialized acrylic and polycarbonate sheetsSecond lien senior secured loan ($55.0 par due 12/2026)8.00% (Libor + 7.00%/Q)12/14/201855.0 55.0 (2)(12)
Co-Invest units (5,969 units)12/14/20180.6 0.9 (2)
55.6 55.9 
SCI PH Parent, Inc. Industrial container manufacturer, reconditioner and servicerSeries B shares (11.4764 shares)8/24/20181.1 1.2 (2)
389.2 392.4 4.43%
Pharmaceuticals, Biotechnology & Life Sciences
Abzena Holdings, Inc. and Astro Group Holdings Ltd. (16)Organization providing discovery, development and manufacturing services to the pharmaceutical and biotechnology industriesFirst lien senior secured loan ($13.7 par due 5/2026)10.50% (Libor + 9.50%/Q)5/7/202113.7 13.7 (2)(12)
First lien senior secured loan ($30.5 par due 5/2026)11.50% (Libor + 4.75% Cash + 5.75% PIK/Q)5/7/202130.5 30.5 (2)(12)
Class A ordinary shares (1,237,500 shares)5/7/20212.5 2.8 (2)
46.7 47.0 
Alcami Corporation and ACM Holdings I, LLC (16)Outsourced drug development services providerFirst lien senior secured loan ($29.2 par due 7/2025)4.39% (Libor + 4.25%/B)7/12/201829.1 28.0 
Second lien senior secured loan ($77.5 par due 7/2026)8.14% (Libor + 8.00%/B)7/12/201877.1 69.0 (2)
Common units (3,663,533 units)7/12/201835.0 19.5 (2)
141.2 116.5 
Cobalt Buyer Sub, Inc., Cobalt Holdings I, LP, and Cobalt Intermediate I, Inc. (16)Provider of biological products to life science and pharmaceutical companiesFirst lien senior secured revolving loan ($0.6 par due 10/2027)6.00% (Libor + 5.25%/M)10/1/20210.6 0.6 (2)(12)
First lien senior secured loan ($29.1 par due 10/2028)6.00% (Libor + 5.25%/Q)10/1/202129.1 28.8 (2)(12)
Series A preferred shares (60,235.91 shares)10.75% (Libor + 10.00%/Q)10/1/202160.2 60.2 (2)(12)
Preferred units (3,019.50 units)8.00% PIK 10/1/20213.1 0.3 (2)
Class A common units (30,500 units)10/1/2021— 2.8 (2)
93.0 92.7 
F-36
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
NMC Skincare Intermediate Holdings II, LLC (16)Developer, manufacturer and marketer of skincare productsFirst lien senior secured revolving loan ($6.2 par due 10/2024)6.00% (Libor + 5.00%/M)10/31/20186.2 6.1 (2)(12)
First lien senior secured loan ($24.2 par due 10/2024)6.00% (Libor + 5.00%/M)10/31/201824.2 23.9 (12)
First lien senior secured loan ($8.1 par due 10/2024)6.00% (Libor + 5.00%/M)10/31/20188.1 8.1 (12)
38.5 38.1 
North American Science Associates, LLC, Cardinal Purchaser LLC and Cardinal Topco Holdings, L.P. (16)Contract research organization providing research and development and testing of medical devicesFirst lien senior secured loan ($48.0 par due 9/2027)6.50% (Libor + 5.75%/Q)9/15/202048.0 48.0 (12)
First lien senior secured loan ($2.6 par due 9/2027)6.50% (Libor + 5.75%/Q)2/26/20212.6 2.6 (12)
First lien senior secured loan ($0.1 par due 9/2027)6.50% (Libor + 5.75%/Q)9/13/20210.1 0.1 (2)(12)
Class A preferred units (13,528 units)8.00% PIK 9/15/202014.9 32.8 (2)
65.6 83.5 
TerSera Therapeutics LLC (16)Acquirer and developer of specialty therapeutic pharmaceutical productsFirst lien senior secured revolving loan—%11/20/2019— — (14)
First lien senior secured loan ($5.1 par due 3/2025)6.60% (Libor + 5.60%/Q)5/3/20175.0 5.1 (12)
First lien senior secured loan ($2.1 par due 3/2025)6.60% (Libor + 5.60%/Q)9/27/20182.1 2.1 (12)
First lien senior secured loan ($1.8 par due 3/2025)6.60% (Libor + 5.60%/Q)4/1/20191.8 1.8 (12)
8.9 9.0 
Vertice Pharma UK Parent Limited Manufacturer and distributor of generic pharmaceutical productsPreferred shares (40,662 shares)12/21/20150.3 — (6)
394.2 386.8 4.36%
Energy
Birch Permian, LLC Operator of private exploration oil and production companySecond lien senior secured loan ($75.7 par due 4/2023)9.50% (Libor + 8.00%/Q)4/12/201975.5 75.7 (2)(12)
Cheyenne Petroleum Company Limited Partnership, CPC 2001 LLC and Mill Shoals LLC Private oil exploration and production companySecond lien senior secured loan ($63.1 par due 1/2024)10.00% (Libor + 9.00%/Q)7/10/201963.1 63.1 (2)(12)
Halcon Holdings, LLC (16)Operator of development, exploration, and production oil companyFirst lien senior secured loan ($19.0 par due 11/2025)7.17% (Libor + 7.00%/M)11/24/202118.7 18.9 (2)
Murchison Oil and Gas, LLC and Murchison Holdings, LLC Exploration and production companyFirst lien senior secured loan ($2.7 par due 10/2023)11.00% (Libor + 9.00%/Q)9/19/20192.7 2.7 (2)(12)
First lien senior secured loan ($38.3 par due 10/2023)10.00% (Libor + 8.00%/Q)9/19/201938.3 38.3 (2)(12)
Preferred units (21,667 units)0.0810/26/201824.9 27.4 
65.9 68.4 
Sundance Energy Inc. (4)Oil and gas producerCommon stock (157,970 shares)4/23/202169.8 68.6 (2)
VPROP Operating, LLC and V SandCo, LLC (5)(16)Sand-based proppant producer and distributor to the oil and natural gas industryFirst lien senior secured loan ($7.0 par due 11/2024)11.00% PIK (Libor + 9.50%/M)11/6/20207.0 7.0 (2)(12)
First lien senior secured loan ($5.5 par due 11/2024)11.00% PIK (Libor + 9.50%/M)6/12/20205.5 5.5 (2)(12)
First lien senior secured loan ($25.1 par due 11/2024)11.00% PIK (Libor + 9.50%/M)3/1/201725.1 25.1 (2)(12)
Class A units (347,900 units)11/6/202032.8 39.9 (2)
70.4 77.5 
363.4 372.2 4.20%
Food & Staples Retailing
Balrog Acquisition, Inc., Balrog Topco, Inc. and Balrog Parent, L.P. Manufacturer and distributor of specialty bakery ingredientsSecond lien senior secured loan ($29.5 par due 9/2029)7.50% (Libor + 7.00%/Q)9/3/202129.5 29.4 (2)(12)
Class A preferred units (5,484 units)8.00% PIK 9/3/20215.6 5.5 (2)
Series A preferred shares (21,921 shares)11.00% PIK 9/3/202122.7 22.7 (2)
F-37
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
57.8 57.6 
Continental Cafe, LLC and Infinity Ovation Yacht Charters, LLC (16)Diversified contract food service providerFirst lien senior secured loan ($15.7 par due 11/2027)8.00% (Libor + 7.00%/Q)11/30/202115.7 15.5 (2)(12)
DecoPac, Inc. and KCAKE Holdings Inc. (16)Supplier of cake decorating solutions and products to in-store bakeriesFirst lien senior secured revolving loan ($2.4 par due 5/2026)7.00% (Libor + 6.00%/M)5/14/20212.4 2.4 (2)(12)
First lien senior secured loan ($148.5 par due 5/2028)9.00% (Libor + 6.00% Cash + 2.00% PIK/Q)5/14/2021148.5 148.5 (2)(12)
Common stock (9,599 shares)5/14/20219.6 10.0 (2)
160.5 160.9 
FS Squared Holding Corp. and FS Squared, LLC (16)Provider of on-site vending and micro market solutionsFirst lien senior secured revolving loan—%3/28/2019— — (14)
First lien senior secured loan ($0.1 par due 3/2025)5.36% (Libor + 5.25%/M)3/28/20190.1 0.1 (2)
Class A units (113,219 units)3/28/201911.1 19.2 (2)
11.2 19.3 
JWC/KI Holdings, LLC Foodservice sales and marketing agencyMembership units (5,000 units)11/16/20155.0 7.7 (2)
SFE Intermediate Holdco LLC (16)Provider of outsourced foodservice to K-12 school districtsFirst lien senior secured loan ($10.1 par due 7/2024)5.75% (Libor + 4.75%/Q)9/5/201810.1 10.1 (12)
First lien senior secured loan ($6.3 par due 7/2024)5.75% (Libor + 4.75%/Q)7/31/20176.3 6.3 (12)
16.4 16.4 
VCP-EDC Co-Invest, LLC Distributor of foodservice equipment and suppliesMembership units (2,970,000 units)6/9/20172.8 0.4 
269.4 277.8 3.13%
Technology Hardware & Equipment
Chariot Buyer LLC (16)Provider of smart access solutions across residential and commercial propertiesFirst lien senior secured revolving loan ($0.2 par due 11/2026)5.75% (Base Rate + 2.50%/M)11/3/20210.2 0.2 (2)
First lien senior secured revolving loan ($2.5 par due 11/2026)3.60% (Libor + 3.50%/M)11/3/20212.5 2.5 (2)
Second lien senior secured loan ($134.4 par due 11/2029)7.50% (Libor + 6.75%/M)11/3/2021134.4 133.0 (2)(12)
137.1 135.7 
Everspin Technologies, Inc. Designer and manufacturer of computer memory solutionsWarrant to purchase up to 18,461 shares of common stock (expires 10/2026)10/7/20160.4 — (2)
Micromeritics Instrument Corp. (16)Scientific instrument manufacturerFirst lien senior secured revolving loan—%12/18/2019— — (14)
First lien senior secured loan ($32.0 par due 12/2025)6.00% (Libor + 5.00%/Q)12/18/201932.0 32.0 (12)
32.0 32.0 
Repairify, Inc. and Repairify Holdings, LLC (16)Provider of automotive diagnostics scans and solutionsClass A common units (163,820 units)6/14/20214.9 4.8 (2)
Wildcat BuyerCo, Inc. and Wildcat Parent, LP (16)Provider and supplier of electrical components for commercial and industrial applicationsFirst lien senior secured loan ($18.2 par due 2/2026)6.75% (Libor + 5.75%/Q)2/27/202018.2 18.2 (12)
First lien senior secured loan ($9.5 par due 2/2026)6.75% (Libor + 5.75%/Q)11/18/20219.5 9.5 (2)(12)
Limited partnership interests (17,655 interests)2/27/20201.8 2.8 (2)
29.5 30.5 
203.9 203.0 2.29%
Transportation
Commercial Trailer Leasing, Inc. (16)Trailer leasing companyFirst lien senior secured loan ($92.8 par due 1/2026)7.25% (Libor + 6.25%/Q)1/19/202192.8 92.8 (2)(12)
Second lien senior secured loan ($19.9 par due 1/2027)13.00%1/19/202119.9 19.9 (2)
112.7 112.7 
F-38
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Shur-Co Acquisition, Inc. and Shur-Co HoldCo, Inc. (16)Provider of tarp systems and accessories for trucks, trailers, carts, and specialty equipment used in the agriculture, construction and flatbed marketsFirst lien senior secured revolving loan ($1.0 par due 6/2027)7.00% (Libor + 6.00%/Q)6/30/20211.0 1.0 (2)(12)
First lien senior secured loan ($27.0 par due 6/2027)7.00% (Libor + 6.00%/Q)6/30/202127.0 27.0 (12)
Common stock (7,598,999 shares)6/30/20217.6 8.9 (2)
35.6 36.9 
148.3 149.6 1.69%
Household & Personal Products
CDI Holdings III Corp. and CDI Holdings I Corp. (16)Provider of personal care appliancesFirst lien senior secured loan ($3.8 par due 12/2027)6.75% (Libor + 5.75%/Q)12/22/20213.8 3.8 (2)(12)
Common stock (6,149 shares)12/22/20216.1 6.1 (2)
9.9 9.9 
Foundation Consumer Brands, LLC Pharmaceutical holding company of over the counter brandsFirst lien senior secured loan ($24.9 par due 10/2026)7.38% (Libor + 6.38%/Q)2/12/202124.4 24.8 (12)
Premier Specialties, Inc. and RMCF V CIV XLIV, L.P. (16)Manufacturer and supplier of natural fragrance materials and cosmeceuticalsFirst lien senior secured loan ($27.5 par due 8/2027)6.75% (Libor + 5.75%/M)8/20/202127.5 27.3 (2)(12)
Limited partner interests (4.58% interest)8/20/20214.7 4.1 (2)
32.2 31.4 
Rug Doctor, LLC and RD Holdco Inc. (5)Manufacturer and marketer of carpet cleaning machinesSecond lien senior secured loan ($22.0 par due 5/2023)11.25% PIK (Libor + 9.75%/M)1/3/201722.0 21.0 (2)(12)
Common stock (458,596 shares)1/3/201714.0 — 
Warrant to purchase up to 56,372 shares of common stock (expires 12/2023)1/3/2017— — 
36.0 21.0 
Walnut Parent, Inc. Manufacturer of natural solution pest and animal control productsFirst lien senior secured loan ($14.9 par due 11/2027)6.50% (Libor + 5.50%/M)11/9/202014.9 14.9 (12)
First lien senior secured loan ($19.9 par due 11/2027)6.50% (Libor + 5.50%/Q)11/22/202119.9 19.9 (2)(12)
34.8 34.8 
137.3 121.9 1.37%
Education
Excelligence Holdings Corp. Developer, manufacturer and retailer of educational productsFirst lien senior secured loan ($9.6 par due 4/2023)7% (Libor + 1.50% Cash + 4.50% PIK/Q)4/17/20179.6 9.3 (2)(12)
Flinn Scientific, Inc. and WCI-Quantum Holdings, Inc. (16)Distributor of instructional products, services and resourcesFirst lien senior secured revolving loan ($4.9 par due 8/2023)5.50% (Libor + 4.75%/A)8/31/20184.9 4.8 (2)(12)
First lien senior secured loan ($30.0 par due 8/2023)5.50% (Libor + 4.75%/Q)7/26/201730.0 29.3 (12)
First lien senior secured loan ($1.1 par due 8/2023)5.50% (Libor + 4.75%/Q)8/31/20181.1 1.1 (12)
Series A preferred stock (1,272 shares)10/24/20140.7 1.1 (2)
36.7 36.3 
Instituto de Banca y Comercio, Inc. & Leeds IV Advisors, Inc. Private school operatorFirst lien senior secured loan ($4.0 par due 10/2022)10.50% (Libor + 9.00%/Q)3/12/20204.0 4.0 (2)(12)
Senior preferred series A-1 shares (151,056 shares)10/31/201598.2 36.4 (2)
Series B preferred stock (348,615 shares)8/5/20101.0 — (2)
Series B preferred stock (1,401,385 shares)8/5/20104.0 — (2)
Series C preferred stock (517,942 shares)6/7/20100.1 — (2)
Series C preferred stock (1,994,644 shares)6/7/20100.5 — (2)
Common stock (4 shares)6/7/2010— — (2)
F-39
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2021
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Common stock (16 shares)6/7/2010— — (2)
107.8 40.4 
Primrose Holding Corporation (4)Franchisor of education-based early childhood centersCommon stock (7,227 shares)1/3/20174.6 27.0 
158.7 113.0 1.27%
Telecommunication Services
Emergency Communications Network, LLC (16)Provider of mission critical emergency mass notification solutionsFirst lien senior secured loan ($46.0 par due 6/2023)8.75% (Libor + 2.63% Cash + 5.12% PIK/Q)6/1/201746.0 42.4 (2)(12)
46.0 42.4 0.48%
Total Investments$19,810.0 $20,009.5 225.65%

F-40

Derivative Instruments

Forward currency contracts
DescriptionNotional Amount to be PurchasedNotional Amount to be soldCounterpartySettlement DateUnrealized Appreciation / (Depreciation)
Forward currency contract$240 CAD309 Truist Financial CorporationJanuary 28, 2022$(5)
Forward currency contract$163 CAD209 Truist Financial CorporationJanuary 19, 2022(2)
Forward currency contract$172 €153 Truist Financial CorporationJanuary 28, 2022(2)
Forward currency contract$126 £95 Truist Financial CorporationJanuary 28, 2022(3)
Forward currency contract$1 CAD2 Truist Financial CorporationJanuary 28, 2022— 
Total$(12)
______________________________________________

(1)Other than the Company’s investments listed in footnote 5 below (subject to the limitations set forth therein), the Company does not “Control” any of its portfolio companies, for the purposes of the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”). In general, under the Investment Company Act, the Company would “Control” a portfolio company if the Company owned more than 25% of its outstanding voting securities (i.e., securities with the right to elect directors) and/or had the power to exercise control over the management or policies of such portfolio company. All of the Company’s portfolio company investments, which as of December 31, 2021 represented 226% of the Company’s net assets or 96% of the Company’s total assets, are subject to legal restrictions on sales.

(2)These assets are pledged as collateral under the Company’s or the Company’s consolidated subsidiaries’ various revolving credit facilities and, as a result, are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the obligations under each of the respective facility (see Note 5).

(3)Investments without an interest rate are non-income producing.
F-41



(4)As defined in the Investment Company Act, the Company is deemed to be an “Affiliated Person” because it owns 5% or more of the portfolio company’s outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company (including through a management agreement). Transactions as of and during the year ended December 31, 2021 in which the issuer was an Affiliated Person of the Company (but not a portfolio company that the Company is deemed to Control) are as follows:
For the Year Ended December 31, 2021
As of December 31, 2021
(in millions)
Company		Purchases (cost)Redemptions (cost)Sales (cost)Interest incomeCapital
structuring service fees		Dividend incomeOther incomeNet realized gains (losses)Net 
unrealized gains (losses)		Fair Value
Apex Clean Energy TopCo, LLC$80.5 $— $— $— $— $— $— $— $(1.4)$79.1 
APG Intermediate Holdings Corporation and APG Holdings, LLC$— $0.1 $— $1.0 $— $— $— $— $(1.1)$25.0 
Blue Angel Buyer 1, LLC and Blue Angel Holdco, LLC$— $— $9.7 $— $— $— $— $46.3 $(18.4)$— 
Blue Wolf Capital Fund II, L.P.$— $— $— $— $— $— $— $0.5 $— $0.2 
Bragg Live Food Products, LLC and SPC Investment Co., L.P.$4.6 $7.8 $— $3.1 $— $0.2 $0.1 $— $(4.4)$47.8 
Crown Health Care Laundry Services, LLC and Crown Laundry Holdings, LLC$— $27.2 $4.5 $(0.5)$— $— $0.9 $10.7 $(8.0)$— 
ESCP PPG Holdings, LLC$— $— $— $— $— $— $— $— $(0.3)$2.8 
European Capital UK SME Debt LP$— $7.7 $— $— $— $0.4 $— $— $4.9 $26.9 
Panda Temple Power, LLC and T1 Power Holdings LLC$— $19.6 $— $0.2 $— $— $— $9.8 $0.9 $— 
PCG-Ares Sidecar Investment II, L.P.$0.1 $— $— $— $— $— $— $— $0.8 $11.1 
PCG-Ares Sidecar Investment, L.P.$— $0.6 $— $— $— $— $— $— $1.5 $1.3 
Primrose Holding Corporation$— $— $— $— $— $— $— $— $12.9 $27.0 
Production Resource Group, L.L.C. and PRG III, LLC$11.5 $0.1 $— $4.8 $0.3 $— $— $0.1 $(4.3)$56.3 
Shock Doctor, Inc. and Shock Doctor Holdings, LLC$0.8 $1.4 $— $1.4 $— $— $— $0.1 $4.3 $23.1 
Sundance Energy Inc.$— $— $— $— $— $— $— $— $(1.1)$68.6 
Totes Isotoner Corporation and Totes Ultimate Holdco, Inc.$— $— $— $0.3 $— $— $— $— $(1.5)$3.9 
$97.5 $64.5 $14.2 $10.3 $0.3 $0.6 $1.0 $67.5 $(15.2)$373.1 

F-42


(5)As defined in the Investment Company Act, the Company is deemed to be both an “Affiliated Person” and “Control” this portfolio company because it owns more than 25% of the portfolio company’s outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company (including through a management agreement). Transactions as of and during the year ended December 31, 2021 in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control are as follows:
For the Year Ended December 31, 2021As of December 31, 2021
(in millions)
Company		Purchases (cost)Redemptions (cost)Sales (cost)Interest incomeCapital
structuring service fees		Dividend incomeOther incomeNet realized gains (losses)Net 
unrealized gains (losses)		Fair Value
Absolute Dental Group LLC and Absolute Dental Equity, LLC$50.5 $26.4 $— $4.1 $1.6 $— $0.1 $— $5.0 $63.9 
ACAS Equity Holdings Corporation$— $— $— $— $— $— $— $— $0.4 $0.4 
ADF Capital, Inc., ADF Restaurant Group, LLC, and ARG Restaurant Holdings, Inc.$— $58.4 $— $— $— $— $— $(57.2)$58.4 $— 
BW Landco LLC$— $— $20.9 $— $— $— $— $20.8 $(16.0)$— 
CoLTs 2005-1 Ltd.$— $— $— $— $— $— $— $— $— $— 
CoLTs 2005-2 Ltd.$— $— $— $— $— $— $— $0.2 $— $— 
Eckler Industries, Inc. and Eckler Purchaser LLC$3.5 $— $— $2.5 $— $— $— $— $(8.1)$23.1 
Halex Holdings, Inc.$— $— $— $— $— $— $— $— $— $— 
HCI Equity, LLC$— $— $— $— $— $— $— $— $(0.1)$— 
Heelstone Renewable Energy, LLC$41.7 $8.5 $— $1.5 $0.7 $0.4 $— $0.2 $9.3 $69.4 
Imaging Business Machines, L.L.C. and Scanner Holdings Corporation$— $— $— $2.4 $— $— $0.6 $— $8.4 $53.0 
Ivy Hill Asset Management, L.P.$347.5 $70.5 $37.0 $2.9 $— $93.0 $— $— $67.3 $935.8 
Joyce Lane Capital LLC and Joyce Lane Financing SPV LLC (fka Ciena Capital LLC)$— $0.3 $— $— $— $— $— $— $— $0.3 
Navisun LLC and Navisun Holdings LLC$6.6 $— $— $8.9 $0.1 $0.4 $0.1 $— $12.6 $143.7 
NECCO Holdings, Inc. and New England Confectionery Company, Inc.$1.9 $14.5 $— $— $— $— $— $(12.4)$8.0 $— 
NECCO Realty Investments LLC$— $— $— $— $— $— $— $— $— $— 
Potomac Intermediate Holdings II LLC$68.4 $— $— $— $— $— $— $— $— $179.7 
PS Operating Company LLC and PS Op Holdings LLC$3.9 $1.2 $— $— $— $— $— $— $— $25.1 
Rug Doctor, LLC and RD Holdco Inc.$— $— $— $2.4 $— $— $— $— $(1.1)$21.0 
S Toys Holdings LLC (fka The Step2 Company, LLC)$— $— $— $— $— $— $— $— $(0.3)$0.2 
Senior Direct Lending Program, LLC$232.2 $367.7 $— $138.0 $18.6 $— $3.8 $— $— $987.3 
Singer Sewing Company, SVP-Singer Holdings, LLC and SVP-Singer Holdings LP$— $234.2 $— $25.4 $1.9 $6.7 $0.5 $109.7 $(87.8)$— 
Startec Equity, LLC$— $— $— $— $— $— $— $— $— $— 
VPROP Operating, LLC and V SandCo, LLC$0.9 $— $— $4.0 $— $— $— $— $5.4 $77.5 
$757.1 $781.7 $57.9 $192.1 $22.9 $100.5 $5.1 $61.3 $61.4 $2,580.4 
______________________________________________________________________

*    Together with Varagon Capital Partners (“Varagon”) and its clients, the Company has co-invested through the Senior Direct Lending Program LLC (d/b/a the “Senior Direct Lending Program” or the “SDLP”). The SDLP has been capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SDLP must be approved by an investment committee of the SDLP consisting of representatives of the Company and Varagon (with approval from a representative of each required); therefore, although the Company owns more than 25% of the voting securities of the SDLP, the Company does not believe that it has control over the SDLP (for purposes of the Investment Company Act or otherwise) because, among other things, these “voting securities” do not
F-43

afford the Company the right to elect directors of the SDLP or any other special rights (see Note 4 to the consolidated financial statements).

(6)    This portfolio company is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company's total assets. Pursuant to Section 55(a) of the Investment Company Act, 16% of the Company's total assets are represented by investments at fair value and other assets that are considered "non-qualifying assets" as of December 31, 2021.

(7)Variable rate loans to the Company’s portfolio companies bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR”) or an alternate base rate (commonly based on the Federal Funds Rate or the Prime Rate), at the borrower’s option, which reset annually (A), semi-annually (S), quarterly (Q), bi-monthly (B), monthly (M) or daily (D). For each such loan, the Company has provided the interest rate in effect on the date presented.

(8)In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 2.00% on $46.9 in aggregate principal amount of a “first out” tranche of the portfolio company’s senior term debt previously syndicated by the Company into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(9)The Company sold a participating interest of approximately $0.6 in aggregate principal amount of the portfolio company’s first lien senior secured delayed draw term loan. As the transaction did not qualify as a “true sale” in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company recorded a corresponding $0.2 secured borrowing, at fair value, included in “secured borrowings” in the accompanying consolidated balance sheet. As of December 31, 2021, the interest rate in effect for the secured borrowing was 14.50%.

(10)The Company sold a participating interest of approximately $75.0 in aggregate principal amount outstanding of the portfolio company’s first lien senior secured revolving loan. As the transaction did not qualify as a “true sale” in accordance with GAAP, the Company recorded a corresponding $73.2 secured borrowing, at fair value, included in “secured borrowings” in the accompanying consolidated balance sheet. As of December 31, 2021, the interest rate in effect for the secured borrowing was 8.50%.

(11)    Loan was on non-accrual status as of December 31, 2021.

(12)    Loan includes interest rate floor feature.

(13)    In addition to the interest earned based on the stated contractual interest rate of this security, the certificates entitle the holders thereof to receive a portion of the excess cash flow from the SDLP’s loan portfolio, after expenses, which may result in a return to the Company greater than the contractual stated interest rate.

(14)    As of December 31, 2021, no amounts were funded by the Company under this first lien senior secured revolving loan; however, there were letters of credit issued and outstanding through a financial intermediary under the loan. See Note 7 for further information on letters of credit commitments related to certain portfolio companies.

(15)    As of December 31, 2021, in addition to the amounts funded by the Company under this first lien senior secured revolving loan, there were also letters of credit issued and outstanding through a financial intermediary under the loan. See Note 7 for further information on letters of credit commitments related to certain portfolio companies.

(16)    As of December 31, 2021, the Company had the following commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to issue letters of credit through a financial intermediary on behalf of certain portfolio companies. Such commitments are subject to the satisfaction of certain conditions set forth in the documents governing these loans and letters of credit and there can be no assurance that such conditions will be satisfied. See Note 7 for further information on revolving and delayed draw loan commitments, including commitments to issue letters of credit, related to certain portfolio companies.
F-44



(in millions)
Portfolio Company		Total revolving and delayed draw loan commitmentsLess: funded commitmentsTotal unfunded commitmentsLess: commitments substantially at discretion of the CompanyLess: unavailable commitments due to borrowing base or other covenant restrictionsTotal net adjusted unfunded revolving and delayed draw commitments
A.U.L. Corp.$1.2 $— $1.2 $— $— $1.2 
Absolute Dental Group LLC and Absolute Dental Equity, LLC7.0 (4.0)3.0 — — 3.0 
Abzena Holdings, Inc. and Astro Group Holdings Ltd.13.7 — 13.7 — — 13.7 
Accommodations Plus Technologies LLC and Accommodations Plus Technologies Holdings LLC4.1 (4.1)— — — — 
ADG, LLC and RC IV GEDC Investor LLC13.7 (11.9)1.8 — — 1.8 
AffiniPay Midco, LLC and AffiniPay Intermediate Holdings, LLC9.0 — 9.0 — — 9.0 
AI Aqua Merger Sub, Inc.0.1 — 0.1 — — 0.1 
Alcami Corporation and ACM Holdings I, LLC29.0 — 29.0 — — 29.0 
Alera Group, Inc.1.0 — 1.0 — — 1.0 
American Residential Services L.L.C. and Aragorn Parent Holdings LP4.5 — 4.5 — — 4.5 
Anaqua Parent Holdings, Inc. & Astorg VII Co-Invest Anaqua4.3 — 4.3 — — 4.3 
APG Intermediate Holdings Corporation and APG Holdings, LLC0.1 — 0.1 — — 0.1 
Appriss Health, LLC and Appriss Health Intermediate Holdings, Inc.0.1 — 0.1 — — 0.1 
Apptio, Inc.4.2 (1.7)2.5 — — 2.5 
AQ Sunshine, Inc.1.8 (0.3)1.5 — — 1.5 
Argenbright Holdings V, LLC1.3 — 1.3 — — 1.3 
Arrowhead Holdco Company and Arrowhead GS Holdings, Inc.20.0 (5.0)15.0 — — 15.0 
ASP-r-pac Acquisition CO LLC and ASP-r-pac Holdings LP6.2 (1.2)5.0 — — 5.0 
Athenahealth, Inc., VVC Holding Corp., Virence Intermediate Holding Corp., and Virence Holdings LLC33.1 — 33.1 — — 33.1 
ATI Restoration, LLC12.5 (11.4)1.1 — — 1.1 
Atlas Intermediate III, L.L.C.0.4 — 0.4 — — 0.4 
Aventine Intermediate LLC and Aventine Holdings II LLC2.6 — 2.6 — — 2.6 
Avetta, LLC4.2 — 4.2 — — 4.2 
AxiomSL Group, Inc. and Calypso Group, Inc.3.9 — 3.9 — — 3.9 
Bamboo Purchaser, Inc.4.1 — 4.1 — — 4.1 
Banyan Software Holdings, LLC33.8 — 33.8 — — 33.8 
Beacon Pointe Harmony, LLC9.0 — 9.0 — — 9.0 
Bearcat Buyer, Inc. and Bearcat Parent, Inc.32.8 — 32.8 — — 32.8 
Belfor Holdings, Inc.25.0 (4.0)21.0 — — 21.0 
Benecon Midco II LLC and Locutus Holdco LLC4.5 — 4.5 — — 4.5 
Benefytt Technologies, Inc.5.9 — 5.9 — — 5.9 
Berner Food & Beverage, LLC1.7 (0.7)1.0 — — 1.0 
Borrower R365 Holdings LLC1.5 — 1.5 — — 1.5 
Bragg Live Food Products, LLC and SPC Investment Co., L.P.4.4 (1.7)2.7 — — 2.7 
Businessolver.com, Inc.18.9 — 18.9 — — 18.9 
Cadence Aerospace, LLC15.1 (11.7)3.4 — — 3.4 
Capstone Acquisition Holdings, Inc. and Capstone Parent Holdings, LP27.3 (11.2)16.1 — — 16.1 
Cardinal Parent, Inc. and Packers Software Intermediate Holdings, Inc.5.0 (0.6)4.4 — — 4.4 
CCS-CMGC Holdings, Inc.12.0 (3.0)9.0 — — 9.0 
CDI Holdings III Corp. and CDI Holdings I Corp.0.9 — 0.9 — — 0.9 
Center for Autism and Related Disorders, LLC8.5 (8.3)0.2 — — 0.2 
Centric Brands LLC and Centric Brands GP LLC7.9 (2.3)5.6 — — 5.6 
Chariot Buyer LLC12.3 (2.8)9.5 — — 9.5 
Cobalt Buyer Sub, Inc., Cobalt Holdings I, LP, and Cobalt Intermediate I, Inc.23.7 (0.6)23.1 — — 23.1 
Commercial Trailer Leasing, Inc.3.3 — 3.3 — — 3.3 
F-45

(in millions)
Portfolio Company		Total revolving and delayed draw loan commitmentsLess: funded commitmentsTotal unfunded commitmentsLess: commitments substantially at discretion of the CompanyLess: unavailable commitments due to borrowing base or other covenant restrictionsTotal net adjusted unfunded revolving and delayed draw commitments
Comprehensive EyeCare Partners, LLC1.9 (0.3)1.6 — — 1.6 
Concert Golf Partners Holdco LLC0.6 (0.1)0.5 — — 0.5 
Consilio Midco Limited and Consilio Investment Holdings, L.P.20.0 — 20.0 — 020.0 
Continental Café, LLC and Infinity Ovation Yacht Charters, LLC8.0 — 8.0 — — 8.0 
CoreLogic, Inc. and T-VIII Celestial Co-Invest LP38.9 — 38.9 — — 38.9 
Cority Software Inc., IQS, Inc. and Cority Parent, Inc.0.1 — 0.1 — — 0.1 
Cornerstone OnDemand, Inc. and Sunshine Software Holdings, Inc.38.7 (0.1)38.6 — — 38.6 
Cozzini Bros., Inc. and BH-Sharp Holdings LP15.0 — 15.0 — — 15.0 
CrossCountry Mortgage, LLC56.3 — 56.3 — — 56.3 
CST Buyer Company (d/b/a Intoxalock)6.1 — 6.1 — — 6.1 
CVP Holdco, Inc. and OMERS Wildcats Investment Holdings LLC19.7 (0.4)19.3 — — 19.3 
DecoPac, Inc. and KCAKE Holdings Inc.16.5 (2.4)14.1 — — 14.1 
Denali Holdco LLC and Denali Topco LLC5.4 — 5.4 — — 5.4 
DFC Global Facility Borrower III LLC103.5 (73.2)30.3 — — 30.3 
Diligent Corporation and Diligent Preferred Issuer, Inc.9.7 — 9.7 — — 9.7 
Display Holding Company, Inc., Saldon Holdings, Inc. and Fastsigns Holdings Inc.2.3 — 2.3 — — 2.3 
DRS Holdings III, Inc. and DRS Holdings I, Inc.10.8 — 10.8 — — 10.8 
DS Admiral Bidco, LLC0.1 — 0.1 — — 0.1 
DTI Holdco, Inc. and OPE DTI Holdings, Inc.6.6 (5.2)1.4 — — 1.4 
Dye & Durham Corporation19.5 — 19.5 — — 19.5 
Dynamic NC Aerospace Holdings, LLC and Dynamic NC Investment Holdings, LP7.1 — 7.1 — — 7.1 
Eckler Industries, Inc. and Eckler Purchaser LLC6.9 (6.7)0.2 — (0.2)— 
Elemica Parent, Inc. & EZ Elemica Holdings, Inc.4.1 (2.3)1.8 — — 1.8 
Emergency Communications Network, LLC6.5 — 6.5 — — 6.5 
EP Wealth Advisors, LLC2.8 (0.2)2.6 — — 2.6 
EpiServer Inc. and Episerver Sweden Holdings AB14.5 — 14.5 — — 14.5 
EPS NASS Parent, Inc.6.6 (0.9)5.7 — — 5.7 
eResearch Technology, Inc. and Astorg VII Co-Invest ERT2.5 — 2.5 — — 2.5 
Essential Services Holding Corporation and OMERS Mahomes Investment Holdings LLC53.3 (1.0)52.3 — — 52.3 
Extrahop Networks, Inc.8.5 — 8.5 — — 8.5 
FL Hawk Intermediate Holdings, Inc.0.5 — 0.5 — — 0.5 
Flinn Scientific, Inc. and WCI-Quantum Holdings, Inc.10.0 (4.9)5.1 — — 5.1 
Flow Control Solutions, Inc.6.0 — 6.0 — — 6.0 
FM:Systems Group, LLC1.5 (1.5)— — — — 
Forescout Technologies, Inc.0.1 — 0.1 — — 0.1 
Foundation Risk Partners, Corp.38.1 — 38.1 — — 38.1 
FS Squared Holding Corp. and FS Squared, LLC9.6 (0.5)9.1 — — 9.1 
Galway Borrower LLC23.3 (0.4)22.9 — — 22.9 
Garden Fresh Restaurant Corp. and GFRC Holdings LLC7.5 (7.5)— — — — 
Genesis Acquisition Co. and Genesis Ultimate Holding Co.1.5 (1.5)— — — — 
GHX Ultimate Parent Corporation, Commerce Parent, Inc. and Commerce Topco, LLC47.5 — 47.5 — — 47.5 
GI Ranger Intermediate LLC9.0 — 9.0 — — 9.0 
Global Music Rights, LLC4.3 — 4.3 — — 4.3 
GraphPAD Software, LLC, Insightful Science Intermediate I, LLC and Insightful Science Holdings, LLC5.0 — 5.0 — — 5.0 
Green Street Parent, LLC and Green Street Intermediate Holdings, LLC0.3 — 0.3 — — 0.3 
HAI Acquisition Corporation and Aloha Topco, LLC19.0 — 19.0 — — 19.0 
F-46

(in millions)
Portfolio Company		Total revolving and delayed draw loan commitmentsLess: funded commitmentsTotal unfunded commitmentsLess: commitments substantially at discretion of the CompanyLess: unavailable commitments due to borrowing base or other covenant restrictionsTotal net adjusted unfunded revolving and delayed draw commitments
Halcon Holdings, LLC6.8 — 6.8 — — 6.8 
Harvey Tool Company, LLC29.5 (5.9)23.6 — — 23.6 
HealthEdge Software, Inc.42.3 (0.3)42.0 — — 42.0 
Heavy Construction Systems Specialists, LLC4.0 — 4.0 — — 4.0 
Heelstone Renewable Energy, LLC51.0 — 51.0 — — 51.0 
Help/Systems Holdings, Inc.7.5 — 7.5 — — 7.5 
HH-Stella, Inc. and Bedrock Parent Holdings, LP18.1 (0.5)17.6 — — 17.6 
High Street Buyer, Inc. and High Street Holdco LLC8.0 — 8.0 — — 8.0 
Highline Aftermarket Acquisition, LLC, Highline Aftermarket SC Acquisition, Inc. and Highline PPC Blocker LLC9.5 (5.9)3.6 — — 3.6 
Hometown Food Company3.9 — 3.9 — — 3.9 
Huskies Parent, Inc., GI Insurity Parent LLC and GI Insurity TopCo LP22.6 (1.6)21.0 — — 21.0 
IntraPac International LLC and IntraPac Canada Corporation19.2 (6.2)13.0 — — 13.0 
JDC Healthcare Management, LLC4.4 (4.4)— — — — 
Jim N Nicks Management, LLC4.8 (2.8)2.0 — — 2.0 
Joyce Lane Capital LLC and Joyce Lane Financing SPV LLC (fka Ciena Capital LLC)1.4 — 1.4 — — 1.4 
K2 Insurance Services, LLC and K2 Holdco LP10.9 — 10.9 — — 10.9 
KBHS Acquisition, LLC (d/b/a Alita Care, LLC)5.0 (0.8)4.2 — — 4.2 
Kellermeyer Bergensons Services, LLC23.0 — 23.0 — — 23.0 
Kene Acquisition, Inc. and Kene Holdings, L.P.8.9 (0.2)8.7 — — 8.7 
Laboratories Bidco LLC and Laboratories Topco LLC44.6 — 44.6 — — 44.6 
Lakers Buyer, Inc. and Lakers Parent LLC11.1 (3.6)7.5 — — 7.5 
Lew's Intermediate Holdings, LLC2.3 (1.8)0.5 — — 0.5 
Lido Advisors, LLC0.8 — 0.8 — — 0.8 
LSP Holdco, LLC and ZBS Mechanical Group Co-Invest Fund 2, LLC16.2 — 16.2 — — 16.2 
Majesco and Magic Topco, L.P.2.0 — 2.0 — — 2.0 
Manna Pro Products, LLC7.0 (1.9)5.1 — — 5.1 
Maverick Acquisition, Inc.17.2 — 17.2 — — 17.2 
Mavis Tire Express Services Topco Corp., Metis Holdco, Inc. and Metis Topco, LP32.9 (23.4)9.5 — — 9.5 
McKenzie Creative Brands, LLC4.5 — 4.5 — — 4.5 
Medline Borrower, LP6.9 — 6.9 — — 6.9 
Micromeritics Instrument Corp.4.1 (0.1)4.0 — — 4.0 
Ministry Brands Holdings, LLC and RCP MB Investments B, L.P.31.3 — 31.3 — — 31.3 
Ministry Brands, LLC and MB Parent HoldCo, L.P. (dba Community Brands)10.9 (5.0)5.9 — — 5.9 
MMIT Holdings, LLC4.6 (0.6)4.0 — — 4.0 
Monica Holdco (US) Inc.3.6 — 3.6 — — 3.6 
Moon Valley Nursery of Arizona Retail, LLC, Moon Valley Nursery Farm Holdings, LLC, Moon Valley Nursery RE Holdings LLC, and Stonecourt IV Partners, LP15.2 — 15.2 — — 15.2 
MRI Software LLC10.2 — 10.2 — — 10.2 
n2y Holding, LLC0.1 — 0.1 — — 0.1 
NAS, LLC and Nationwide Marketing Group, LLC3.0 (0.6)2.4 — — 2.4 
National Intergovernmental Purchasing Alliance Company9.0 — 9.0 — — 9.0 
NCWS Intermediate, Inc. and NCWS Holdings LP28.3 — 28.3 — — 28.3 
Nelipak Holding Company, Nelipak European Holdings Cooperatief U.A., KNPAK Holdings, LP and PAKNK Netherlands Treasury B.V.0.6 (0.2)0.4 — — 0.4 
Nest Topco Borrower Inc., KKR Nest Co-Invest L.P., and NBLY 2021-1119.1 — 119.1 — — 119.1 
NMC Skincare Intermediate Holdings II, LLC9.1 (6.2)2.9 — — 2.9 
NMN Holdings III Corp. and NMN Holdings LP12.5 (1.1)11.4 — — 11.4 
North American Fire Holdings, LLC and North American Fire Ultimate Holdings, LLC23.9 — 23.9 — — 23.9 
F-47

(in millions)
Portfolio Company		Total revolving and delayed draw loan commitmentsLess: funded commitmentsTotal unfunded commitmentsLess: commitments substantially at discretion of the CompanyLess: unavailable commitments due to borrowing base or other covenant restrictionsTotal net adjusted unfunded revolving and delayed draw commitments
North American Science Associates, LLC, Cardinal Purchaser LLC and Cardinal Topco Holdings, L.P.6.0 — 6.0 — — 6.0 
North Haven Falcon Buyer, LLC and North Haven Falcon Holding Company, LLC6.7 — 6.7 — — 6.7 
North Haven Stack Buyer, LLC10.0 — 10.0 — — 10.0 
NSM Insurance Group, LLC6.0 (0.7)5.3 — — 5.3 
NueHealth Performance, LLC6.2 (3.3)2.9 — — 2.9 
Olympia Acquisition, Inc. and Olympia TopCo, L.P.11.0 (10.3)0.7 — — 0.7 
OneDigital Borrower LLC7.5 — 7.5 — — 7.5 
Padres L.P.64.2 — 64.2 — — 64.2 
Pathway Vet Alliance LLC and Jedi Group Holdings LLC1.9 — 1.9 — — 1.9 
Patriot Growth Insurance Services, LLC6.7 — 6.7 — — 6.7 
Paya, Inc and GTCR-Ultra Holdings LLC4.5 — 4.5 — — 4.5 
PDI TA Holdings, Inc., Peachtree Parent, Inc. and Insight PDI Holdings, LLC7.6 — 7.6 — — 7.6 
Pegasus Global Enterprise Holdings, LLC, Mekone Blocker Acquisition, Inc. and Mekone Parent, LLC45.9 — 45.9 — — 45.9 
Pelican Products, Inc.2.3 — 2.3 — — 2.3 
People Corporation29.4 (2.9)26.5 — — 26.5 
Perforce Software, Inc.0.5 — 0.5 — — 0.5 
Petroleum Service Group LLC16.9 (3.8)13.1 — — 13.1 
Pluralsight, Inc.0.3 — 0.3 — 00.3 
Precinmac (US) Holdings Inc., Trimaster Manufacturing Inc. and Blade Group Holdings, LP.15.5 — 15.5 — — 15.5 
Premier Specialties, Inc. and RMCF V CIV XLIV, L.P.11.0 — 11.0 — — 11.0 
Premise Health Holding Corp. and OMERS Bluejay Investment Holdings LP36.0 (12.6)23.4 — — 23.4 
Pritchard Industries, LLC and LJ Pritchard TopCo Holdings, LLC29.7 — 29.7 — — 29.7 
Production Resource Group, L.L.C. and PRG III, LLC2.5 — 2.5 — — 2.5 
ProfitSolv Purchaser, Inc. and PS Co-Invest, L.P.15.0 — 15.0 — — 15.0 
Project Essential Bidco, Inc. and Project Essential Super Parent, Inc.1.1 — 1.1 — — 1.1 
Project Potter Buyer, LLC and Project Potter Parent, L.P.43.8 (0.9)42.9 — — 42.9 
Proofpoint, Inc.3.1 — 3.1 — — 3.1 
PS Operating Company LLC and PS Op Holdings LLC5.9 (2.8)3.1 — — 3.1 
Pyramid Management Advisors, LLC and Pyramid Investors, LLC9.7 (9.7)— — 0— 
QF Holdings, Inc.6.0 — 6.0 — — 6.0 
Radius Aerospace, Inc. and Radius Aerospace Europe Limited2.9 — 2.9 — — 2.9 
Raptor Technologies, LLC, Sycamore Bidco LTD and Rocket Parent, LLC4.4 — 4.4 — — 4.4 
Reddy Ice LLC0.3 — 0.3 — — 0.3 
Redwood Services, LLC and Redwood Services Holdco, LLC4.7 — 4.7 — — 4.7 
Reef Lifestyle, LLC32.8 (13.2)19.6 — — 19.6 
Registrar Intermediate, LLC and PSP Registrar Co-Investment Fund, L.P.28.0 — 28.0 — — 28.0 
Relativity ODA LLC3.8 — 3.8 — — 3.8 
Repairify, Inc. and Repairify Holdings, LLC7.3 — 7.3 — — 7.3 
Rialto Management Group, LLC1.3 (0.2)1.1 — — 1.1 
RMS HoldCo II, LLC and RMS Group Holdings, Inc.2.9 — 2.9 — — 2.9 
Rodeo AcquisitionCo LLC6.2 (0.4)5.8 — — 5.8 
RSC Acquisition, Inc. and RSC Insurance Brokerage, Inc.0.6 (0.3)0.3 — — 0.3 
RTI Surgical, Inc. and Pioneer Surgical Technology, Inc.15.9 (5.0)10.9 — — 10.9 
F-48

(in millions)
Portfolio Company		Total revolving and delayed draw loan commitmentsLess: funded commitmentsTotal unfunded commitmentsLess: commitments substantially at discretion of the CompanyLess: unavailable commitments due to borrowing base or other covenant restrictionsTotal net adjusted unfunded revolving and delayed draw commitments
Safe Home Security, Inc., Security Systems Inc., Safe Home Monitoring, Inc., National Protective Services, Inc., Bright Integrations LLC and Medguard Alert, Inc.8.5 — 8.5 — — 8.5 
Schill Landscaping and Lawn Care Services, LLC and Landscape Parallel Partners, LP5.1 — 5.1 — — 5.1 
SCIH Salt Holdings Inc.7.5 (6.2)1.3 — — 1.3 
SCM Insurance Services Inc.4.3 — 4.3 — — 4.3 
SFE Intermediate Holdco LLC10.2 — 10.2 — — 10.2 
Shock Doctor, Inc. and Shock Doctor Holdings, LLC2.5 (1.2)1.3 — — 1.3 
Shur-Co Acquisition, Inc. and Shur-Co Holdco, Inc.5.0 (1.0)4.0 — — 4.0 
SiroMed Physician Services, Inc. and SiroMed Equity Holdings, LLC7.1 — 7.1 — — 7.1 
SM Wellness Holdings, Inc. and SM Holdco, Inc.3.8 — 3.8 — — 3.8 
Spring Insurance Solutions, LLC5.6 — 5.6 — — 5.6 
Star US Bidco LLC8.5 — 8.5 — — 8.5 
Stealth Holding LLC and UCIT Online Security Inc.2.9 — 2.9 — — 2.9 
Sun Acquirer Corp. and Sun TopCo, LP26.8 — 26.8 — — 26.8 
Sundance Group Holdings, Inc.7.6 (0.9)6.7 — — 6.7 
Sunk Rock Foundry Partners LP, Hatteras Electrical Manufacturing Holding Company and Sigma Electric Manufacturing Corporation, Diecast Beacon7.5 (0.6)6.9 — — 6.9 
Sunshine Sub, LLC5.8 — 5.8 — — 5.8 
SV-Burton Holdings, LLC and LBC Breeze Holdings LLC7.3 — 7.3 — — 7.3 
Symplr Software Inc. and Symplr Software Intermediate Holdings, Inc.7.0 — 7.0 — — 7.0 
Synergy HomeCare Franchising, LLC and NP/Synergy Holdings, LLC4.2 — 4.2 — — 4.2 
TA/WEG Holdings, LLC9.3 (0.8)8.5 — — 8.5 
Taymax Group, L.P., Taymax Group G.P., LLC, PF Salem Canada ULC and TCP Fit Parent, L.P.1.9 (0.5)1.4 — (0.3)1.1 
TCP Hawker Intermediate LLC5.3 — 5.3 — — 5.3 
Teligent, Inc.3.4 — 3.4 — (3.4)— 
TerSera Therapeutics LLC0.1 — 0.1 — — 0.1 
The Alaska Club Partners, LLC, Athletic Club Partners LLC and The Alaska Club, Inc.1.1 — 1.1 — — 1.1 
The Arcticom Group, LLC and AMCP Mechanical Holdings, LP29.5 (2.0)27.5 — — 27.5 
The Ultimate Software Group, Inc. and H&F Unite Partners, L.P.10.0 (0.1)9.9 — — 9.9 
The Ultimus Group Midco, LLC, The Ultimus Group, LLC, and The Ultimus Group Aggregator, LP6.9 — 6.9 — — 6.9 
Therapy Brands Holdings LLC8.6 — 8.6 — — 8.6 
Thermostat Purchaser III, Inc.11.7 — 11.7 — — 11.7 
THG Acquisition, LLC34.8 — 34.8 — — 34.8 
United Digestive MSO Parent, LLC8.4 — 8.4 — — 8.4 
US Salt Investors, LLC and Emerald Lake Pearl Acquisition-A, L.P.9.9 — 9.9 — — 9.9 
Verscend Holding Corp.22.5 (0.1)22.4 — — 22.4 
VLS Recovery Services, LLC23.8 (1.5)22.3 — — 22.3 
VPP Intermediate Holdings, LLC and VPP Group Holdings, L.P.6.2 — 6.2 — — 6.2 
VPROP Operating, LLC and V SandCo, LLC7.1 — 7.1 — — 7.1 
VS Buyer, LLC8.1 — 8.1 — — 8.1 
Watchfire Enterprises, Inc.2.0 — 2.0 — — 2.0 
Watermill Express, LLC and Watermill Express Holdings, LLC1.9 — 1.9 — — 1.9 
WebPT, Inc.0.1 — 0.1 — — 0.1 
Wellness AcquisitionCo, Inc.0.1 — 0.1 — — 0.1 
Wildcat BuyerCo, Inc. and Wildcat Parent, LP9.9 — 9.9 — 09.9 
WorkWave Intermediate II, LLC5.2 — 5.2 — — 5.2 
WSHP FC Acquisition LLC10.3 (1.5)8.8 — — 8.8 
F-49

(in millions)
Portfolio Company		Total revolving and delayed draw loan commitmentsLess: funded commitmentsTotal unfunded commitmentsLess: commitments substantially at discretion of the CompanyLess: unavailable commitments due to borrowing base or other covenant restrictionsTotal net adjusted unfunded revolving and delayed draw commitments
XIFIN, Inc. and ACP Charger Co-Invest LLC8.9 (1.1)7.8 — — 7.8 
YE Brands Holdings, LLC1.2 — 1.2 — — 1.2 
$2,732.5 $(352.3)$2,380.2 $— $(3.9)$2,376.3 

(17)    As of December 31, 2021, the Company was party to subscription agreements to fund equity investments in private equity investment partnerships as follows:
(in millions)
Company		Total private equity commitmentsLess: funded private equity commitmentsTotal unfunded private equity commitmentsLess: private equity commitments substantially at the discretion of the CompanyTotal net adjusted unfunded private equity commitments
PCG-Ares Sidecar Investment, L.P. and PCG-Ares Sidecar Investment II, L.P.$50.0 $(12.5)$37.5 $(37.5)$— 
European Capital UK SME Debt LP60.9 (55.1)5.8 (5.8)— 
$110.9 $(67.6)$43.3 $(43.3)$— 

(18)    As of December 31, 2021, the Company had commitments to co-invest in the SDLP for its portion of the SDLP’s commitment to fund delayed draw loans of up to $62. See Note 4 to the consolidated financial statements for more information on the SDLP.

(19)    Other than the investments noted by this footnote, the fair value of the Company’s investments is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 8 to the consolidated financial statements for more information regarding the fair value of the Company’s investments.

(20)    As of December 31, 2021, the estimated net unrealized gain for federal tax purposes was $0.1 billion based on a tax cost basis of $19.9. As of December 31, 2021, the estimated aggregate gross unrealized loss for federal income tax purposes was $0.7 billion and the estimated aggregate gross unrealized gain for federal income tax purposes was $0.8 billion.     
F-50
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Health Care Services
Absolute Dental Group LLC and Absolute Dental Equity, LLC (5)(15)Dental services providerFirst lien senior secured loan ($9.2 par due 9/2022)11.00% PIK (Libor + 10.00%/Q)1/5/2016$9.2 $9.2 (2)(11)
First lien senior secured loan ($16.4 par due 9/2022)11.00% PIK (Libor + 10.00%/Q)1/5/201616.4 16.4 (2)(11)
Class A pref units (14,750,000 units)1/5/20164.7 5.3 (2)
Common units (7,200,000 units)1/5/2016— — (2)
30.3 30.9 
Acessa Health Inc. (fka HALT Medical, Inc.) Medical supply providerCommon stock (569,823 shares)6/22/20170.1 — 
ADCS Billings Intermediate Holdings, LLC (15)Dermatology practiceFirst lien senior secured revolving loan ($4.8 par due 5/2022)6.75% (Libor + 5.75%/Q)5/18/20164.8 4.7 (2)(11)
ADG, LLC and RC IV GEDC Investor LLC (15)Dental services providerFirst lien senior secured revolving loan ($7.7 par due 9/2022)7.50% (Libor + 1.50% Cash, 2.75% PIK/M)9/28/20167.7 6.9 (2)(11)
Second lien senior secured loan ($103.3 par due 3/2024)9/28/201689.0 77.5 (2)(10)
Membership units (3,000,000 units)9/28/20163.0 — (2)
99.7 84.4 
Alteon Health, LLC Provider of physician management servicesFirst lien senior secured loan ($2.8 par due 9/2023)7.50% (Libor + 6.50%/Q)5/15/20172.8 2.3 (2)(11)
Athenahealth, Inc., VVC Holding Corp., Virence Intermediate Holding Corp., and Virence Holdings LLC (15)Revenue cycle management provider to the physician practices and acute care hospitalsSecond lien senior secured loan ($210.3 par due 2/2027)8.65% (Libor + 8.50%/M)2/11/2019210.3 210.3 (2)
Senior preferred stock (121,810 shares)11.28% PIK (Libor + 11.13%/Q)2/11/2019149.4 149.4 (2)
Class A interests (0.39% interest)2/11/20199.0 13.9 (2)
368.7 373.6 
Bearcat Buyer, Inc. and Bearcat Parent, Inc. (15)Provider of central institutional review boards over clinical trialsFirst lien senior secured revolving loan ($0.1 par due 7/2024)5.25% (Libor + 4.25%/Q)7/9/20190.1 0.1 (2)(11)
First lien senior secured loan ($30.6 par due 7/2026)5.25% (Libor + 4.25%/Q)7/9/201930.6 30.6 (2)(11)
First lien senior secured loan ($17.0 par due 7/2026)5.25% (Libor + 4.25%/Q)9/10/201917.0 17.0 (2)(11)
Second lien senior secured loan ($64.2 par due 7/2027)9.25% (Libor + 8.25%/Q)7/9/201964.2 64.2 (2)(11)
Second lien senior secured loan ($5.3 par due 7/2027)9.25% (Libor + 8.25%/Q)7/9/20195.3 5.3 (2)(11)
Second lien senior secured loan ($12.7 par due 7/2027)9.25% (Libor + 8.25%/Q)9/10/201912.7 12.7 (2)(11)
Class B common units (4,211 units)7/9/20194.2 8.3 (2)
134.1 138.2 
CCS-CMGC Holdings, Inc. (15)Correctional facility healthcare operatorFirst lien senior secured revolving loan10/1/2018— — (13)
First lien senior secured loan ($34.3 par due 10/2025)5.67% (Libor + 5.50%/Q)9/25/201834.1 32.9 (2)
34.1 32.9 
Center for Autism and Related Disorders, LLC (15)Autism treatment and services provider specializing in applied behavior analysis therapyFirst lien senior secured revolving loan ($7.5 par due 11/2023)4.73% (Libor + 4.50%/Q)11/21/20187.5 7.1 (2)(14)
Comprehensive EyeCare Partners, LLC (15)Vision care practice management companyFirst lien senior secured revolving loan ($1.3 par due 2/2024)7.00% (Libor + 5.75%/Q)2/14/20181.3 1.3 (2)(11)
First lien senior secured loan ($5.3 par due 2/2024)7.00% (Libor + 5.75%/Q)2/14/20185.3 5.2 (2)(11)
First lien senior secured loan ($1.0 par due 2/2024)8.00% (Base Rate + 4.75%/Q)2/14/20181.0 1.0 (2)(11)
First lien senior secured loan ($2.7 par due 2/2024)7.00% (Libor + 5.75%/Q)2/14/20182.7 2.7 (2)(11)
10.3 10.2 
F-51
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Convey Health Solutions, Inc. Healthcare workforce management software providerFirst lien senior secured loan ($3.1 par due 9/2026)6.25% (Libor + 5.25%/Q)9/4/20193.1 3.1 (2)(11)
First lien senior secured loan ($2.3 par due 9/2026)10.00% (Libor + 9.00%/Q)4/8/20202.3 2.3 (2)(11)
5.4 5.4 
CVP Holdco, Inc. and OMERS Wildcats Investment Holdings LLC (15)Veterinary hospital operatorFirst lien senior secured revolving loan10/31/2019— — (13)
First lien senior secured loan ($53.2 par due 10/2025)6.25% (Libor + 5.25%/Q)10/31/201953.2 53.2 (2)(11)
First lien senior secured loan ($31.3 par due 10/2025)6.25% (Libor + 5.25%/Q)10/31/201931.3 31.3 (2)(11)
Common stock (32,429 shares)10/31/201910.0 11.9 (2)
94.5 96.4 
D4C Dental Brands HoldCo, Inc. and Bambino Group Holdings, LLC Dental services providerClass A preferred units (1,000,000 units)12/21/20161.0 1.0 (2)
DCA Investment Holding LLC (15)Multi-branded dental practice managementFirst lien senior secured revolving loan ($5.7 par due 7/2021)6.25% (Libor + 5.25%/Q)7/2/20155.7 5.5 (2)(11)(14)
First lien senior secured loan ($18.1 par due 7/2021)6.25% (Libor + 5.25%/Q)7/2/201518.1 17.6 (2)(11)
23.8 23.1 
Emerus Holdings, Inc. Freestanding 24-hour emergency care micro-hospitals operatorFirst lien senior secured loan ($16.9 par due 2/2022)14.00%2/21/201916.9 16.9 (2)
Evolent Health LLC and Evolent Health, Inc. (15)Medical technology company focused on value based care services and payment solutionsFirst lien senior secured loan ($67.1 par due 12/2024)9.00% (Libor + 8.00%/Q)12/30/201961.2 75.9 (2)(6)(11)
Warrant to purchase up to 1,354,968 shares of common stock (expires 1/2025)12/30/20195.9 7.0 (2)(6)
67.1 82.9 
GHX Ultimate Parent Corporation, Commerce Parent, Inc. and Commerce Topco, LLC On-demand supply chain automation solutions provider to the healthcare industrySecond lien senior secured loan ($34.5 par due 6/2025)9.00% (Libor + 8.00%/Q)6/30/201734.3 34.5 (2)(11)
Second lien senior secured loan ($55.0 par due 6/2025)9.00% (Libor + 8.00%/Q)1/13/202055.0 55.0 (2)(11)
Series A preferred stock (110,425 shares)11.75% (Libor + 10.75%/Q)6/30/2017166.9 166.9 (2)(11)
Class A units (14,013,303 units)6/30/201714.0 17.3 (2)
270.2 273.7 
Global Medical Response Inc Emergency air medical services providerSenior subordinated loan ($182.7 par due 3/2026)8.88% (Libor + 7.88%/Q)3/14/2018182.7 182.7 (2)(11)
Warrant to purchase up to 115,733 units of common stock (expires 3/2028)3/14/20180.9 2.1 (2)
183.6 184.8 
HealthEdge Software, Inc. (15)Provider of financial, administrative and clinical software platforms to the healthcare industryFirst lien senior secured revolving loan4/9/2020— — (13)
First lien senior secured loan ($47.5 par due 4/2026)7.25% (Libor + 6.25%/M)12/16/202047.5 47.5 (2)(11)
First lien senior secured loan ($3.7 par due 4/2026)7.25% (Libor + 6.25%/M)4/9/20203.7 3.7 (2)(11)
First lien senior secured loan ($10.7 par due 4/2026)7.25% (Libor + 6.25%/M)4/9/202010.7 10.7 (2)(11)
61.9 61.9 
Hygiena Borrower LLC (15)Adenosine triphosphate testing technology providerSecond lien senior secured loan ($2.5 par due 8/2023)8.75% (Libor + 7.75%/Q)8/26/20162.5 2.5 (2)(11)
Second lien senior secured loan ($10.7 par due 8/2023)8.75% (Libor + 7.75%/Q)2/27/201710.7 10.7 (2)(11)
Second lien senior secured loan ($11.1 par due 8/2023)8.75% (Libor + 7.75%/Q)6/29/201811.1 11.1 (2)(11)
Second lien senior secured loan ($0.6 par due 8/2023)8.75% (Libor + 7.75%/Q)6/29/20180.6 0.6 (2)(11)
24.9 24.9 
JDC Healthcare Management, LLC (15)Dental services providerFirst lien senior secured revolving loan ($0.8 par due 4/2022)4/10/20170.5 0.6 (2)(10)
F-52
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($29.9 par due 4/2023)4/10/201727.9 23.1 (2)(10)
First lien senior secured loan ($4.2 par due 4/2023)4/10/20173.9 3.2 (2)(10)
32.3 26.9 
LivaNova USA Inc.Medical device company focused on treating cardiovascular and neurological diseasesFirst lien senior secured loan ($42.5 par due 6/2025)7.50% (Libor + 6.50%/Q)6/10/202042.5 42.0 (11)
MB2 Dental Solutions, LLC (15)Dental services providerFirst lien senior secured revolving loan ($2.9 par due 9/2023)8.75% (Base Rate + 5.50%/Q)9/29/20172.9 2.9 (2)(11)
MCH Holdings, Inc. and MC Acquisition Holdings I, LLC Healthcare professional providerFirst lien senior secured loan ($113.5 par due 7/2021)8.50% (Libor + 7.00%/M)7/26/2017113.5 113.5 (2)(11)
Class A units (1,438,643 shares)1/17/20141.5 1.1 (2)
115.0 114.6 
Minerva Surgical, Inc. (15)Medical device company focused on women's healthFirst lien senior secured loan ($31.5 par due 12/2022)11.50% (Libor + 3.50% Cash, 6.00% PIK/Q)12/30/201930.7 31.5 (2)(11)
Napa Management Services Corporation and ASP NAPA Holdings, LLC Anesthesia management services providerSecond lien senior secured loan ($72.8 par due 10/2023)12.00% PIK (Libor + 11.00%/Q)4/19/201672.8 67.0 (2)(11)
Preferred units (1,842 units)15.00% PIK6/29/20200.1 0.1 (2)
Senior preferred units (5,320 units)8.00% PIK6/29/20200.3 0.3 (2)
Class A units (25,277 units)4/19/20162.5 0.9 (2)
75.7 68.3 
NMN Holdings III Corp. and NMN Holdings LP (15)Provider of complex rehabilitation technology solutions for patients with mobility lossFirst lien senior secured revolving loan11/13/2018— — (13)
Partnership units (30,000 units)11/13/20183.0 4.7 (2)
3.0 4.7 
NueHealth Performance, LLC (15)Developer, builder and manager of specialty surgical hospitals and ambulatory surgery centersFirst lien senior secured loan ($11.1 par due 9/2023)8.25% (Libor + 7.25%/M)9/27/201811.1 11.0 (2)(11)
First lien senior secured loan ($1.5 par due 9/2023)8.25% (Libor + 7.25%/M)9/27/20181.5 1.5 (2)(11)
12.6 12.5 
Olympia Acquisition, Inc. and Olympia TopCo, L.P. (15)Behavioral health and special education platform providerFirst lien senior secured revolving loan ($10.1 par due 9/2024)8.50% (Libor + 5.50% Cash, 2.00% PIK/Q)9/24/201910.1 9.3 (2)(11)
First lien senior secured loan ($0.0 par due 9/2026)8.50% (Libor + 5.50% Cash, 2.00% PIK/M)12/31/20200.1 — (2)(11)
First lien senior secured loan ($42.5 par due 9/2026)8.50% (Libor + 5.50% Cash, 2.00% PIK/M)9/24/201942.5 39.1 (2)(11)
Class A common units (9,549,000 units)9/24/20199.5 3.2 (2)
62.2 51.6 
OMH-HealthEdge Holdings, LLCProvider of financial, administrative and clinical software platforms to the healthcare industryFirst lien senior secured loan ($26.4 par due 10/2025)6.25% (Libor + 5.25%/Q)10/24/201926.4 26.4 (2)(11)
OneSmile Intermediate, LLC Dental services providerSenior subordinated loan ($8.5 par due 10/2026)8.00% PIK12/1/20208.5 7.1 (2)
OSYS Holdings, LLC Provider of technology-enabled solutions to pharmaciesLimited liability company membership interest (1.57%)11/21/20131.0 0.7 (2)
Pathway Vet Alliance LLC and Jedi Group Holdings LLC (15)Veterinary hospital operatorFirst lien senior secured revolving loan3/31/2020— — (13)
Second lien senior secured loan ($76.3 par due 3/2028)8.75% (Libor + 7.75%/M)3/31/202076.3 76.3 (2)(11)
Class R common units (6,004,768 units)3/31/20206.0 8.0 (2)
82.3 84.3 
Performance Health Supply, Inc. Distributor of rehabilitation supplies and equipmentSecond lien senior secured loan ($84.0 par due 8/2023)11.50% PIK (Libor + 10.50%/Q)9/2/201583.3 74.8 (2)(11)
PetVet Care Centers, LLC Veterinary hospital operatorFirst lien senior secured loan ($26.0 par due 2/2025)5.25% (Libor + 4.25%/M)10/31/201925.6 26.0 (2)(11)
F-53
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
PhyMED Management LLC Provider of anesthesia servicesSecond lien senior secured loan ($50.0 par due 9/2022)12.00% (Libor + 2.50% Cash, 8.50% PIK/Q)12/18/201549.9 46.0 (2)(11)
Premise Health Holding Corp. and OMERS Bluejay Investment Holdings LP (15)Provider of employer-sponsored onsite health and wellness clinics and pharmaciesFirst lien senior secured revolving loan ($12.0 par due 7/2023)3.47% (Libor + 3.25%/Q)7/10/201812.0 11.9 (2)(14)
First lien senior secured loan ($10.7 par due 7/2025)3.75% (Libor + 3.50%/Q)7/10/201810.7 10.6 (2)
Second lien senior secured loan ($67.1 par due 7/2026)7.75% (Libor + 7.50%/Q)7/10/201866.6 67.1 (2)
Class A units (9,775 units)7/10/20189.8 14.4 (2)
99.1 104.0 
Project Ruby Ultimate Parent Corp.Provider of care coordination and transition management software solutionsFirst lien senior secured loan ($1.6 par due 2/2024)5.25% (Libor + 4.25%/Q)12/31/20201.6 1.6 (2)(11)
Second lien senior secured loan ($1.4 par due 2/2025)9.25% (Libor + 8.25%/Q)12/31/20201.4 1.4 (2)(11)
3.0 3.0 
Respicardia, Inc. Developer of implantable therapies to improve cardiovascular healthWarrant to purchase up to 99,094 shares of Series C preferred stock (expires 6/2022)6/28/2012— — (2)
RTI Surgical, Inc. and Pioneer Surgical Technology, Inc. (15)Manufacturer of biologic, metal and synthetic implants/devicesFirst lien senior secured loan ($38.1 par due 7/2026)8.25% (Libor + 6.75%/Q)7/20/202038.1 37.4 (11)
SCSG EA Acquisition Company, Inc. (15)Provider of outsourced clinical services to hospitals and health systemsFirst lien senior secured revolving loan9/1/2017— — (13)
SiroMed Physician Services, Inc. and SiroMed Equity Holdings, LLC (15)Outsourced anesthesia providerFirst lien senior secured loan ($13.2 par due 3/2024)5.75% (Libor + 4.75%/Q)3/26/201813.2 10.4 (2)(11)
Common units (684,854 units)3/26/20184.8 — (2)
18.0 10.4 
SM Wellness Holdings, Inc. and SM Holdco, Inc. (15)Breast cancer screening providerFirst lien senior secured loan ($7.0 par due 8/2024)7.00% (Libor + 6.25%/Q)8/1/20187.0 6.9 (2)(11)
First lien senior secured loan ($2.0 par due 8/2024)7.00% (Libor + 6.25%/Q)9/25/20192.0 2.0 (2)(11)
Series A preferred stock (44,975 shares)10.48% PIK (Libor + 10.25%/Q)8/1/201860.2 60.2 (2)
Series A units (8,041 units)8/1/20188.0 — (2)
Series B units (804,142 units)8/1/2018— 4.4 (2)
77.2 73.5 
Symplr Software Inc. and Symplr Software Intermediate Holdings, Inc. (15)SaaS based healthcare compliance platform providerSecond lien senior secured loan ($53.5 par due 12/2028)8.50% (Libor + 7.75%/Q)12/22/202053.5 52.4 (2)(11)
Series C preferred shares (75,939 shares)11.00% PIK12/22/202076.1 76.1 (2)
129.6 128.5 
Synergy HomeCare Franchising, LLC and NP/Synergy Holdings, LLC (15)Franchisor of private-pay home care for the elderlyFirst lien senior secured revolving loan4/2/2018— — (13)
First lien senior secured loan ($15.7 par due 4/2024)6.75% (Libor + 5.75%/Q)4/2/201815.7 15.7 (2)(11)
Common units (550 units)4/2/20180.6 0.8 
16.3 16.5 
Teligent, Inc.Pharmaceutical company that develops, manufactures and markets injectable pharmaceutical productsSecond lien senior secured loan ($59.3 par due 6/2024)12/13/201852.3 28.5 (2)(10)
Second lien senior secured loan ($34.3 par due 6/2024)12/13/201830.4 16.5 (2)(10)
Warrant to purchase up to 490,492 shares of common stock (expires 4/2025)4/6/2020— — (2)
Warrant to purchase up to 122,548 shares of common stock (expires 7/2025)7/20/2020— — (2)
82.7 45.0 
Touchstone Acquisition, Inc. and Touchstone Holding, L.P.Manufacturer of consumable products in the dental, medical, cosmetic and consumer/industrial end-marketsFirst lien senior secured loan ($25.2 par due 11/2025)4.90% (Libor + 4.75%/M)11/15/201825.2 24.7 (2)
F-54
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($11.2 par due 11/2025)4.90% (Libor + 4.75%/M)11/15/201811.2 10.9 
Class A preferred units (2,149 units)8.00% PIK11/15/20182.5 2.5 (2)
38.9 38.1 
U.S. Anesthesia Partners, Inc. Anesthesiology service providerSecond lien senior secured loan ($71.8 par due 6/2025)8.25% (Libor + 7.25%/Q)6/16/201771.2 70.4 (2)(11)
United Digestive MSO Parent, LLC (15)Gastroenterology physician groupFirst lien senior secured loan ($1.1 par due 12/2024)5.00% (Libor + 4.00%/Q)12/14/20181.1 1.1 (2)(11)
First lien senior secured loan ($2.4 par due 12/2024)5.00% (Libor + 4.00%/Q)12/14/20182.4 2.4 (2)(11)
3.5 3.5 
Urgent Cares of America Holdings I, LLC and FastMed Holdings I, LLC Operator of urgent care clinicsPreferred units (7,696,613 units)6/11/20157.7 — 
Series A common units (2,000,000 units)6/11/20152.0 — 
Series C common units (5,288,427 units)6/11/2015— — 
9.7 — 
Urology Management Associates, LLC and JWC/UMA Holdings, L.P. Urology private practiceFirst lien senior secured loan ($9.7 par due 8/2024)6.00% (Libor + 5.00%/M)8/31/20189.6 9.7 (11)
Limited partnership interests (3.64% interest)8/31/20184.8 3.7 (2)
14.4 13.4 
WSHP FC Acquisition LLC (15)Provider of biospecimen products for pharma researchFirst lien senior secured revolving loan ($3.3 par due 3/2024)7.25% (Libor + 6.25%/Q)3/30/20183.3 3.3 (2)(11)
First lien senior secured loan ($27.9 par due 3/2024)7.25% (Libor + 6.25%/Q)3/30/201827.9 27.9 (2)(11)
First lien senior secured loan ($5.9 par due 3/2024)7.25% (Libor + 6.25%/Q)3/30/20185.9 5.9 (2)(11)
First lien senior secured loan ($4.6 par due 3/2024)7.25% (Libor + 6.25%/Q)2/11/20194.6 4.6 (2)(11)
First lien senior secured loan ($8.6 par due 3/2024)7.25% (Libor + 6.25%/Q)8/30/20198.6 8.6 (2)(11)
First lien senior secured loan ($10.9 par due 3/2024)7.25% (Libor + 6.25%/Q)10/31/201910.9 10.9 (2)(11)
61.2 61.2 
2,758.5 2,680.5 37.35%
Software & Services
AffiniPay Midco, LLC and AffiniPay Intermediate Holdings, LLC (15)Payment processing solution providerFirst lien senior secured revolving loan2/28/2020— — (13)
First lien senior secured loan ($64.6 par due 3/2026)6.25% (Libor + 5.00%/Q)2/28/202064.6 64.6 (2)(11)
Senior subordinated loan ($24.2 par due 2/2028)12.75% PIK2/28/202024.2 24.2 (2)
88.8 88.8 
Anaqua Parent Holdings, Inc. & Astorg VII Co-Invest Anaqua (15)Provider of intellectual property management lifecycle softwareFirst lien senior secured loan ($5.1 par due 4/2026)5.50% (Euribor + 5.50%/Q)4/10/20194.7 5.1 
Limited partnership units (4,400,000 units)6/13/20195.0 8.8 (2)(6)
9.7 13.9 
APG Intermediate Holdings Corporation and APG Holdings, LLC (4)(15)Aircraft performance software providerFirst lien senior secured loan ($12.8 par due 1/2025)6.75% (Libor + 5.25%/Q)1/3/202012.8 12.8 (2)(11)
First lien senior secured loan ($0.8 par due 1/2025)6.75% (Libor + 5.25%/Q)1/3/20200.8 0.8 (2)(11)
Class A membership units (9,750,000 units)1/3/20209.8 12.6 (2)
23.4 26.2 
Apptio, Inc. (15)Provider of cloud-based technology business management solutionsFirst lien senior secured loan ($62.2 par due 1/2025)8.25% (Libor + 7.25%/Q)1/10/201962.2 62.2 (11)
Banyan Software Holdings, LLC (15)Vertical software businesses holding companyFirst lien senior secured loan ($18.6 par due 10/2026)8.50% (Libor + 7.50%/Q)10/30/202018.6 18.4 (2)(11)
F-55
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Blue Campaigns Intermediate Holding Corp. and Elevate Parent, Inc. (dba EveryAction) (15)Provider of fundraising and organizing efforts and digital services to non-profits and political campaignsFirst lien senior secured revolving loan8/20/2018— — (13)
First lien senior secured loan ($47.2 par due 8/2023)8.50% (Libor + 6.75%/Q)8/20/201847.2 47.2 (11)
Series A preferred stock (150,000 shares)9/26/20181.5 2.0 (2)
48.7 49.2 
CallMiner, Inc. Provider of cloud-based conversational analytics solutionsWarrant to purchase up to 2,350,636 shares of Series 1 preferred stock (expires 7/2024)7/23/2014— — (2)
Cardinal Parent, Inc. and Packers Software Intermediate Holdings, Inc. (15)Provider of software and technology-enabled content and analytical solutions to insurance brokersSecond lien senior secured loan ($48.1 par due 11/2028)8.50% (Libor + 7.75%/Q)11/12/202048.1 47.2 (2)(11)
Series A-2 preferred shares (8,963 shares)11.25% PIK (Libor + 11.00%/Q)12/23/20209.0 9.0 (2)
Series A preferred shares (24,898 shares)11.21% PIK (Libor + 11.00%/Q)11/12/202025.3 25.3 (2)
82.4 81.5 
Clearwater Analytics, LLC (15)Provider of integrated cloud-based investment portfolio management, accounting, reporting and analytics softwareFirst lien senior secured loan ($45.9 par due 10/2025)7.25% (Libor + 6.25%/Q)10/19/202045.9 45.9 (2)(11)
Cority Software Inc., IQS, Inc. and Project Falcon Parent, Inc. (15)Provider of environmental, health and safety software to track compliance dataFirst lien senior secured loan ($6.4 par due 7/2026)6.25% (Libor + 5.25%/Q)7/2/20196.4 6.4 (2)(6)(11)
First lien senior secured loan ($4.5 par due 7/2026)6.25% (Libor + 5.25%/Q)10/15/20194.5 4.5 (2)(6)(11)
First lien senior secured loan ($1.1 par due 7/2026)8.25% (Libor + 7.25%/Q)9/3/20201.1 1.1 (2)(6)(11)
Preferred equity (198 shares)9.00% PIK7/2/20190.2 0.2 (2)(6)
Common equity (190,143 shares)7/2/2019— 0.2 (2)(6)
12.2 12.4 
Datix Bidco Limited Global healthcare software company that provides software solutions for patient safety and risk managementFirst lien senior secured loan ($0.1 par due 4/2025)4.74% (Libor + 4.50%/Q)10/7/2019— — (2)(6)
Diligent Corporation (15)Provider of secure SaaS solutions for board and leadership team documentsFirst lien senior secured revolving loan8/4/2020— — (13)
First lien senior secured loan ($33.4 par due 8/2025)7.25% (Libor + 6.25%/Q)8/4/202032.6 33.0 (11)
32.6 33.0 
Drilling Info Holdings, Inc. and Titan DI Preferred Holdings, Inc. SaaS based business analytics company focused on oil and gas industrySecond lien senior secured loan ($25.0 par due 7/2026)8.40% (Libor + 8.25%/M)2/11/202025.0 24.3 (2)
Preferred stock (29.53 shares)13.50% PIK2/11/202032.3 33.3 (2)
57.3 57.6 
Elemica Parent, Inc. & EZ Elemica Holdings, Inc. (15)SaaS based supply chain management software provider focused on chemical marketsFirst lien senior secured revolving loan ($3.4 par due 9/2025)7.00% (Libor + 6.00%/Q)9/18/20193.4 3.3 (2)
First lien senior secured loan ($51.0 par due 9/2025)7.00% (Libor + 6.00%/Q)9/18/201951.0 49.5 (2)(11)
First lien senior secured loan ($11.5 par due 9/2025)7.00% (Libor + 6.00%/Q)9/18/201911.5 11.2 (2)(11)
First lien senior secured loan ($5.8 par due 9/2025)7.00% (Libor + 6.00%/Q)12/15/20205.8 5.6 (2)(11)
Preferred equity (4,599 shares)9/18/20194.6 5.1 
76.3 74.7 
EP Purchaser, LLC., Entertainment Partners Canada ULC and TPG VIII EP Co-Invest II, L.P. (15)Provider of entertainment workforce and production management solutionsFirst lien senior secured loan ($29.2 par due 5/2026)6.50% (Libor + 6.25%/Q)5/10/201929.2 27.4 
First lien senior secured loan ($20.5 par due 5/2026)6.50% (Libor + 6.25%/Q)5/10/201920.5 19.3 (2)(9)
First lien senior secured loan ($10.7 par due 5/2026)6.50% (Libor + 6.25%/Q)5/10/201910.7 10.0 (2)(6)
F-56
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($4.1 par due 5/2026)6.50% (Libor + 6.25%/Q)5/10/20194.1 3.8 (2)(6)(9)
Partnership units (5,034,483 units)5/10/20195.0 5.8 (2)
69.5 66.3 
Episerver Inc. and Goldcup 17308 AB (15)Provider of web content management and digital commerce solutionsFirst lien senior secured loan ($6.5 par due 10/2024)6.00% (Euribor + 6.00%/Q)3/22/20196.0 6.3 (2)(6)
First lien senior secured loan ($27.2 par due 10/2024)6.75% (Libor + 5.75%/Q)10/9/201827.2 26.6 (2)(6)(11)
33.2 32.9 
eResearch Technology, Inc. and Astorg VII Co-Invest ERT (15)Provider of mission-critical, software-enabled clinical research solutionsSecond lien senior secured loan ($19.9 par due 2/2028)8.50% (Libor + 8.00%/M)2/4/202019.5 19.8 (2)(11)
Limited partnership interest (3,300,000 shares)1/31/20203.7 4.0 (2)(6)
23.2 23.8 
First Insight, Inc. Software company providing merchandising and pricing solutions to companies worldwideWarrant to purchase up to 122,827 units of Series C preferred stock (expires 3/2024)3/20/2014— — (2)
FM: Systems Group LLC (15)Provider of facilities and space management software solutionsFirst lien senior secured revolving loan ($1.5 par due 12/2024)7.50% (Libor + 6.50%/Q)2/8/20181.5 1.5 (2)(11)
First lien senior secured loan ($3.2 par due 12/2024)7.50% (Libor + 6.50%/Q)12/2/20193.2 3.2 (2)(11)
4.7 4.7 
Forescout Technologies, Inc. (15)Network access control solutions providerFirst lien senior secured loan ($17.0 par due 8/2026)10.50% PIK (Libor + 9.50%/Q)8/17/202016.6 16.9 (2)(11)
Frontline Technologies Group Holding LLC, Frontline Technologies Blocker Buyer, Inc., Frontline Technologies Holdings, LLC and Frontline Technologies Parent, LLC Provider of human capital management and SaaS-based software solutions to employees and administrators of K-12 school organizationsFirst lien senior secured loan ($17.4 par due 9/2023)6.75% (Libor + 5.75%/M)12/30/202017.4 17.4 (2)(11)
Class A preferred units (4,574 units)9.00% PIK9/18/20175.6 6.2 
Class B common units (499,050 units)9/18/2017— 4.6 
23.0 28.2 
Genesis Acquisition Co. and Genesis Holding Co. (15)Child care management software and services providerFirst lien senior secured revolving loan ($1.5 par due 7/2024)4.25% (Libor + 4.00%/Q)7/31/20181.5 1.4 (2)
First lien senior secured loan ($0.2 par due 7/2024)4.25% (Libor + 4.00%/Q)7/31/20180.2 0.1 (2)
Second lien senior secured loan ($25.8 par due 7/2025)7.73% (Libor + 7.50%/Q)7/31/201825.8 23.7 (2)
Second lien senior secured loan ($6.6 par due 7/2025)7.73% (Libor + 7.50%/Q)7/31/20186.6 6.0 (2)
Class A common stock (8 shares)7/31/20180.8 0.6 (2)
34.9 31.8 
Graphpad Software, LLC (15)Provider of data analysis, statistics, and visualization software solutions for scientific research applicationsFirst lien senior secured loan ($0.5 par due 12/2023)7.00% (Libor + 6.00%/Q)11/2/20200.5 0.5 (2)(11)
GTCR-Ultra Holdings III, LLC and GTCR-Ultra Holdings LLC (15)Provider of payment processing and merchant acquiring solutionsClass B units (2,878,372 units)8/1/2017— — (2)
Help/Systems Holdings, Inc. (15)Provider of IT operations management and cybersecurity softwareFirst lien senior secured loan ($26.0 par due 11/2026)5.75% (Libor + 4.75%/Q)11/22/201926.0 26.0 (2)(11)
IfByPhone Inc. Voice-based marketing automation software providerWarrant to purchase up to 124,300 shares of Series C preferred stock (expires 10/2022)10/15/20120.1 — (2)
Infogix, Inc. and Infogix Parent Corporation (15)Enterprise data analytics and integrity software solutions providerFirst lien senior secured revolving loan ($5.3 par due 4/2024)7.00% (Libor + 6.00%/Q)4/18/20185.3 5.3 (2)(11)
Series A preferred stock (2,475 shares)1/3/20172.6 3.9 
Common stock (1,297,768 shares)1/3/2017— — 
7.9 9.2 
F-57
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Inmar, Inc. Technology-driven solutions provider for retailers, wholesalers and manufacturersFirst lien senior secured loan ($15.5 par due 5/2024)5.00% (Libor + 4.00%/Q)1/31/201915.0 15.2 (2)(11)
Second lien senior secured loan ($28.3 par due 5/2025)9.00% (Libor + 8.00%/Q)4/25/201728.0 27.4 (2)(11)
43.0 42.6 
Huskies Parent, Inc. (15)Insurance software providerFirst lien senior secured revolving loan ($0.6 par due 7/2024)4.15% (Libor + 4.00%/M)7/18/20190.6 0.6 (2)
Invoice Cloud, Inc. (15)Provider of electronic payment processing solutionsFirst lien senior secured revolving loan2/11/2019— — (13)
First lien senior secured loan ($34.3 par due 2/2024)7.50% (Libor + 3.25% Cash, 3.25% PIK/Q)2/11/201934.3 34.3 (2)(11)
First lien senior secured loan ($13.9 par due 2/2024)7.50% (Libor + 3.25% Cash, 3.25% PIK/Q)2/11/201913.8 13.9 (2)(11)
48.1 48.2 
IV Rollover Holdings, LLC Solar power generation facility developer and operatorClass B units (170,490 units)5/31/2017— — (2)
Class X units (5,000,000 units)5/31/20172.3 2.3 (2)
2.3 2.3 
Majesco and Magic Topco, L.P. (15)Insurance software providerFirst lien senior secured revolving loan9/21/2020— — (13)
First lien senior secured loan ($36.7 par due 9/2027)8.75% (Libor + 7.75%/Q)9/21/202036.7 36.4 (2)(11)
Class A units (2,199 units)9.00% PIK9/21/20202.3 2.3 (2)
Class B units (494,157 units)9/21/2020— — (2)
39.0 38.7 
Ministry Brands, LLC and MB Parent HoldCo, L.P. (dba Community Brands) (15)Software and payment services provider to faith-based institutionsFirst lien senior secured loan ($9.3 par due 12/2022)5.00% (Libor + 4.00%/Q)4/6/20179.3 9.0 (2)(11)
First lien senior secured loan ($4.8 par due 12/2022)5.00% (Libor + 4.00%/Q)8/22/20174.8 4.7 (2)(11)
Second lien senior secured loan ($90.0 par due 6/2023)10.25% (Libor + 9.25%/Q)12/2/201689.7 89.1 (2)(11)
Second lien senior secured loan ($16.6 par due 6/2023)10.25% (Libor + 9.25%/Q)12/2/201616.6 16.4 (2)(11)
Second lien senior secured loan ($9.2 par due 6/2023)10.25% (Libor + 9.25%/Q)4/6/20179.2 9.1 (2)(11)
Second lien senior secured loan ($4.7 par due 6/2023)10.25% (Libor + 9.25%/Q)4/6/20174.7 4.7 (2)(11)
Second lien senior secured loan ($17.9 par due 6/2023)10.25% (Libor + 9.25%/Q)8/22/201717.9 17.7 (2)(11)
Second lien senior secured loan ($10.3 par due 6/2023)9.00% (Libor + 8.00%/Q)4/18/201810.3 10.0 (2)(11)
Second lien senior secured loan ($38.6 par due 6/2023)9.00% (Libor + 8.00%/Q)4/18/201838.6 37.5 (2)(11)
Class A units (500,000 units)12/2/20165.0 4.0 (2)
206.1 202.2 
MRI Software LLC (15)Provider of real estate and investment management softwareFirst lien senior secured loan ($50.4 par due 2/2026)6.50% (Libor + 5.50%/Q)2/10/202050.4 49.9 (2)(11)
First lien senior secured loan ($0.5 par due 2/2026)6.50% (Libor + 5.50%/Q)8/28/20200.5 0.5 (2)(11)
50.9 50.4 
Novetta Solutions, LLC Provider of advanced analytics solutions for the government, defense and commercial industriesFirst lien senior secured loan ($8.4 par due 10/2022)6.00% (Libor + 5.00%/Q)1/3/20178.3 8.4 (2)(11)
Second lien senior secured loan ($31.0 par due 10/2023)9.50% (Libor + 8.50%/Q)1/3/201729.8 31.0 (2)(11)
38.1 39.4 
nThrive, Inc. (fka Precyse Acquisition Corp.) Provider of healthcare information management technology and servicesSecond lien senior secured loan ($10.0 par due 4/2023)10.75% (Libor + 9.75%/M)4/20/20169.9 10.0 (2)(11)
PayNearMe, Inc. Electronic cash payment system providerWarrant to purchase up to 195,726 shares of Series E preferred stock (expires 3/2023)3/11/20160.2 — (2)
PaySimple, Inc. (15)Provider of business management solutionsFirst lien senior secured revolving loan8/23/2019— — (13)
F-58
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($35.4 par due 8/2025)5.65% (Libor + 5.50%/M)9/23/202035.4 35.1 (2)
35.4 35.1 
PDI TA Holdings, Inc., Peachtree Parent, Inc. and Insight PDI Holdings, LLC (15)Provider of enterprise management software for the convenience retail and petroleum wholesale marketFirst lien senior secured loan ($54.0 par due 10/2024)5.50% (Libor + 4.50%/Q)3/19/201954.0 54.0 (2)(11)
Second lien senior secured loan ($8.3 par due 10/2025)9.50% (Libor + 8.50%/Q)12/17/20208.3 8.3 (2)(11)
Second lien senior secured loan ($70.1 par due 10/2025)9.50% (Libor + 8.50%/Q)3/19/201970.1 70.1 (2)(11)
Series A preferred stock (13,656 shares)13.25% PIK3/19/201917.0 17.2 (2)
Class A units (2,062,493 units)3/19/20192.1 2.4 (2)
151.5 152.0 
Pegasus Global Enterprise Holdings, LLC, Mekone Blocker Acquisition, Inc. and Mekone Parent, LLC (15)Provider of plant maintenance and scheduling softwareFirst lien senior secured loan ($20.0 par due 5/2025)6.75% (Libor + 5.75%/Q)5/29/201920.0 20.0 (2)(11)
First lien senior secured loan ($5.8 par due 5/2025)6.75% (Libor + 5.75%/Q)5/29/20195.8 5.8 (2)(11)
First lien senior secured loan ($5.8 par due 5/2025)7.25% (Libor + 6.25%/Q)6/24/20205.8 5.8 (2)(11)
First lien senior secured loan ($48.7 par due 5/2025)7.25% (Libor + 6.25%/Q)10/16/202048.7 48.7 (2)(11)
First lien senior secured loan ($1.8 par due 5/2025)7.25% (Libor + 6.25%/Q)10/16/20201.8 1.8 (2)(11)
Class A units (5,000 units)5/29/20195.0 9.2 
87.1 91.3 
Perforce Software, Inc. (15)Developer of software used for application developmentFirst lien senior secured revolving loan ($0.1 par due 7/2024)4.65% (Libor + 4.50%/M)7/1/20190.1 0.1 (2)
PHNTM Holdings, Inc. and Planview Parent, Inc. Provider of project and portfolio management softwareClass A common stock (990 shares)1/27/20171.0 2.2 (2)
Class B common stock (168,329 shares)1/27/2017— 0.4 (2)
1.0 2.6 
Poplicus Incorporated Business intelligence and market analytics platform for companies that sell to the public sectorWarrant to purchase up to 2,402,991 shares of Series C preferred stock (expires 6/2025)6/25/20150.1 — (2)
Project Alpha Intermediate Holding, Inc. and Qlik Parent, Inc. Provider of data visualization software for data analyticsClass A common stock (7,445 shares)8/22/20167.4 10.8 (2)
Class B common stock (1,841,609 shares)8/22/20160.1 0.1 (2)
7.5 10.9 
Project Potter Buyer, LLC and Project Potter Parent, L.P. (15)Software solutions provider to the ready-mix concrete industryFirst lien senior secured revolving loan4/23/2020— — (13)
First lien senior secured loan ($44.5 par due 4/2027)9.25% (Libor + 8.25%/M)4/23/202044.5 44.5 (2)(11)
First lien senior secured loan ($13.0 par due 4/2027)9.25% (Libor + 8.25%/M)10/30/202013.0 13.0 (2)(11)
First lien senior secured loan ($14.6 par due 4/2027)9.25% (Libor + 8.25%/M)11/18/202014.6 14.6 (2)(11)
First lien senior secured loan ($5.0 par due 4/2027)9.25% (Libor + 8.25%/M)11/18/20205.0 5.0 (2)(11)
Class A units (1,599 units)9.00% PIK4/23/20201.7 1.7 (2)
Class B units (588,636 units)4/23/2020— — (2)
78.8 78.8 
QF Holdings, Inc. (15)SaaS based electronic health record software providerFirst lien senior secured loan ($24.4 par due 9/2024)8.00% (Libor + 7.00%/Q)9/19/201924.4 24.4 (2)(11)
First lien senior secured loan ($4.9 par due 9/2024)8.00% (Libor + 7.00%/Q)9/19/20194.9 4.9 (2)(11)
29.3 29.3 
Raptor Technologies, LLC and Rocket Parent, LLC (15)Provider of SaaS-based safety and security software to the K-12 school marketFirst lien senior secured revolving loan ($0.8 par due 12/2023)7.00% (Libor + 6.00%/M)12/17/20180.8 0.8 (2)(11)
First lien senior secured loan ($15.7 par due 12/2024)7.00% (Libor + 6.00%/Q)12/17/201815.7 15.2 (2)(11)
F-59
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($5.3 par due 12/2024)7.00% (Libor + 6.00%/Q)12/17/20185.3 5.2 (2)(11)
Class A common units (2,294,000 units)12/17/20182.3 1.9 
24.1 23.1 
Regent Education, Inc. Provider of software solutions designed to optimize the financial aid and enrollment processesWarrant to purchase up to 5,393,194 shares of common stock (expires 12/2026)12/23/2016— — (2)
Warrant to purchase up to 987 shares of common stock (expires 12/2026)12/23/2016— — (2)
— — 
Retriever Medical/Dental Payments LLC, FSDC Holdings, LLC, Rectangle Ware-Ever Pay LLC and Retriever Enterprises, LLC (15)Provider of payment processing services and software to healthcare providersFirst lien senior secured loan ($26.5 par due 2/2023)6.75% (Libor + 5.75%/Q)3/4/201926.5 26.5 (2)(11)
RMCF III CIV XXIX, L.P Software provider for clinical trial managementLimited partnership interest (99.90% interest)12/19/20141.0 13.8 (2)
Severin Acquisition, LLC, PeopleAdmin, Inc., Promachos Holding, Inc. and Performance Matters LLC (15)Provider of student information system software solutions to the K-12 education marketFirst lien senior secured revolving loan ($2.0 par due 8/2023)3.40% (Libor + 3.25%/M)8/1/20182.0 2.0 (2)
First lien senior secured loan ($26.6 par due 8/2025)5.50% (Libor + 4.50%/M)11/22/201926.6 26.6 (11)
Second lien senior secured loan ($80.0 par due 8/2026)6.90% (Libor + 6.75%/M)6/12/201879.4 80.0 (2)
108.0 108.6 
Smarsh Inc., MobileGuard, LLC, Actiance, Inc. and Skywalker TopCo, LLC SaaS based communication archival service providerFirst lien senior secured loan ($13.3 par due 11/2025)9.25% (Libor + 8.25%/Q)11/20/202013.3 13.0 (2)(11)
Common units (1,432,835 units)11/20/20204.8 4.8 (2)
18.1 17.8 
SocialFlow, Inc. Social media optimization platform providerWarrant to purchase up to 215,331 shares of Series C preferred stock (expires 1/2026)1/13/2016— — (2)
Sophia, L.P. Provider of ERP software and services for higher education institutionsSecond lien senior secured loan ($105.9 par due 10/2028)9.00% (Libor + 8.00%/Q)10/7/2020105.9 103.8 (2)(11)
SoundCloud Limited Platform for receiving, sending, and distributing musicCommon stock (73,422 shares)8/15/20170.4 0.7 (2)(6)
SpareFoot, LLC (15)PMS solutions and web services for the self-storage industryFirst lien senior secured revolving loan ($1.2 par due 4/2023)6.00% (Libor + 5.00%/Q)4/13/20181.2 1.2 (2)(11)(14)
First lien senior secured loan ($1.2 par due 4/2024)6.00% (Libor + 5.00%/Q)5/6/20201.2 1.2 (2)(11)
Second lien senior secured loan ($6.1 par due 4/2025)10.25% (Libor + 9.25%/Q)4/13/20186.0 6.1 (2)(11)
Second lien senior secured loan ($4.2 par due 4/2025)10.25% (Libor + 9.25%/Q)8/31/20184.1 4.2 (2)(11)
Second lien senior secured loan ($2.5 par due 4/2025)10.25% (Libor + 9.25%/Q)7/1/20192.5 2.5 (2)(11)
Second lien senior secured loan ($1.3 par due 4/2025)10.25% (Libor + 9.25%/Q)7/1/20191.3 1.3 (2)(11)
Second lien senior secured loan ($1.1 par due 4/2025)10.25% (Libor + 9.25%/Q)5/6/20201.1 1.1 (2)(11)
17.4 17.6 
Sparta Systems, Inc., Project Silverback Holdings Corp. and Silverback Holdings, Inc. (15)Quality management software providerFirst lien senior secured revolving loan8/21/2017— — (13)
Second lien senior secured loan ($20.0 par due 8/2025)9.25% (Libor + 8.25%/M)8/21/201719.8 20.0 (2)(11)
Series B preferred stock (10,084 shares)8/21/20171.1 3.8 
20.9 23.8 
Storm UK Holdco Limited and Storm US Holdco Inc. (15)Provider of water infrastructure software solutions for municipalities / utilities and engineering consulting firmsFirst lien senior secured revolving loan ($0.2 par due 5/2022)6.25% (Libor + 5.25%/M)5/5/20170.2 0.2 (2)(6)(11)
Surf Holdings, LLC Cybersecurity solutions providerSecond lien senior secured loan ($25.0 par due 3/2028)9.00% (Libor + 8.00%/Q)3/5/202025.0 25.0 (2)(6)(11)
F-60
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
TCP Hawker Intermediate LLC (15)Workforce management solutions providerFirst lien senior secured loan ($6.7 par due 8/2026)6.50% (Libor + 5.50%/M)12/1/20206.7 6.7 (2)(11)
First lien senior secured loan ($35.1 par due 8/2026)6.50% (Libor + 5.50%/Q)8/30/201935.1 35.1 (2)(11)
First lien senior secured loan ($7.4 par due 8/2026)6.50% (Libor + 5.50%/M)8/30/20197.4 7.4 (2)(11)
49.2 49.2 
The Ultimate Software Group, Inc. and H&F Unite Partners, L.P. (15)Provider of cloud based HCM solutions for businessesFirst lien senior secured revolving loan5/3/2019— — (6)(13)
Second lien senior secured loan ($205.4 par due 5/2027)8.15% (Libor + 8.00%/M)5/3/2019205.4 205.4 (2)(6)
Limited partnership interests (12,583,556 interests)5/3/201912.6 14.4 (2)(6)
218.0 219.8 
Vela Trading Technologies, LLC (15)Provider of market data software and content to global financial services clientsFirst lien senior secured revolving loan ($3.4 par due 6/2022)6.50% (Libor + 5.00% Cash, 0.50% PIK/Q)2/8/20183.4 3.2 (2)(11)
First lien senior secured revolving loan ($0.1 par due 6/2022)9.00% (Libor + 7.50 Cash, 0.50% PIK/Q)
2/8/20180.1 0.1 (2)(11)
First lien senior secured loan ($4.5 par due 6/2022)11.00% (Libor + 7.50% Cash, 2.50% PIK/Q)4/17/20184.5 4.3 (2)(11)
8.0 7.6 
Velocity Holdings Corp. Hosted enterprise resource planning application management services providerCommon units (1,713,546 units)12/13/20134.5 2.4 
Verscend Holding Corp. (15)Healthcare analytics solutions providerFirst lien senior secured revolving loan8/27/2018— — (13)
WebPT, Inc. (15)Electronic medical record software providerFirst lien senior secured loan ($48.1 par due 8/2024)7.75% (Libor + 6.75%/Q)8/28/201948.1 47.6 (2)(11)
Zemax Software Holdings, LLC (15)Provider of optical illumination design software to design engineersFirst lien senior secured revolving loan ($2.0 par due 6/2024)8.00% (Base Rate + 4.75%/Q)6/25/20182.0 2.0 (2)(11)
First lien senior secured loan ($16.7 par due 6/2024)6.75% (Libor + 5.75%/Q)6/25/201816.7 16.7 (2)(11)
18.7 18.7 
2,320.7 2,344.8 32.67%
Commercial & Professional Services
Accommodations Plus Technologies LLC and Accommodations Plus Technologies Holdings LLC (15)Provider of outsourced crew accommodations and logistics management solutions to the airline industryFirst lien senior secured revolving loan ($4.1 par due 5/2023)10.25% (Libor + 9.25%/Q)5/11/20184.1 3.9 (2)(11)
Class A common units (236,358 units)5/11/20184.3 4.6 
8.4 8.5 
Aero Operating LLC Provider of snow removal and melting service for airports and marine terminalsFirst lien senior secured loan ($36.9 par due 2/2026)8.00% (Libor + 6.50%/M)2/7/202036.9 35.1 (2)(11)
AMCP Clean Intermediate, LLC (15)Provider of janitorial and facilities management servicesFirst lien senior secured revolving loan10/1/2018— — (13)
First lien senior secured loan ($1.4 par due 10/2024)7.25% (Libor + 6.25%/Q)7/31/20201.4 1.4 (2)(11)
First lien senior secured loan ($0.7 par due 10/2024)7.25% (Libor + 6.25%/Q)10/1/20200.7 0.7 (2)(11)
First lien senior secured loan ($8.7 par due 10/2024)7.25% (Libor + 6.25%/Q)12/14/20208.7 8.7 (2)(11)
10.8 10.8 
Capstone Acquisition Holdings, Inc. and Capstone Parent Holdings, LP (15)Outsourced supply chain solutions provider to operators of distribution centersFirst lien senior secured revolving loan ($1.4 par due 11/2025)5.75% (Libor + 4.75%/M)11/12/20201.4 1.4 (2)(11)(14)
Second lien senior secured loan ($68.3 par due 11/2028)9.75% (Libor + 8.75%/Q)11/12/202068.3 66.9 (2)(11)
Class A units (10,581 units)11/12/202010.6 10.6 (2)
80.3 78.9 
Cozzini Bros., Inc. and BH-Sharp Holdings LP (15)Provider of commercial knife sharpening and cutlery services in the restaurant industryFirst lien senior secured revolving loan3/10/2017— — (13)
F-61
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($12.0 par due 3/2023)8.50% (Libor + 3.00% Cash, 4.50% PIK/Q)3/10/201712.0 10.3 (2)(11)
Common units (2,950,000 units)3/10/20173.0 0.3 (2)
15.0 10.6 
Crown Health Care Laundry Services, LLC and Crown Laundry Holdings, LLC (4)(15)Provider of outsourced healthcare linen management solutionsFirst lien senior secured revolving loan3/13/2014— — (13)
First lien senior secured loan ($9.9 par due 12/2021)7.25% (Libor + 6.25%/M)3/13/20149.9 9.9 (2)(11)
First lien senior secured loan ($0.9 par due 12/2021)7.25% (Libor + 6.25%/M)4/6/20170.9 0.9 (2)(11)
First lien senior secured loan ($5.0 par due 12/2021)7.25% (Libor + 6.25%/M)2/22/20195.0 5.0 (11)
First lien senior secured loan ($11.3 par due 12/2021)7.25% (Libor + 6.25%/M)6/12/201811.3 11.3 (2)(11)
Class A preferred units (3,393,973 units)3/13/20144.0 6.0 (2)
Class B common units (377,108 units)3/13/20140.4 6.5 (2)
31.5 39.6 
Divisions Holding Corporation and RC V Tecmo Investor LLC (15)Technology based aggregator for facility maintenance servicesFirst lien senior secured revolving loan ($2.5 par due 8/2026)7.50% (Libor + 6.50%/Q)8/14/20202.5 2.5 (2)(11)
First lien senior secured loan ($43.6 par due 8/2026)7.50% (Libor + 6.50%/Q)8/14/202043.6 43.2 (2)(11)
Common member units (9,624,000 units)8/14/20209.6 15.5 (2)
55.7 61.2 
DTI Holdco, Inc. and OPE DTI Holdings, Inc. (15)Provider of legal process outsourcing and managed servicesFirst lien senior secured revolving loan ($0.4 par due 9/2022)6.75% (Base Rate + 3.50%/Q)9/23/20160.4 0.4 (2)(14)
First lien senior secured revolving loan ($4.4 par due 9/2022)4.71% (Libor + 4.50%/Q)9/23/20164.4 3.9 (2)(14)
Class A common stock (7,500 shares)8/19/20147.5 3.7 (2)
Class B common stock (7,500 shares)8/19/2014— — (2)
12.3 8.0 
Elevation Services Parent Holdings, LLC (15)Elevator service platformFirst lien senior secured revolving loan ($0.4 par due 12/2026)6.50% (Libor + 5.50%/Q)12/18/20200.4 0.4 (2)(11)
First lien senior secured loan ($8.8 par due 12/2026)6.50% (Libor + 5.50%/Q)12/18/20208.8 8.7 (2)(11)
9.2 9.1 
HAI Acquisition Corporation and Aloha Topco, LLC (15)Professional employer organization offering human resources, compliance and risk management servicesFirst lien senior secured loan ($61.7 par due 11/2024)6.50% (Libor + 5.50%/M)11/1/201761.7 61.7 (2)(11)
Class A units (16,980 units)11/1/20171.7 2.5 (2)
63.4 64.2 
IMIA Holdings, Inc. (15)Marine preservation maintenance companyFirst lien senior secured revolving loan10/26/2018— — (13)
First lien senior secured loan ($28.4 par due 10/2025)7.00% (Libor + 6.00%/Q)10/26/201828.3 28.4 (11)
28.3 28.4 
IRI Holdings, Inc., IRI Group Holdings, Inc. and IRI Parent, L.P. Market research company focused on the consumer packaged goods industryFirst lien senior secured loan ($57.7 par due 12/2025)4.40% (Libor + 4.25%/M)11/30/201857.2 57.7 
First lien senior secured loan ($7.9 par due 12/2025)5.15% (Libor + 5.00%/M)9/28/20207.5 7.9 (2)
Second lien senior secured loan ($86.8 par due 11/2026)8.15% (Libor + 8.00%/M)11/30/201885.7 86.8 (2)
Series A-1 preferred shares (46,900 shares)11.50% PIK (Libor + 10.50%/S)11/30/201858.2 58.9 (2)(11)
Class A-1 common units (90,500 units)11/30/20189.1 16.5 (2)
217.7 227.8 
F-62
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Kellermeyer Bergensons Services, LLC (15)Provider of janitorial and facilities management servicesFirst lien senior secured loan ($1.7 par due 11/2026)7.50% (Libor + 6.50%/Q)11/7/20191.7 1.7 (2)(11)
First lien senior secured loan ($30.0 par due 11/2026)7.50% (Libor + 6.50%/Q)11/7/201929.7 30.0 (2)(11)
First lien senior secured loan ($6.6 par due 11/2026)7.50% (Libor + 6.50%/Q)11/7/20196.6 6.6 (2)(11)
38.0 38.3 
KPS Global LLC and Cool Group LLC Manufacturer of walk-in cooler and freezer systemsFirst lien senior secured loan ($15.2 par due 4/2022)6.50% (Libor + 5.50%/M)4/5/201715.2 15.2 (2)(11)
First lien senior secured loan ($4.1 par due 4/2022)6.50% (Libor + 5.50%/M)11/16/20184.1 4.1 (2)(11)
Class A units (13,292 units)9/21/20181.1 2.0 
20.4 21.3 
Laboratories Bidco LLC (15)Lab testing services for nicotine containing productsFirst lien senior secured loan ($20.8 par due 6/2024)7.00% (Libor + 6.00%/Q)10/30/202020.8 20.8 (2)(11)
First lien senior secured loan ($29.5 par due 6/2024)7.00% (Libor + 6.00%/Q)10/4/201929.5 29.5 (2)(11)
First lien senior secured loan ($25.5 par due 6/2024)7.00% (CDOR + 6.00%/Q)10/4/201924.4 25.5 (11)
74.7 75.8 
Microstar Logistics LLC, Microstar Global Asset Management LLC, and MStar Holding Corporation Keg management solutions providerSecond lien senior secured loan ($138.9 par due 7/2023)10.00% PIK (Libor + 9.00%/Q)8/13/2020138.9 119.4 (2)(11)
Series A preferred stock (1,507 shares)8/13/20201.5 2.1 (2)
Common stock (54,710 shares)12/14/20124.9 1.0 (2)
145.3 122.5 
NAS, LLC and Nationwide Marketing Group, LLC (15)Buying and marketing services organization for appliance, furniture and consumer electronics dealersFirst lien senior secured loan ($6.4 par due 6/2024)7.50% (Libor + 6.50%/Q)11/3/20206.4 6.4 (2)(11)
NM GRC Holdco, LLC Regulatory compliance services provider to financial institutionsFirst lien senior secured loan ($35.6 par due 2/2024)8.50% (Libor + 6.00% Cash, 1.50% PIK/M)2/9/201835.4 34.2 (2)(11)
First lien senior secured loan ($9.5 par due 2/2024)8.50% (Libor + 6.00% Cash, 1.50% PIK/M)2/9/20189.5 9.1 (2)(11)
44.9 43.3 
Petroleum Service Group LLC (15)Provider of operational services for US petrochemical and refining companiesFirst lien senior secured revolving loan7/23/2019— — (13)
First lien senior secured loan ($34.6 par due 7/2025)6.25% (Libor + 5.25%/Q)7/23/201934.6 34.6 (11)
First lien senior secured loan ($0.7 par due 7/2025)6.25% (Libor + 5.25%/Q)7/23/20190.7 0.7 (2)(11)
35.3 35.3 
QC Supply, LLC (15)Specialty distributor and solutions provider to the swine and poultry marketsFirst lien senior secured revolving loan ($8.8 par due 12/2021)8.00% (Libor + 7.00%/M)12/29/20168.8 8.1 (2)(11)(14)
First lien senior secured loan ($25.8 par due 12/2022)8.00% (Libor + 6.50% Cash, 0.50% PIK/M)12/29/201625.8 23.8 (2)(11)
First lien senior secured loan ($8.7 par due 12/2022)8.00% (Libor + 6.50% Cash, 0.50% PIK/M)12/29/20168.7 8.0 (2)(11)
43.3 39.9 
R2 Acquisition Corp. Marketing servicesCommon stock (250,000 shares)5/29/20070.3 0.3 (2)
RE Community Holdings GP, LLC and RE Community Holdings, LP Operator of municipal recycling facilitiesLimited partnership interest (2.86% interest)3/1/2011— — (2)
Limited partnership interest (2.49% interest)3/1/2011— — (2)
— — 
Research Now Group, LLC and Survey Sampling International, LLC Provider of outsourced data collection to the market research industryFirst lien senior secured loan ($41.1 par due 12/2024)6.50% (Libor + 5.50%/Q)2/14/201941.1 39.9 (2)(11)
F-63
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
SecurAmerica, LLC, ERMC LLC, ERMC Of America, LLC, SecurAmerica Corporation, SecurAmerica Aviation Security LLC, American Security Programs, Inc., USI LLC, Argenbright Holdings IV, LLC and Scrub Holdings, Inc (15)Provider of outsourced security guard services, outsourced facilities management and outsourced aviation servicesFirst lien senior secured loan ($4.7 par due 12/2023)9.25% (Libor + 8.00%/Q)11/24/20204.7 4.7 (2)(11)
First lien senior secured loan ($25.7 par due 12/2023)9.25% (Libor + 8.00%/M)12/21/201825.7 25.7 (2)(11)
First lien senior secured loan ($9.7 par due 12/2023)9.25% (Libor + 8.00%/M)12/21/20189.7 9.7 (2)(11)
First lien senior secured loan ($1.7 par due 12/2023)9.25% (Libor + 8.00%/M)12/21/20181.7 1.7 (2)(11)
First lien senior secured loan ($1.1 par due 12/2023)9.25% (Libor + 8.00%/M)12/21/20181.1 1.1 (2)(11)
First lien senior secured loan ($3.0 par due 7/2021)9.25% (Libor + 3.50% Cash, 4.50% PIK/Q)4/16/20203.0 3.0 (2)(11)
First lien senior secured loan ($14.5 par due 12/2023)9.25% (Libor + 8.00%/M)11/24/202014.5 14.5 (2)(11)
60.4 60.4 
SSE Buyer, Inc., Supply Source Enterprises, Inc., Impact Products LLC, The Safety Zone, LLC and SSE Parent, LP (15)Manufacturer and distributor of personal protection equipment, commercial cleaning, maintenance and safety productsFirst lien senior secured loan ($22.0 par due 6/2026)10.22% (Libor + 9.22%/Q)6/30/202022.0 22.0 (2)(11)
Limited partnership class A-1 units (2,173 units)6/30/20201.1 1.7 (2)
Limited partnership class A-2 units (2,173 units)6/30/20201.1 1.7 (2)
24.2 25.4 
Startec Equity, LLC (5)Communication servicesMember interest4/1/2020— — 
TDG Group Holding Company and TDG Co-Invest, LP (15)Operator of multiple franchise concepts primarily related to home maintenance or repairsFirst lien senior secured revolving loan ($0.1 par due 5/2024)5.40% (Libor + 5.25%/M)5/31/20180.1 0.1 (2)(14)
Preferred units (2,871,000 units)5/31/20182.9 3.5 (2)
Common units (29,000 units)5/31/2018— 2.1 (2)
3.0 5.7 
Tyden Group Holding Corp. Producer and marketer of global cargo security, product identification and traceability products and utility meter productsPreferred stock (46,276 shares)1/3/20170.4 0.4 (6)
Common stock (5,521,203 shares)1/3/20172.0 1.1 (6)
2.4 1.5 
Visual Edge Technology, Inc. Provider of outsourced office solutions with a focus on printer and copier equipment and other parts and suppliesFirst lien senior secured loan ($16.8 par due 8/2022)8.50% (Libor + 5.75% Cash, 1.25% PIK/M)8/31/201716.7 16.6 (2)(11)
First lien senior secured loan ($15.7 par due 8/2022)8.50% (Libor + 5.75% Cash, 1.25% PIK/Q)8/31/201715.7 15.5 (2)(11)
Senior subordinated loan ($75.6 par due 9/2024)16.00% PIK8/31/201773.4 74.0 (2)
Warrant to purchase up to 3,094,492 shares of common stock (expires 8/2027)8/31/2017— — (2)
Warrant to purchase up to 2,838,079 shares of preferred stock (expires 8/2027)8/31/20173.9 2.6 (2)
109.7 108.7 
VLS Recovery Services, LLC (15)Provider of commercial and industrial waste processing and disposal servicesFirst lien senior secured revolving loan10/17/2017— — (13)
VRC Companies, LLC (15)Provider of records and information management servicesFirst lien senior secured loan ($26.4 par due 3/2023)7.50% (Libor + 6.50%/Q)3/31/201726.4 26.4 (2)(11)
WCI-HFG Holdings, LLC Distributor of repair and replacement parts for commercial kitchen equipmentPreferred units (1,400,000 units)10/20/20151.4 1.7 (2)
XIFIN, Inc. and ACP Charger Co-Invest LLC (15)Revenue cycle management provider to labsFirst lien senior secured loan ($2.1 par due 2/2026)6.25% (Libor + 5.25%/Q)2/6/20202.1 2.1 (2)(11)
F-64
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Common stock (180,000 shares)2/6/20201.8 2.6 (2)
3.9 4.7 
1,250.6 1,239.7 17.27%
Investment Funds and Vehicles
ACAS Equity Holdings Corporation (5)Investment companyCommon stock (589 shares)1/3/20170.4 — (6)
Ares IIIR/IVR CLO Ltd. Investment vehicleSubordinated notes ($20.0 par due 4/2021)1/3/2017— — (6)
Blue Wolf Capital Fund II, L.P. (4)Investment partnershipLimited partnership interest (8.50% interest)1/3/2017— 0.2 (6)(18)
CoLTs 2005-1 Ltd. (5)Investment vehiclePreferred shares (360 shares)1/3/2017— — (6)
CoLTs 2005-2 Ltd. (5)Investment vehiclePreferred shares (34,170,000 shares)1/3/2017— — (6)
CREST Exeter Street Solar 2004-1 Investment vehiclePreferred shares (3,500,000 shares) 1/3/2017— — (6)
European Capital UK SME Debt LP (4)Investment partnershipLimited partnership interest (45% interest)1/3/201726.6 29.7 (6)(16)
HCI Equity, LLC (5)Investment companyMember interest (100.00% interest)4/1/2010— 0.1 (6)(18)
Partnership Capital Growth Investors III, L.P. Investment partnershipLimited partnership interest (2.50% interest)10/5/20112.8 3.4 (6)(18)
PCG-Ares Sidecar Investment II, L.P. (4)Investment partnershipLimited partnership interest (100.00% interest)10/31/20146.9 10.2 (2)(6)(16)
PCG-Ares Sidecar Investment, L.P. (4)Investment partnershipLimited partnership interest (100.00% interest)5/22/20144.8 0.4 (6)(16)
Piper Jaffray Merchant Banking Fund I, L.P. Investment partnershipLimited partnership interest (2.00% interest)8/16/20121.1 1.3 (6)(18)
Senior Direct Lending Program, LLC (5)(17)Co-investment vehicleSubordinated certificates ($1122.9 par due 12/2036)8.24% (Libor + 8.00%/Q)(12)7/27/20161,122.9 1,122.9 (6)
Member interest (87.50% interest)7/27/2016— — (6)
1,122.9 1,122.9 
VSC Investors LLC Investment companyMembership interest (1.95% interest)1/24/20080.3 0.5 (2)(6)(18)
1,165.8 1,168.7 16.29%
Consumer Services
ADF Capital, Inc., ADF Restaurant Group, LLC, and ARG Restaurant Holdings, Inc. (5)Restaurant owner and operatorFirst lien senior secured loan ($56.6 par due 12/2019)11/27/200639.9 — (2)(10)
First lien senior secured loan ($6.6 par due 12/2019)12/22/20164.8 — (2)(10)
Promissory note ($31.8 par due 12/2023)11/27/200613.8 — (2)
Warrant to purchase up to 0.95 units of Series D common stock (expires 12/2023)12/18/2013— — (2)
58.5 — 
Aimbridge Acquisition Co., Inc. Hotel operatorSecond lien senior secured loan ($22.5 par due 2/2027)7.65% (Libor + 7.50%/M)2/1/201922.2 20.0 (2)
American Residential Services L.L.C. and Aragorn Parent Holdings LP (15)Heating, ventilation and air conditioning services providerFirst lien senior secured revolving loan ($0.5 par due 10/2025)3.65% (Libor + 3.50%/M)10/15/20200.5 0.5 (2)(14)
Second lien senior secured loan ($56.4 par due 10/2028)9.50% (Libor + 8.50%/Q)10/15/202056.4 55.8 (2)(11)
Series A preferred units (2,531,500 units)10.00% PIK10/15/20202.6 2.5 (2)
59.5 58.8 
ATI Restoration, LLC (15)Provider of disaster recovery servicesFirst lien senior secured revolving loan7/31/2020— — (13)
First lien senior secured loan ($33.7 par due 7/2026)6.50% (Libor + 5.50%/Q)7/31/202033.7 33.3 (11)
33.7 33.3 
ChargePoint, Inc. Developer and operator of electric vehicle charging stationsWarrant to purchase up to 809,126 shares of Series E preferred stock (expires 12/2024)12/30/20140.3 3.0 (2)
F-65
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Cipriani USA, Inc. (15)Manager and operator of banquet facilities, restaurants, hotels and other leisure propertiesFirst lien senior secured loan ($12.6 par due 5/2023)11.75% (Libor + 10.75%/M)12/22/202012.6 11.1 (2)(11)
First lien senior secured loan ($68.2 par due 5/2023)11.75% (Libor + 10.75%/M)5/30/201866.8 60.0 (2)(11)
First lien senior secured loan ($12.2 par due 5/2023)11.75% (Libor + 10.75%/M)11/5/201812.2 10.7 (2)(11)
First lien senior secured loan ($15.0 par due 5/2023)11.75% (Libor + 10.75%/M)7/3/201914.7 13.2 (2)(11)
First lien senior secured loan ($20.0 par due 5/2023)11.75% (Libor + 10.75%/M)12/27/201918.2 17.6 (2)(11)
First lien senior secured loan ($3.0 par due 5/2023)11.75% (Libor + 10.75%/M)8/20/20183.0 2.7 (2)(11)
First lien senior secured loan ($3.0 par due 5/2023)11.75% (Libor + 10.75%/M)11/5/20183.0 2.7 (2)(11)
First lien senior secured loan ($4.9 par due 5/2023)11.75% (Libor + 10.75%/M)6/30/20204.9 4.3 (2)(11)
135.4 122.3 
Concert Golf Partners Holdco LLC (15)Golf club owner and operatorFirst lien senior secured loan ($18.2 par due 8/2025)5.50% (Libor + 4.50%/Q)8/20/201918.2 18.2 (2)(11)
First lien senior secured loan ($2.2 par due 8/2025)5.50% (Libor + 4.50%/Q)8/20/20192.2 2.2 (2)(11)
20.4 20.4 
Essential Services Holding Corporation and OMERS Mahomes Investment Holdings LLC (15)Provider of plumbing and HVAC servicesFirst lien senior secured revolving loan11/16/2020— — (13)
First lien senior secured loan ($115.8 par due 11/2026)6.75% (Libor + 5.75%/Q)11/16/2020115.8 114.6 (2)(11)
First lien senior secured loan ($33.0 par due 11/2026)6.75% (Libor + 5.75%/Q)11/16/202033.0 32.7 (2)(11)
Class A units (5,803.43 units)11/16/202019.6 19.6 (2)
168.4 166.9 
FWR Holding Corporation (15)Restaurant owner, operator, and franchisorFirst lien senior secured revolving loan8/21/2017— — (13)
First lien senior secured loan ($4.0 par due 8/2023)8.00% (Libor + 5.50% Cash, 1.50% PIK/Q)8/21/20174.0 3.7 (2)(11)
First lien senior secured loan ($0.5 par due 8/2023)8.00% (Libor + 5.50% Cash, 1.50% PIK/Q)8/21/20170.5 0.5 (2)(11)
First lien senior secured loan ($0.5 par due 8/2023)8.00% (Libor + 5.50% Cash, 1.50% PIK/Q)2/28/20190.5 0.5 (2)(11)
First lien senior secured loan ($0.8 par due 8/2023)8.00% (Libor + 5.50% Cash, 1.50% PIK/Q)2/28/20190.8 0.8 (2)(11)
First lien senior secured loan ($0.5 par due 8/2023)8.00% (Libor + 5.50% Cash, 1.50% PIK/Q)2/28/20190.5 0.5 (2)(11)
First lien senior secured loan ($0.7 par due 8/2023)8.00% (Libor + 5.50% Cash, 1.50% PIK/Q)2/28/20190.7 0.6 (2)(11)
First lien senior secured loan ($1.8 par due 8/2023)8.00% (Libor + 5.50% Cash, 1.50% PIK/Q)12/20/20191.8 1.7 (2)(11)
8.8 8.3 
Garden Fresh Restaurant Corp. and GFRC Holdings LLC (15)Restaurant owner and operatorFirst lien senior secured revolving loan ($6.9 par due 2/2022)2/1/20176.3 — (2)(10)
First lien senior secured loan ($19.6 par due 2/2022)2/1/201717.9 — (2)(10)
24.2 — 
Jenny C Acquisition, Inc. Health club franchisorSenior subordinated loan ($1.3 par due 4/2025)8.00% PIK4/5/20191.3 1.3 (2)
Jim N Nicks Management, LLC (15)Restaurant owner and operatorFirst lien senior secured revolving loan ($4.9 par due 7/2023)6.25% (Libor + 5.25%/Q)7/10/20174.9 4.4 (2)(11)
First lien senior secured loan ($13.7 par due 7/2023)6.25% (Libor + 5.25%/Q)7/10/201713.7 12.5 (2)(11)
First lien senior secured loan ($1.1 par due 7/2023)6.25% (Libor + 5.25%/Q)7/10/20171.1 1.0 (2)(11)
19.7 17.9 
F-66
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
ME Equity LLC Franchisor in the massage industryCommon stock (3,000,000 shares)9/27/20123.0 2.2 (2)
Movati Athletic (Group) Inc. (15)Premier health club operatorFirst lien senior secured loan ($2.9 par due 10/2022)7.50% (CDOR + 5.50% Cash, 0.50% PIK/Q)10/5/20173.0 2.7 (2)(6)(11)
First lien senior secured loan ($2.1 par due 10/2022)7.50% (CDOR + 5.50% Cash, 0.50% PIK/Q)10/5/20172.0 1.9 (2)(6)(11)
5.0 4.6 
OTG Management, LLC (15)Airport restaurant operatorFirst lien senior secured revolving loan ($10.1 par due 8/2021)10.00% (Libor + 7.00% Cash, 2.00% PIK/Q)8/26/201610.1 8.7 (2)(11)
First lien senior secured loan ($5.4 par due 8/2021)10.00% (Libor + 7.00% Cash, 2.00% PIK/Q)10/7/20205.4 4.6 (2)(11)
First lien senior secured loan ($23.8 par due 8/2021)10.00% (Libor + 7.00% Cash, 2.00% PIK/Q)8/26/201623.8 20.5 (2)(11)
First lien senior secured loan ($98.5 par due 8/2021)10.00% (Libor + 7.00% Cash, 2.00% PIK/Q)8/26/201698.5 84.7 (2)(11)
First lien senior secured loan ($9.7 par due 8/2021)10.00% (Libor + 7.00% Cash, 2.00% PIK/Q)10/10/20189.7 8.3 (2)(11)
First lien senior secured loan ($16.1 par due 8/2021)10.00% (Libor + 7.00% Cash, 2.00% PIK/Q)10/7/202016.1 13.8 (2)(11)
Senior subordinated loan ($38.6 par due 2/2022)8/26/201636.1 29.0 (2)(10)
Class A preferred units (3,000,000 units)8/26/201638.3 — 
Common units (3,000,000 units)1/5/20113.0 — 
Warrant to purchase up to 7.73% of common units6/19/20080.1 — 
241.1 169.6 
Portillo's Holdings, LLC Fast casual restaurant brandSecond lien senior secured loan ($34.0 par due 12/2024)10.75% (Libor + 9.50%/Q)11/27/201933.2 34.0 (2)(11)
Pyramid Management Advisors, LLC and Pyramid Investors, LLC (15)Hotel operatorFirst lien senior secured revolving loan ($9.5 par due 7/2023)8.00% (Libor + 5.75% Cash, 1.25% PIK/Q)4/12/20189.5 8.5 (2)(11)(14)
First lien senior secured loan ($16.8 par due 7/2023)8.00% (Libor + 5.75% Cash, 1.25% PIK/Q)4/12/201816.8 15.1 (2)(11)
First lien senior secured loan ($1.4 par due 7/2023)8.00% (Libor + 5.75% Cash, 1.25% PIK/Q)4/12/20181.4 1.3 (2)(11)
First lien senior secured loan ($6.3 par due 7/2023)8.00% (Libor + 5.75% Cash, 1.25% PIK/Q)12/27/20196.3 5.7 (2)(11)
Preferred membership units (996,833 units)7/15/20161.0 0.3 
35.0 30.9 
Redwood Services, LLC and Redwood Services Holdco, LLC (15)Provider of residential HVAC and plumbing servicesFirst lien senior secured loan ($5.4 par due 12/2025)8.00% (Libor + 7.00%/Q)12/31/20205.4 5.3 (2)(11)
Series D units (5,291,723 units)8.00% PIK12/31/20205.3 5.3 
10.7 10.6 
Safe Home Security, Inc., Security Systems Inc., Safe Home Monitoring, Inc., National Protective Services, Inc., Bright Integrations LLC and Medguard Alert, Inc. (15)Provider of safety systems for business and residential customersFirst lien senior secured loan ($45.3 par due 8/2024)8.25% (Libor + 7.25%/M)8/4/202045.3 44.8 (2)(11)
SERV 2020-1 Provider of restoration and cleaning services to commercial and residential customersFirst lien senior secured loan ($0.0 par due 1/2051)3.34%12/9/2020— — (2)
Spectra Finance, LLC (15)Venue management and food and beverage providerFirst lien senior secured revolving loan ($15.2 par due 4/2023)6.75% (Libor + 5.00% Cash, 0.75% PIK/M)4/2/201815.2 14.0 (2)(11)(14)
First lien senior secured loan ($3.2 par due 4/2024)6.75% (Libor + 5.00% Cash, 0.75% PIK/Q)4/2/20183.2 2.9 (2)(11)
18.4 16.9 
F-67
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Spin HoldCo Inc. and Airvending Limited Laundry service and equipment providerFirst lien senior secured loan ($15.6 par due 11/2022)7.00% (Libor + 6.00%/Q)5/15/202015.6 15.6 (6)(11)
First lien senior secured loan ($11.0 par due 11/2022)7.00% (Libor + 6.00%/Q)5/15/202011.0 11.0 (2)(11)
Second lien senior secured loan ($154.2 par due 5/2023)8.50% (Libor + 7.50%/Q)5/14/2013154.2 152.6 (2)(11)
180.8 179.2 
Taymax Group, L.P., Taymax Group G.P., LLC, PF Salem Canada ULC and TCP Fit Parent, L.P. (15)Planet Fitness franchiseeFirst lien senior secured revolving loan ($1.3 par due 7/2024)5.75% (Libor + 4.75%/Q)7/31/20181.3 1.2 (2)(11)
First lien senior secured loan ($0.3 par due 7/2025)5.75% (Libor + 4.75%/Q)3/5/20200.3 0.3 (2)(11)
First lien senior secured loan ($0.6 par due 7/2025)5.75% (Libor + 4.75%/Q)3/5/20200.6 0.6 (2)(11)
Class A units (37,020 units)7/31/20183.8 0.8 
6.0 2.9 
The Alaska Club Partners, LLC, Athletic Club Partners LLC and The Alaska Club, Inc. (15)Premier health club operatorFirst lien senior secured loan ($15.4 par due 12/2024)10.25% (Libor + 5.00% Cash, 2.00% PIK/Q)12/16/201915.4 13.8 (2)(11)
WASH Multifamily Acquisition Inc. and Coinamatic Canada Inc. Laundry service and equipment providerFirst lien senior secured loan ($110.5 par due 5/2022)5.75% (Libor + 4.75%/M)8/1/2019110.5 110.5 (2)(11)
Second lien senior secured loan ($22.0 par due 5/2023)8.00% (Libor + 7.00%/M)5/14/201521.7 21.5 (2)(11)
Second lien senior secured loan ($3.8 par due 5/2023)8.00% (Libor + 7.00%/M)5/14/20153.8 3.8 (2)(11)
136.0 135.8 
1,282.3 1,097.5 15.29%
Consumer Durables & Apparel
Badger Sportswear Acquisition, Inc. Provider of team uniforms and athletic wearSecond lien senior secured loan ($56.8 par due 3/2024)11.00% (Libor + 9.75%/Q)9/6/201656.8 50.0 (2)(11)
Bowhunter Holdings, LLC Provider of branded archery and bowhunting accessoriesCommon units (421 units)4/24/20144.2 — 
Centric Brands LLC (15)Designer, marketer and distributor of licensed and owned apparelFirst lien senior secured revolving loan ($3.0 par due 10/2024)6.50% (Libor + 5.50%/Q)5/20/20203.0 3.0 (2)(11)
First lien senior secured loan ($60.2 par due 10/2025)11.00% (Libor + 10.00% PIK/Q)10/29/201860.2 54.1 (2)(11)
Membership interests (273,609 units)10/29/20182.9 3.1 (2)
66.1 60.2 
DRS Holdings III, Inc. and DRS Holdings I, Inc. (15)Footwear and orthopedic foot-care brandFirst lien senior secured loan ($30.1 par due 11/2025)6.75% (Libor + 5.75%/Q)11/1/201930.1 29.5 (2)(11)
Common stock (8,549 shares)11/1/20198.5 4.9 (2)
38.6 34.4 
GSM Acquisition Corp. (15)Manufacturer of outdoor productsFirst lien senior secured loan ($1.8 par due 11/2026)6.00% (Libor + 5.00%/Q)11/16/20201.8 1.8 (2)(11)
First lien senior secured loan ($26.0 par due 11/2026)6.00% (Libor + 5.00%/Q)11/16/202026.0 25.6 (2)(11)
27.8 27.4 
Implus Footcare, LLC Provider of footwear and other accessoriesFirst lien senior secured loan ($104.4 par due 4/2024)8.75% (Libor + 2.50% Cash, 5.25% PIK/Q)6/1/2017104.4 89.8 (2)(11)
First lien senior secured loan ($14.3 par due 4/2024)8.75% (Libor + 2.50% Cash, 5.25% PIK/Q)6/1/201714.3 12.3 (2)(11)
First lien senior secured loan ($1.3 par due 4/2024)8.75% (Libor + 2.50% Cash, 5.25% PIK/Q)6/30/20161.3 1.1 (2)(11)
First lien senior secured loan ($5.1 par due 4/2024)8.75% (Libor + 2.50% Cash, 5.25% PIK/Q)7/17/20185.1 4.4 (2)(11)
125.1 107.6 
Pelican Products, Inc. Flashlights manufacturerSecond lien senior secured loan ($27.3 par due 5/2026)8.75% (Libor + 7.75%/Q)5/14/201827.2 27.1 (2)(11)
Rawlings Sporting Goods Company, Inc. and Easton Diamond Sports, LLCSports equipment manufacturing companyFirst lien senior secured loan ($93.6 par due 12/2026)8.50% (Libor + 7.50%/M)12/31/202093.6 92.7 (2)(11)
F-68
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Reef Lifestyle, LLC (15)Apparel retailerFirst lien senior secured revolving loan ($8.3 par due 10/2024)11.00% (Libor + 5.75% Cash, 4.25% PIK/M)10/26/20188.3 6.8 (2)(11)(14)
First lien senior secured loan ($25.8 par due 10/2024)11.00% (Libor + 5.75% Cash, 4.25% PIK/Q)10/26/201825.8 21.1 (2)(11)
First lien senior secured loan ($0.4 par due 10/2024)11.00% (Libor + 5.75% Cash, 4.25% PIK/Q)7/31/20200.4 0.3 (2)(11)
First lien senior secured loan ($0.3 par due 10/2024)11.00% (Libor + 5.75% Cash, 4.25% PIK/M)7/31/20200.3 0.3 (2)(11)
34.8 28.5 
S Toys Holdings LLC (fka The Step2 Company, LLC) (5)Toy manufacturerClass B common units (126,278,000 units)10/30/2014— 0.3 
Common units (1,116,879 units)4/1/2011— — 
Warrant to purchase up to 3,157,895 units4/1/2010— — 
— 0.3 
SHO Holding I Corporation Manufacturer and distributor of slip resistant footwearSecond lien senior secured loan ($105.1 par due 10/2024)10.29% PIK (Libor + 9.29%/Q)10/27/2015104.1 83.0 (2)(11)
Shock Doctor, Inc. and Shock Doctor Holdings, LLC (4)(15)Developer, marketer and distributor of sports protection equipment and accessoriesFirst lien senior secured revolving loan ($1.6 par due 5/2024)7.00% (Base Rate + 3.75%/M)5/21/20191.6 1.5 (2)(11)(14)
First lien senior secured loan ($19.4 par due 5/2024)5.75% (Libor + 4.75%/Q)5/21/201919.3 18.0 (2)(11)
Class A preferred units (50,000 units)3/14/20145.0 — (2)
Class C preferred units (50,000 units)4/22/20155.0 — (2)
Preferred units (14,591 units)5/14/20191.6 — (2)
32.5 19.5 
Singer Sewing Company, SVP-Singer Holdings, LLC and SVP-Singer Holdings LP (5)(15)Manufacturer of consumer sewing machinesFirst lien senior secured revolving loan7/26/2017— — (13)
First lien senior secured loan ($234.2 par due 2/2026)10.00% (Libor + 9.00%/Q)11/12/2020222.5 234.2 (2)(11)
Class A common units (6,264,706 units)7/26/2017— 74.1 (2)
222.5 308.3 
Totes Isotoner Corporation and Totes Ultimate Holdco, Inc. (4)Designer, marketer, and distributor of rain and cold weather productsFirst lien senior secured loan ($2.2 par due 12/2024)7.00% (Libor + 6.00%/Q)12/23/20192.2 1.9 (2)(11)
First lien senior secured loan ($1.6 par due 6/2024)5.00% (Libor + 4.00%/Q)12/23/20191.6 1.6 (2)(11)
Common stock (861,000 shares)12/23/20196.0 2.0 (2)
9.8 5.5 
Varsity Brands Holding Co., Inc. and BCPE Hercules Holdings, LP Leading manufacturer and distributor of textiles, apparel & luxury goodsSecond lien senior secured loan ($21.1 par due 12/2025)9.25% (Libor + 8.25%/M)7/30/201821.1 19.0 (2)(11)
Second lien senior secured loan ($122.7 par due 12/2025)9.25% (Libor + 8.25%/M)12/15/2017122.7 110.5 (2)(11)
Class A units (1,400 units)7/30/20181.4 0.5 (2)
145.2 130.0 
988.3 974.5 13.58%
Diversified Financials
Commercial Credit Group, Inc. Commercial equipment finance and leasing companySenior subordinated loan ($8.5 par due 8/2022)11.00% (Libor + 9.75%/M)5/10/20128.5 8.5 (2)(11)
DFC Global Facility Borrower III LLC (15)Non-bank provider of alternative financial servicesFirst lien senior secured revolving loan ($114.4 par due 9/2024)11.75% (Libor + 10.75%/M)8/9/2019114.4 114.4 (2)(6)(11)
eCapital Finance Corp. Consolidator of commercial finance businessesSenior subordinated loan ($36.5 par due 1/2025)10.00% (Libor + 8.50%/M)1/31/202036.5 36.5 (2)(11)
Senior subordinated loan ($43.0 par due 1/2025)10.00% (Libor + 8.50%/M)1/31/202043.0 43.0 (2)(11)
Senior subordinated loan ($7.7 par due 1/2025)10.00% (Libor + 8.50%/Q)11/24/20207.7 7.7 (2)(11)
F-69
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
87.2 87.2 
EP Wealth Advisors, LLC (15)Wealth management and financial planning firmFirst lien senior secured loan ($0.1 par due 9/2026)6.25% (Libor + 5.25%/Q)9/4/20200.1 0.1 (2)(11)
Ivy Hill Asset Management, L.P. (5)Asset management servicesSenior subordinated loan ($72.0 par due 5/2023)7.25% (Libor + 6.50%/Q)2/8/201872.0 72.0 (6)(11)
Member interest (100.00% interest)6/15/2009469.0 556.5 (6)
541.0 628.5 
Javlin Three LLC, Javlin Four LLC, and Javlin Five LLC Asset-backed financial services companyFirst lien senior secured loan ($16.0 par due 6/2017)6/24/201412.9 0.8 (2)(6)(10)
Joyce Lane Capital LLC and Joyce Lane Financing SPV LLC (fka Ciena Capital LLC) (5)(15)Specialty finance companyFirst lien senior secured loan ($0.6 par due 12/2022)4.25% (Libor + 4.00%/Q)12/27/20180.6 0.6 (2)(6)
Equity interests11/29/2010— — (2)(6)
0.6 0.6 
LS DE LLC and LM LSQ Investors LLC Asset based lenderSenior subordinated loan ($37.0 par due 6/2021)10.50%6/25/201537.0 36.6 (2)(6)
Senior subordinated loan ($3.0 par due 6/2021)10.50%6/15/20173.0 3.0 (2)(6)
Membership units (3,275,000 units)6/25/20153.3 3.7 (6)
43.3 43.3 
Rialto Management Group, LLC (15)Investment and asset management platform focused on real estateFirst lien senior secured revolving loan11/30/2018— — (6)(13)
First lien senior secured loan ($0.8 par due 12/2024)4.65% (Libor + 4.50%/M)11/30/20180.8 0.8 (2)(6)
0.8 0.8 
TA/WEG Holdings, LLC (15)Wealth management and financial planning firmFirst lien senior secured revolving loan10/2/2019— — (13)
First lien senior secured loan ($0.5 par due 10/2025)6.75% (Libor + 5.75%/Q)11/6/20200.5 0.5 (2)(11)
First lien senior secured loan ($4.7 par due 10/2025)6.75% (Libor + 5.75%/Q)10/2/20194.7 4.7 (2)(11)
5.2 5.2 
The Ultimus Group Midco, LLC, The Ultimus Group, LLC, and The Ultimus Group Aggregator, LP (15)Provider of asset-servicing capabilities for fund managersFirst lien senior secured revolving loan ($4.0 par due 2/2024)4.75% (Libor + 4.50%/Q)2/1/20194.0 3.8 (2)
First lien senior secured loan ($38.2 par due 2/2026)5.50% (Libor + 4.50%/Q)2/1/201938.2 36.3 (2)(11)
Class A units (1,443 units)2/1/20191.6 1.7 
Class A units (245 units)2/1/20190.2 — 
Class B units (2,167,424 units)2/1/2019— — 
Class B units (245,194 units)2/1/2019— — 
44.0 41.8 
858.0 931.2 12.98%
Automobiles & Components
Automotive Keys Group, LLC and Automotive Keys Investor, LLC Provider of replacement wireless keys for automotive marketFirst lien senior secured loan ($12.2 par due 11/2025)6.00% (Libor + 5.00%/Q)12/22/202012.2 11.9 (2)(11)
First lien senior secured loan ($5.3 par due 11/2025)6.00% (Libor + 5.00%/Q)11/6/20205.3 5.2 (2)(11)
Preferred units (4,113,113 units)9.00% PIK11/6/20204.2 4.2 (2)
Class A common units (4,113,113 units)11/6/2020— — (2)
21.7 21.3 
Eckler Industries, Inc. and Eckler Purchaser LLC (5)(15)Restoration parts and accessories provider for classic automobilesFirst lien senior secured revolving loan ($2.7 par due 5/2022)12.00% PIK7/12/20122.7 2.6 (2)
First lien senior secured loan ($23.3 par due 5/2022)12.00% PIK7/12/201223.3 22.6 (2)
Class A common units (67,972 units)7/12/201216.4 — (2)
42.4 25.2 
GB Auto Service, Inc. and GB Auto Service Holdings, LLC (15)Automotive parts and repair services retailerFirst lien senior secured revolving loan ($3.8 par due 10/2024)7.00% (Libor + 6.00%/M)10/19/20183.8 3.8 (2)(11)
F-70
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($21.9 par due 10/2024)7.00% (Libor + 6.00%/Q)10/19/201821.9 21.9 (2)(11)
First lien senior secured loan ($30.1 par due 10/2024)7.00% (Libor + 6.00%/Q)10/19/201830.1 30.1 (11)
First lien senior secured loan ($38.8 par due 10/2024)7.00% (Libor + 6.00%/Q)3/9/202038.8 38.8 (2)(11)
Common units (4,389,156 units)10/19/20185.7 10.4 (2)
100.3 105.0 
Highline Aftermarket Acquisition, LLC, Highline Aftermarket SC Acquisition, Inc. and Highline PPC Blocker LLC (15)Manufacturer and distributor of automotive fluidsFirst lien senior secured revolving loan ($9.5 par due 11/2025)4.00% (Libor + 3.75%/M)11/9/20209.5 9.2 (2)
Second lien senior secured loan ($41.2 par due 11/2028)8.75% (Libor + 8.00%/Q)11/9/202041.2 40.4 (2)(11)
Second lien senior secured loan ($29.2 par due 11/2028)8.75% (Libor + 8.00%/Q)11/9/202029.2 28.6 (2)(11)
Co-invest units (59,230 units)11/4/20205.9 5.9 (2)
85.8 84.1 
Mac Lean-Fogg Company and MacLean-Fogg Holdings, L.L.C.Manufacturer and supplier for the power utility and automotive markets worldwideFirst lien senior secured loan ($153.0 par due 12/2025)5.63% (Libor + 5.00%/M)12/21/2018152.4 146.9 (11)
First lien senior secured loan ($19.3 par due 12/2025)5.63% (Libor + 5.00%/M)12/21/201819.3 18.5 (2)(11)
Preferred units (59,453 units)4.50% Cash, 9.25% PIK10/9/201572.3 72.3 
244.0 237.7 
Mavis Tire Express Services Corp. and Mavis Tire Express Services TopCo, L.P. (15)Auto parts retailerSecond lien senior secured loan ($153.9 par due 3/2026)8.50% (Libor + 7.50%/Q)3/20/2018152.3 153.9 (2)(11)
Second lien senior secured loan ($1.4 par due 3/2026)8.50% (Libor + 7.50%/Q)3/20/20181.4 1.4 (2)(11)
Second lien senior secured loan ($23.3 par due 3/2026)9.00% (Libor + 8.00%/Q)10/15/201923.3 23.3 (2)(11)
Class A units (12,400,000 units)3/20/201812.4 19.0 (2)
189.4 197.6 
SK SPV IV, LLC Collision repair site operatorSeries A common stock (12,500 units)8/18/20140.6 1.4 (2)
Series B common stock (12,500 units)8/18/20140.6 1.4 (2)
1.2 2.8 
Wand Newco 3, Inc.Collision repair companySecond lien senior secured loan ($180.2 par due 2/2027)7.40% (Libor + 7.25%/M)2/5/2019177.8 174.8 (2)
862.6 848.5 11.82%
Power Generation
Beacon RNG LLC Owner of natural gas facilitiesClass B units (35,000,000 units)3/11/201935.0 39.3 
CPV Maryland Holding Company II, LLC Gas turbine power generation facilities operatorSenior subordinated loan ($66.2 par due 3/2021)14.00% PIK8/8/201461.6 61.6 (2)
DGH Borrower LLC Developer, owner and operator of quick start, small-scale natural gas-fired power generation projectsFirst lien senior secured loan ($50.3 par due 6/2023)8.25% (Libor + 7.25%/Q)6/8/201850.3 45.7 (2)(11)
Green Energy Partners, Stonewall LLC and Panda Stonewall Intermediate Holdings II LLC Gas turbine power generation facilities operatorFirst lien senior secured loan ($14.4 par due 11/2021)6.50% (Libor + 5.50%/Q)11/13/201414.3 13.1 (2)(11)
Senior subordinated loan ($134.2 par due 12/2021)11/13/2014132.1 87.3 (2)(10)
146.4 100.4 
Heelstone Renewable Energy, LLC (5)(15)Provider of cloud based IT solutions, infrastructure and servicesPreferred equity (2,700,000 shares)6/28/201929.4 29.7 
Hummel Station LLC Gas turbine power generation facilities operatorFirst lien senior secured loan ($0.9 par due 10/2022)7.00% (Libor + 6.00%/M)12/10/20200.9 0.9 (2)(11)(18)
Navisun LLC and Navisun Holdings LLC (5)(15)Owner and operater of commercial and industrial solar projectsFirst lien senior secured loan ($52.6 par due 11/2023)8.00% PIK11/15/201752.6 52.6 (2)
First lien senior secured loan ($14.6 par due 11/2023)9.00% PIK3/7/201914.6 14.6 (2)
F-71
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($39.1 par due 11/2023)5.00% Cash, 3.00% PIK8/15/201939.1 39.1 (2)
Series A preferred units (1,000 units)10.50% PIK11/15/201712.6 12.6 
Class A units (550 units)11/15/2017— 0.3 
118.9 119.2 
Panda Temple Power, LLC and T1 Power Holdings LLC (4)Gas turbine power generation facilities operatorSecond lien senior secured loan ($4.5 par due 2/2023)9.00% PIK (Libor + 8.00%/M)3/6/20154.5 4.5 (2)(11)
Class A Common units (616,122 shares)3/6/201515.0 14.1 
19.5 18.6 
PERC Holdings 1 LLC Operator of recycled energy, combined heat and power, and energy efficiency facilitiesClass B common units (21,653,543 units)10/20/20140.6 12.7 (2)
PosiGen Backleverage, LLC and PosiGen, Inc. (15)Seller and leaser of solar power systems for residential and commercial customersFirst lien senior secured loan ($43.8 par due 1/2023)10.50% (Libor + 7.00% Cash, 1.50% PIK/Q)9/29/202042.9 43.0 (2)(11)
First lien senior secured loan ($1.9 par due 1/2023)15.00% (Libor + 7.00% Cash, 6.00% PIK/M)9/29/20201.9 1.9 (2)(11)
Warrant to purchase up to 78,632 shares of common stock (expires 1/2027)1/29/2020— — (2)
44.8 44.9 
Riverview Power LLC Operator of natural gas and oil fired power generation facilitiesFirst lien senior secured loan ($76.6 par due 12/2022)9.00% (Libor + 8.00%/Q)12/29/201675.8 76.6 (2)(11)
SE1 Generation, LLC Solar power developerSenior subordinated loan ($55.6 par due 12/2022)5.50% Cash, 4.00% PIK12/17/201955.6 54.5 (2)
Sunrun Atlas Depositor 2019-2, LLC and Sunrun Atlas Holdings 2019-2, LLC Residential solar energy providerFirst lien senior secured loan ($0.1 par due 2/2055)3.61%10/28/20190.1 0.1 (2)
Senior subordinated loan ($137.0 par due 11/2025)8.75% (Libor + 2.75% Cash, 4.00% PIK/Q)11/26/2019137.0 137.0 (2)(11)
137.1 137.1 
Sunrun Xanadu Issuer 2019-1, LLC and Sunrun Xanadu Holdings 2019-1, LLC Residential solar energy providerFirst lien senior secured loan ($0.4 par due 6/2054)3.98%6/7/20190.4 0.4 (2)
Senior subordinated loan ($66.9 par due 7/2030)8.75% (Libor + 2.75% Cash, 4.00% PIK/Q)6/27/201966.9 66.9 (2)(11)
67.3 67.3 
843.2 808.5 11.27%
Capital Goods
AEP Holdings, Inc. and Arrowhead Holdco Company (15)Distributor of non-discretionary, mission-critical aftermarket replacement partsFirst lien senior secured loan ($7.7 par due 11/2025)6.75% (Libor + 5.75%/Q)12/31/20207.7 7.5 (2)(11)
First lien senior secured loan ($17.1 par due 11/2025)6.75% (Euribor + 5.75%/Q)11/17/202016.6 16.8 (2)(11)
Common stock (3,467 shares)8/31/20153.5 3.4 (2)
27.8 27.7 
Cadence Aerospace, LLC (15)Aerospace precision components manufacturerFirst lien senior secured revolving loan ($14.2 par due 11/2022)9.50% (Libor + 3.25% Cash, 5.25% PIK/Q)11/14/201714.2 12.8 (2)(11)(14)
First lien senior secured revolving loan ($0.4 par due 11/2023)9.50% (Libor + 3.25% Cash, 5.25% PIK/Q)7/22/20200.4 0.3 (2)(11)
First lien senior secured loan ($31.7 par due 11/2023)9.50% (Libor + 3.25% Cash, 5.25% PIK/Q)11/14/201731.5 28.5 (2)(11)
First lien senior secured loan ($9.9 par due 11/2023)9.50% (Libor + 3.25% Cash, 5.25% PIK/Q)7/5/20189.9 8.9 (2)(11)
First lien senior secured loan ($12.0 par due 11/2023)9.50% (Libor + 3.25% Cash, 5.25% PIK/Q)10/31/201912.0 10.8 (2)(11)
First lien senior secured loan ($7.9 par due 11/2023)9.50% (Libor + 3.25% Cash, 5.25% PIK/Q)2/12/20207.9 7.1 (2)(11)
First lien senior secured loan ($1.7 par due 11/2023)9.50% (Libor + 3.25% Cash, 5.25% PIK/Q)7/31/20201.6 1.5 (2)(11)
F-72
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
77.5 69.9 
Creation Holdings Inc. (15)Manufacturer of electrical systemsFirst lien senior secured revolving loan ($4.4 par due 8/2024)6.75% (Libor + 5.75%/M)8/15/20194.4 4.3 (2)(6)(11)(14)
First lien senior secured loan ($17.6 par due 8/2025)6.75% (Libor + 5.75%/Q)8/15/201917.5 17.3 (2)(6)(11)
First lien senior secured loan ($6.7 par due 8/2025)6.75% (Libor + 5.75%/Q)8/15/20196.7 6.5 (6)(11)
28.6 28.1 
DFS Holding Company, Inc. Distributor of maintenance, repair, and operations parts, supplies, and equipment to the foodservice industryFirst lien senior secured loan ($168.6 par due 8/2023)8.50% (Libor + 6.00% Cash, 1.50% PIK/M)7/26/2017168.6 158.5 (2)(11)
First lien senior secured loan ($4.3 par due 8/2023)8.50% (Libor + 6.00% Cash, 1.50% PIK/M)3/1/20174.3 4.1 (2)(11)
First lien senior secured loan ($0.7 par due 8/2023)8.50% (Libor + 6.00% Cash, 1.50% PIK/M)5/22/20200.7 0.6 (2)(11)
First lien senior secured loan ($0.7 par due 2/2022)8.50% (Libor + 6.00% Cash, 1.50% PIK/M)5/22/20200.7 0.6 (2)(11)
First lien senior secured loan ($1.6 par due 8/2023)8.50% (Libor + 6.00% Cash, 1.50% PIK/M)5/22/20201.6 1.5 (2)(11)
175.9 165.3 
Dynamic NC Aerospace Holdings, LLC and Dynamic NC Investment Holdings, LP (15)Provider of aerospace technology and equipmentFirst lien senior secured revolving loan ($0.7 par due 12/2025)8.75% (Base Rate + 5.50%/Q)12/30/20200.7 0.7 (2)(11)
First lien senior secured loan ($26.0 par due 12/2026)8.75% (Base Rate + 5.50%/Q)12/30/202026.0 25.8 (2)(11)
Common units (9,773,000 units)12/30/20209.8 9.8 
36.5 36.3 
ESCP PPG Holdings, LLC (4)Distributor of new equipment and aftermarket parts to the heavy-duty truck industryClass A units (3,500,000 units)12/14/20163.5 3.1 (2)
Flow Control Solutions, Inc. (15)Distributor and manufacturer of flow control systems componentsFirst lien senior secured loan ($10.8 par due 11/2024)6.75% (Libor + 5.75%/Q)11/21/201810.8 10.8 (2)(11)
First lien senior secured loan ($9.5 par due 11/2024)6.75% (Libor + 5.75%/Q)11/21/20189.5 9.5 (2)(11)
20.3 20.3 
Harvey Tool Company, LLC (15)Manufacturer of cutting tools used in the metalworking industryFirst lien senior secured revolving loan10/12/2017— — (13)
First lien senior secured loan ($32.0 par due 10/2024)5.75% (Libor + 4.75%/Q)11/30/202032.0 32.0 (2)(11)
First lien senior secured loan ($30.0 par due 10/2024)5.75% (Libor + 4.75%/Q)10/12/201730.0 30.0 (2)(11)
Second lien senior secured loan ($43.7 par due 10/2025)9.50% (Libor + 8.50%/Q)10/12/201743.7 43.7 (2)(11)
105.7 105.7 
Imaging Business Machines, L.L.C. and Scanner Holdings Corporation (5)Provider of high-speed intelligent document scanning hardware and softwareSenior subordinated loan ($8.3 par due 6/2022)14.00%1/3/20178.2 8.3 (2)
Senior subordinated loan ($8.3 par due 6/2022)14.00%1/3/20178.2 8.3 (2)
Series A preferred stock (73,804,135 shares)1/3/20171.2 26.9 
Class A common stock (48,082 shares)1/3/2017— 0.1 
Class B common stock (431,055 shares)1/3/20170.1 0.9 
17.7 44.5 
Kene Acquisition, Inc. and Kene Holdings, L.P. (15)National utility services firm providing engineering and consulting services to natural gas, electric power and other energy and industrial end marketsFirst lien senior secured revolving loan8/8/2019— — (13)
First lien senior secured loan ($51.5 par due 8/2026)5.25% (Libor + 4.25%/Q)8/8/201951.5 51.0 (2)(11)
Class A units (4,549,000 units)8/8/20194.5 4.3 (2)
F-73
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
56.0 55.3 
LTG Acquisition, Inc. Designer and manufacturer of display, lighting and passenger communication systems for mass transportation marketsClass A membership units (5,000 units)1/3/20175.1 — 
MB Aerospace Holdings II Corp. Aerospace engine components manufacturerSecond lien senior secured loan ($68.4 par due 1/2026)10.00% (Libor + 9.00%/Q)1/22/201868.4 61.6 (2)(11)
Second lien senior secured loan ($23.6 par due 1/2026)10.00% (Libor + 9.00%/Q)5/28/201923.6 21.3 (2)(11)
92.0 82.9 
NCWS Intermediate, Inc. and NCWS Holdings LP (15)Manufacturer and supplier of car wash equipment, parts and supplies to the conveyorized car wash marketFirst lien senior secured loan ($144.1 par due 12/2026)7.50% (Libor + 6.50%/Q)12/29/2020144.1 142.7 (2)(11)
Class A-2 common units (10,000,000 units)12/29/202010.0 10.0 (2)
154.1 152.7 
Radius Aerospace, Inc. and Radius Aerospace Europe Limited (15)Metal fabricator in the aerospace industryFirst lien senior secured revolving loan ($0.2 par due 3/2025)6.75% (Libor + 5.75%/Q)3/29/20190.2 0.2 (2)(11)
First lien senior secured revolving loan ($1.1 par due 3/2025)6.75% (GBP Libor + 5.75%/Q)11/14/20191.0 1.0 (2)(6)(11)
1.2 1.2 
Star US Bidco LLC (15)Manufacturer of pumps, compressors and other highly-engineered equipment for mission-critical applicationsFirst lien senior secured revolving loan3/17/2020— — (13)
Sunk Rock Foundry Partners LP, Hatteras Electrical Manufacturing Holding Company and Sigma Electric Manufacturing Corporation (15)Manufacturer of metal castings, precision machined components and sub-assemblies in the electrical products, power transmission and distribution and general industrial marketsFirst lien senior secured revolving loan ($2.5 par due 10/2022)7.25% (Libor + 6.25%/Q)10/31/20172.5 2.5 (2)(11)(14)
804.4 795.5 11.08%
Insurance Services
Alera Group Intermediate Holdings, Inc. Insurance service providerSecond lien senior secured loan ($26.2 par due 3/2026)8.65% (Libor + 8.50%/M)3/5/201926.2 26.2 (2)
Second lien senior secured loan ($24.4 par due 3/2026)8.65% (Libor + 8.50%/M)3/5/201924.4 24.4 (2)
50.6 50.6 
Amynta Agency Borrower Inc. and Amynta Warranty Borrower Inc. Insurance service providerFirst lien senior secured loan ($13.3 par due 2/2025)4.65% (Libor + 4.50%/M)12/21/201813.3 12.9 (2)
AQ Sunshine, Inc. (15)Specialized insurance brokerFirst lien senior secured loan ($8.7 par due 4/2025)7.00% (Libor + 6.00%/Q)4/15/20198.7 8.7 (2)(11)
First lien senior secured loan ($9.5 par due 4/2025)7.00% (Libor + 6.00%/Q)10/29/20209.5 9.5 (2)(11)
18.2 18.2 
Ardonagh Midco 2 plc and Ardonagh Midco 3 plc (15)Insurance broker and underwriting servicerFirst lien senior secured loan ($2.4 par due 7/2026)8.25% (GBP Libor + 7.50%/Q)6/26/20202.3 2.4 (2)(6)(11)
First lien senior secured loan ($68.7 par due 7/2026)8.25% (GBP Libor + 7.50%/Q)6/26/202063.1 68.7 (2)(6)(11)
First lien senior secured loan ($7.8 par due 7/2026)8.50% (Euribor + 7.50%/Q)6/26/20207.3 7.8 (2)(6)(11)
Senior subordinated loan ($1.1 par due 1/2027)11.50%6/26/20201.1 1.1 (2)(6)
73.8 80.0 
Benecon Midco II LLC and Locutus Holdco LLC (15)Employee benefits provider for small and mid-size employersFirst lien senior secured revolving loan ($1.8 par due 12/2026)6.50% (Libor + 5.50%/Q)12/4/20201.8 1.7 (2)(11)
Common units (9,803,682 units)12/4/202010.0 10.0 (2)
11.8 11.7 
Foundation Risk Partners, Corp. (15)Full service independent insurance agencyFirst lien senior secured loan ($21.8 par due 11/2023)5.75% (Libor + 4.75%/Q)11/10/201721.8 21.8 (2)(11)
First lien senior secured loan ($25.8 par due 11/2023)5.75% (Libor + 4.75%/Q)8/30/201925.8 25.8 (11)
Second lien senior secured loan ($19.1 par due 11/2024)9.50% (Libor + 8.50%/Q)8/9/201819.1 19.1 (2)(11)
F-74
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Second lien senior secured loan ($21.7 par due 11/2024)9.50% (Libor + 8.50%/Q)8/9/201821.7 21.7 (2)(11)
Second lien senior secured loan ($27.4 par due 11/2024)9.50% (Libor + 8.50%/Q)5/1/201927.4 27.4 (2)(11)
Second lien senior secured loan ($14.8 par due 11/2024)9.50% (Libor + 8.50%/Q)8/30/201914.8 14.8 (2)(11)
Second lien senior secured loan ($27.5 par due 11/2024)9.50% (Libor + 8.50%/Q)11/10/201727.5 27.5 (2)(11)
158.1 158.1 
K2 Insurance Services, LLC and K2 Holdco LP (15)Specialty insurance and managing general agencyFirst lien senior secured revolving loan7/1/2019— — (13)
First lien senior secured loan ($51.5 par due 7/2024)6.00% (Libor + 5.00%/Q)7/1/201951.5 51.5 (2)(11)
First lien senior secured loan ($10.5 par due 7/2024)6.00% (Libor + 5.00%/M)7/1/201910.5 10.5 (2)(11)
Common units (799,000 units)7/1/20190.8 1.5 (2)
62.8 63.5 
NSM Insurance Group, LLC Insurance program administratorFirst lien senior secured loan ($12.9 par due 5/2026)7.00% (Libor + 5.75%/Q)5/11/201812.9 12.9 (2)(11)
RSC Acquisition, Inc. and RSC Insurance Brokerage, Inc. (15)Insurance brokerFirst lien senior secured revolving loan11/1/2019— — (13)
First lien senior secured loan ($43.1 par due 10/2026)6.50% (Libor + 5.50%/Q)11/1/201943.1 42.7 (2)(11)
43.1 42.7 
SCM Insurance Services Inc. (15)Provider of claims management, claims investigation & support and risk management solutions for the Canadian property and casualty insurance industryFirst lien senior secured loan ($20.5 par due 8/2024)6.00% (CDOR + 5.00%/M)8/29/201720.8 20.1 (2)(6)(11)
Second lien senior secured loan ($59.6 par due 3/2025)10.00% (CDOR + 9.00%/M)8/29/201760.5 58.4 (2)(6)(11)
81.3 78.5 
SG Acquisition, Inc. Provider of insurance solutions for car salesFirst lien senior secured loan ($38.6 par due 1/2027)5.90% (Libor + 5.75%/M)1/27/202038.6 38.6 (2)
Spring Insurance Solutions, LLC (15)Technology-based direct to consumer sales and marketing platform for insurance productsFirst lien senior secured loan ($19.0 par due 11/2025)7.50% (Libor + 6.50%/Q)11/23/202019.0 18.8 (2)(11)
THG Acquisition, LLC (15)Multi-line insurance brokerFirst lien senior secured revolving loan12/2/2019— — (13)
First lien senior secured loan ($0.9 par due 12/2026)7.00% (Libor + 6.00%/Q)12/15/20200.9 0.9 (2)(11)
First lien senior secured loan ($10.0 par due 12/2026)6.75% (Libor + 5.75%/Q)12/2/201910.0 9.9 (2)(11)
First lien senior secured loan ($17.7 par due 12/2026)7.00% (Libor + 6.00%/Q)12/15/202017.7 17.7 (2)(11)
28.6 28.5 
612.1 615.0 8.57%
Energy
Birch Permian, LLC Operator of private exploration oil and production companySecond lien senior secured loan ($88.3 par due 4/2023)9.50% (Libor + 8.00%/Q)4/12/201987.7 81.2 (2)(11)
Cheyenne Petroleum Company Limited Partnership, CPC 2001 LLC and Mill Shoals LLC Private oil exploration and production companySecond lien senior secured loan ($63.1 par due 1/2024)10.50% (Libor + 8.50%/Q)7/10/201963.1 52.4 (2)(11)
Murchison Oil and Gas, LLC and Murchison Holdings, LLC Exploration and production companyFirst lien senior secured loan ($6.8 par due 10/2023)11.00% (Libor + 9.00%/Q)9/19/20196.7 6.8 (2)(11)
First lien senior secured loan ($38.3 par due 10/2023)10.00% (Libor + 8.00%/Q)9/19/201938.3 38.0 (2)(11)
Preferred units (21,667 units)8.00%10/26/201823.5 20.8 
68.5 65.6 
Penn Virginia Holding Corp. Exploration and production companySecond lien senior secured loan ($90.1 par due 9/2022)8.00% (Libor + 7.00%/M)9/28/201790.1 84.7 (2)(6)(11)
Sundance Energy, Inc. Oil and gas producerSecond lien senior secured loan ($61.3 par due 4/2023)4/23/201858.6 36.8 (2)(10)
VPROP Operating, LLC and V SandCo, LLC (5)(15)Sand-based proppant producer and distributor to the oil and natural gas industryFirst lien senior secured loan ($5.4 par due 11/2024)11.00% PIK 11/6/20205.4 5.4 (2)(11)
First lien senior secured loan ($4.9 par due 11/2024)11.00% PIK 6/12/20204.9 4.9 (2)(11)
F-75
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($22.5 par due 11/2024)11.00% PIK 3/1/201722.5 22.5 (2)(11)
Class A units (347,900 units)11/6/202032.8 34.4 (2)
65.6 67.2 
433.6 387.9 5.41%
Food & Beverage
American Seafoods Group LLC and American Seafoods Partners LLC Harvester and processor of seafoodClass A units (77,922 units)8/19/20150.1 0.2 (2)
Warrant to purchase up to 7,422,078 Class A units (expires 8/2035)8/19/20157.4 17.5 (2)
7.5 17.7 
Bragg Live Food Products, LLC and SPC Investment Co., L.P. (4)(15)Health food companyFirst lien senior secured revolving loan ($1.2 par due 12/2025)6.75% (Libor + 5.75%/Q)3/11/20191.2 1.2 (2)(11)
First lien senior secured loan ($39.8 par due 12/2025)6.75% (Libor + 5.75%/Q)12/28/202039.8 39.8 (2)(11)
Common units (14,850 units)3/11/201914.9 14.3 (2)
55.9 55.3 
CHG PPC Parent LLC Diversified food products manufacturerSecond lien senior secured loan ($60.5 par due 3/2026)7.65% (Libor + 7.50%/M)3/30/201860.5 60.5 (2)
Second lien senior secured loan ($34.1 par due 3/2026)7.90% (Libor + 7.75%/M)1/31/201934.1 34.1 (2)
94.6 94.6 
Ferraro Fine Foods Corp. and Italian Fine Foods Holdings L.P. (15)Specialty Italian food distributorFirst lien senior secured loan ($9.3 par due 5/2024)5.25% (Libor + 4.25%/Q)5/9/20189.3 9.3 (2)(11)
First lien senior secured loan ($0.5 par due 5/2024)5.25% (Libor + 4.25%/Q)12/7/20180.5 0.5 (2)(11)
First lien senior secured loan ($2.8 par due 5/2024)5.25% (Libor + 4.25%/Q)5/10/20192.8 2.8 (2)(11)
Class A common units (2,724,000 units)5/9/20182.7 4.1 (2)
15.3 16.7 
Gehl Foods, LLC and GF Parent LLC Producer of low-acid, aseptic food and beverage productsClass A preferred units (2,940 units)5/13/20152.9 — (2)
Class A common units (60,000 units)5/13/20150.1 — (2)
Class B common units (0.26 units)5/13/2015— — (2)
3.0 — 
Hometown Food Company (15)Food distributorFirst lien senior secured revolving loan ($0.5 par due 8/2023)6.25% (Libor + 5.00%/M)8/31/20180.5 0.5 (2)(11)(14)
KC Culinarte Intermediate, LLC Manufacturer of fresh refrigerated and frozen food productsFirst lien senior secured loan ($25.8 par due 8/2025)4.75% (Libor + 3.75%/M)1/24/202025.8 22.2 (2)(11)
Second lien senior secured loan ($35.7 par due 8/2026)8.75% (Libor + 7.75%/M)8/24/201835.7 29.6 (2)(11)
61.5 51.8 
NECCO Holdings, Inc. and New England Confectionery Company, Inc. (5)(15)Producer and supplier of candyFirst lien senior secured revolving loan ($19.9 par due 1/2018)1/3/20177.9 2.9 (10)
First lien senior secured loan ($11.6 par due 11/2021)1/3/20170.9 1.6 (10)
First lien senior secured loan ($2.2 par due 8/2018)11/20/20172.1 — (10)
First lien senior secured loan ($0.7 par due 11/2018)11/20/20170.7 0.1 (10)
Common stock (860,189 shares)1/3/20170.9 — 
12.5 4.6 
RF HP SCF Investor, LLC Branded specialty food companyMembership interest (10.08% interest)12/22/201612.5 16.9 (2)(6)
Sovos Brands Intermediate, Inc. (15)Food and beverage platformFirst lien senior secured loan ($6.7 par due 11/2025)4.96% (Libor + 4.75%/Q)11/20/20186.7 6.7 (2)
Teasdale Foods, Inc. and Familia Group Holdings Inc. (15)Provider of beans, sauces and hominy to the retail, foodservice and wholesale channelsFirst lien senior secured loan ($79.0 par due 12/2025)7.25% (Libor + 6.25%/Q)12/18/202079.0 77.4 (2)(11)
F-76
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Warrant to purchase up to 57,827 shares of common stock (expires 2/2034)2/4/2019— — (2)
79.0 77.4 
349.0 342.2 4.77%
Retailing & Distribution
Blue Angel Buyer 1, LLC and Blue Angel Holdco, LLC (4)(15)Distributor of OEM appliance aftermarket partsFirst lien senior secured revolving loan1/2/2019— — (13)
First lien senior secured loan ($5.3 par due 1/2026)5.25% (Libor + 4.25%/Q)2/20/20205.3 5.3 (2)(11)
Class A preferred units (46,359 units)8.00% PIK1/2/20194.3 22.7 (2)
9.6 28.0 
Chariot Acquisition, LLC Manufacturer of aftermarket golf cart parts and accessoriesFirst lien senior secured loan ($26.2 par due 9/2021)7.25% (Libor + 6.25%/Q)1/3/201726.1 26.2 (2)(11)
Display Holding Company, Inc., Saldon Holdings, Inc. and Fastsigns Holdings Inc. (15)Provider of visual communications solutionsFirst lien senior secured revolving loan3/13/2019— — (13)
First lien senior secured loan ($16.2 par due 3/2025)6.65% (Libor + 5.65%/M)3/13/201916.2 16.2 (2)(11)
First lien senior secured loan ($2.6 par due 3/2025)6.65% (Libor + 5.65%/M)8/27/20192.6 2.6 (2)(11)
Common units (600 units)3/13/20190.6 0.8 (2)
19.4 19.6 
GPM Investments, LLC and ARKO Corp. Convenience store operatorFirst lien senior secured loan ($27.4 par due 3/2027)6.25% (Libor + 4.75%/Q)2/28/202027.4 27.4 (2)(11)
First lien senior secured loan ($26.0 par due 3/2027)6.25% (Libor + 4.75%/Q)2/28/202026.0 26.0 (11)
Common stock (2,088,478 shares)12/22/202019.8 17.4 (2)
Warrant to purchase up to 1,088,780 common stock (expires 12/2025)12/22/20201.6 1.6 (2)
74.8 72.4 
McKenzie Creative Brands, LLC (15)Designer, manufacturer and distributor of hunting-related suppliesFirst lien senior secured loan ($84.5 par due 9/2023)6.75% (Libor + 5.75%/Q)9/18/201484.5 84.5 (2)(8)(11)
First lien senior secured loan ($5.5 par due 9/2023)6.75% (Libor + 5.75%/Q)9/18/20145.5 5.5 (2)(11)
90.0 90.0 
Pine Holdings, Inc. Retailer of fine and artisanal paper productsClass A common stock (36,364 shares)9/23/20136.0 — (2)
Reddy Ice LLC (15)Packaged ice manufacturer and distributorFirst lien senior secured revolving loan7/1/2019— — (13)
First lien senior secured loan ($57.1 par due 7/2025)7.50% (Libor + 6.50%/Q)7/1/201957.1 56.0 (2)(11)
First lien senior secured loan ($3.8 par due 7/2025)7.50% (Libor + 6.50%/Q)7/1/20193.8 3.7 (2)(11)
60.9 59.7 
SCIH Salt Holdings Inc. (15)Salt and packaged ice melt manufacturer and distributorFirst lien senior secured revolving loan ($0.1 par due 3/2025)6.25% (Base Rate + 3.00%/M)3/16/20200.1 0.1 (2)(11)(14)(18)
First lien senior secured revolving loan ($2.3 par due 3/2025)5.00% (Libor + 4.00%/M)3/16/20202.2 2.3 (2)(11)(14)(18)
2.3 2.4 
289.1 298.3 4.16%
Materials
Genomatica, Inc. Developer of a biotechnology platform for the production of chemical productsWarrant to purchase 322,422 shares of Series D preferred stock (expires 3/2023)3/28/2013— — (2)
Halex Holdings, Inc. (5)Manufacturer of flooring installation productsCommon stock (51,853 shares)1/3/2017— — 
H-Food Holdings, LLC and Matterhorn Parent, LLC Food contract manufacturerSecond lien senior secured loan ($73.0 par due 3/2026)7.15% (Libor + 7.00%/M)11/25/201873.0 73.0 (2)
Common units (5,827 units)11/25/20185.8 4.9 
78.8 77.9 
F-77
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
IntraPac International LLC and IntraPac Canada Corporation (15)Manufacturer of diversified packaging solutions and plastic injection molded productsFirst lien senior secured revolving loan ($7.7 par due 1/2025)6.00% (Libor + 5.75%/Q)1/11/20197.7 7.6 (2)
First lien senior secured loan ($7.0 par due 1/2026)6.00% (Libor + 5.75%/Q)1/11/20197.0 6.8 (2)
First lien senior secured loan ($21.4 par due 1/2026)6.00% (Libor + 5.75%/Q)1/11/201921.4 21.0 (6)
36.1 35.4 
Nelipak Holding Company, Nelipak European Holdings Cooperatief U.A., KNPAK Holdings, LP and PAKNK Netherlands Treasury B.V. (15)Manufacturer of thermoformed packaging for medical devicesFirst lien senior secured revolving loan ($0.3 par due 7/2024)5.25% (Libor + 4.25%/Q)7/2/20190.3 0.3 (2)(11)
First lien senior secured loan ($15.2 par due 7/2026)5.25% (Libor + 4.25%/Q)7/2/201915.2 14.7 (2)(11)
First lien senior secured loan ($5.6 par due 7/2026)4.50% (Euribor + 4.50%/Q)7/2/20195.2 5.4 (2)(6)
First lien senior secured loan ($26.5 par due 7/2026)4.50% (Euribor + 4.50%/Q)8/8/201924.3 25.7 (2)(6)
Class A units (6,762,668 units)7/2/20196.8 4.7 (2)
51.8 50.8 
Novipax Buyer, L.L.C. and Novipax Parent Holding Company, L.L.C. Developer and manufacturer of absorbent pads for food productsFirst lien senior secured loan ($24.1 par due 12/2026)6.75% (Libor + 5.75%/Q)12/1/202024.1 23.9 (11)
Class A preferred units (4,772 units)10.00% PIK12/1/20204.8 4.8 (2)
Class C units (4,772 units)12/1/2020— — (2)
28.9 28.7 (2)
Plaskolite PPC Intermediate II LLC and Plaskolite PPC Blocker LLC Manufacturer of specialized acrylic and polycarbonate sheetsFirst lien senior secured loan ($12.2 par due 12/2025)5.25% (Libor + 4.25%/Q)12/14/201812.0 12.2 (11)
Second lien senior secured loan ($55.7 par due 12/2026)8.75% (Libor + 7.75%/Q)12/14/201855.7 55.7 (2)(11)
Co-Invest units (5,969 units)12/14/20180.6 0.9 (2)
68.3 68.8 
SCI PH Parent, Inc. Industrial container manufacturer, reconditioner and servicerSeries B shares (11.4764 shares)8/24/20181.1 1.0 (2)
TWH Infrastructure Industries, Inc. (15)Provider of engineered products used in the trenchless rehabilitation of wastewater infrastructureFirst lien senior secured revolving loan ($0.1 par due 4/2025)5.76% (Libor + 5.50%/Q)4/9/20190.1 — (2)
First lien senior secured loan ($6.5 par due 4/2025)5.76% (Libor + 5.50%/Q)4/9/20196.5 6.1 (2)
6.6 6.1 
271.6 268.7 3.74%
Pharmaceuticals, Biotechnology & Life Sciences
Alcami Corporation and ACM Holdings I, LLC (15)Outsourced drug development services providerFirst lien senior secured loan ($29.5 par due 7/2025)4.40% (Libor + 4.25%/M)7/12/201829.4 27.7 (2)
Second lien senior secured loan ($77.5 par due 7/2026)8.15% (Libor + 8.00%/M)7/12/201877.0 67.4 (2)
Common units (3,663,533 units)7/12/201835.0 10.4 (2)
141.4 105.5 
NMC Skincare Intermediate Holdings II, LLC (15)Developer, manufacturer and marketer of skincare productsFirst lien senior secured revolving loan ($5.8 par due 10/2024)6.00% (Libor + 5.00%/M)10/31/20185.8 5.6 (2)(11)(14)
First lien senior secured loan ($24.4 par due 10/2024)6.00% (Libor + 5.00%/M)10/31/201824.4 23.7 (2)(11)
First lien senior secured loan ($8.2 par due 10/2024)6.00% (Libor + 5.00%/M)10/31/20188.2 8.0 (11)
38.4 37.3 
North American Science Associates, Inc. and Cardinal Topco Holdings, L.P. (15)Contract research organization providing research and development and testing of medical devicesFirst lien senior secured loan ($7.9 par due 9/2026)7.25% (Libor + 6.25%/Q)9/15/20207.9 7.8 (2)(11)
First lien senior secured loan ($48.4 par due 9/2026)7.25% (Libor + 6.25%/Q)9/15/202048.4 47.9 (2)(11)
F-78
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
Class A preferred units (15,431 units)8.00% PIK9/15/202015.8 22.0 (2)
72.1 77.7 
TerSera Therapeutics LLC (15)Acquirer and developer of specialty therapeutic pharmaceutical productsFirst lien senior secured revolving loan11/20/2019— — (13)
First lien senior secured loan ($5.1 par due 3/2025)6.60% (Libor + 5.60%/Q)5/3/20175.1 5.1 (2)(11)
First lien senior secured loan ($2.1 par due 3/2025)6.60% (Libor + 5.60%/Q)9/27/20182.1 2.1 (2)(11)
First lien senior secured loan ($1.8 par due 3/2025)6.60% (Libor + 5.60%/Q)4/1/20191.8 1.8 (2)(11)
9.0 9.0 
Vertice Pharma UK Parent Limited Manufacturer and distributor of generic pharmaceutical productsPreferred shares (40,662 shares)12/21/20150.3 0.1 (6)
261.2 229.6 3.20%
Household & Personal Products
Plantation Products, LLC, Seed Holdings, Inc. and Flora Parent, Inc. Provider of branded lawn and garden productsSecond lien senior secured loan ($66.0 par due 5/2023)9.25% (Libor + 8.25%/M)12/23/201465.9 66.0 (2)(11)
Common stock (30,000 shares)12/23/20143.0 9.4 (2)
68.9 75.4 
Rug Doctor, LLC and RD Holdco Inc. (5)Manufacturer and marketer of carpet cleaning machinesSecond lien senior secured loan ($19.6 par due 5/2023)11.25% (Libor + 9.75%/Q)1/3/201719.6 19.6 (2)(11)
Common stock (458,596 shares)1/3/201714.0 — 
Warrant to purchase up to 56,372 shares of common stock (expires 12/2023)1/3/2017— — 
33.6 19.6 
Walnut Parent, Inc. Manufacturer of natural solution pest and animal control productsFirst lien senior secured loan ($24.8 par due 11/2027)6.50% (Libor + 5.50%/M)11/9/202024.8 24.5 (11)
127.3 119.5 1.66%
Technology Hardware & Equipment
DRB Holdings, LLC (15)Provider of integrated technology solutions to car wash operatorsFirst lien senior secured loan ($23.2 par due 10/2023)6.50% (Libor + 5.50%/Q)10/6/201723.2 23.2 (2)(11)
First lien senior secured loan ($7.5 par due 10/2023)6.50% (Libor + 5.50%/Q)12/18/20207.5 7.5 (2)(11)
30.7 30.7 
Everspin Technologies, Inc. Designer and manufacturer of computer memory solutionsWarrant to purchase up to 18,461 shares of common stock (expires 10/2026)10/7/20160.4 — (2)
Micromeritics Instrument Corp. (15)Scientific instrument manufacturerFirst lien senior secured revolving loan ($4.0 par due 12/2025)6.00% (Libor + 5.00%/Q)12/18/20194.0 3.7 (2)(11)(14)
First lien senior secured loan ($32.4 par due 12/2025)6.00% (Libor + 5.00%/Q)12/18/201932.4 30.4 (2)(11)
36.4 34.1 
Wildcat BuyerCo, Inc. and Wildcat Parent, LP (15)Provider and supplier of electrical components for commercial and industrial applicationsFirst lien senior secured revolving loan2/27/2020— — (13)
First lien senior secured loan ($18.3 par due 2/2026)6.25% (Libor + 5.25%/Q)2/27/202018.3 18.3 (2)(11)
First lien senior secured loan ($3.5 par due 2/2026)6.25% (Libor + 5.25%/Q)2/27/20203.5 3.5 (2)(11)
Limited partnership interests (17,655 interests)2/27/20201.8 2.2 (2)
23.6 24.0 
91.1 88.8 1.24%
Education
Excelligence Holdings Corp. Developer, manufacturer and retailer of educational productsFirst lien senior secured loan ($9.4 par due 4/2023)8.00% (Libor + 2.50% Cash, 4.50% PIK/Q)4/17/20179.4 7.6 (2)(11)
Flinn Scientific, Inc. and WCI-Quantum Holdings, Inc. (15)Distributor of instructional products, services and resourcesFirst lien senior secured revolving loan ($0.9 par due 8/2023)5.50% (Libor + 4.75%/Q)8/31/20180.9 0.8 (2)(11)
First lien senior secured loan ($30.3 par due 8/2023)5.50% (Libor + 4.75%/Q)7/26/201730.3 26.3 (2)(11)
F-79
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
First lien senior secured loan ($1.1 par due 8/2023)5.50% (Libor + 4.75%/Q)8/31/20181.1 1.0 (2)(11)
Series A preferred stock (1,272 shares)10/24/20140.7 0.9 (2)
33.0 29.0 
Infilaw Holding, LLC (15)Operator of for-profit law schoolsFirst lien senior secured revolving loan ($5.0 par due 9/2022)8/25/20114.2 — (2)(10)(14)
Instituto de Banca y Comercio, Inc. & Leeds IV Advisors, Inc. Private school operatorFirst lien senior secured loan ($17.3 par due 10/2022)10.50% (Libor + 9.00%/Q)3/12/202017.3 17.3 (2)(11)
Senior preferred series A-1 shares (151,056 shares)10/31/201598.1 15.0 (2)
Series B preferred stock (348,615 shares)8/5/20101.0 — (2)
Series B preferred stock (1,401,385 shares)8/5/20104.0 — (2)
Series C preferred stock (517,942 shares)6/7/20100.1 — (2)
Series C preferred stock (1,994,644 shares)6/7/20100.5 — (2)
Common stock (4 shares)6/7/2010— — (2)
Common stock (16 shares)6/7/2010— — (2)
121.0 32.3 
Primrose Holding Corporation (4)Franchisor of education-based early childhood centersCommon stock (7,227 shares)1/3/20174.6 14.1 
172.2 83.0 1.16%
Media & Entertainment
CMW Parent LLC (fka Black Arrow, Inc.) Multiplatform media firmSeries A units (32 units)9/11/2015— — (2)
OUTFRONT Media Inc. Provider of out-of-home advertisingSeries A convertible perpetual preferred stock (25,000 shares)7.00%4/20/202025.0 35.7 (2)(6)
Production Resource Group, L.L.C. and PRG III, LLC (4)(15)Provider of rental equipment, labor, production management, scenery, and other products to various entertainment end-marketsFirst lien senior secured loan ($31.6 par due 8/2024)9.75% (Libor + 3.00% Cash, 5.50% PIK/Q)8/21/201831.6 31.6 (2)(11)
First lien senior secured loan ($9.1 par due 8/2024)8.50% (Libor + 5.00% Cash, 2.50% PIK/Q)7/31/20209.1 9.1 (2)(11)
Class A units (113,617 units)10/6/20204.9 5.1 (2)
45.6 45.8 
The Teaching Company Holdings, Inc. Education publications providerPreferred stock (10,663 shares)9/29/20061.1 0.8 (2)
Common stock (15,393 shares)9/29/2006— — (2)
1.1 0.8 
71.7 82.3 1.15%
Telecommunication Services
Emergency Communications Network, LLC (15)Provider of mission critical emergency mass notification solutionsFirst lien senior secured loan ($44.4 par due 6/2023)8.75% (Libor + 2.625% Cash, 5.125% PIK/Q)6/1/201744.3 39.5 (2)(11)
44.3 39.5 0.55%
Real Estate
BW Landco LLC (5)Real estate developerMembership interest (100%)7/5/201920.9 37.0 
NECCO Realty Investments LLC (5)Real estate holding companyMembership units (7,450 units)1/3/2017— — 
20.9 37.0 0.51%
Food & Staples Retailing
DecoPac, Inc. (15)Supplier of cake decorating solutions and products to in-store bakeriesFirst lien senior secured revolving loan9/29/2017— — (13)
FS Squared Holding Corp. and FS Squared, LLC (15)Provider of on-site vending and micro market solutionsFirst lien senior secured revolving loan3/28/2019— — (13)
First lien senior secured loan ($1.4 par due 3/2025)5.40% (Libor + 5.25%/M)3/28/20191.4 1.4 (2)
Class A units (99,500 units)3/28/201910.0 11.1 (2)
11.4 12.5 
F-80
ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in millions)

Company(1)Business DescriptionInvestmentInterest(3)(7)Acquisition
Date		Amortized
Cost		Fair 
Value		 Percentage
of Net
Assets
JWC/KI Holdings, LLC Foodservice sales and marketing agencyMembership units (5,000 units)11/16/20155.0 4.6 (2)
SFE Intermediate Holdco LLC (15)Provider of outsourced foodservice to K-12 school districtsFirst lien senior secured revolving loan7/31/2017— — (13)
First lien senior secured loan ($10.2 par due 7/2024)6.25% (Libor + 5.25%/Q)9/5/201810.2 10.2 (2)(11)
First lien senior secured loan ($6.4 par due 7/2024)6.25% (Libor + 5.25%/Q)7/31/20176.3 6.4 (2)(11)
16.5 16.6 
VCP-EDC Co-Invest, LLC Distributor of foodservice equipment and suppliesMembership units (2,970,000 units)6/9/20172.8 0.2 
35.7 33.9 0.47%
Total Investments15,914.2 15,515.1 216.19%
F-81

Derivative Instruments

Forward currency contracts
DescriptionNotional Amount to be PurchasedNotional Amount to be soldCounterpartySettlement DateUnrealized Appreciation / (Depreciation)
Forward currency contract$112 CAD142 Bank of MontrealJanuary 21, 2021$— 
Forward currency contract$102 £75 Bank of MontrealJanuary 21, 2021(1)
Total$(1)

Interest rate swap
DescriptionPayment TermsCounterpartyMaturity DateNotional AmountValue Upfront Payments/Receipts Unrealized Appreciation / (Depreciation)
Interest rate swap Pay Fixed 2.0642%Receive Floating One-Month Libor of 0.19%Bank of MontrealJanuary 4, 2021$395 $(1)$— $(1)
Total$(1)
____________________________________________________

(1)Other than the Company’s investments listed in footnote 5 below (subject to the limitations set forth therein), the Company does not “Control” any of its portfolio companies, for the purposes of the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”). In general, under the Investment Company Act, the Company would “Control” a portfolio company if the Company owned more than 25% of its outstanding voting securities (i.e., securities with the right to elect directors) and/or had the power to exercise control over the management or policies of such portfolio company. All of the Company’s portfolio company investments, which as of December 31, 2020 represented 216% of the Company’s net assets or 96% of the Company’s total assets, are subject to legal restrictions on sales.

(2)These assets are pledged as collateral under the Company’s or the Company’s consolidated subsidiaries’ various revolving credit facilities and, as a result, are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the obligations under each respective credit facilities (see Note 5).

(3)Investments without an interest rate are non-income producing.


























F-82


(4)As defined in the Investment Company Act, the Company is deemed to be an “Affiliated Person” because it owns 5% or more of the portfolio company’s outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company (including through a management agreement). Transactions as of and during the year ended December 31, 2020 in which the issuer was an Affiliated Person of the Company (but not a portfolio company that the Company is deemed to Control) are as follows:
For the Year Ended December 31, 2020As of December 31, 2020
(in millions)
Company		Purchases (cost)Redemptions (cost)Sales (cost)Interest incomeCapital
structuring service fees		Dividend incomeOther incomeNet realized gains (losses)Net 
unrealized gains (losses)		Fair Value
APG Intermediate Holdings Corporation and APG Holdings, LLC$24.5 $0.1 $1.0 $0.9 $0.5 $— $— $— $2.9 $26.2 
Blue Angel Buyer 1, LLC and Blue Angel Holdco, LLC$7.5 $8.7 $1.3 $0.3 $0.1 $0.5 $0.1 $(0.1)$18.4 $28.0 
Blue Wolf Capital Fund II, L.P.$— $1.6 $— $— $— $— $— $3.8 $(0.9)$0.2 
Bragg Live Food Products, LLC and SPC Investment Co., L.P.$11.6 $3.1 $— $2.2 $0.3 $— $0.2 $— $3.1 $55.3 
Crown Health Care Laundry Services, LLC and Crown Laundry Holdings, LLC$14.0 $10.3 $22.1 $2.8 $— $— $0.2 $(0.2)$5.9 $39.6 
ESCP PPG Holdings, LLC$— $— $— $— $— $— $— $— $0.2 $3.1 
European Capital UK SME Debt LP$2.3 $14.5 $— $— $— $— $— $— $1.6 $29.7 
Ioxus, Inc.$1.7 $0.3 $8.6 $— $— $— $— $(7.3)$3.3 $— 
Panda Temple Power, LLC and T1 Power Holdings LLC$— $6.2 $— $0.9 $— $— $— $— $2.1 $18.6 
PCG-Ares Sidecar Investment II, L.P.$0.1 $— $— $— $— $— $— $— $(2.6)$10.2 
PCG-Ares Sidecar Investment, L.P.$0.1 $— $— $— $— $— $— $— $(3.8)$0.4 
Primrose Holding Corporation$— $— $— $— $— $— $— $— $(4.7)$14.1 
Production Resource Group, L.L.C. and PRG III, LLC$5.9 $— $— $1.0 $0.2 $— $— $— $1.8 $45.8 
Shock Doctor, Inc. and Shock Doctor Holdings, LLC$1.5 $2.0 $— $1.4 $— $— $— $— $(4.4)$19.5 
Totes Isotoner Corporation and Totes Ultimate Holdco, Inc.$— $— $— $0.2 $— $— $— $— $(4.3)$5.5 
UL Holding Co., LLC$— $20.5 $7.5 $2.1 $— $— $— $20.1 $(20.6)$— 
$69.2 $67.3 $40.5 $11.8 $1.1 $0.5 $0.5 $16.3 $(2.0)$296.2 






















F-83



(5) As defined in the Investment Company Act, the Company is deemed to be both an “Affiliated Person” and “Control” this portfolio company because it owns more than 25% of the portfolio company’s outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company (including through a management agreement). Transactions as of and during the year ended December 31, 2020 in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control are as follows:
For the Year Ended December 31, 2020As of December 31, 2020
(in millions)
Company		Purchases (cost)Redemptions (cost)Sales (cost)Interest incomeCapital
structuring service fees		Dividend incomeOther incomeNet realized gains (losses)Net 
unrealized gains (losses)		Fair Value
Absolute Dental Group LLC and Absolute Dental Equity, LLC$9.0 $— $— $0.7 $— $— $— $— $0.6 $30.9 
ACAS Equity Holdings Corporation$— $— $— $— $— $— $— $— $— $— 
ADF Capital, Inc., ADF Restaurant Group, LLC, and ARG Restaurant Holdings, Inc.$— $— $— $— $— $— $— $— $— $— 
BW Landco LLC$1.0 $— $— $— $— $— $— $— $10.7 $37.0 
CoLTs 2005-1 Ltd.$— $— $— $— $— $— $— $— $— $— 
CoLTs 2005-2 Ltd.$— $— $— $— $— $— $— $— $— $— 
Eckler Industries, Inc. and Eckler Purchaser LLC$0.5 $3.5 $— $3.1 $— $— $0.1 $— $3.0 $25.2 
Halex Holdings, Inc.$— $— $— $— $— $— $— $— $— $— 
HCI Equity, LLC$— $— $— $— $— $0.1 $— $— $— $0.1 
Heelstone Renewable Energy, LLC$23.0 $8.9 $41.5 $0.4 $0.2 $— $— $(4.1)$(0.7)$29.7 
Imaging Business Machines, L.L.C. and Scanner Holdings Corporation$1.3 $— $— $2.6 $— $— $0.4 $— $8.7 $44.5 
Ivy Hill Asset Management, L.P.$175.0 $78.0 $— $5.9 $— $74.0 $— $— $10.7 $628.5 
Joyce Lane Capital LLC and Joyce Lane Financing SPV LLC (fka Ciena Capital LLC)$— $12.7 $— $— $— $— $— $2.3 $9.8 $0.6 
Miles 33 (Finance) Limited$— $— $— $— $— $— $— $(0.2)$— $— 
Montgomery Lane, LLC and Montgomery Lane, Ltd.$— $— $— $— $— $— $— $— $— $— 
MVL Group, Inc.$— $— $— $— $— $— $— $— $— $— 
Navisun LLC and Navisun Holdings LLC$9.1 $— $— $8.2 $0.1 $1.2 $0.2 $— $(1.8)$119.2 
NECCO Holdings, Inc. and New England Confectionery Company, Inc.$0.7 $— $— $— $— $— $— $— $(0.7)$4.6 
NECCO Realty Investments LLC$— $— $— $— $— $— $— $— $— $— 
Pillar Processing LLC and PHL Investors, Inc.$— $3.8 $— $— $— $— $— $(3.8)$3.8 $— 
Rug Doctor, LLC and RD Holdco Inc.$0.9 $— $— $2.1 $— $— $— $— $(5.1)$19.6 
S Toys Holdings LLC (fka The Step2 Company, LLC)$— $— $— $— $— $0.2 $— $— $(0.6)$0.3 
Senior Direct Lending Program, LLC$308.1 $94.0 $— $127.2 $19.0 $— $3.8 $— $— $1,122.9 
Singer Sewing Company, SVP-Singer Holdings, LLC and SVP-Singer Holdings LP$35.5 $79.7 $— $36.3 $— $— $0.2 $1.0 $102.1 $308.3 
Startec Equity, LLC$— $— $— $— $— $— $— $— $— $— 
VPROP Operating, LLC and V SandCo, LLC$5.3 $— $— $0.6 $0.2 $— $— $— $1.6 $67.2 
$569.4 $280.6 $41.5 $187.1 $19.5 $75.5 $4.7 $(4.8)$142.1 $2,438.6 

_____________________________________________________________________

*    Together with Varagon Capital Partners (“Varagon”) and its clients, the Company has co-invested through the Senior Direct Lending Program, LLC (d/b/a the “Senior Direct Lending Program” or the “SDLP”). The SDLP has been capitalized as transactions are completed and all portfolio decisions and generally all other decisions in
F-84

respect of the SDLP must be approved by an investment committee of the SDLP consisting of representatives of the Company and Varagon (with approval from a representative of each required); therefore, although the Company owns more than 25% of the voting securities of the SDLP, the Company does not believe that it has control over the SDLP (for purposes of the Investment Company Act or otherwise) because, among other things, these “voting securities” do not afford the Company the right to elect directors of the SDLP or any other special rights (see Note 4).

(6)    This portfolio company is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. Pursuant to Section 55(a) of the Investment Company Act, 18% of the Company’s total assets are represented by investments at fair value and other assets that are considered “non-qualifying assets” as of December 31, 2020.

(7)Variable rate loans to the Company’s portfolio companies bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR”) or an alternate base rate (commonly based on the Federal Funds Rate or the Prime Rate), at the borrower’s option, which reset annually (A), semi-annually (S), quarterly (Q), bi-monthly (B), monthly (M) or daily (D). For each such loan, the Company has provided the interest rate in effect on the date presented.

(8)In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 2.00% on $56.0 in aggregate principal amount of a “first out” tranche of the portfolio company’s senior term debt previously syndicated by the Company into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(9)The Company sold a participating interest of approximately $24.6 in aggregate principal amount of the portfolio company’s first lien senior secured term loan. As the transaction did not qualify as a “true sale” in accordance with GAAP, the Company recorded a corresponding $23.1 secured borrowing, at fair value, included in “secured borrowings” in the accompanying consolidated balance sheet. As of December 31, 2020, the interest rate in effect for the secured borrowing was 6.50%.

(10)    Loan was on non-accrual status as of December 31, 2020.

(11)    Loan includes interest rate floor feature.

(12)    In addition to the interest earned based on the stated contractual interest rate of this security, the certificates entitle the holders thereof to receive a portion of the excess cash flow from the SDLP’s loan portfolio, after expenses, which may result in a return to the Company greater than the contractual stated interest rate.

(13)    As of December 31, 2020, no amounts were funded by the Company under this first lien senior secured revolving loan; however, there were letters of credit issued and outstanding through a financial intermediary under the loan. See Note 7 for further information on letters of credit commitments related to certain portfolio companies.

(14)    As of December 31, 2020, in addition to the amounts funded by the Company under this first lien senior secured revolving loan, there were also letters of credit issued and outstanding through a financial intermediary under the loan. See Note 7 for further information on letters of credit commitments related to certain portfolio companies.

(15)    As of December 31, 2020, the Company had the following commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to issue letters of credit through a financial intermediary on behalf of certain portfolio companies. Such commitments are subject to the satisfaction of certain conditions set forth in the documents governing these loans and letters of credit and there can be no assurance that such conditions will be satisfied. See Note 7 for further information on revolving and delayed draw loan commitments, including commitments to issue letters of credit, related to certain portfolio companies.






F-85



(in millions)
Portfolio Company		Total revolving and delayed draw loan commitmentsLess: funded commitmentsTotal unfunded commitmentsLess: commitments substantially at discretion of the CompanyLess: unavailable commitments due to borrowing base or other covenant restrictionsTotal net adjusted unfunded revolving and delayed draw commitments
A.U.L. Corp.$1.2 $— $1.2 $— $— $1.2 
Absolute Dental Group LLC14.0 — 14.0 — — 14.0 
Accommodations Plus Technologies LLC4.1 (4.1)— — — — 
ADCS Clinics Intermediate Holdings, LLC5.0 (4.8)0.2 — — 0.2 
ADG, LLC14.0 (7.7)6.3 — — 6.3 
AEP Holdings, Inc.1.0 — 1.0 — — 1.0 
AffiniPay Midco, LLC9.0 (0.1)8.9 — — 8.9 
Alcami Corporation29.0 — 29.0 — — 29.0 
Alita Care, LLC (fka KBHS Acquisition, LLC)5.0 — 5.0 — — 5.0 
AMCP Clean Intermediate, LLC6.1 (1.8)4.3 — — 4.3 
American Residential Services L.L.C.7.5 (1.9)5.6 — — 5.6 
Anaqua Parent Holdings, Inc.0.1 — 0.1 — — 0.1 
APG Intermediate Holdings Corporation9.6 — 9.6 — — 9.6 
Apptio, Inc.4.2 — 4.2 — — 4.2 
AQ Sunshine, Inc.1.3 — 1.3 — — 1.3 
Ardonagh Midco 3 PLC12.1 — 12.1 — — 12.1 
Athenahealth, Inc.33.1 — 33.1 — — 33.1 
ATI Restoration, LLC21.7 (0.8)20.9 — — 20.9 
Atlas Intermediate III L.L.C.0.1 — 0.1 — — 0.1 
Avetta, LLC4.2 — 4.2 — — 4.2 
Banyan Software Holdings, LLC12.4 — 12.4 — — 12.4 
Bearcat Buyer, Inc.32.8 (0.1)32.7 — — 32.7 
Belfor Holdings, Inc.25.0 — 25.0 — — 25.0 
Benecon Midco II LLC7.5 (1.8)5.7 — — 5.7 
Blue Angel Buyer 1, LLC5.5 — 5.5 — — 5.5 
Blue Campaigns Intermediate Holding Corp.3.0 (0.7)2.3 — — 2.3 
Bragg Live Food Products LLC4.4 (1.2)3.2 — — 3.2 
Cadence Aerospace, LLC14.7 (14.7)— — — — 
Capstone Acquisition Holdings, Inc.30.3 (10.8)19.5 — — 19.5 
Cardinal Parent, Inc.5.0 — 5.0 — — 5.0 
CCS-CMGC Holdings, Inc.12.0 (3.6)8.4 — — 8.4 
Center for Autism and Related Disorders, LLC8.5 (8.5)— — — — 
Centric Brands LLC7.9 (3.0)4.9 — — 4.9 
Cipriani USA, Inc.17.4 — 17.4 — — 17.4 
Clearwater Analytics, LLC8.2 — 8.2 — — 8.2 
Comprehensive EyeCare Partners, LLC2.3 (1.3)1.0 (0.4)— 0.6 
Concert Golf Partners Holdco LLC3.1 — 3.1 — — 3.1 
Cority Software Inc.0.1 — 0.1 — — 0.1 
Cozzini Bros., Inc.15.0 (3.6)11.4 — — 11.4 
Creation Holdings Inc.13.2 (4.8)8.4 — — 8.4 
Crown Health Care Laundry Services, Inc.10.0 (0.9)9.1 — — 9.1 
CST Buyer Company6.1 — 6.1 — — 6.1 
CVP Holdco, Inc.15.7 — 15.7 — — 15.7 
DCA Investment Holding LLC5.8 (5.8)— — — — 
DecoPac, Inc.8.1 (0.9)7.2 — — 7.2 
DFC Global Facility Borrower III LLC152.5 (114.4)38.1 — — 38.1 
Diligent Corporation10.2 — 10.2 — — 10.2 
Divisions Holding Corporation15.3 (2.5)12.8 — — 12.8 
Dorner Holding Corp.3.3 — 3.3 — 3.3 
DRB Holdings, LLC9.9 — 9.9 — — 9.9 
DRS Holdings III, Inc.6.8 — 6.8 — — 6.8 
DTI Holdco, Inc.7.9 (4.9)3.0 — — 3.0 
Dynamic NC Aerospace Holdings, LLC10.1 (0.7)9.4 — — 9.4 
Eckler Industries, Inc.5.6 (2.7)2.9 — — 2.9 
Elemica Parent, Inc.25.2 (3.4)21.8 (14.9)— 6.9 
Elevation Services Parent Holdings, LLC14.2 (0.4)13.8 — — 13.8 
Emergency Communications Network, LLC6.5 — 6.5 — — 6.5 
F-86

(in millions)
Portfolio Company		Total revolving and delayed draw loan commitmentsLess: funded commitmentsTotal unfunded commitmentsLess: commitments substantially at discretion of the CompanyLess: unavailable commitments due to borrowing base or other covenant restrictionsTotal net adjusted unfunded revolving and delayed draw commitments
EP Purchaser, LLC.22.4 — 22.4 — — 22.4 
EP Wealth Advisors, LLC0.6 — 0.6 — — 0.6 
Episerver, Inc.9.5 — 9.5 — — 9.5 
eResearch Technology, Inc.5.1 — 5.1 — — 5.1 
Essential Services Holding Corporation43.4 (0.7)42.7 — — 42.7 
Evolent Health LLC44.8 — 44.8 — — 44.8 
Ferraro Fine Foods Corp.8.0 — 8.0 — — 8.0 
Flinn Scientific, Inc.10.0 (0.9)9.1 — — 9.1 
Flow Control Solutions, Inc.10.0 — 10.0 — — 10.0 
FM:Systems Group, LLC1.5 (1.5)— — — — 
Forescout Technologies, Inc.0.1 — 0.1 — — 0.1 
Foundation Risk Partners, Corp.54.8 — 54.8 — — 54.8 
FS Squared Holding Corp.9.7 (0.3)9.4 — — 9.4 
FWR Holding Corporation2.2 — 2.2 — (0.1)2.1 
Garden Fresh Restaurant Corp.7.5 (6.9)0.6 — (0.6)— 
GB Auto Service, Inc.18.8 (3.8)15.0 — (3.6)11.4 
Genesis Acquisition Co.1.5 (1.5)— — — — 
GraphPAD Software, LLC1.1 — 1.1 — — 1.1 
Green Street Parent, LLC0.3 — 0.3 — — 0.3 
GSM Acquisition Corp.5.2 — 5.2 — — 5.2 
GTCR-Ultra Acquisition, Inc.2.0 — 2.0 — — 2.0 
HAI Acquisition Corporation19.0 — 19.0 — — 19.0 
Harvey Tool Company, LLC13.5 (0.1)13.4 — — 13.4 
HealthEdge Software, Inc.4.1 — 4.1 — — 4.1 
Heelstone Renewable Energy, LLC21.1 — 21.1 — — 21.1 
Help/Systems Holdings, Inc.7.5 — 7.5 — — 7.5 
Highline Aftermarket Acquisition, LLC12.5 (9.5)3.0 — — 3.0 
Hometown Food Company3.9 (0.5)3.4 — — 3.4 
Huskies Parent, Inc.3.3 (0.6)2.7 — — 2.7 
Hygiena Borrower LLC7.4 — 7.4 — — 7.4 
IMIA Holdings, Inc.9.9 (0.5)9.4 — — 9.4 
Infilaw Corporation5.7 (5.7)— — — — 
Infinite Electronics International, Inc.3.0 — 3.0 — — 3.0 
Infogix, Inc.5.3 (5.3)— — — — 
IntraPac International LLC19.2 (7.7)11.5 — — 11.5 
Invoice Cloud, Inc.4.9 (0.9)4.0 — — 4.0 
JDC Healthcare Management, LLC4.1 (0.8)3.3 — (3.3)— 
Jim N Nicks Management LLC4.9 (4.9)— — — — 
Joyce Lane Financing SPV LLC1.4 — 1.4 — — 1.4 
K2 Insurance Services, LLC4.7 — 4.7 — — 4.7 
Kellermeyer Bergensons Services, LLC7.4 — 7.4 — — 7.4 
Kene Acquisition, Inc.8.9 (0.1)8.8 — — 8.8 
Laboratories Bidco LLC11.8 — 11.8 — — 11.8 
Majesco and Magic Topco, L.P.5.0 (0.6)4.4 — — 4.4 
Manna Pro Products, LLC10.0 — 10.0 — — 10.0 
Masergy Holdings, Inc.2.5 — 2.5 — — 2.5 
Mavis Tire Express Services Corp.11.3 — 11.3 — — 11.3 
MB2 Dental Solutions, LLC4.6 (2.9)1.7 — — 1.7 
McKenzie Creative Brands, LLC4.5 — 4.5 — — 4.5 
Micromeritics Instrument Corp.4.1 (4.1)— — — — 
Minerva Surgical, Inc.9.9 — 9.9 — — 9.9 
Ministry Brands, LLC10.9 — 10.9 — — 10.9 
Movati Athletic (Group) Inc.0.9 — 0.9 (0.9)— — 
MRI Software LLC9.0 — 9.0 — — 9.0 
MSHC, Inc.2.6 (0.6)2.0 — — 2.0 
n2y Holding, LLC0.1 — 0.1 — — 0.1 
NAS, LLC3.0 — 3.0 — — 3.0 
National Intergovernmental Purchasing Alliance Company9.0 — 9.0 — — 9.0 
F-87

(in millions)
Portfolio Company		Total revolving and delayed draw loan commitmentsLess: funded commitmentsTotal unfunded commitmentsLess: commitments substantially at discretion of the CompanyLess: unavailable commitments due to borrowing base or other covenant restrictionsTotal net adjusted unfunded revolving and delayed draw commitments
Navisun LLC18.1 — 18.1 — — 18.1 
NCWS Intermediate, Inc.43.0 — 43.0 — — 43.0 
NECCO Holdings, Inc.25.0 (19.9)5.1 (5.1)— — 
Nelipak Holding Company0.6 (0.3)0.3 — — 0.3 
NMC Skincare Intermediate Holdings II, LLC9.1 (6.9)2.2 — — 2.2 
NMN Holdings III Corp12.5 (1.1)11.4 — — 11.4 
Nordco Inc.10.0 — 10.0 — — 10.0 
North American Science Associates, Inc.11.0 — 11.0 — — 11.0 
NueHealth Performance, LLC3.3 — 3.3 — — 3.3 
Olympia Acquisition, Inc.10.8 (10.1)0.7 — — 0.7 
OneDigital Borrower LLC7.5 — 7.5 — — 7.5 
OTG Management, LLC10.1 (10.1)— — — — 
Pathway Vet Alliance LLC1.9 — 1.9 — — 1.9 
PaySimple, Inc.21.1 (0.1)21.0 — — 21.0 
PDI TA Holdings, Inc.7.6 — 7.6 — — 7.6 
Pegasus Global Enterprise Holdings, LLC45.9 — 45.9 — — 45.9 
Perforce Software, Inc.0.5 (0.1)0.4 — — 0.4 
Petroleum Service Group LLC21.2 (1.1)20.1 — — 20.1 
PosiGen Backleverage, LLC3.6 — 3.6 — — 3.6 
Premise Health Holding Corp.36.0 (13.6)22.4 — — 22.4 
Production Resource Group, LLC5.6 — 5.6 — — 5.6 
Project Potter Buyer, LLC5.5 — 5.5 — — 5.5 
Project Silverback Holdings Corp.6.5 (0.1)6.4 — — 6.4 
Pyramid Management Advisors, LLC10.9 (9.5)1.4 (1.4)— — 
QC Supply, LLC10.0 (10.0)— — — — 
QF Holdings, Inc.5.0 — 5.0 — — 5.0 
Radius Aerospace, Inc.2.9 (1.3)1.6 — — 1.6 
Raptor Technologies, LLC4.7 (0.8)3.9 (3.0)— 0.9 
Reddy Ice LLC8.2 — 8.2 (3.6)— 4.6 
Redwood Services LLC8.3 — 8.3 — — 8.3 
Reef Lifestyle, LLC32.2 (8.6)23.6 — — 23.6 
Retriever Medical/Dental Payments LLC3.5 — 3.5 — — 3.5 
Rialto Management Group, LLC1.0 (0.2)0.8 — — 0.8 
RSC Acquisition, Inc.0.6 — 0.6 — — 0.6 
RTI Surgical, Inc.15.9 — 15.9 — — 15.9 
Safe Home Security, Inc.9.9 — 9.9 — — 9.9 
Saldon Holdings, Inc.2.3 — 2.3 — — 2.3 
SCIH Salt Holdings Inc.7.5 (2.6)4.9 — — 4.9 
SCM Insurance Services Inc.4.2 — 4.2 — — 4.2 
SCSG EA Acquisition Company, Inc.4.0 (0.2)3.8 — — 3.8 
SecurAmerica, LLC3.4 — 3.4 — — 3.4 
Severin Acquisition, LLC9.0 (2.0)7.0 — — 7.0 
SFE Intermediate HoldCo LLC10.2 (0.1)10.1 — — 10.1 
Shock Doctor, Inc.2.5 (1.6)0.9 — — 0.9 
Sigma Electric Manufacturing Corporation7.5 (2.9)4.6 — — 4.6 
SiroMed Physician Services, Inc.7.1 — 7.1 — 7.1 
SM Wellness Holdings, Inc.9.1 — 9.1 — — 9.1 
SOS Security Holdings, LLC0.5 (0.3)0.2 — — 0.2 
Sovos Brands Intermediate, Inc.4.3 — 4.3 — — 4.3 
SpareFoot, LLC1.4 (1.4)— — — — 
Spectra Finance, LLC24.1 (15.3)8.8 — — 8.8 
Spring Insurance Solutions, LLC6.3 — 6.3 — — 6.3 
SSE Buyer, Inc.6.5 — 6.5 — — 6.5 
Star US Bidco LLC8.5 (0.1)8.4 — — 8.4 
Storm US Holdco, Inc.1.1 (0.2)0.9 — — 0.9 
Sunshine Sub, LLC5.8 — 5.8 — — 5.8 
Singer Sewing Company1.4 (1.4)— — — 
Symplr Software Inc.10.0 — 10.0 — — 10.0 
Synergy HomeCare Franchising, LLC4.2 (0.1)4.1 — — 4.1 
F-88

(in millions)
Portfolio Company		Total revolving and delayed draw loan commitmentsLess: funded commitmentsTotal unfunded commitmentsLess: commitments substantially at discretion of the CompanyLess: unavailable commitments due to borrowing base or other covenant restrictionsTotal net adjusted unfunded revolving and delayed draw commitments
TA/WEG Holdings, LLC3.8 — 3.8 — — 3.8 
Taymax Group, L.P.2.1 (1.3)0.8 — (0.4)0.4 
TCP Hawker Intermediate LLC7.6 — 7.6 — — 7.6 
TDG Group Holding Company0.3 (0.1)0.2 — — 0.2 
TerSera Therapeutics LLC0.1 — 0.1 — — 0.1 
The Alaska Club Partners, LLC, Athletic Club Partners LLC and The Alaska Club, Inc.1.1 — 1.1 — — 1.1 
The Ultimate Software Group, Inc.10.0 (0.1)9.9 — — 9.9 
The Ultimus Group Midco, LLC6.9 (4.0)2.9 — — 2.9 
Theranest, LLC10.9 — 10.9 — — 10.9 
THG Acquisition, LLC33.1 — 33.1 — — 33.1 
TWH Infrastructure Industries, Inc.0.1 (0.1)— — — — 
U.S. Acute Care Solutions, LLC1.7 — 1.7 — — 1.7 
United Digestive MSO Parent, LLC14.8 — 14.8 — — 14.8 
Vela Trading Technologies LLC3.5 (3.5)— — — 
Verscend Holding Corp.22.5 (0.1)22.4 — — 22.4 
VLS Recovery Services, LLC19.8 (0.3)19.5 — — 19.5 
VPROP Operating, LLC8.0 — 8.0 — — 8.0 
VRC Companies, LLC1.5 — 1.5 — — 1.5 
VS Buyer, LLC8.1 — 8.1 — — 8.1 
Watchfire Enterprises, Inc.2.0 — 2.0 — — 2.0 
WebPT, Inc.6.1 — 6.1 — — 6.1 
Wildcat BuyerCo, Inc.10.3 — 10.3 — — 10.3 
WSHP FC Acquisition LLC11.3 (3.3)8.0 — — 8.0 
Xifin, Inc.7.3 — 7.3 — — 7.3 
Zemax Software Holdings, LLC4.1 (2.0)2.1 — — 2.1 
$2,020.6 $(409.1)$1,611.5 $(29.3)$(8.0)$1,574.2 

(16)    As of December 31, 2020, the Company was party to subscription agreements to fund equity investments in private equity investment partnerships as follows:

(in millions)
Company		Total private equity commitmentsLess: funded private equity commitmentsTotal unfunded private equity commitmentsLess: private equity commitments substantially at the discretion of the CompanyTotal net adjusted unfunded private equity commitments
PCG-Ares Sidecar Investment, L.P. and PCG-Ares Sidecar Investment II, L.P.$50.0 $(12.4)$37.6 $(37.6)$— 
European Capital UK SME Debt LP61.5 (55.7)5.8 (5.8)— 
$111.5 $(68.1)$43.4 $(43.4)$— 


(17)    As of December 31, 2020, the Company had commitments to co-invest in the SDLP for its portion of the SDLP’s commitment to fund delayed draw loans of up to $37. See Note 4 to the consolidated financial statements for more information on the SDLP.

(18)    Other than the investments noted by this footnote, the fair value of the Company’s investments is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 8 to the consolidated financial statements for more information regarding the fair value of the Company’s investments.

(19)    As of December 31, 2020, the estimated net unrealized loss for federal tax purposes was $0.4 billion based on a tax cost basis of $15.9 billion. As of December 31, 2020, the estimated aggregate gross unrealized loss for federal income tax purposes was $0.9 billion and the estimated aggregate gross unrealized gain for federal income tax purposes was $0.5 billion.

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ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(in millions, except per share data)

 Common StockCapital in
Excess of
Par Value		Accumulated Undistributed (Overdistributed) EarningsTotal
Stockholders’
Equity
 SharesAmount
Balance at December 31, 2018426 $— $7,173 $127 $7,300 
Issuance of common stock, net of offering and underwriting costs4 — 64 — 64 
Shares issued in connection with dividend reinvestment plan1 — 24 — 24 
Issuance of Convertible Unsecured Notes (See Note 5)— — 4 — 4 
Net investment income— — — 811 811 
Net realized losses on investments, foreign currency and other transactions— — — (65)(65)
Net unrealized gains on investments, foreign currency and other transactions— — — 47 47 
Dividends declared and payable ($1.68 per share)— — — (718)(718)
Tax reclassification of stockholders’ equity in accordance with GAAP— — 495 (495)— 
Balance at December 31, 2019431 $— $7,760 $(293)$7,467 
Issuance of common stock, net of offering and underwriting costs— — 4 — 4 
Repurchases of common stock(8)— (100)— (100)
Net investment income— — — 794 794 
Net realized losses on investments, foreign currency and other transactions— — — (166)(166)
Net unrealized losses on investments, foreign currency and other transactions— — — (144)(144)
Dividends declared and payable ($1.60 per share)— — — (679)(679)
Tax reclassification of stockholders’ equity in accordance with GAAP— — (8)8 — 
Balance at December 31, 2020423 $— $7,656 $(480)$7,176 
Issuance of common stock, net of offering and underwriting costs42 — 819 — 819 
Shares issued in connection with dividend reinvestment plan3 — 38 — 38 
Net investment income— — — 741 741 
Net realized gains on investments, foreign currency and other transactions— — — 240 240 
Net unrealized gains on investments, foreign currency and other transactions— — — 586 586 
Dividends declared and payable ($1.62 per share)— — — (732)(732)
Tax reclassification of stockholders’ equity in accordance with GAAP— — 40 (40)— 
Balance at December 31, 2021
468 $— $8,553 $315 $8,868 
   
See accompanying notes to consolidated financial statements.

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ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
 For the Years Ended December 31,
 202120202019
OPERATING ACTIVITIES:  
Net increase in stockholders’ equity resulting from operations$1,567 $484 793 
Adjustments to reconcile net increase in stockholders’ equity resulting from operations:
Net realized (gains) losses on investments, foreign currency and other transactions(283)166 65 
Net unrealized (gains) losses on investments, foreign currency and other transactions(586)144 (47)
Realized loss on extinguishment of debt43 — — 
Net accretion of discount on investments(16)(8)(12)
PIK interest(164)(150)(79)
Collections of PIK interest104 55 35 
PIK dividends(91)(67)(61)
Collections of PIK dividends122 1 — 
Amortization of debt issuance costs29 23 18 
Net accretion of discount on notes payable2 8 8 
Proceeds from sales and repayments of investments and other transactions10,250 5,468 4,905 
Purchases of investments(13,644)(6,759)(6,796)
Changes in operating assets and liabilities:
Interest receivable(24)12 (26)
Receivable from participants38 (38)— 
Other assets10 (21)9 
Operating lease right-of-use asset12 56 (94)
Base management fees payable13 1 9 
Income based fees payable(72)92 12 
Capital gains incentive fees payable161 (58)(54)
Interest and facility fees payable17 29 (10)
Payable to participants42 63 9 
Accounts payable and other liabilities27 (20)(7)
Operating lease liabilities(16)(61)88 
Net cash used in provided by operating activities(2,459)(580)(1,235)
FINANCING ACTIVITIES:  
Borrowings on debt19,336 8,256 13,176 
Repayments and repurchases of debt(16,829)(6,737)(11,422)
Debt issuance costs(64)(37)(34)
Net proceeds from issuance of common stock819 4 64 
Dividends paid(694)(679)(694)
Repurchases of common stock — (100)— 
Secured borrowings, net51 23 25 
Net cash provided by financing activities2,619 730 1,115 
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH160 150 (120)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD326 176 296 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD$486 $326 $176 
Supplemental Information:  
Interest paid during the period$310 243 $264 
Taxes, including excise tax, paid during the period$26 16 $18 
Dividends declared and payable during the period$732 $679 $718 

See accompanying notes to consolidated financial statements.
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ARES CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2021
(in millions, except per share data, percentages and as otherwise indicated;
for example, with the word “billion” or otherwise)

1.     ORGANIZATION

Ares Capital Corporation (the “Company”) is a specialty finance company that is a closed-end, non-diversified management investment company incorporated in Maryland. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”). The Company has elected to be treated as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”), and operates in a manner so as to qualify for the tax treatment applicable to RICs.
 
The Company’s investment objective is to generate both current income and capital appreciation through debt and equity investments. The Company invests primarily in first lien senior secured loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt, generally in a first lien position) and second lien senior secured loans. In addition to senior secured loans, the Company also invests in subordinated loans (sometimes referred to as mezzanine debt), which in some cases includes an equity component, and preferred equity. To a lesser extent, the Company also makes common equity investments.
 
The Company is externally managed by Ares Capital Management LLC (“Ares Capital Management” or the Company’s “investment adviser”), a subsidiary of Ares Management Corporation (“Ares Management”), a publicly traded, leading global alternative investment manager, pursuant to an investment advisory and management agreement. Ares Operations LLC (“Ares Operations” or the Company’s “administrator”), a subsidiary of Ares Management, provides certain administrative and other services necessary for the Company to operate.
 
2.     SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
 
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”), and include the accounts of the Company and its consolidated subsidiaries. The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification (“ASC”) 946, Financial Services-Investment Companies. The consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the results of operations and financial condition as of and for the periods presented. All significant intercompany balances and transactions have been eliminated.

The Company reclassified certain prior period amounts in the accompanying consolidated balance sheet to conform to its current period presentation. These reclassifications had no impact on prior periods’ net income or stockholders’ equity.
 
Cash, Cash Equivalents and Restricted Cash
 
Cash and cash equivalents include funds from time to time deposited with financial institutions and short-term, liquid investments in a money market account. Cash and cash equivalents are carried at cost which approximates fair value. As of December 31, 2021 and 2020, there was $62 and $13, respectively, of cash denominated in foreign currencies included within “cash and cash equivalents” in the accompanying consolidated balance sheet.

Restricted cash primarily relates to cash received by the Company on behalf of participating lenders as a result of the Company’s role as administrative agent for certain loans. The cash received is generally distributed to participating lenders shortly after the receipt of such cash.

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the consolidated balance sheet to the total amount shown at the end of the applicable period in the consolidated statement of cash flows:

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 As of December 31,
 20212020
Cash and cash equivalents$372 $254 
Restricted cash114 72 
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows$486 $326 
 
Concentration of Credit Risk
 
The Company places its cash and cash equivalents with financial institutions and, at times, cash held in money market accounts may exceed the Federal Deposit Insurance Corporation insured limit.
 
Investments
 
Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. Unrealized gains or losses primarily reflect the change in investment values, including the reversal of previously recorded unrealized gains or losses when gains or losses are realized.
 
Investments for which market quotations are readily available are typically valued at such market quotations. In order to validate market quotations, the Company looks at a number of factors to determine if the quotations are representative of fair value, including the source and nature of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available (i.e., substantially all of the Company’s investments) are valued at fair value as determined in good faith by the Company’s board of directors, based on, among other things, the input of the Company’s investment adviser, audit committee and independent third-party valuation firms that have been engaged at the direction of the Company’s board of directors to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing 12-month period (with certain de minimis exceptions) and under a valuation policy and a consistently applied valuation process. The valuation process is conducted at the end of each fiscal quarter, and a portion of the Company’s investment portfolio at fair value is subject to review by an independent third-party valuation firm each quarter. In addition, the Company’s independent registered public accounting firm obtains an understanding of, and performs select procedures relating to, the Company’s investment valuation process within the context of performing the integrated audit.
 
As part of the valuation process, the Company may take into account the following types of factors, if relevant, in determining the fair value of the Company’s investments: the enterprise value of a portfolio company (the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time), the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, changes in the interest rate environment and the credit markets, which may affect the price at which similar investments would trade in their principal markets and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent sale occurs, the Company considers the pricing indicated by the external event to corroborate its valuation.
 
Because there is not a readily available market value for most of the investments in its portfolio, the Company values substantially all of its portfolio investments at fair value as determined in good faith by its board of directors, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded it.
 
In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.

The Company’s board of directors undertakes a multi-step valuation process each quarter, as described below:
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•The Company’s quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals responsible for the portfolio investment in conjunction with the Company’s portfolio management team.

•Preliminary valuations are reviewed and discussed with the Company’s investment adviser’s management and investment professionals, and then valuation recommendations are presented to the Company’s board of directors.

•The audit committee of the Company’s board of directors reviews these valuations, as well as the input of third parties, including independent third-party valuation firms who have reviewed a portion of the investments in the Company’s portfolio at fair value.

•The Company’s board of directors discusses valuations and ultimately determines the fair value of each investment in the Company’s portfolio without a readily available market quotation in good faith based on, among other things, the input of the Company’s investment adviser, audit committee and, where applicable, independent third-party valuation firms.
 
See Note 8 for more information on the Company’s valuation process.

Interest Income Recognition
 
Interest income is recorded on an accrual basis and includes the accretion of discounts, amortization of premiums and payment-in-kind (“PIK”) interest. Discounts from and premiums to par value on investments purchased are accreted/amortized into interest income over the life of the respective security using the effective yield method. To the extent loans contain PIK provisions, PIK interest, computed at the contractual rate specified in each applicable agreement, is accrued and recorded as interest income and added to the principal balance of the loan. PIK interest income added to the principal balance is generally collected upon repayment of the outstanding principal. To maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders in the form of dividends for the year the income was earned, even though the Company has not yet collected the cash. The amortized cost of investments represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest.

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon the Company’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest are paid or there is no longer any reasonable doubt that such principal or interest will be collected in full and, in the Company’s judgment, are likely to remain current. The Company may make exceptions to this policy if the loan has sufficient collateral value (i.e., typically measured as enterprise value of the portfolio company) or is in the process of collection.

Dividend Income Recognition 

Dividend income on preferred equity is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. To the extent a preferred equity contains PIK provisions, PIK dividends, computed at the contractual rate specified in each applicable agreement, are accrued and recorded as dividend income and added to the principal balance of the preferred equity. PIK dividends added to the principal balance are generally collected upon redemption of the equity.
 
Capital Structuring Service Fees and Other Income
 
In pursuit of the Company’s investment objective, the Company’s investment adviser seeks to provide assistance to its portfolio companies and in return the Company may receive fees for capital structuring services. These fees are fixed based on contractual terms, are generally only available to the Company as a result of the Company’s underlying investments, are normally paid at the closing of the investments, are generally non-recurring and non-refundable and are recognized as revenue when earned upon closing of the investment. The services that the Company’s investment adviser provides vary by investment, but generally include reviewing existing credit facilities, arranging bank financing, arranging equity financing, structuring financing from multiple lenders, structuring financing from multiple equity investors, restructuring existing loans, raising equity and debt capital, and providing general financial advice, which concludes upon closing of the investment. Any services of the
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above nature subsequent to the closing would generally generate a separate fee payable to the Company. In certain instances where the Company is invited to participate as a co-lender in a transaction and does not provide significant services in connection with the investment, a portion of loan fees paid to the Company in such situations will be deferred and amortized over the contractual life of the loan.

Other income includes amendment fees that are fixed based on contractual terms and are generally non-recurring and
non-refundable and are recognized as revenue when earned upon closing of the related transaction. Other income also includes fees for management and consulting services, agency services, loan guarantees, commitments, and other services rendered by the Company to portfolio companies. Such fees are fixed based on contractual terms and are recognized as income as services are rendered.
 
Foreign Currency Translation
 
The Company’s books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:
 
(1)Fair value of investment securities, other assets and liabilities—at the exchange rates prevailing at the end of the period.

(2)Purchases and sales of investment securities, income and expenses—at the exchange rates prevailing on the respective dates of such transactions, income or expenses.
 
Results of operations based on changes in foreign exchange rates are separately disclosed in the statement of operations, if any. Foreign security and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices more volatile than those of comparable U.S. companies or U.S. government securities. 

Derivative Instruments
 
The Company does not utilize hedge accounting and as such values its derivatives at fair value with the unrealized gains or losses recorded in “net unrealized gains (losses) from foreign currency and other transactions” in the Company’s consolidated statement of operations.
 
Equity Offering Expenses
 
The Company’s offering costs are charged against the proceeds from equity offerings when proceeds are received.
 
Debt Issuance Costs
 
Debt issuance costs are amortized over the life of the related debt instrument using the straight line method or the effective yield method, depending on the type of debt instrument.

Secured Borrowings

The Company follows the guidance in ASC Topic 860, Transfers and Servicing, when accounting for participations and other partial loan sales. Certain loan sales do not qualify for sale accounting under ASC Topic 860 because these sales do not meet the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest or which are not eligible for sale accounting remain as an investment on the consolidated balance sheet as required under GAAP and the proceeds are recorded as a secured borrowing. Secured borrowings are carried at fair value.
 
 Leases

The Company is obligated under a number of operating leases pursuant to which it is leasing office facilities from third parties with remaining terms ranging from approximately one to five years. Such operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the accompanying consolidated balance sheets. The Company does not have any finance leases.
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The ROU asset represents the Company’s right to use an underlying asset for the lease term and the operating lease liability represents the Company’s obligation to make lease payments arising from such lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the remaining lease term. The Company’s leases do not provide an implicit discount rate, and as such the Company uses its weighted average borrowing rate based on the information available at the commencement date in determining the present value of the remaining lease payments. Lease expense is recognized on a straight-line basis over the remaining lease term. The Company has elected as a practical expedient to treat non-lease components as part of the lease as these components are not significant when compared to the lease component.

Income Taxes
 
The Company has elected to be treated as a RIC under the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Company must (among other requirements) meet certain source-of- income and asset diversification requirements and timely distribute to its stockholders at least 90% of its investment company taxable income, as defined by the Code, for each year. The Company has made and intends to continue to make the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal corporate-level income taxes.
 
Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year dividend distributions from such current year taxable income into the next tax year and pay a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year taxable income will be in excess of estimated dividend distributions for the current year from such income, the Company accrues excise tax, if any, on estimated excess taxable income as such taxable income is earned.
 
The Company may hold certain portfolio company investments through consolidated taxable subsidiaries. Such subsidiaries may be subject to U.S. federal and state corporate-level income taxes. These consolidated subsidiaries recognize deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences between the tax basis of certain assets and liabilities and the reported amounts included in the accompanying consolidated balance sheet using the applicable statutory tax rates in effect for the year in which any such temporary differences are expected to reverse.    
 
Dividends to Common Stockholders
 
Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by the Company’s board of directors each quarter and is generally based upon the earnings estimated by management and considers the level of undistributed taxable income carried forward from the prior year for distribution in the current year. Net realized capital gains, if any, are generally distributed, although the Company may decide to retain such capital gains for investment.
 
The Company has adopted a dividend reinvestment plan that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Company’s board of directors authorizes, and the Company declares, a cash dividend, then the Company’s stockholders who have not “opted out” of the Company’s dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash dividend. The Company may use newly issued shares to implement the dividend reinvestment plan or, if the Company is otherwise permitted under applicable law to purchase such shares, the Company may purchase shares in the open market in connection with the Company’s obligations under the dividend reinvestment plan.
 
Use of Estimates in the Preparation of Financial Statements
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of actual and contingent assets and liabilities at the date of the financial statements and the reported amounts of income or loss and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the valuation of investments.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all accounting standard updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its consolidated financial statements.
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In August 2020, the FASB issued ASU No. 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, after adoption, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 and can be adopted on either a fully retrospective or modified retrospective basis. The application of this guidance will not have a material impact on the Company’s consolidated financial statements.
    
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848),” which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition. ASU 2020-04 and ASU 2021-01 are effective for all entities through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company is currently evaluating the impact of the adoption of ASU 2020-04 and 2021-01 on its consolidated financial statements.

3.     AGREEMENTS

Investment Advisory and Management Agreement
 
The Company is party to an investment advisory and management agreement (the “investment advisory and management agreement”) with Ares Capital Management. Subject to the overall supervision of the Company’s board of directors, Ares Capital Management provides investment advisory and management services to the Company. For providing these services, Ares Capital Management receives fees from the Company consisting of a base management fee, a fee based on the Company’s net investment income (“income based fee”) and a fee based on the Company’s net capital gains (“capital gains incentive fee”). The investment advisory and management agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.
 
Effective June 21, 2019, in connection with the Company’s board of directors’ approval of the modification of the asset coverage requirement applicable to senior securities from 200% to 150%, the investment advisory and management agreement was amended to reduce the Company’s annual base management fee rate from 1.5% to 1.0% on all assets financed using leverage over 1.0x debt to equity. For all assets financed using leverage up to 1.0x debt to equity, the annual base management fee rate remains at 1.5%. Prior to June 21, 2019, the base management fee was calculated at an annual rate of 1.5%. The base management fee is based on the average value of the Company’s total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) at the end of the two most recently completed calendar quarters and is calculated by applying the applicable fee rate. The base management fee is payable quarterly in arrears. See Note 5 for additional information.
 
The income based fee is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income, as defined in the investment advisory and management agreement, for the quarter. Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the administration agreement, and any interest expense and dividends paid on any outstanding preferred stock, but excluding the income based fee and capital gains incentive fee accrued under GAAP). Pre-incentive fee net investment income includes, in the case of investments with a deferred income feature such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities, accrued income that the Company has not yet received in cash. The Company’s investment adviser is not under any obligation to reimburse the Company for any part of the income based fees it received that was based on accrued income that the Company never actually received.
 
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Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses, unrealized capital appreciation, unrealized capital depreciation or income tax expense related to realized gains and losses. Because of the structure of the income based fee, it is possible that the Company may pay such fees in a quarter where the Company incurs a loss. For example, if the Company earns pre-incentive fee net investment income in excess of the hurdle rate (as defined below) for a quarter, the Company will pay the applicable income based fee even if the Company has incurred a loss in that quarter due to realized and/or unrealized capital losses.
 
Pre-incentive fee net investment income, expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before taking into account any income based fees and capital gains incentive fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed “hurdle rate” of 1.75% per quarter. If market credit spreads rise, the Company may be able to invest its funds in debt instruments that provide for a higher return, which may increase the Company’s pre-incentive fee net investment income and make it easier for the Company’s investment adviser to surpass the fixed hurdle rate and receive an income based fee based on such net investment income. To the extent the Company has retained pre-incentive fee net investment income that has been used to calculate the income based fee, it is also included in the amount of the Company’s total assets (other than cash and cash equivalents but including assets purchased with borrowed funds) used to calculate the base management fee.

The Company pays its investment adviser an income based fee with respect to the Company’s pre-incentive fee net investment income in each calendar quarter as follows:
 
•No income based fee in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the hurdle rate;

•100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter. The Company refers to this portion of its pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 2.1875%) as the “catch-up” provision. The “catch-up” is meant to provide the Company’s investment adviser with 20% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeded 2.1875% in any calendar quarter; and

•20% of the amount of the Company’s pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter.
 
These calculations are adjusted for any share issuances or repurchases during the quarter.

In connection with the Company’s acquisition of American Capital, Ltd., a Delaware corporation (“American Capital”) (the “American Capital Acquisition”), Ares Capital Management waived $10 of income based fees for each of the ten calendar quarters beginning with the second calendar quarter of 2017 and ending with the third calendar quarter of 2019 (the “Fee Waiver”).

The capital gains incentive fee is determined and payable in arrears as of the end of each calendar year (or, upon termination of the investment advisory and management agreement, as of the termination date) and is calculated at the end of each applicable year by subtracting (a) the sum of the Company’s cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (b) the Company’s cumulative aggregate realized capital gains, in each case calculated from October 8, 2004 (the date the Company completed its initial public offering). Realized capital gains and losses include gains and losses on investments and foreign currencies, gains and losses on extinguishment of debt and from other assets, as well as any income tax and other expenses related to cumulative aggregate realized gains and losses. If such amount is positive at the end of such year, then the capital gains incentive fee for such year is equal to 20% of such amount, less the aggregate amount of capital gains incentive fees paid in all prior years. If such amount is negative, then there is no capital gains incentive fee for such year.
 
The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive, between (a) the net sales price of each investment in the Company’s portfolio when sold and (b) the accreted or amortized cost basis of such investment.
 
The cumulative aggregate realized capital losses are calculated as the sum of the amounts by which (a) the net sales price of each investment in the Company’s portfolio when sold is less than (b) the accreted or amortized cost basis of such investment.
 
F-98

The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each investment in the Company’s portfolio as of the applicable capital gains incentive fee calculation date and (b) the accreted or amortized cost basis of such investment.
 
Notwithstanding the foregoing, as a result of an amendment to the capital gains incentive fee under the investment advisory and management agreement that was adopted on June 6, 2011, if the Company is required by GAAP to record an investment at its fair value as of the time of acquisition instead of at the actual amount paid for such investment by the Company (including, for example, as a result of the application of the asset acquisition method of accounting), then solely for the purposes of calculating the capital gains incentive fee, the “accreted or amortized cost basis” of an investment shall be an amount (the “Contractual Cost Basis”) equal to (1) (x) the actual amount paid by the Company for such investment plus (y) any amounts recorded in the Company’s financial statements as required by GAAP that are attributable to the accretion of such investment plus (z) any other adjustments made to the cost basis included in the Company’s financial statements, including PIK interest or additional amounts funded (net of repayments) minus (2) any amounts recorded in the Company’s financial statements as required by GAAP that are attributable to the amortization of such investment, whether such calculated Contractual Cost Basis is higher or lower than the fair value of such investment (as determined in accordance with GAAP) at the time of acquisition.
  
The base management fees, income based fees and capital gains incentive fees for the years ended December 31, 2021, 2020 and 2019 were as follows:

For the Years Ended December 31,
202120202019
Base management fees$253 $217 $205 
Income based fees$225 $184 $194 
Waiver of income based fees— — (30)
Income based fees, net of Fee Waiver$225 $184 $164 
Capital gains incentive fees(1)$161 $(58)$(4)
________________________________________

(1)Calculated in accordance with GAAP as discussed below.

The capital gains incentive fee payable to the Company’s investment adviser as calculated under the investment advisory and management agreement for the year ended December 31, 2021 was $26. There was no capital gains incentive fee payable to the Company’s investment adviser as calculated under the investment advisory and management agreement for the years ended December 31, 2020 and 2019. In addition, in accordance with GAAP, the Company had cumulatively accrued a capital gains incentive fee of $161 as of December 31, 2021, of which $135 is not currently due under the investment advisory and management agreement. GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the investment advisory and management agreement. This GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the capital gains incentive fee plus the aggregate cumulative unrealized capital appreciation, net of any expense associated with cumulative unrealized capital depreciation or appreciation. If such amount is positive at the end of a period, then GAAP requires the Company to record a capital gains incentive fee equal to 20% of such cumulative amount, less the aggregate amount of actual capital gains incentive fees paid or capital gains incentive fees accrued under GAAP in all prior periods. As of December 31, 2021, the Company has paid capital gains incentive fees since inception totaling $108, excluding the $26 payable for the year ended December 31, 2021 that will be paid in the first quarter of 2022. The resulting accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. There can be no assurance that such unrealized capital appreciation will be realized in the future.

Cash payment of any income based fees and capital gains incentive fees otherwise earned by the Company’s investment adviser is deferred if during the most recent four full calendar quarter period ending on or prior to the date such
F-99

payment is to be made the sum of (a) the aggregate distributions to the Company’s stockholders and (b) the change in net assets (defined as total assets less indebtedness and before taking into account any income based fees and capital gains incentive fees payable during the period) is less than 7.0% of the Company’s net assets (defined as total assets less indebtedness) at the beginning of such period. These calculations will be adjusted for any share issuances or repurchases. Any income based fees and capital gains incentive fees deferred for payment are carried over for payment in subsequent calculation periods to the extent such fees are payable under the terms of the investment advisory and management agreement. As of December 31, 2020, income based fees payable of $140 in the accompanying consolidated balance sheet included $83 earned by the Company’s investment adviser that were previously deferred. These deferred income based fees were paid in the first quarter of 2021 pursuant to the terms of the investment advisory and management agreement.
 
The services of all investment professionals and staff of the Company’s investment adviser, when and to the extent engaged in providing investment advisory and management services to the Company, and routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Company’s investment adviser. Under the investment
advisory and management agreement, the Company bears all other costs and expenses of its operations and transactions, including, but not limited to, those relating to: organization; calculation of the Company’s net asset value (including, but not limited to, the cost and expenses of any independent third-party valuation firm); expenses incurred by the Company’s investment adviser payable to third parties, including agents, consultants or other advisers, in monitoring the Company’s financial and legal affairs and in monitoring the Company’s investments (including the cost of consultants hired to develop information technology systems designed to monitor the Company’s investments) and performing due diligence on the Company’s prospective portfolio companies; interest payable on indebtedness, if any, incurred to finance the Company’s investments (including payments to third party vendors for financial information services); offerings of the Company’s common stock and other securities; investment advisory and management fees; administration fees; fees payable to third parties, including agents, consultants or other advisers, relating to, or associated with, evaluating and making investments in portfolio companies, regardless of whether such transactions are ultimately consummated; transfer agent and custodial fees; registration fees; listing fees; taxes; independent directors’ fees and expenses; costs of preparing and filing reports or other documents with the SEC; the costs of any reports, proxy statements or other notices to stockholders, including printing costs; to the extent the Company is covered by any joint insurance policies, the Company’s allocable portion of the insurance premiums for such policies; direct costs and expenses of administration, including auditor and legal costs; and all other expenses incurred by the Company or its administrator in connection with administering the Company’s business as described in more detail under “Administration Agreement” below.

Administration Agreement
 
The Company is party to an administration agreement, referred to herein as the “administration agreement”, with its administrator, Ares Operations. Pursuant to the administration agreement, Ares Operations furnishes the Company with office equipment and clerical, bookkeeping and record keeping services at the Company’s office facilities. Under the administration agreement, Ares Operations also performs, or oversees the performance of, the Company’s required administrative services, which include, among other things, providing assistance in accounting, legal, compliance, operations, technology and investor relations, being responsible for the financial records that the Company is required to maintain and preparing reports to its stockholders and reports filed with the SEC. In addition, Ares Operations assists the Company in determining and publishing its net asset value, assists the Company in providing managerial assistance to its portfolio companies, oversees the preparation and filing of the Company’s tax returns and the printing and dissemination of reports to its stockholders, and generally oversees the payment of its expenses and the performance of administrative and professional services rendered to the Company by others. Payments under the administration agreement are equal to an amount based upon its allocable portion of Ares Operations’ overhead and other expenses (including travel expenses) incurred by Ares Operations in performing its obligations under the administration agreement, including the Company’s allocable portion of the compensation, rent and other expenses of certain of its officers (including the Company’s chief compliance officer, chief financial officer, chief accounting officer, general counsel, secretary, treasurer and assistant treasurer) and their respective staffs. The administration agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.
 
For the years ended December 31, 2021, 2020 and 2019, the Company incurred $15, $13 and $14, respectively, in administrative fees. As of December 31, 2021 and 2020, a total of $4 and $3, respectively, in administrative fees were unpaid and included in “accounts payable and other liabilities” in the accompanying consolidated balance sheet.

4.     INVESTMENTS

As of December 31, 2021 and 2020, investments consisted of the following:

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 As of December 31,
 20212020
Amortized Cost(1)Fair ValueAmortized Cost(1)Fair Value
First lien senior secured loans(2)$9,583 $9,459 $7,224 $6,987 
Second lien senior secured loans4,614 4,524 4,386 4,171 
Subordinated certificates of the SDLP(3)987 987 1,123 1,123 
Senior subordinated loans912 906 1,005 951 
Preferred equity1,547 1,561 1,020 926 
Other equity2,167 2,572 1,156 1,357 
Total$19,810 $20,009 $15,914 $15,515 
________________________________________

(1)The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.
    
(2)First lien senior secured loans include certain loans that the Company classifies as “unitranche” loans. The total amortized cost and fair value of the loans that the Company classified as “unitranche” loans were $5,210 and $5,163, respectively, as of December 31, 2021, and $2,909 and $2,793, respectively, as of December 31, 2020.

(3)The proceeds from these certificates were applied to co-investments with Varagon and its clients to fund first lien senior secured loans to 19 and 23 different borrowers as of December 31, 2021 and 2020, respectively.
  
The Company uses Global Industry Classification Standards for classifying the industry groupings of its portfolio companies. The industrial and geographic compositions of the Company’s portfolio at fair value as of December 31, 2021 and 2020 were as follows:
 As of December 31,
20212020
Industry
Software & Services21.9 %15.1 %
Health Care Services10.8 17.3 
Commercial & Professional Services9.2 8.0 
Diversified Financials7.5 6.0 
Insurance Services5.8 4.0 
Investment Funds and Vehicles(1)5.2 7.5 
Capital Goods4.8 5.1 
Automobiles & Components4.6 5.5 
Power Generation4.5 5.2 
Consumer Durables & Apparel4.4 6.3 
Consumer Services3.9 7.1 
Retailing and Distribution2.8 1.9 
Media & Entertainment2.2 0.5 
Food & Beverage2.2 2.2 
Materials2.0 1.7 
Other8.2 6.6 
Total100.0 %100.0 %
________________________________________

(1)Includes the Company’s investment in the SDLP, which had made first lien senior secured loans to 19 and 23 different borrowers as of December 31, 2021 and 2020, respectively. The portfolio companies in the SDLP are in industries similar to the companies in the Company’s portfolio.
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 As of December 31,
20212020
Geographic Region
West(1)31.2 %24.9 %
Midwest27.9 26.0 
Southeast17.2 22.6 
Mid-Atlantic14.5 16.7 
Northeast4.8 7.1 
International4.4 2.7 
Total100.0 %100.0 %
________________________________________

(1)Includes the Company’s investment in the SDLP, which represented 4.9% and 7.2% of the total investment portfolio at fair value as of December 31, 2021 and 2020, respectively.

As of December 31, 2021, loans on non-accrual status represented 0.8% and 0.5% of the total investments at amortized cost and at fair value, respectively. As of December 31, 2020, loans on non-accrual status represented 3.3% and 2.0% of the total investments at amortized cost and at fair value, respectively.

Senior Direct Lending Program

The Company has established a joint venture with Varagon to make certain first lien senior secured loans, including certain stretch senior and unitranche loans, primarily to U.S. middle-market companies. Varagon was formed in 2013 as a lending platform by American International Group, Inc. and other partners. The joint venture is called the SDLP. In July 2016, the Company and Varagon and its clients completed the initial funding of the SDLP. The SDLP may generally commit and hold individual loans of up to $350. The Company and other accounts managed by the Company’s investment adviser and its affiliates may directly co-invest with the SDLP to accommodate larger transactions. The SDLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SDLP must be approved by an investment committee of the SDLP consisting of representatives of the Company and Varagon (with approval from a representative of each required).

The Company provides capital to the SDLP in the form of subordinated certificates (the “SDLP Certificates”), and Varagon and its clients provide capital to the SDLP in the form of senior notes, intermediate funding notes and SDLP Certificates. As of December 31, 2021 and 2020, the Company and a client of Varagon owned 87.5% and 12.5%, respectively, of the outstanding SDLP Certificates.

As of December 31, 2021 and 2020, the Company and Varagon and its clients had agreed to make capital available to the SDLP of $6,150 and $6,150, respectively, in the aggregate, of which $1,444 and $1,444, respectively, is to be made available from the Company. The Company will continue to provide capital to the SDLP in the form of SDLP Certificates, and Varagon and its clients will provide capital to the SDLP in the form of senior notes, intermediate funding notes and SDLP Certificates. This capital will only be committed to the SDLP upon approval of transactions by the investment committee of the SDLP as discussed above. Below is a summary of the funded capital and unfunded capital commitments of the SDLP.

 As of December 31,
20212020
Total capital funded to the SDLP(1)$4,168 $4,772 
Total capital funded to the SDLP by the Company(1)$987 $1,123 
Total unfunded capital commitments to the SDLP(2)$262 $152 
Total unfunded capital commitments to the SDLP by the Company(2)$62 $37 
___________________________________________________________________________
(1)At principal amount.

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(2)These commitments to fund delayed draw loans have been approved by the investment committee of the SDLP and will be funded if and when conditions to funding such delayed draw loans are met.

The SDLP Certificates pay a coupon equal to LIBOR plus 8.0% and also entitle the holders thereof to receive a portion of the excess cash flow from the loan portfolio, after expenses, which may result in a return to the holders of the SDLP Certificates that is greater than the stated coupon. The SDLP Certificates are junior in right of payment to the senior notes and intermediate funding notes.

The amortized cost and fair value of the SDLP Certificates held by the Company were $987 and $987, respectively, as of December 31, 2021 and $1,123 and $1,123, respectively, as of December 31, 2020. The Company’s yield on its investment in the SDLP Certificates at amortized cost and fair value was 13.5% and 13.5%, respectively, as of December 31, 2021, and 13.5% and 13.5%, respectively, as of December 31, 2020. For the years ended December 31, 2021, 2020 and 2019, the Company earned interest income of $138, $127 and $122, respectively, from its investment in the SDLP Certificates. The Company is also entitled to certain fees in connection with the SDLP. For the years ended December 31, 2021, 2020 and 2019, in connection with the SDLP, the Company earned capital structuring service and other fees totaling $22, $23 and $25, respectively.

As of December 31, 2021 and 2020, the SDLP’s portfolio was comprised entirely of first lien senior secured loans to U.S. middle-market companies and were in industries similar to the companies in the Company’s portfolio. As of December 31, 2021 and 2020, none of the loans were on non-accrual status. Below is a summary of the SDLP’s portfolio.
As of December 31,
20212020
Total first lien senior secured loans(1)(2)$4,194 $4,483 
Largest loan to a single borrower(1)$342 $345 
Total of five largest loans to borrowers(1)$1,540 $1,565 
Number of borrowers in the SDLP19 23 
Commitments to fund delayed draw loans(3)$262 $152 
___________________________________________________________________________

(1)At principal amount.

(2)First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of December 31, 2021 and 2020, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $2,908 and $3,551, respectively.

(3)As discussed above, these commitments have been approved by the investment committee of the SDLP.

Selected financial information for the SDLP as of and for the years ended December 31, 2021 and 2020, was as follows:
As of December 31,
20212020
Selected Balance Sheet Information: 
Investments at fair value (amortized cost of $4,193 and $4,483, respectively)$4,127 $4,345 
Other assets84 400 
Total assets$4,211 $4,745 
Senior notes$2,939 $3,364 
Intermediate funding notes101 124 
Other liabilities51 52 
Total liabilities3,091 3,540 
Subordinated certificates and members’ capital1,120 1,205 
Total liabilities and members’ capital$4,211 $4,745 

F-103

For the Years Ended December 31,
20212020
Selected Statement of Operations Information: 
Total investment income$282 $302 
Interest expense91 113 
Other expenses17 16 
Total expenses108 129 
Net investment income174 173 
Net realized and unrealized gains (losses) on investments69 (64)
Net increase in members’ capital resulting from operations$243 $109 

Ivy Hill Asset Management, L.P.

Ivy Hill Asset Management, L.P. (“IHAM”) is an asset management services company and an SEC-registered investment adviser. The Company has made investments in IHAM, its wholly owned portfolio company, and previously made investments in certain vehicles managed by IHAM. As of December 31, 2021, IHAM had assets under management of approximately $9.5 billion. As of December 31, 2021, IHAM managed 20 vehicles and served as the sub-manager/sub-servicer for one other vehicle (these vehicles managed or sub-managed/sub-serviced by IHAM are referred to as the “IHAM Vehicles”). IHAM earns fee income from managing the IHAM Vehicles and has also invested in certain of these vehicles as part of its business strategy. The amortized cost of IHAM’s total investments as of December 31, 2021 and 2020 was $966 and $671, respectively. For the years ended December 31, 2021, 2020 and 2019, IHAM had management and incentive fee income of $31, $28 and $27, respectively, and other investment-related income of $91, $75 and $61, respectively.

 The amortized cost and fair value of the Company’s investment in IHAM was $781 and $936, respectively, as of December 31, 2021, which was comprised of an equity investment of $765 and $920, respectively, and a debt investment of $16 and $16, respectively. The amortized cost and fair value of the Company’s investment in IHAM was $541 and $628, respectively, as of December 31, 2020, which was comprised of an equity investment of $469 and $556, respectively, and a debt investment of $72 and $72, respectively. For the years ended December 31, 2021, 2020 and 2019, the Company received distributions from IHAM of $93, $74 and $68, respectively. For the years ended December 31, 2021 and 2020, the Company earned interest income of $3 and $6, respectively, from its investment in IHAM.
 
From time to time, IHAM or certain IHAM Vehicles may purchase investments from, or sell investments to, the Company. For any such sales or purchases by the IHAM Vehicles to or from the Company, the IHAM Vehicle must obtain approval from third parties unaffiliated with the Company or IHAM, as applicable. During the years ended December 31, 2021, 2020 and 2019, IHAM or certain of the IHAM Vehicles purchased $2,407, $940 and $1,141, respectively, of loans from the Company. For the years ended December 31, 2021, 2020 and 2019, the Company recognized $7, $21 and $2, respectively, of net realized losses from these sales. During the years ended December 31, 2021 and 2020, $108 and $78, respectively, of investment commitments were repaid to the Company by IHAM.

IHAM is party to an administration agreement, referred to herein as the “IHAM administration agreement,” with Ares Operations. Pursuant to the IHAM administration agreement, Ares Operations provides IHAM with, among other things, office facilities, equipment, clerical, bookkeeping and record keeping services, services relating to the marketing and sale of interests in vehicles managed by IHAM, services of, and oversight of, custodians, depositories, accountants, attorneys, underwriters and such other persons in any other capacity deemed to be necessary. Under the IHAM administration agreement, IHAM reimburses Ares Operations for all of the actual costs associated with such services, including Ares Operations’ allocable portion of the compensation, rent and other expenses of its officers, employees and respective staff in performing its obligations under the IHAM administration agreement.


5.     DEBT

In accordance with the Investment Company Act, the Company is allowed to borrow amounts such that its asset coverage, calculated pursuant to the Investment Company Act, is at least 150% after such borrowing. The Company’s asset coverage requirement applicable to senior securities was reduced from 200% to 150% effective June 21, 2019. As of December 31, 2021, the aggregate principal amount outstanding of the senior securities issued by the Company was $11,061 and the Company’s asset coverage was 179%.
F-104


The Company’s outstanding debt as of December 31, 2021 and 2020 was as follows:

 As of December 31, 
 2021 2020 
Total Aggregate Principal Amount Committed/ Outstanding (1)Principal Amount OutstandingCarrying ValueTotal Aggregate Principal Amount Committed/ Outstanding (1)Principal Amount OutstandingCarrying Value
Revolving Credit Facility$4,232 (2)$1,507 $1,507 $3,617 (2)$1,180 $1,180 
Revolving Funding Facility1,525 762 762 1,525 1,028 1,028 
SMBC Funding Facility800 (3)401 401 725 (3)453 453 
BNP Funding Facility300 — — 300 150 150 
2022 Convertible Notes388 388 388 (4)388 388 383 (4)
2024 Convertible Notes403 403 395 (4)403 403 392 (4)
2022 Notes— — — 600 600 598 (5)
2023 Notes750 750 748 (6)750 750 747 (6)
2024 Notes900 900 897 (7)900 900 896 (7)
March 2025 Notes600 600 596 (8)600 600 595 (8)
July 2025 Notes1,250 1,250 1,260 (9)750 750 742 (9)
January 2026 Notes1,150 1,150 1,143 (10)1,150 1,150 1,141 (10)
July 2026 Notes1,000 1,000 988 (11)— — — 
2028 Notes1,250 1,250 1,246 (12)— — — 
2031 Notes700 700 689 (13)— — — 
2047 Notes— — — 230 230 186 (14)
Total$15,248 $11,061 $11,020 $11,938 $8,582 $8,491 
________________________________________

(1)Represents the total aggregate amount committed or outstanding, as applicable, under such instrument. Borrowings under the committed Revolving Credit Facility, Revolving Funding Facility, SMBC Funding Facility and BNP Funding Facility (each as defined below) are subject to borrowing base and other restrictions.

(2)Provides for a feature that allows the Company, under certain circumstances, to increase the size of the Revolving Credit Facility (as defined below) to a maximum of $5,945.

(3)Provides for a feature that allows ACJB (as defined below), under certain circumstances, to increase the size of the SMBC Funding Facility (as defined below) to a maximum of $1,000.

(4)Represents the aggregate principal amount outstanding of the Convertible Unsecured Notes (as defined below). As of December 31, 2021, the total unamortized debt issuance costs and the unaccreted discount for the 2022 Convertible Notes and the 2024 Convertible Notes (each as defined below) were $0 and $8, respectively. As of December 31, 2020, the total unamortized debt issuance costs and the unaccreted discount for the 2022 Convertible Notes and the 2024 Convertible Notes were $5 and $11, respectively. In February 2022, the Company repaid in full the 2022 Convertible Notes upon their maturity. See Note 15 for this subsequent event relating to the 2022 Convertible Notes.

(5)Represents the aggregate principal amount outstanding of the 2022 Notes (as defined below), less unamortized debt issuance costs and the unaccreted discount recorded upon the issuance of the 2022 Notes. As of December 31, 2020, the total unamortized debt issuance costs and the unaccreted discount was $2. In December 2021, the 2022 Notes were redeemed at par plus accrued and unpaid interest for a total redemption price of approximately $609.

F-105

(6)Represents the aggregate principal amount outstanding of the 2023 Notes (as defined below), less unamortized debt issuance costs and the unaccreted discount recorded upon the issuance of the 2023 Notes. As of December 31, 2021 and 2020, the total unamortized debt issuance costs and the unaccreted discount was $2 and $3, respectively.

(7)Represents the aggregate principal amount outstanding of the 2024 Notes (as defined below), less unamortized debt issuance costs and the net unaccreted discount recorded upon the issuance of the 2024 Notes. As of December 31, 2021 and 2020, the total unamortized debt issuance costs and the net unaccreted discount was $3 and $4, respectively.

(8)Represents the aggregate principal amount outstanding of the March 2025 Notes (as defined below), less unamortized debt issuance costs and the unaccreted discount recorded upon the issuance of the March 2025 Notes. As of December 31, 2021 and 2020, the total unamortized debt issuance costs and the unaccreted discount was $4 and $5, respectively.

(9)Represents the aggregate principal amount outstanding of the July 2025 Notes (as defined below), less unamortized debt issuance costs and the net unaccreted premium recorded upon the issuance of the July 2025 Notes. As of December 31, 2021, the total unamortized debt issuance costs and the net unaccreted premium was $10. As of December 31, 2020, the total unamortized debt issuance costs and the unaccreted discount was $8.

(10)Represents the aggregate principal amount outstanding of the January 2026 Notes (as defined below), less unamortized debt issuance costs and the unaccreted discount recorded upon the issuance of the January 2026 Notes. As of December 31, 2021 and 2020, the total unamortized debt issuance costs and the unaccreted discount was $7 and $9, respectively.

(11)Represents the aggregate principal amount outstanding of the July 2026 Notes (as defined below), less unamortized debt issuance costs and the unaccreted discount recorded upon the issuance of the July 2026 Notes. As of December 31, 2021, the total unamortized debt issuance costs and the unaccreted discount was $12.

(12)Represents the aggregate principal amount outstanding of the 2028 Notes (as defined below), less unamortized debt issuance costs and the net unaccreted discount recorded upon the issuance of the 2028 Notes. As of December 31, 2021, the total unamortized debt issuance costs and the net unaccreted discount was $4.

(13)Represents the aggregate principal amount outstanding of the 2031 Notes (as defined below), less unamortized debt issuance costs and the unaccreted discount recorded upon the issuance of the 2031 Notes. As of December 31, 2021, the total unamortized debt issuance costs and the unaccreted discount was $11.

(14)Represents the aggregate principal amount outstanding of the entire $230 in aggregate principal amount outstanding of the unsecured notes that were scheduled to mature on April 15, 2047 (the “2047 Notes”), less the unaccreted purchased discount recorded in connection with the Allied Acquisition (as defined below). As of December 31, 2020, the total unaccreted purchased discount was $44. In March 2021, the Company redeemed the entire $230 in aggregate principal amount of the 2047 Notes, which resulted in a realized loss on the extinguishment of debt of $43.

 The weighted average stated interest rate and weighted average maturity, both on aggregate principal amount outstanding, of all the Company’s outstanding debt as of December 31, 2021 were 3.1% and 4.2 years, respectively, and as of December 31, 2020 were 3.4% and 4.2 years, respectively.
 
Revolving Credit Facility
 
The Company is party to a senior secured revolving credit facility (as amended and restated, the “Revolving Credit Facility”), that allows the Company to borrow up to $4,232 at any one time outstanding. The Revolving Credit Facility consists of a $874 term loan tranche and a $3,358 revolving tranche. For $824 of the term loan tranche, the stated maturity date is March 31, 2026. For the remaining $50 of the term loan tranche, the stated maturity date is March 30, 2025. For $3,208 of the revolving tranche, the end of the revolving period and the stated maturity date are March 31, 2025 and March 31, 2026, respectively. For the remaining $150 of the revolving tranche, the end of the revolving period and the stated maturity date are March 30, 2024 and March 30, 2025, respectively. The Revolving Credit Facility also provides for a feature that allows the Company, under certain circumstances, to increase the overall size of the Revolving Credit Facility to a maximum of $5,945. The Revolving Credit Facility generally requires payments of interest at the end of each LIBOR interest period, but no less frequently than quarterly, on LIBOR based loans, and monthly payments of interest on other loans. Subsequent to the end of the respective revolving periods and prior to the respective stated maturity dates, the Company is required to repay the relevant outstanding principal amounts under both the term loan tranche and revolving tranche on a monthly basis in an amount equal to 1/12th of the outstanding principal amount at the end of the respective revolving periods.
F-106


Under the Revolving Credit Facility, the Company is required to comply with various covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including, without limitation, covenants related to: (a) limitations on the incurrence of additional indebtedness and liens, (b) limitations on certain investments, (c) limitations on certain restricted payments, (d) maintaining a certain minimum stockholders’ equity, (e) maintaining a ratio of total assets (less total liabilities not representing indebtedness) to total indebtedness of the Company and its consolidated subsidiaries (subject to certain exceptions) of not less than 1.5:1.0, (f) limitations on pledging certain unencumbered assets, and (g) limitations on the creation or existence of agreements that prohibit liens on certain properties of the Company and certain of its subsidiaries. These covenants are subject to important limitations and exceptions that are described in the documents governing the Revolving Credit Facility. Amounts available to borrow under the Revolving Credit Facility (and the incurrence of certain other permitted debt) are also subject to compliance with a borrowing base that applies different advance rates to different types of assets (based on their value as determined pursuant to the Revolving Credit Facility) that are pledged as collateral. As of December 31, 2021, the Company was in compliance in all material respects with the terms of the Revolving Credit Facility.
 
As of December 31, 2021 and 2020, there was $1,507 and $1,180 outstanding, respectively, under the Revolving Credit Facility. The Revolving Credit Facility also provides for a sub-limit for the issuance of letters of credit for up to an aggregate amount of $250 with the ability to increase by an incremental $50 on an uncommitted basis. As of December 31, 2021 and 2020, the Company had $68 and $90, respectively, in letters of credit issued through the Revolving Credit Facility. The amount available for borrowing under the Revolving Credit Facility is reduced by any letters of credit issued. As of December 31, 2021, there was $2,657 available for borrowing (net of letters of credit issued) under the Revolving Credit Facility, subject to borrowing base restrictions.
 
The interest rate charged on the Revolving Credit Facility is based on LIBOR (or an alternate rate of interest for certain loans, commitments and/or other extensions of credit denominated in Sterling, Canadian Dollars, Euros and certain other foreign currencies) plus an applicable spread of either 1.75% or 1.875% or an “alternate base rate” (as defined in the agreements governing the Revolving Credit Facility) plus an applicable spread of 0.75% or 0.875%, in each case, determined monthly based on the total amount of the borrowing base relative to the sum of (i) the greater of (a) the aggregate amount of revolving exposure and term loans outstanding under the Revolving Credit Facility and (b) 85% of the total commitments of the Revolving Credit Facility (or, if higher, the total revolving exposure) plus (ii) other debt, if any, secured by the same collateral as the Revolving Credit Facility. The Revolving Credit Facility allows for borrowings to be made using one, three or six month LIBOR. As of December 31, 2021, the one, three and six month LIBOR was 0.10%, 0.21% and 0.34%, respectively. As of December 31, 2021, the interest rate in effect was LIBOR plus 1.75%. In addition to the stated interest expense on the Revolving Credit Facility, the Company is required to pay a commitment fee of 0.375% per annum on any unused portion of the Revolving Credit Facility. The Company is also required to pay a letter of credit fee of either 2.00% or 2.125% per annum on letters of credit issued, determined monthly based on the total amount of the borrowing base relative to the total commitments of the Revolving Credit Facility and other debt, if any, secured by the same collateral as the Revolving Credit Facility.

In December 2017, in connection with $395 of the term loan tranche of the Revolving Credit Facility, the Company entered into a three-year interest rate swap agreement to mitigate its exposure to adverse fluctuations in interest rates for a total notional amount of $395, which matured on January 4, 2021.

The Revolving Credit Facility is secured by certain assets in the Company’s portfolio and excludes investments held by Ares Capital CP under the Revolving Funding Facility, those held by ACJB under the SMBC Funding Facility and those held by AFB under the BNP Funding Facility, each as described below, and certain other investments.

For the years ended December 31, 2021, 2020 and 2019, the components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the Revolving Credit Facility were as follows:
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 For the Years Ended December 31,
 202120202019
Stated interest expense$21 $43 $59 
Credit facility fees17 7 7 
Amortization of debt issuance costs7 7 6 
Total interest and credit facility fees expense$45 $57 $72 
Cash paid for interest expense$20 $41 $58 
Average stated interest rate2.14 %2.58 %3.96 %
Average outstanding balance$1,014 $1,576 $1,478 
 
Revolving Funding Facility
 
The Company and the Company’s consolidated subsidiary, Ares Capital CP Funding LLC (“Ares Capital CP”), are party to a revolving funding facility (as amended, the “Revolving Funding Facility”), that allows Ares Capital CP to borrow up to $1,525 at any one time outstanding. The Revolving Funding Facility is secured by all of the assets held by, and the membership interest in, Ares Capital CP. The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility are December 29, 2024 and December 29, 2026, respectively.
 
Amounts available to borrow under the Revolving Funding Facility are subject to a borrowing base that applies different advance rates to different types of assets held by Ares Capital CP. Ares Capital CP is also subject to limitations with respect to the loans securing the Revolving Funding Facility, including restrictions on sector concentrations, loan size, payment frequency and status, collateral interests and loans with fixed rates, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and Ares Capital CP are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the agreements governing the Revolving Funding Facility. As of December 31, 2021, the Company and Ares Capital CP were in compliance in all material respects with the terms of the Revolving Funding Facility.
 
As of December 31, 2021 and 2020, there was $762 and $1,028 outstanding, respectively, under the Revolving Funding Facility. Since December 29, 2021, the interest rate charged on the Revolving Funding Facility is based on one month LIBOR plus 1.90% per annum or a “base rate” (as defined in the agreements governing the Revolving Funding Facility) plus 1.00% per annum. Prior to December 29, 2021, the interest rate charged on the Revolving Funding Facility was based on one month LIBOR plus 2.00% per annum or a “base rate” plus 1.00% per annum. Since December 29, 2021, Ares Capital CP is also required to pay a commitment fee of between 0.50% and 1.25% per annum depending on the size of the unused portion of the Revolving Funding Facility. Prior to and including December 29, 2021, Ares Capital CP was required to pay a commitment fee of between 0.50% and 1.50% per annum depending on the size of the unused portion of the Revolving Funding Facility.
  
For the years ended December 31, 2021, 2020 and 2019, the components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the Revolving Funding Facility were as follows:
 For the Years Ended December 31,
 202120202019
Stated interest expense$15 $20 $25 
Credit facility fees6 5 4 
Amortization of debt issuance costs4 4 3 
Total interest and credit facility fees expense$25 $29 $32 
Cash paid for interest expense$17 $19 $26 
Average stated interest rate2.33 %2.54 %4.26 %
Average outstanding balance$643 $761 $576 

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SMBC Funding Facility
 
The Company and the Company’s consolidated subsidiary, Ares Capital JB Funding LLC (“ACJB”), are party to a revolving funding facility (as amended, the “SMBC Funding Facility”), with ACJB, as the borrower, and Sumitomo Mitsui Banking Corporation, as the administrative agent and collateral agent, that allows ACJB to borrow up to $800 at any one time outstanding. The SMBC Funding Facility also provides for a feature that allows ACJB, subject to receiving certain consents, to increase the overall size of the SMBC Funding Facility to $1,000. The SMBC Funding Facility is secured by all of the assets held by ACJB. The end of the reinvestment period and the stated maturity date for the SMBC Funding Facility are May 28, 2024 and May 28, 2026, respectively. The reinvestment period and the stated maturity date are both subject to two one-year extensions by mutual agreement.
 
Amounts available to borrow under the SMBC Funding Facility are subject to a borrowing base that applies an advance rate to assets held by ACJB. ACJB is also subject to limitations with respect to the loans securing the SMBC Funding Facility, including restrictions on sector concentrations, loan size, payment frequency and status, collateral interests and loans with fixed rates, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and ACJB are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the SMBC Funding Facility. As of December 31, 2021, the Company and ACJB were in compliance in all material respects with the terms of the SMBC Funding Facility.
 
As of December 31, 2021 and 2020, there was $401 and $453 outstanding, respectively, under the SMBC Funding Facility. The interest rate charged on the SMBC Funding Facility is based on an applicable spread of either 1.75% or 2.00% over one month LIBOR or 0.75% or 1.00% over a “base rate” (as defined in the agreements governing the SMBC Funding Facility), in each case, determined monthly based on the amount of the average borrowings outstanding under the SMBC Funding Facility. As of December 31, 2021, the interest rate in effect was one month LIBOR plus 1.75%. Since September 10, 2019, ACJB is required to pay a commitment fee of between 0.50% and 1.00% per annum depending on the size of the unused portion of the SMBC Funding Facility. Prior to and including September 10, 2019, ACJB was required to pay a commitment fee of between 0.35% and 0.875% per annum depending on the size of the unused portion of the SMBC Funding Facility.
 
For the years ended December 31, 2021, 2020 and 2019, the components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the SMBC Funding Facility were as follows:
 For the Years Ended December 31,
 202120202019
Stated interest expense$4 $10 $9 
Credit facility fees6 1 1 
Amortization of debt issuance costs3 3 1 
Total interest and credit facility fees expense$13 $14 $11 
Cash paid for interest expense$4 $10 $9 
Average stated interest rate2.05 %2.36 %4.05 %
Average outstanding balance$191 $390 $227 
    
    BNP Funding Facility
 
The Company and the Company’s consolidated subsidiary, ARCC FB Funding LLC (“AFB”), are party to a revolving funding facility (as amended, the “BNP Funding Facility”) with AFB, as the borrower, and BNP Paribas, as the administrative agent and lender, that allows AFB to borrow up to $300 at any one time outstanding. The BNP Funding Facility is secured by all of the assets held by AFB. The end of the reinvestment period and the stated maturity date for the BNP Funding Facility are June 11, 2023 and June 11, 2025, respectively. The reinvestment period and the stated maturity date are both subject to a one-year extension by mutual agreement.
 
Amounts available to borrow under the BNP Funding Facility are subject to a borrowing base that applies an advance rate to assets held by AFB. AFB is also subject to limitations with respect to the loans securing the BNP Funding Facility, including restrictions on sector concentrations, loan size, payment frequency and status, collateral interests and loans with fixed rates, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and AFB are also required to comply with various covenants, reporting
F-109

requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the BNP Funding Facility. As of December 31, 2021, the Company and AFB were in compliance in all material respects with the terms of the BNP Funding Facility.
 
As of December 31, 2021, there were no amounts outstanding under the BNP Funding Facility. As of December 31, 2020, there was $150 outstanding under the BNP Funding Facility. Since June 29, 2021, the interest rate charged on the BNP Funding Facility is based on three month LIBOR, or a “base rate” (as defined in the agreements governing the BNP Funding Facility) plus a margin of (i) 1.80% during the reinvestment period and (ii) 2.30% following the reinvestment period. Prior to June 29, 2021, the interest rate charged on the BNP Funding Facility was based on three month LIBOR (subject to a floor of 0.45%), or a “base rate” (as defined in the agreements governing the BNP Funding Facility) plus a margin that generally ranged between 2.65% and 3.15% (depending on the types of assets such advances relate to), with a weighted average margin floor for all classes of advances of (i) 2.75% during the reinvestment period and (ii) 3.25% following the reinvestment period. As of December 31, 2021, the interest rate in effect was LIBOR plus 1.80%. Beginning on December 11, 2020, AFB is required to pay a commitment fee of between 0.00% and 1.25% per annum depending on the size of the unused portion of the BNP Funding Facility. Prior to December 11, 2020, there was no commitment fee required to be paid.

For the year ended December 31, 2021, the components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the BNP Funding Facility were as follows:

 For the Year Ended December 31, 2021
Stated interest expense$1 
Credit facility fees4 
Amortization of debt issuance costs1 
Total interest and credit facility fees expense$6 
Cash paid for interest expense1 
Average stated interest rate3.46 %
Average outstanding balance15 

Convertible Unsecured Notes
 
The Company has issued $388 in aggregate principal amount of unsecured convertible notes that mature on February 1, 2022 (the “2022 Convertible Notes”) and $403 in aggregate principal amount of unsecured convertible notes that mature on March 1, 2024 (the “2024 Convertible Notes” and together with the 2022 Convertible Notes, the “Convertible Unsecured Notes”). The Convertible Unsecured Notes mature upon their respective maturity dates unless previously converted or repurchased in accordance with their terms. The Company does not have the right to redeem the Convertible Unsecured Notes prior to maturity. The 2022 Convertible Notes and the 2024 Convertible Notes bear interest at a rate of 3.75% and 4.625%, respectively, per annum, payable semi-annually.
 
In certain circumstances, assuming the respective conversion date below has not already passed, the Convertible Unsecured Notes will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of its common stock, at the Company’s election, at their respective conversion rates (listed below as of December 31, 2021) subject to customary anti-dilution adjustments and the requirements of their respective indenture (the “Convertible Unsecured Notes Indentures”). To the extent the 2022 Convertible Notes are converted, the Company has elected to settle in cash for all conversion dates after August 1, 2021. Prior to the close of business on the business day immediately preceding their respective conversion date (listed below), holders may convert their Convertible Unsecured Notes only under certain circumstances set forth in the Convertible Unsecured Notes Indentures. On or after their respective conversion dates until the close of business on the scheduled trading day immediately preceding the maturity date for the 2022 Convertible Notes and the second scheduled trading day immediately preceding the maturity date for the 2024 Convertible Notes, holders may convert their Convertible Unsecured Notes at any time. In addition, if the Company engages in certain corporate events as described in their respective Convertible Unsecured Notes Indenture, holders of the Convertible Unsecured Notes may require the Company to repurchase for cash all or part of the Convertible Unsecured Notes at a repurchase price equal to 100% of the principal amount of the Convertible Unsecured Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the required repurchase date.
 
F-110

Certain key terms related to the convertible features for each of the Convertible Unsecured Notes as of December 31, 2021 are listed below.
2022
Convertible Notes		2024
Convertible Notes
Conversion premium15.0 %15.0 %
Closing stock price at issuance$16.86 $17.29 
Closing stock price dateJanuary 23, 2017March 5, 2019
Conversion price (1)$18.99 $19.88 
Conversion rate (shares per one thousand dollar principal amount)(1)52.6455 50.2930 
Conversion datesAugust 1, 2021December 1, 2023
________________________________________

(1)Represents conversion price and conversion rate, as applicable, as of December 31, 2021, taking into account any applicable de minimis adjustments that will be made on the conversion date.
 
As of December 31, 2021, the principal amounts of each series of the Convertible Unsecured Notes exceeded the value of the underlying shares multiplied by the per share closing price of the Company’s common stock.
 
The Convertible Unsecured Notes Indentures contain certain covenants, including covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a) of the Investment Company Act, or any successor provisions, and to provide financial information to the holders of the Convertible Unsecured Notes under certain circumstances. These covenants are subject to important limitations and exceptions that are described in the Convertible Unsecured Notes Indentures. As of December 31, 2021, the Company was in compliance in all material respects with the terms of the Convertible Unsecured Notes Indentures.
 
The Convertible Unsecured Notes are accounted for in accordance with ASC 470-20, Debt. Upon conversion of any of the Convertible Unsecured Notes, the Company intends to pay the outstanding principal amount in cash and to the extent that the conversion value exceeds the principal amount, the Company has the option to pay in cash or shares of the Company’s common stock (or a combination of cash and shares) in respect of the excess amount, subject to the requirements of the Convertible Unsecured Notes Indentures. The Company has determined that the embedded conversion options in the Convertible Unsecured Notes are not required to be separately accounted for as a derivative under GAAP. In accounting for the Convertible Unsecured Notes, the Company estimated at the time of issuance separate debt and equity components for each of the Convertible Unsecured Notes. An original issue discount equal to the equity components of the Convertible Unsecured Notes was recorded in “capital in excess of par value” in the accompanying consolidated balance sheet. Additionally, the issuance costs associated with the Convertible Unsecured Notes were allocated to the debt and equity components in proportion to the allocation of the proceeds and accounted for as debt issuance costs and equity issuance costs, respectively.
 
The debt and equity component percentages, the issuance costs and the equity component amounts for each of the Convertible Unsecured Notes are listed below.
2022
Convertible Notes		2024
Convertible Notes
Debt and equity component percentages, respectively(1)96.0% and 4.0%98.9% and 1.1%
Debt issuance costs(1)$9 $4 
Equity issuance costs(1)$— $— 
Equity component, net of issuance costs(2)$15 $13 
________________________________________

(1)At time of issuance.

(2)At time of issuance and as of December 31, 2021.
 
In addition to the original issue discount equal to the equity component of the 2024 Convertible Notes, the 2024 Convertible Notes were issued at a discount. The Company records interest expense comprised of both stated interest expense as well as accretion of any original issue discount.
 
F-111

As of December 31, 2021, the components of the carrying value of the Convertible Unsecured Notes, the stated interest rate and the effective interest rate were as follows:
2022
Convertible Notes		2024
Convertible Notes
Principal amount of debt$388 $403 
Original issue discount, net of accretion2 (6)
Debt issuance costs(2)(2)
Carrying value of debt$388 $395 
Stated interest rate3.75 %4.63 %
Effective interest rate(1)4.60 %5.30 %
________________________________________

(1)The effective interest rate of the debt component of the Convertible Unsecured Notes is equal to the stated interest rate plus the accretion of original issue discount.

For the years ended December 31, 2021, 2020 and 2019, the components of interest expense and cash paid for interest expense for the Convertible Unsecured Notes, as well as any other convertible notes outstanding during the periods presented were as follows.
 For the Years Ended December 31,
 202120202019
Stated interest expense$33 $33 $30 
Amortization of debt issuance costs3 3 3 
Accretion of original issue discount6 5 5 
Total interest expense$42 $41 $38 
Cash paid for interest expense$34 $33 $30 

See Note 15 for a subsequent event relating to the 2022 Convertible Notes.

Unsecured Notes
 
The Company has issued certain unsecured notes (each issuance of which is referred to herein using the “defined term” set forth under the “Unsecured Notes” column of the table below and collectively referred to as the “Unsecured Notes”), that pay interest semi-annually and all principal amounts are due upon maturity. Each of the Unsecured Notes may be redeemed in whole or in part at any time at the Company’s option at a redemption price equal to par plus a “make whole” premium, if applicable, as determined pursuant to the indentures governing each of the Unsecured Notes, plus any accrued and unpaid interest. Certain key terms related to the features for the Unsecured Notes as of December 31, 2021 are listed below.


Unsecured Notes		Aggregate Principal Amount IssuedInterest RateOriginal Issuance DateMaturity Date
2023 Notes$750 3.500%August 10, 2017February 10, 2023
2024 Notes$900 4.200%June 10, 2019June 10, 2024
March 2025 Notes$600 4.250%January 11, 2018March 1, 2025
July 2025 Notes$1,250 3.250%January 15, 2020July 15, 2025
January 2026 Notes$1,150 3.875%July 15, 2020January 15, 2026
July 2026 Notes$1,000 2.150%January 13, 2021July 15, 2026
2028 Notes$1,250 2.875%June 10, 2021June 15, 2028
2031 Notes$700 3.200%November 4, 2021November 15, 2031

See Note 15 for a subsequent event relating to an additional issuance of unsecured notes.

F-112

For the years ended December 31, 2021, 2020 and 2019, the components of interest expense and cash paid for interest expense for the Unsecured Notes, as well as any other unsecured notes outstanding during the periods presented are listed below.
 For the Years Ended December 31,
 202120202019
Stated interest expense$234 $168 $130 
Amortization of debt issuance costs11 6 5 
Net (amortization) accretion of original issue premium/discount(4)1 1 
Accretion of purchase discount— 1 2 
Total interest expense$241 $176 $138 
Cash paid for interest expense$234 $140 $141 
 
The Unsecured Notes contain certain covenants, including covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a) of the Investment Company Act, or any successor provisions, and to provide financial information to the holders of such notes under certain circumstances. These covenants are subject to important limitations and exceptions set forth in the indentures governing such notes. As of December 31, 2021, the Company was in compliance in all material respects with the terms of the respective indentures governing each of the Unsecured Notes.
 
The Convertible Unsecured Notes and the Unsecured Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any future indebtedness that is expressly subordinated in right of payment to the Convertible Unsecured Notes and the Unsecured Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not expressly subordinated; effectively junior in right of payment to any of its secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.

6.     DERIVATIVE INSTRUMENTS

The Company enters into forward currency contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. As of December 31, 2021, the counterparty to these forward currency contracts was Truist Financial Corporation. As of December 31, 2020, the counterparty to these forward currency contracts was Bank of Montreal.

In December 2017, in connection with $395 of the term loan tranche of the Revolving Credit Facility, the Company entered into a three-year interest rate swap agreement to mitigate its exposure to adverse fluctuations in interest rates for a total notional amount of $395, which matured on January 4, 2021. Under the interest rate swap agreement, the Company paid a fixed interest rate of 2.06% and received a floating rate based on the prevailing one-month LIBOR plus a spread of 1.75%. As of December 31, 2020, the one month LIBOR rate in effect was 0.19%.

Certain information related to the Company’s derivative instruments as of December 31, 2021 and 2020 is presented below.`
    
F-113

 As of December 31, 2021
Derivative InstrumentNotional
Amount		Maturity DateGross Amount of Recognized AssetsGross Amount of Recognized LiabilitiesBalance Sheet
Location of Net Amounts
Foreign currency forward contractCAD309 1/28/2022240 (245)Accounts payable and other liabilities
Foreign currency forward contractCAD209 1/19/2022163 (165)Accounts payable and other liabilities
Foreign currency forward contract€153 1/28/2022172 (174)Accounts payable and other liabilities
Foreign currency forward contract£95 1/28/2022126 (129)Accounts payable and other liabilities
Foreign currency forward contractCAD2 1/28/20221 (1)Accounts payable and other liabilities
Total$702 $(714)

 As of December 31, 2020
Derivative InstrumentNotional
Amount		Maturity DateGross Amount of Recognized AssetsGross Amount of Recognized LiabilitiesBalance Sheet
Location of Net Amounts
Interest rate swap$395 1/4/2021$— $(1)Accounts payable and other liabilities
Foreign currency forward contractCAD142 1/21/2021112 (112)Accounts payable and other liabilities
Foreign currency forward contract£75 1/21/2021102 (103)Accounts payable and other liabilities
Total$214 $(216)

Net realized gains (losses) on derivative instruments recognized by the Company for the years ended December 31, 2021, 2020 and 2019 is in the following location in the consolidated statements of operations:
Derivative InstrumentStatement LocationFor the Years Ended December 31,
202120202019
Interest rate swapNet realized gains (losses) from foreign currency and other transactions$— $(6)$1 
Foreign currency forward contractNet realized gains (losses) from foreign currency and other transactions13 (9)— 
Total$13 $(15)$1 

Net unrealized gains (losses) on derivative instruments recognized by the Company for the years ended December 31, 2021, 2020 and 2019 is in the following location in the consolidated statements of operations:

Derivative InstrumentStatement LocationFor the Years Ended December 31,
202120202019
Interest rate swapNet unrealized gains (losses) from foreign currency and other transactions$— $1 $(6)
Foreign currency forward contractNet unrealized gains (losses) from foreign currency and other transactions(14)(1)— 
Total$(14)$— $(6)

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7.     COMMITMENTS AND CONTINGENCIES

Investment Commitments

The Company has various commitments to fund investments in its portfolio as described below. As of December 31, 2021 and 2020, the Company had the following commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to fund which are at (or substantially at) the Company’s discretion:
 As of December 31,
 20212020
Total revolving and delayed draw loan commitments $2,733 $2,020 
Less: funded commitments(352)(409)
Total unfunded commitments2,381 1,611 
Less: commitments substantially at discretion of the Company— (29)
Less: unavailable commitments due to borrowing base or other covenant restrictions(4)(8)
Total net adjusted unfunded revolving and delayed draw loan commitments$2,377 $1,574 
    
Included within the total revolving and delayed draw loan commitments as of December 31, 2021 and 2020 were delayed draw loan commitments totaling $1,273 and $652, respectively. The Company’s commitment to fund delayed draw loans is triggered upon the satisfaction of certain pre-negotiated terms and conditions. Generally, the most significant and uncertain term requires the borrower to satisfy a specific use of proceeds covenant. The use of proceeds covenant typically requires the borrower to use the additional loans for the specific purpose of a permitted acquisition or permitted investment, for example. In addition to the use of proceeds covenant, the borrower is generally required to satisfy additional negotiated covenants (including specified leverage levels).

Also included within the total revolving loan commitments as of December 31, 2021 were commitments to issue up to $314 in letters of credit through a financial intermediary on behalf of certain portfolio companies. As of December 31, 2021, the Company had $68 in letters of credit issued and outstanding under these commitments on behalf of the portfolio companies. For all these letters of credit issued and outstanding, the Company would be required to make payments to third parties if the portfolio companies were to default on their related payment obligations. Of these letters of credit, $59 expire in 2022 and $9 expire in 2023.
 
The Company also has commitments to co-invest in the SDLP for the Company’s portion of the SDLP’s commitments to fund delayed draw loans to certain portfolio companies of the SDLP. See Note 4 for more information.
 
As of December 31, 2021 and 2020, the Company was party to subscription agreements to fund equity investments in private equity investment partnerships as follows:
 As of December 31,
 20212020
Total private equity commitments$111 $111 
Less: funded private equity commitments(68)(68)
Total unfunded private equity commitments43 43 
Less: private equity commitments substantially at discretion of the Company(43)(43)
Total net adjusted unfunded private equity commitments$— $— 
 
In the ordinary course of business, the Company may sell certain of its investments to third party purchasers. In particular, in connection with the sale of certain controlled portfolio company equity investments (as well as certain other sales) the Company has, and may continue to do so in the future, agreed to indemnify such purchasers for future liabilities arising from the investments and the related sale transaction. Such indemnification provisions have given rise to liabilities in the past and may do so in the future.

In addition, in the ordinary course of business, the Company may guarantee certain obligations in connection with its portfolio companies (in particular, certain controlled portfolio companies). Under these guarantee arrangements, payments may be required to be made to third parties if such guarantees are called upon or if the portfolio companies were to default on their related obligations, as applicable.
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Lease Commitments

The Company is obligated under a number of operating leases pursuant to which it is leasing office facilities from third parties with remaining terms ranging from approximately one to five years. For certain of its operating leases, the Company had previously entered into subleases including one with Ares Management LLC. During the year ended December 31, 2020, the Company assigned to Ares Management LLC all of its rights, title and interest in the offices it subleased to Ares Management LLC and Ares Management LLC assumed all of the Company’s obligations. See Note 13 for a further description of the sublease with Ares Management LLC.

The components of operating lease expense for the years ended December 31, 2021, 2020 and 2019 were as follows:
For the Years Ended December 31,
202120202019
Operating lease costs$10 $17 $19 
Less: sublease income(9)(16)(17)
Total operating lease costs (1)$1 $1 $2 

(1)Total operating lease costs are incurred from office leases assumed as part of the American Capital Acquisition.

Supplemental cash flow information related to operating leases for the years ended December 31, 2021 and 2020 were as follows:
For the Years Ended December 31,
20212020
Cash paid for amounts included in the measurement of operating lease liabilities$16 $23 
Operating ROU assets obtained in exchange for operating lease liabilities$11 $14 
 
Supplemental balance sheet information as of December 31, 2021 and 2020 related to operating leases were as follows:
For the Years Ended December 31,
20212020
Operating lease ROU assets$27 $38 
Operating lease liabilities$43 $59 
Weighted average remaining lease term3.7 years4.6 years
Weighted average discount rate3.1%3.3%
 
The following table shows future minimum lease payments under the Company’s operating leases and a reconciliation to the operating lease liability as of December 31, 2021:

Amount
2022$15 
202316 
20246 
20256 
20266 
  Total lease payments49 
Less imputed interest(6)
  Total operating lease liabilities$43 

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The following table shows future expected rental payments to be received under the Company’s subleases where the Company is the sublessor as of December 31, 2021:

Amount
2022$9 
20239 
20244 
20254 
20264 
Total$30 

8.     FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows ASC 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASC 825-10”), which provides companies the option to report selected financial assets and liabilities at fair value. ASC 825-10 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect of the company’s choice to use fair value on its earnings. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the balance sheet. The Company has not elected the ASC 825-10 option to report selected financial assets and liabilities at fair value. With the exception of the line items entitled “other assets” and “debt,” which are reported at amortized cost, the carrying value of all other assets and liabilities approximate fair value.
 
The Company also follows ASC 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), which expands the application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure of fair value measurements. ASC 820-10 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Company to assume that the portfolio investment is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820-10, the Company has considered its principal market as the market in which the Company exits its portfolio investments with the greatest volume and level of activity. ASC 820-10 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC 820-10, these inputs are summarized in the three broad levels listed below:

•Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

•Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

•Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
 
In addition to using the above inputs in investment valuations, the Company continues to employ the net asset valuation policy approved by the Company’s board of directors that is consistent with ASC 820-10 (see Note 2 for more information). Consistent with the Company’s valuation policy, it evaluates the source of inputs, including any markets in which the Company’s investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. The Company’s valuation policy considers the fact that because there is not a readily available market value for most of the investments in the Company’s portfolio, the fair value of the investments must typically be determined using unobservable inputs.
 
    The Company’s portfolio investments (other than as described below in the following paragraph) are typically valued using two different valuation techniques. The first valuation technique is an analysis of the enterprise value (“EV”) of the portfolio company. Enterprise value means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The primary method for determining EV uses a multiple analysis whereby appropriate multiples are applied to the portfolio company’s EBITDA (generally defined as net income before net interest expense, income tax expense, depreciation and amortization). EBITDA
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multiples are typically determined based upon review of market comparable transactions and publicly traded comparable companies, if any. The Company may also employ other valuation multiples to determine EV, such as revenues or, in the case of certain portfolio companies in the power generation industry, kilowatt capacity. The second method for determining EV uses a discounted cash flow analysis whereby future expected cash flows of the portfolio company are discounted to determine a present value using estimated discount rates (typically a weighted average cost of capital based on costs of debt and equity consistent with current market conditions). The EV analysis is performed to determine the value of equity investments, the value of debt investments in portfolio companies where the Company has control or could gain control through an option or warrant security, and to determine if there is credit impairment for debt investments. If debt investments are credit impaired, an EV analysis may be used to value such debt investments; however, in addition to the methods outlined above, other methods such as a liquidation or wind-down analysis may be utilized to estimate enterprise value. The second valuation technique is a yield analysis, which is typically performed for non-credit impaired debt investments in portfolio companies where the Company does not own a controlling equity position. To determine fair value using a yield analysis, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk. In the yield analysis, the Company considers the current contractual interest rate, the maturity and other terms of the investment relative to risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the enterprise value of the portfolio company. As debt investments held by the Company are substantially illiquid with no active transaction market, the Company depends on primary market data, including newly funded transactions, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.
 
For other portfolio investments such as investments in the SDLP Certificates, discounted cash flow analysis is the primary technique utilized to determine fair value. Expected future cash flows associated with the investment are discounted to determine a present value using a discount rate that reflects estimated market return requirements.
 
The following tables summarize the significant unobservable inputs the Company used to value the majority of its investments categorized within Level 3 as of December 31, 2021 and 2020. The tables are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant to the Company’s determination of fair values.

 As of December 31, 2021 
Unobservable Input
Asset CategoryFair ValuePrimary Valuation TechniquesInputEstimated Range
Weighted Average(1)
First lien senior secured loans$9,456 Yield analysisMarket yield2.0% - 16.5%7.6%
Second lien senior secured loans4,432 Yield analysisMarket yield6.8% - 22.9%9.5%
Subordinated certificates of the SDLP987 Discounted cash flow analysisDiscount rate8.8% - 9.7%9.3%
Senior subordinated loans889 Yield analysisMarket yield7.1% - 27.8%11.5%
Preferred equity1,561 EV market multiple analysisEBITDA multiple3.2x - 64.4x16.5x
Ivy Hill Asset Management, L.P.936 Discounted cash flow analysisDiscount rate9.9% - 27.9%16.3%
Other equity1,647 EV market multiple analysisEBITDA multiple4.9x - 32.1x14.9x
Total investments$19,908 
________________________________________

(1)Unobservable inputs were weighted by the relative fair value of the investments.
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 As of December 31, 2020 
Unobservable Input
Asset CategoryFair ValuePrimary Valuation TechniquesInputEstimated Range
Weighted Average(1)
First lien senior secured loans$6,984 Yield analysisMarket yield1.3% - 19.3%8.5%
Second lien senior secured loans4,171 Yield analysisMarket yield7.0% - 19.7%10.5%
Subordinated certificates of the SDLP1,123 Discounted cash flow analysisDiscount rate10.2% - 11.1%11.0%
Senior subordinated loans879 Yield analysisMarket yield8.8% - 22.0%11.3%
Preferred equity926 EV market multiple analysisEBITDA multiple2.8x - 22.0x13.9x
Ivy Hill Asset Management, L.P.628 Discounted cash flow analysisDiscount rate10.5% - 27.5%17.1%
Other equity795 EV market multiple analysisEBITDA multiple5.4x - 47.7x13.1x
Total investments$15,506 
________________________________________

(1)Unobservable inputs were weighted by the relative fair value of the investments.

Changes in market yields, discount rates or EBITDA multiples, each in isolation, may change the fair value of certain of the Company’s investments. Generally, an increase in market yields or discount rates or decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Company’s investments.
 
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, it could realize significantly less than the value at which the Company has recorded it.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.
 
The following table presents fair value measurements of cash and cash equivalents, restricted cash, investments, derivatives and unfunded revolving and delayed draw loan commitments as of December 31, 2021:

 Fair Value Measurements Using
TotalLevel 1Level 2Level 3
Cash and cash equivalents$372 $372 $— $— 
Restricted cash$114 $114 $— $— 
Investments not measured at net asset value$20,004 $— $96 $19,908 
Investments measured at net asset value(1)5 
 Total investments$20,009 
Derivatives$(12)$— $(12)$— 
Unfunded revolving and delayed draw loan commitments(2)$(20)$— $— $(20)
________________________________________

(1)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.

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(2)The fair value of unfunded revolving and delayed draw loan commitments is included in “accounts payable and other liabilities” in the accompanying consolidated balance sheet.

The following table presents fair value measurements of cash and cash equivalents, restricted cash, investments, derivatives and unfunded revolving and delayed draw loan commitments as of December 31, 2020:

 Fair Value Measurements Using
TotalLevel 1Level 2Level 3
Cash and cash equivalents$254 $254 $— $— 
Restricted cash$72 $72 $— $— 
Investments not measured at net asset value$15,509 $— $3 $15,506 
Investments measured at net asset value (1)6 
  Total investments$15,515 
Derivatives$(2)$— $(2)$— 
Unfunded revolving and delayed draw loan commitments(2)$(27)$— $— $(27)
________________________________________

(1)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.

(2)The fair value of unfunded revolving and delayed draw loan commitments is included in “accounts payable and other liabilities” in the accompanying consolidated balance sheet.

The following table presents changes in investments that use Level 3 inputs as of and for the year ended December 31, 2021:
 As of and For the Year Ended December 31, 2021
Balance as of December 31, 2020$15,506 
Net realized gains258 
Net unrealized gains597 
Purchases13,704 
Sales(5,573)
Repayments(4,894)
PIK interest and dividends250 
Net accretion of discount on securities16 
Net transfers into Level 3(1)45 
Net transfers out of Level 3(1)(1)
Balance as of December 31, 2021$19,908 
________________________________________

(1)For the year ended December 31, 2021, transfers into Level 3 from Level 2 were as a result of changes in the observability of significant inputs for certain portfolio companies. For the year ended December 31, 2021, transfers out of Level 3 to Level 2 were as a result of changes in the observability of significant inputs for certain portfolio companies.

As of December 31, 2021, the net unrealized appreciation on the investments that use Level 3 inputs was $165.

For the year ended December 31, 2021, the total amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to the Company’s Level 3 assets still held as of December 31, 2021, and reported within the net unrealized gains (losses) on investments, foreign currency and other transactions in the Company’s consolidated statement of operations was $649.
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The following table presents changes in investments that use Level 3 inputs as of and for the year ended December 31, 2020:
As of and For the
Year Ended
December 31, 2019
Balance as of December 31, 2019$14,348 
Net realized losses(179)
Net unrealized losses(86)
Purchases6,718 
Sales(2,494)
Repayments(3,019)
PIK interest and dividends211 
Net accretion of discount on securities7 
Net transfers into Level 3(1)1 
Net transfers out of Level 3(1)(1)
Balance as of December 31, 2020$15,506 

(1)For the year ended December 31, 2020, transfers into Level 3 from Level 2 were as a result of changes in the observability of significant inputs for certain portfolio companies. For the year ended December 31, 2020, transfers out of Level 3 to Level 2 were as a result of changes in the observability of significant inputs for certain portfolio companies.

As of December 31, 2020, the net unrealized depreciation on the investments that use Level 3 inputs was $432.

For the year ended December 31, 2020, the total amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to the Company’s Level 3 assets still held as of December 31, 2020, and reported within the net unrealized gains (losses) on investments, foreign currency and other transactions in the Company’s consolidated statement of operations was $(235).

The following are the carrying and fair values of the Company’s debt obligations as of December 31, 2021 and 2020. Fair value is estimated by discounting remaining payments using applicable current market rates, which take into account changes in the Company’s marketplace credit ratings, or market quotes, if available.

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 As of December 31,
 20212020
Carrying value(1)Fair valueCarrying value(1)Fair value
Revolving Credit Facility$1,507 $1,507 $1,180 $1,180 
Revolving Funding Facility762 762 1,028 1,018 
SMBC Funding Facility401 401 453 445 
BNP Funding Facility— — 150 153 
2022 Convertible Notes (principal amount outstanding of $388)388 (2)433 383 (2)398 
2024 Convertible Notes (principal amount outstanding of $403)395 (2)457 392 (2)425 
2022 Notes (principal amount outstanding of $0 and $600, respectively)— — 598 (2)617 
2023 Notes (principal amount outstanding of $750)748 (2)768 747 (2)794 
2024 Notes (principal amount outstanding of $900)897 (3)952 896 (3)983 
March 2025 Notes (principal amount outstanding of $600)596 (2)637 595 (2)653 
July 2025 Notes (principal amount outstanding of $1,250 and $750, respectively)1,260 (3)1,297 742 (3)795 
January 2026 Notes (principal amount outstanding of $1,150)1,143 (2)1,213 1,141 (2)1,248 
July 2026 Notes (principal amount outstanding of $1,000 and $0, respectively)988 (2)989 — — 
2028 Notes (principal amount outstanding of $1,250 and $0, respectively)1,246 (3)1,248 — — 
2031 Notes (principal amount outstanding of $700 and $0, respectively)689 (2)687 — — 
2047 Notes (principal amount outstanding of $0 and $230, respectively)— — 186 (4)243 
Total$11,020 (5)$11,351 $8,491 (5)$8,952 
________________________________________

(1)The Revolving Credit Facility, the Revolving Funding Facility, the SMBC Funding Facility and the BNP Funding Facility carrying values are the same as the principal amounts outstanding.

(2)Represents the aggregate principal amount outstanding, less unamortized debt issuance costs and the unaccreted discount recorded upon issuance. In December 2021, the Company redeemed the entire aggregate principal amount of the 2022 Notes at par plus accrued and unpaid interest.

(3)Represents the aggregate principal amount outstanding, less unamortized debt issuance costs and the net unaccreted/amortized discount or premium recorded upon issuance.

(4)Represents the aggregate principal amount outstanding of the 2047 Notes, less the unaccreted purchased discount recorded in connection with the Allied Acquisition. In March 2021, the Company redeemed the entire aggregate principal amount of the 2047 Notes at par plus accrued and unpaid interest.

(5)Total principal amount of debt outstanding totaled $11,061 and $8,582 as of December 31, 2021 and 2020, respectively.

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The following table presents fair value measurements of the Company’s debt obligations as of December 31, 2021 and 2020:
 As of December 31,
Fair Value Measurements Using20212020
Level 1$— $243 
Level 211,351 8,709 
Total$11,351 $8,952 

9.     STOCKHOLDERS’ EQUITY

The Company may from time to time issue and sell shares of its common stock through public or “at the market” offerings. In connection with the issuance of its common stock, the Company issued and sold the following shares of common stock during the year ended December 31, 2021:


Issuances of Common Stock		Number of Shares IssuedGross ProceedsUnderwriting Fees/Offering ExpensesNet ProceedsAverage Offering Price Per Share(1)
Public offerings26.5$513.8 $19.0 $494.8 18.7$19.39 (2)
“At the market” offerings16.4$329.3 $5.2 $324.1 $20.07 
Total42.9$843.1 $24.2 $818.9 
________________________________________

(1)    Represents the gross offering price per share before deducting underwriting discounts and commissions and estimated offering expenses.

(2)    14.0 shares and 12.5 shares were sold to the underwriters for a price of $17.85 per share and $19.67 per share, respectively, which the underwriters were then permitted to sell at variable prices to the public. See Note 15 for a subsequent event relating to the Company’s public offerings.

“At the Market” Offerings

The Company has entered into equity distribution agreements with several banks (the “Equity Distribution Agreements”). The Equity Distribution Agreements provide that the Company may from time to time issue and sell, by means of “at the market” offerings, up to $500 shares of its common stock. Subject to the terms and conditions of the Equity Distribution Agreements, sales of common stock, if any, may be made in transactions that are deemed to be “at the market” offerings as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. Under the currently effective Equity Distribution Agreements, common stock with an aggregate offering amount of $366 remained available for issuance as of December 31, 2021.

See Note 12 for information regarding shares of common stock issued or purchased in accordance with the Company’s dividend reinvestment plan.

Stock Repurchase Program

The Company is authorized under its stock repurchase program to purchase up to $500 in the aggregate of its outstanding common stock in the open market at certain thresholds below its net asset value per share, in accordance with the guidelines specified in Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The timing, manner, price and amount of any share repurchases will be determined by the Company, in its sole discretion, based upon an evaluation of economic and market conditions, stock price, applicable legal and regulatory requirements and other factors. The stock repurchase program does not require the Company to repurchase any specific number of shares of common stock or any shares of common stock at all. Consequently, the Company cannot assure stockholders that any specific number of shares of common stock, if any, will be repurchased under the stock repurchase program. As of December 31, 2021, the expiration date of the stock repurchase program is February 15, 2022. The program may be suspended, extended, modified or discontinued at any time. As of December 31, 2021, there was $500 available for additional repurchases under the stock repurchase program.

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During the year ended December 31, 2021, the Company did not repurchase any shares of the Company’s common stock under the stock repurchase program. During the year ended December 31, 2020, the Company repurchased a total of 8.5 shares of its common stock in the open market under the stock repurchase program for $100. The shares were repurchased at an average price of $11.83 per share, including commissions paid. During the year ended December 31, 2019, the Company did not repurchase any shares of the Company’s common stock under the stock repurchase program.

See Note 15 for a subsequent event relating to the Company’s stock repurchase program.

10.     EARNINGS PER SHARE

The following information sets forth the computations of basic and diluted net increase in stockholders’ equity resulting from operations per share for the years ended December 31, 2021, 2020 and 2019:

 For the Years Ended December 31,
 202120202019
Net increase in stockholders’ equity resulting from operations available to common stockholders$1,567 $484 $793 
Weighted average shares of common stock outstanding—basic and diluted446 424 427 
Basic and diluted net increase in stockholders’ equity resulting from operations per share$3.51 $1.14 $1.86 

For the purpose of calculating diluted net increase in stockholders’ equity resulting from operations per share, the average closing price of the Company’s common stock for the year ended December 31, 2021 was more than the conversion price for the 2022 Convertible Notes outstanding as of December 31, 2021. For the year ended December 31, 2021, the average closing price of the Company’s common stock was less than the conversion price for the 2024 Convertible Notes outstanding as of December 31, 2021. For each of the years ended December 31, 2020 and 2019, the average closing price of the Company’s common stock was less than the conversion price for each of the Convertible Unsecured Notes outstanding as of December 31, 2020 and 2019, respectively, as well as any other convertible unsecured notes outstanding during the period. For all periods presented in the financial statements, the underlying shares for the intrinsic value of the embedded options in the Convertible Unsecured Notes and any other convertible unsecured notes outstanding during the periods presented had no material impact on the computation of diluted net increase in stockholders’ equity resulting from operations per share.

11.   INCOME AND EXCISE TAXES

For U.S. federal income tax purposes, amounts distributed to the Company’s stockholders as dividends are reported as ordinary income, capital gains, or a combination thereof. Dividends paid per common share for the years ended December 31, 2021, 2020 and 2019 were taxable as follows (unaudited):

 For the Years Ended December 31,
 202120202019
Ordinary income(1)$1.62 $1.60 $1.68 
Capital gains— — — 
Total(2)$1.62 $1.60 $1.68 
_______________________________________________________________________________

(1)For the years ended December 31, 2021 and 2020, ordinary income included dividend income of approximately $0.0461, $0.0157 per share and $0.0064 per share, respectively, that qualified to be taxed at the maximum capital gains rate and, in the case of certain eligible corporate shareholders, dividends that were eligible for the dividends received deduction.

(2)For the years ended December 31, 2021, 2020 and 2019, the percentage of total dividends paid that constituted interest-related dividends were 84.6%, 88.4% and 86.8%, respectively.

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The following reconciles net increase in stockholders’ equity resulting from operations to taxable income for the years ended December 31, 2021, 2020 and 2019:

 For the Years Ended December 31,
 202120202019
 (Estimated)(1)
Net increase in stockholders’ equity resulting from operations$1,567 $484 $793 
Adjustments:
Net unrealized losses (gains) on investments, foreign currency and other transactions(587)145 (47)
Income not currently taxable(2)(223)(147)(150)
Income for tax but not book162 133 89 
Expenses not currently deductible165 19 13 
Expenses for tax but not book— (59)— 
Realized gain/loss differences(3)(198)148 86 
Taxable income$886 $723 $784 
_______________________________________________________________________________

(1)The calculation of estimated 2021 U.S. federal taxable income is based on certain estimated amounts, including information received from third parties and, as a result, actual 2021 U.S. federal taxable income will not be finally determined until the Company’s 2021 U.S. federal tax return is filed in 2022 (and, therefore, such estimate is subject to change).

(2)Includes a reduction for dividend income from preferred equity that is not taxable until collected totaling $91, $67 and $61, respectively, net of dividend income collected of $122, $1 and $0, respectively, for the years ended December 31, 2021, 2020 and 2019, respectively.

(3)Certain realized gain/loss differences are the result of the realization of certain tax only capital losses on the investments and liabilities acquired in the acquisition of Allied Capital Corporation in April 2010 (the “Allied Acquisition”). Because the Allied Acquisition was a “tax-free” reorganization under the Code, realized losses for tax purposes can differ from GAAP. Note that unlike the Allied Acquisition, the American Capital Acquisition was treated as a taxable purchase of the American Capital assets for purposes of the Company’s taxable income calculations; therefore, realized gains or losses for tax purposes are generally consistent with realized gains or losses under GAAP.

Taxable income generally differs from net increase in stockholders’ equity resulting from operations for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized gains or losses, as unrealized gains or losses are generally not included in taxable income until they are realized. In addition, on April 1, 2010, the Company acquired Allied Capital in a “tax-free” merger under the Code, which has caused certain merger-related items to vary in their deductibility for GAAP and tax purposes.

Capital losses in excess of capital gains earned in a tax year may generally be carried forward and used to offset capital gains, subject to certain limitations. As of December 31, 2021, the Company estimates that it will have a capital loss carryforward of approximately $121 available for use in later tax years. While the Company’s ability to utilize losses in the future depends on a variety of factors that cannot be known in advance, these capital loss carryforwards will be subject to limitations under Section 382 of the Code. The unused balance will be carried forward and utilized as gains are realized, subject to such limitations.

For the year ended December 31, 2021, the Company estimated U.S. federal taxable income exceeded its distributions made from such taxable income during the year; consequently, the Company has elected to carry forward the excess for distribution to shareholders in 2022. The amount carried forward to 2022 is estimated to be approximately $625, substantially all of which is expected to be ordinary income, although these amounts will not be finalized until the 2021 tax returns are filed in 2022. For the years ended December 31, 2020 and 2019, the Company had taxable income in excess of the distributions made from such taxable income during the year, and therefore, the Company elected to carry forward the excess for distribution to shareholders in 2021 and 2020, respectively. The amounts carried forward to 2021 and 2020 were $471 and $410, respectively. To the extent that the Company determines that its estimated current year annual taxable income will exceed its estimated current year dividends from such taxable income, the Company accrues excise tax on estimated excess taxable
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income. For the years ended December 31, 2021, 2020 and 2019, a net expense of $24, $17 and $15, respectively, was recorded for U.S. federal excise tax. The net expense for the years ended December 31, 2021 and 2020 each included a reduction in expense related to an expected refund request arising from the overpayment of the prior year’s excise tax of $1 and $1, respectively.

As of December 31, 2021, the estimated cost basis of investments for U.S. federal tax purposes was $19.9 billion resulting in estimated gross unrealized gains and losses of $0.8 billion and $0.7 billion, respectively. As of December 31, 2020, the estimated cost basis of investments for U.S. federal tax purposes was $15.9 billion resulting in estimated gross unrealized gains and losses of $0.5 billion and $0.9 billion, respectively. As of December 31, 2021 and 2020, the cost of investments for U.S. federal tax purposes was greater than the amortized cost of investments for book purposes of $19.8 billion and $15.9 billion, respectively, primarily as a result of the carryover of tax basis in excess of the related GAAP basis in connection with the Allied Acquisition. The Allied Acquisition qualified as a “tax-free” reorganization under the Code, which resulted in the assets acquired by the Company retaining Allied Capital’s tax cost basis at the merger date.

The Company may adjust the classification of stockholders’ equity as a result of permanent book-to-tax differences, which may include merger-related items, differences in the book and tax basis of certain assets and liabilities, and nondeductible federal taxes (including excise taxes), among other items. These adjustments are reclassifications among the individual components of stockholders’ equity and have no effect on total stockholders’ equity. For the year ended December 31, 2021, the Company increased capital in excess of par value by $40 and decreased accumulated undistributed earnings by $40 in the consolidated statement of stockholders’ equity. After adjusting for these reclassifications, the capital in excess of par value, accumulated undistributed net investment income, accumulated net realized losses and accumulated net unrealized gains were $8,553, $253, $(88) and $150, respectively. The adjustments made for the year ended December 31, 2021 are based on certain estimated amounts and assumptions and, as a result, such adjustments are subject to change until the Company’s 2021 U.S. federal tax return is filed in 2022. For the year ended December 31, 2020, the Company decreased capital in excess of par value by $8 and increased accumulated overdistributed earnings by $8 in the consolidated statement of stockholders’ equity. After adjusting for these reclassifications, the capital in excess of par value, accumulated undistributed net investment income, accumulated net realized losses and accumulated net unrealized losses were $7,656, $233, $(276) and $(437), respectively.

Certain of the Company’s consolidated subsidiaries are subject to U.S. federal and state income taxes. For the years ended December 31, 2021, 2020 and 2019, the Company recorded a net tax expense of approximately $6, $2 and $1, respectively, for these subsidiaries.

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12.   DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared and payable during the years ended December 31, 2021, 2020 and 2019:

Date declaredRecord datePayment datePer share
amount		Total amount
October 26, 2021December 15, 2021December 30, 2021$0.41 $191 
July 28, 2021September 15, 2021September 30, 20210.41 189 
April 28, 2021June 15, 2021June 30, 20210.40 177 
February 10, 2021March 15, 2021March 31, 20210.40 175 
Total dividends declared and payable for the year ended December 31, 2021
$1.62 $732 
October 27, 2020December 15, 2020December 30, 2020$0.40 $169 
August 4, 2020September 15, 2020September 30, 20200.40 169 
May 5, 2020June 15, 2020June 30, 20200.40 169 
February 12, 2020March 16, 2020March 31, 20200.40 172 
Total dividends declared and payable for the year ended December 31, 2020$1.60 $679 
October 30, 2019December 16, 2019December 30, 2019$0.40 $172 
February 12, 2019December 16, 2019December 27, 20190.02 (1)9 
July 30, 2019September 16, 2019September 30, 20190.40 170 
February 12, 2019September 16, 2019September 30, 20190.02 (1)9 
April 30, 2019June 14, 2019June 28, 20190.40 170 
February 12, 2019June 14, 2019June 28, 20190.02 (1)9 
February 12, 2019March 15, 2019March 29, 20190.40 170 
February 12, 2019March 15, 2019March 29, 20190.02 (1)9 
Total dividends declared and payable for the year ended December 31, 2019$1.68 $718 
___________________________________________________________________________
(1)Represents an additional dividend.

The Company has a dividend reinvestment plan, whereby the Company may buy shares of its common stock in the open market or issue new shares in order to satisfy dividend reinvestment requests. When the Company issues new shares in connection with the dividend reinvestment plan, the issue price is equal to the closing price of its common stock on the dividend payment date. Dividend reinvestment plan activity for the years ended December 31, 2021, 2020 and 2019, was as follows:
For the Years Ended December 31,
202120202019
Shares issued1.9 — 1.3 
Average issue price per share$19.86 $— $18.39 
Shares purchased by plan agent to satisfy dividends declared and payable during the period for stockholders — 2.6 (1)0.5 (2)
Average purchase price per share$— $13.76 $17.42 
_______________________________________________________________________________

(1)Shares were purchased in April 2020, July 2020, October 2020 and January 2021.

(2)Shares were purchased in April 2019.

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13.   RELATED PARTY TRANSACTIONS

In accordance with the investment advisory and management agreement, the Company bears all costs and expenses of the operation of the Company and reimburses its investment adviser or its affiliates for certain of such costs and expenses paid for by the investment adviser or its affiliates on behalf of the Company. For the years ended December 31, 2021, 2020 and 2019, the Company’s investment adviser or its affiliates incurred and the Company reimbursed such expenses totaling $5, $7 and $7, respectively.

The Company is party to office leases pursuant to which it is leasing office facilities from third parties. For certain of these office leases, the Company had previously entered into separate subleases with Ares Management LLC, the sole member of Ares Capital Management, whereby Ares Management LLC subleased the full amount of certain of the Company’s office leases. During the year ended December 31, 2020, the Company assigned to Ares Management LLC all of its rights, title and interest in the offices it subleased to Ares Management LLC and Ares Management LLC assumed all of the Company’s obligations.

The Company has also entered into agreements with Ares Management LLC and IHAM, pursuant to which Ares Management LLC and IHAM are entitled to use the Company’s proprietary portfolio management software. For the years ended December 31, 2021, 2020 and 2019, amounts payable to the Company under these agreements totaled $0, $0 and $0, respectively.

See Notes 3 and 4 for descriptions of other related party transactions.

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14.   FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights as of and for the years ended December 31, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013 and 2012:

 As of and For the Years Ended December 31,
Per Share Data:20212020201920182017
Net asset value, beginning of period(1)$16.97 $17.32 $17.12 $16.65 $16.45 
Issuances of common stock0.11 — 0.02 — (0.01)
Repurchases of common stock— 0.11 — — — 
Deemed contribution from Ares Capital Management— — — — 0.13 
Issuances of convertible notes— — — — 0.04 
Net investment income for period(2)1.66 1.87 1.90 1.63 1.20 
Net realized and unrealized gains (losses) for period(2)1.84 (0.73)(0.04)0.38 0.36 
Net increase in stockholders’ equity3.61 1.25 1.88 2.01 1.72 
Total distributions to stockholders(3)(1.62)(1.60)(1.68)(1.54)(1.52)
Net asset value at end of period(1)$18.96 $16.97 $17.32 $17.12 $16.65 
Per share market value at end of period$21.19 $16.89 $18.65 $15.58 $15.72 
Total return based on market value(4)36.18 %(0.86)%30.49 %8.91 %4.55 %
Total return based on net asset value(5)21.97 %5.20 %12.14 %12.10 %10.53 %
Shares outstanding at end of period468 423 431 426 426 
Ratio/Supplemental Data: 
Net assets at end of period$8,868 $7,176 $7,467 $7,300 $7,098 
Ratio of operating expenses to average net assets(6)(7)13.05 %10.27 %9.92 %8.63 %9.45 %
Ratio of net investment income to average net assets(6)(8)9.19 %11.39 %11.01 %9.60 %7.65 %
Portfolio turnover rate(6)60 %40 %38 %54 %51 %

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 As of and For the Years Ended December 31,
Per Share Data:20162015201420132012
Net asset value, beginning of period(1)$16.46 $16.82 $16.46 $16.04 $15.34 
Issuances of common stock— 0.01 — 0.16 0.05 
Repurchases of common stock— (0.01)— — — 
Deemed contribution from Ares Capital Management— — — — — 
Issuances of convertible notes— — — — 0.04 
Net investment income for period(2)1.57 1.62 1.43 1.61 1.52 
Net realized and unrealized gains (losses) for period(2)(0.06)(0.41)0.50 0.22 0.69 
Net increase in stockholders’ equity1.51 1.21 1.93 1.99 2.30 
Total distributions to stockholders(3)(1.52)(1.57)(1.57)(1.57)(1.60)
Net asset value at end of period(1)$16.45 $16.46 $16.82 $16.46 $16.04 
Per share market value at end of period$16.49 $14.25 $15.61 $17.77 $17.50 
Total return based on market value(4)26.39 %1.35 %(3.32)%10.51 %23.62 %
Total return based on net asset value(5)9.15 %7.16 %11.79 %11.41 %14.34 %
Shares outstanding at end of period314 314 314 298 249 
Ratio/Supplemental Data:
Net assets at end of period$5,165 $5,173 $5,284 $4,904 $3,988 
Ratio of operating expenses to average net assets(6)(7)9.59 %9.51 %10.46 %10.03 %10.70 %
Ratio of net investment income to average net assets(6)(8)9.58 %9.75 %8.71 %9.86 %9.62 %
Portfolio turnover rate(6)39 %42 %39 %27 %45 %

_______________________________________________________________________________

(1)The net assets used equals the total stockholders’ equity on the consolidated balance sheet.

(2)Weighted average basic per share data.

(3)Includes additional dividends of (a) $0.08 per share for the year ended December 31, 2019, (b) $0.05 per share for the year ended December 31, 2015, (c) $0.05 per share for the year ended December 31, 2014, (d) $0.05 per share for the year ended December 31, 2013 and (e) $0.10 per share for the year ended December 31, 2012.

(4)For the year ended December 31, 2021, the total return based on market value equaled the increase of the ending market value at December 31, 2021 of $21.19 per share from the ending market value at December 31, 2020 of $16.89 per share plus the declared and payable dividends of $1.62 per share for the year ended December 31, 2021, divided by the market value at December 31, 2020. For the year ended December 31, 2020, the total return based on market value equaled the decrease of the ending market value at December 31, 2020 of $16.89 per share from the ending market value at December 31, 2019 of $18.65 per share plus the declared and payable dividends of $1.60 per share for the year ended December 31, 2020, divided by the market value at December 31, 2019. For the year ended December 31, 2019, the total return based on market value equaled the increase of the ending market value at December 31, 2019 of $18.65 per share from the ending market value at December 31, 2018 of $15.58 per share plus the declared and payable dividends of $1.68 per share for the year ended December 31, 2019, divided by the market value at December 31, 2018. For the year ended December 31, 2018, the total return based on market value equaled the decrease of the ending market value at December 31, 2018 of $15.58 per share from the ending market value at December 31, 2017 of $15.72 per share plus the declared and payable dividends of $1.54 per share for the year ended December 31, 2018, divided by the market value at December 31, 2017. For the year ended December 31, 2017, the total return based on market value equaled the decrease of the ending market value at December 31, 2017 of $15.72 per share from the ending market value at December 31, 2016 of $16.49 per share plus the declared and payable dividends of $1.52 per share for the year ended December 31, 2017, divided by the market value at December 31, 2016. For the year ended December 31, 2016, the total return based on market value equaled the increase of the ending market value at December 31, 2016 of $16.49 per share from the ending market value at December 31, 2015 of $14.25 per share plus the declared and payable dividends of $1.52 per share for the year ended December 31, 2016, divided by the market value at December 31, 2015. For the year ended December 31, 2015, the total return based on market value equaled
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the decrease of the ending market value at December 31, 2015 of $14.25 per share from the ending market value at December 31, 2014 of $15.61 per share plus the declared and payable dividends of $1.57 per share for the year ended December 31, 2015, divided by the market value at December 31, 2014. For the year ended December 31, 2014, the total return based on market value equaled the decrease of the ending market value at December 31, 2014 of $15.61 per share from the ending market value at December 31, 2013 of $17.77 per share plus the declared and payable dividends of $1.57 per share for the year ended December 31, 2014, divided by the market value at December 31, 2013. For the year ended December 31, 2013, the total return based on market value equaled the increase of the ending market value at December 31, 2013 of $17.77 per share from the ending market value at December 31, 2012 of $17.50 per share plus the declared and payable dividends of $1.57 per share for the year ended December 31, 2013, divided by the market value at December 31, 2012. For the year ended December 31, 2012, the total return based on market value equaled the increase of the ending market value at December 31, 2012 of $17.50 per share from the ending market value at December 31, 2011 of $15.45 per share plus the declared and payable dividends of $1.60 per share for the year ended December 31, 2012, divided by the market value at December 31, 2011. The Company’s performance changes over time and currently may be different than that shown. Past performance is no guarantee of future results.

(5)For the year ended December 31, 2021, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $1.62 per share for the year ended December 31, 2021, divided by the beginning net asset value for the period. For the year ended December 31, 2020, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $1.60 per share for the year ended December 31, 2020, divided by the beginning net asset value for the period. For the year ended December 31, 2019, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $1.68 per share for the year ended December 31, 2019, divided by the beginning net asset value for the period. For the year ended December 31, 2018, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $1.54 per share for the year ended December 31, 2018, divided by the beginning net asset value for the period. For the year ended December 31, 2017, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $1.52 per share for the year ended December 31, 2017, divided by the beginning net asset value for the period. These calculations are adjusted for shares issued in connection with the dividend reinvestment plan, the issuance of common stock in connection with any equity offerings and the equity components of any convertible notes issued during the period. For the year ended December 31, 2016, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $1.52 per share for the year ended December 31, 2016, divided by the beginning net asset value for the period. For the year ended December 31, 2015, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $1.57 per share for the year ended December 31, 2015, divided by the beginning net asset value for the period. For the year ended December 31, 2014, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $1.57 per share for the year ended December 31, 2014, divided by the beginning net asset value for the period. For the year ended December 31, 2013, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $1.57 per share for the year ended December 31, 2013, divided by the beginning net asset value for the period. For the year ended December 31, 2012, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $1.60 per share for the year ended December 31, 2012 divided by the beginning net asset value for the period. The Company’s performance changes over time and currently may be different than that shown. Past performance is no guarantee of future results.

(6)The ratios reflect an annualized amount.

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(7)For the years ended December 31, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013 and 2012, the ratio of operating expenses to average net assets consisted of the following:

 For the Years Ended December 31,
20212020201920182017
Base management fees3.14 %3.10 %2.78 %2.49 %2.57 %
Income based fees and capital gains incentive fees, net of the Fee Waiver4.80 %1.80 %2.23 %2.24 %2.18 %
Income based fees and capital gains incentive fees excluding the Fee Waiver4.80 %1.80 %2.64 %2.79 %2.32 %
Cost of borrowing4.61 %4.54 %3.94 %3.33 %3.37 %
Other operating expenses0.50 %0.83 %0.97 %0.57 %1.33 %

 For the Years Ended December 31,
20162015201420132012
Base management fees2.64 %2.55 %2.51 %2.40 %2.38 %
Income based fees and capital gains incentive fees2.29 %2.31 %2.90 %2.80 %3.50 %
Cost of borrowing3.58 %4.32 %4.24 %3.94 %3.94 %
Other operating expenses1.08 %0.33 %0.81 %0.89 %0.88 %

(8)The ratio of net investment income to average net assets excludes income taxes related to realized gains and losses.

15.   SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-K or would be required to be recognized in the consolidated financial statements as of and for the year ended December 31, 2021, except as discussed below.

In January 2022, the Company issued $500 in aggregate principal amount of unsecured notes, which bear interest at a rate of 2.875% per annum and mature on June 15, 2027 (the ‘‘2027 Notes’’). The 2027 Notes pay interest semi-annually and all principal is due upon maturity. The 2027 Notes may be redeemed in whole or in part at any time at the Company’s option at the redemption price determined pursuant to the indenture governing the 2027 Notes, and any accrued and unpaid interest. The 2027 Notes were issued at a discount to the principal amount.

In February 2022, the Company repaid in full the 2022 Convertible Notes upon their maturity, resulting in a realized loss on the extinguishment of debt of $48.

In January 2022, the Company completed a public equity offering pursuant to which it sold an aggregate of 11.2 shares of common stock at a price of $21.06 per share to the participating underwriters, with net proceeds totaling $235.5, after giving effect to estimated offering expenses.

In February 2022, the Company’s board of directors authorized an amendment to the Company’s existing stock repurchase program to extend the expiration date of the program from February 15, 2022 to February 15, 2023. Under the program, the Company may repurchase up to $500 in the aggregate of its outstanding common stock in the open market at a price per share that meets certain thresholds below its net asset value per share, in accordance with the guidelines specified in Rule 10b-18 of the Exchange Act. The timing, manner, price and amount of any share repurchases will be determined by the Company, in its discretion, based upon the evaluation of economic and market conditions, stock price, applicable legal and regulatory requirements and other factors.
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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ARES CAPITAL CORPORATION
By:/s/ R. KIPP DEVEER
R. Kipp deVeer
Chief Executive Officer and Director
Date: February 9, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:/s/ R. KIPP DEVEER 
R. Kipp deVeer
Chief Executive Officer (principal executive officer) and
Director
Date: February 9, 2022
By:/s/ PENNI F. ROLL 
Penni F. Roll
Chief Financial Officer (principal financial officer)
Date: February 9, 2022
By:/s/ SCOTT C. LEM 
Scott C. Lem
Chief Accounting Officer (principal accounting officer)
Date: February 9, 2022
By:/s/ MICHAEL J AROUGHETI 
Michael J Arougheti
Director
Date: February 9, 2022
By:/s/ ANN TORRE BATES 
Ann Torre Bates
Director
Date: February 9, 2022
By:/s/ DANIEL KELLY, JR.
Daniel Kelly, Jr.
Director
Date: February 9, 2022




By:/s/ STEVEN B. MCKEEVER 
Steven B. McKeever
Director
Date: February 9, 2022
By:/s/ MICHAEL PARKS 
Michael Parks
Director
Date: February 9, 2022
By:/s/ ROBERT L. ROSEN 
Robert L. Rosen
Director
Date: February 9, 2022
By:/s/ BENNETT ROSENTHAL 
Bennett Rosenthal
Director
Date: February 9, 2022
By:/s/ ERIC B. SIEGEL 
Eric B. Siegel
Director
Date: February 9, 2022