Ladies and gentlemen, welcome to the Quarter 1, 2021 SLR Senior Investment Corp. Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Thank you. I'd now like to turn the conference over to your host, Chairman and Co-CEO, Mr. Michael Gross. Sir, please go ahead.

Thank you, operator. Good morning. Welcome to SLR Senior Investment Corp's earnings call for the first quarter ended March 31, 2021. I'm joined today by Bruce Spohler, our Co-Chief Executive Officer, and Richard Peteka, our Chief Financial Officer. Rich, would you please start off by covering the webcast and forward-looking statements.

Of course. Thank you, Michael. I'd like to remind everyone that today's call and webcast are being recorded. Please note, that they are the property of SLR Senior Investment Corp, and that any unauthorized broadcast in any form are strictly prohibited. This conference call is being webcast on our website at www.slrseniorinvestmentcorp.com. Audio replays of this call will be made available later today as disclosed in our press release. I would also like to call your attention to the customary disclosures in our press release regarding forward-looking information. Statements made in today's conference call and webcast may constitute forward-looking statements which relate to future events or our future performance or financial condition. These statements are not guarantees of our future performance, financial condition or results, and involve a number of risks and uncertainties, including impacts from COVID-19. Past performance is not indicative of future results. Actual results may differ materially as a result of a number of factors, including those described from time to time in our filings with the SEC. SLR Senior Investment Corp undertakes no duty to update any forward-looking information unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website, or call us at (212) 993-1670. At this time, I'd like to turn the call back to our chairman and co-CEO, Michael Gross.

Thank you very much, Rich. I'm pleased to report that SLR Senior Investment Corp's, or SUNS, portfolio continues to be 100% performing for Q1 2021, which continues to support our investment thesis at a diversified portfolio across asset-based loans in niche markets, in first lien cash flow loans to upper middle-market companies provides meaningful downside protection during challenging economic periods. SUNS portfolio companies have proven that resilient business models and assets and liquidity that we believe enable them to manage successfully through the pandemic induce depths of the economic contraction and perform well in the current expansionary environment. We attribute our healthy portfolio foundation to our conservative underwriting, the deep experience of investment team, and SUNS diversified origination platform across cash flow, asset-based lending, and life science verticals. After the close yesterday we reported a net asset value of $15.91 per share at March 31, consistent with the reported nab at December 31, 2020. Credit quality portfolio continues to be strong, and our watch list remains at historic lows. Year-to-date, the US middle-market has reflected a more favorable economic backdrop punctuated by resurgence and sponsor-led M&A and refinancing transactions. The government's fiscal and monetary stimulus programs combined with the vaccination program have turbocharged recovery and removed a number of the uncertainties. Given this stable backdrop, SUNS originated investments of approximately $50 million in the first quarter. The majority of our portfolio growth came from cash flow investments in large upper middle-market companies that highlight the scale of the SLR platform and allows SUNS the opportunity to participate in transactions that are available only to managers who can hold up to $200 million in a given position. A number of these transactions are a combination of funded loans and delayed draw term loans, or DDTLs, that provides certainty of capital to…

Thank you, Michael. SLR Senior Investment Corp's net asset value at March 31 was $255.3 million, or $15.91 per share. This compares to a net asset value of $255.4 million, or $15.91 per share at December 31, 2020. SLR Senior's balance sheet investment portfolio at March 31, 2021 had a fair market value of $367.5 million in 47 portfolio companies, operating in 18 industries. Compared to a fair market value of $340.8 million in 44 portfolio companies, operating in 19 industries at December 31, 2020. In addition, as of March 31, 2021, the company had unfunded commitments of approximately $28.7 million. Turning to our funding profile and leverage, SUNS continues to have a strong balance sheet which served us well through the downturn and will in the current recovery. On March 31, SUNS had only $111.2 million of debt outstanding, with a net debt to equity ratio of 0.4x, up slightly from 0.34x at December 31, 2020. That leaves SUNS with over $415 million available to fund portfolio growth as of March 31. As a reminder, SLR Senior's target leverage ratio is 1.25x to 1.5x net debt/equity under the reduced asset coverage requirement. Importantly, SUNS has no near term debt maturities, having termed out both its primary $225 million credit facility and its secondary $75 million credit facility to 2023 and 2024, respectively. In addition, SUNS has $85 million of unsecured notes with a maturity date of March 31, 2025. From a P&L perspective, gross investment income for the 3 months ended March 31, 2021, total $6.6 million compared to $7.3 million for the 3 months ended December 31, 2020. Net expenses for the 3 months ended March 31, 2021 was $3.5 million, compared to $2.5 million for the 3 months ended December 31, 2020. Net investment income for the quarter ended March 31, 2021 is $3.2 million or $0.20 per average share, compared to $4.8 million or $0.30 per average share for the 3 months ended December 31. Below the line, SLR Senior had a net realized and unrealized gain for the first fiscal quarter of 2021, totaling $1.6 million, compared to net realized and unrealized gains of $2 million for the 3 months ended December 31, 2020. Accordingly, SLR Senior had a net increase in net assets resulting from operations of $4.8 million or $0.30 per average share for the 3 months ended March 31, 2021. This compares to a net increase in net assets resulting from operations of $6.9 million or $0.43 per average share for the 3 months ended December 31, 2020. Lastly, our Board of directors declared a monthly distribution for May 2021 of $0.10 per share, payable on June 2, 2021 to stockholders of record on May 20, 2021. At this time, I'd like to turn the call over to our co-CEO, Bruce Spohler.

Thank you, Rich. First and foremost, SUNS portfolio has remained 100% performing throughout the current economic slowdown and early stages of recovery. The performance is a tremendous compliment to the financial sponsors and portfolio companies that we have invested alongside. In addition, SUNS defensive portfolio and performance supports our underwriting thesis of minimizing the risk of loss by investing senior in the capital structure in first lien cash flow loans to non-cyclical companies, and allocating a significant portion of our exposure to collateralize loans to our specialty finance verticals. At quarter end, the weighted average investment risk rating of SUNS portfolio remained below 2 based on our 1 to 4 risk rating scale, with 1 representing the least amount of risk. SUNS comprehensive portfolio totaled just under $500 million at quarter end, and was highly diversified, encompassing over 200 borrowers across 115 industries. Approximately 50% of our portfolio was invested in our specialty lending strategies, with the remaining 50% invested in first lien cash flow loans. Our largest industry exposures are insurance, health care providers and services, and software. The average investment per borrower was $2.4 million, or less than 0.5 of 1% of the total portfolio. At quarter end, approximately 100% of our portfolio consisted of senior secured first lien loans. At 3/31, a weighted average asset level yield on the comprehensive portfolio was 9.5%. By having 50% of the total portfolio allocated to our specialty finance strategies, we've been able to maintain yields near 10%, despite the low LIBOR rate as well as spread compression. Including activity across our 4 business lines, originations for the first quarter total just under $50 million, and repayments were just over $15 million, resulting in net portfolio growth of just over $30 million. Now let me provide an update on each of…

Thank you, Bruce. From inception, we've endeavored to make the right decisions to preserve and enhance long-term shareholder value. Our priority has always been to create and maintain a portfolio that can generate steady income for our shareholders and protect our capital. While the recovery is underway, we remain disciplined in the face of a tighter pricing environment, higher leverage, and loose structures. All of which have elevated the risk of principal loss in middle-market leveraged finance over an extended period. As a result, we have positioned SUNS defensively. We have diversified our portfolio across cash flow and specialty finance first lien senior secured loans to manage downside risk. We have operated well under target fund leverage in a preserved liquidity. While leverage in middle-market direct lending remains near all time highs, the economic rebound appears to be on solid footing, and we're seeing a broader set of attractive investment opportunities. With over $415 million of available capital and a strong foundation, given our defensive portfolio and low leverage, we believe the company is positioned to originate attractive new investments. Our patience and willingness to remain under-invested during the height of the pandemic provides us the foundation to be more aggressive today. We believe that the improved investment opportunity set will persist for a number of quarters as companies require financing solutions for working capital and growth initiatives. Sponsored activities, definitely on the upswing, and the PE industry is armed with significant dry powder. SUNS and the rest of the SLR platform is in a great position to capitalize on this opportunity. We hope that all of you are in good health, and we would like to thank you all for your time today and your support of our company. Operator, at this time would you please open the line for questions.

If we have no more questions, we'll conclude. We recognize that today and this whole week is an incredibly busy earnings week. For those of you who listen to this call in replay and have questions, please feel free to reach out to any of us if you have any follow-up questions. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect.