Ares Capital’s Return on Net Assets Reaches 2.3% in Third Quarter
Key Facts
Ares Capital posted a total return on net asset value of 2.3% in the third quarter of 2026, the highest in the past four quarters, according to an analysis published by Seeking Alpha. But the strong return was not accompanied by an improvement in earnings measures from the same period last year. The company reported core earnings of $0.46 per share, compared with $0.50 in the third quarter of 2025. Net investment income was $328 million, or $0.46 per share, compared with $338 million, or $0.48 per share, a year earlier. The figures put the strong return on assets alongside year-over-year declines in investment income and core earnings.
Net asset value per share was $19.31 on September 30, 2026, compared with $19.94 on December 31, 2025. GAAP net income was $0.44 per share in the third quarter, compared with $0.57 in the corresponding period of 2025. The company declared a fourth-quarter distribution of $0.48 per share, payable on December 29 to shareholders of record on December 15, 2026. The declared distribution exceeds net investment income per share for the quarter, which was $0.46, while core earnings per share were at the same level. This comparison provides a direct view of the declared distribution against investment income earned during the quarter, without by itself determining its trajectory in coming periods.
The chief executive attributed the quarter’s results to “healthy portfolio performance and stable credit quality,” but said slower deal activity led to a more moderate pace of new investment origination. Total new investment commitments were $2.109 billion in the third quarter, compared with $3.924 billion in the third quarter of 2025. The company said it made about $2.1 billion in new commitments, of which about $1.6 billion was funded. The commitments included 25 new portfolio companies and 28 existing companies. The chief executive added that deal activity was stronger entering the fourth quarter and that the investment pipeline had increased significantly from the previous quarter.
On asset quality, non-accrual loans represented 2.4% of total investments at amortized cost on September 30, 2026, up from 1.8% on December 31, 2025. At fair value, the ratio was 1.4% in September, compared with 1.2% at the end of December. Portfolio investments at fair value totaled $29.213 billion on September 30, compared with $29.485 billion on December 31, 2025. The chief financial officer said available liquidity was about $7 billion. He added that the company strengthened its borrowing capacity by issuing $750 million in unsecured notes due in seven years.
In a separate expansion move, Ares Capital announced on October 27, 2026, a merger agreement with MidCap Financial Investment, known as MFIC; the acquisition had not been completed when the agreement was announced. The company estimated the deal’s total implied value at about $2.6 billion, or $10.88 for each MFIC share, comprising $1.21 in cash and $9.67 in implied value from Ares shares. The consideration represents a premium of about 30.1% to MFIC’s closing share price on October 26 and 25.8% to its 30-day volume-weighted average price through that date. Ares expects the merger, when completed, to expand its portfolio to more than 800 companies and more than $31 billion in investments at fair value, adding more than 200 existing positions. The company said the deal is expected to be modestly accretive to core earnings per share and to support future distributions.
The deal is expected to close in the first half of 2027, subject to MFIC shareholder approval, regulatory approvals and customary closing conditions. The deal’s effects on portfolio size, earnings and distributions therefore remain contingent on its completion, and the companies’ portfolios have not yet been integrated. Ares Capital shares closed at $19.13 on November 6, 2026. That was the latest share price in the data cited in this story, following the agreement announcement and quarterly results. The next specified milestone for the deal is completion of the required approvals ahead of the expected closing date.