Blue Owl Capital Corp - Quarter Report: 2017 March (Form 10-Q)

Large accelerated filer

Accelerated filer

Non-accelerated filer

☒ (Do not check if a small reporting company)

Small reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 814-01190

OWL ROCK CAPITAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Maryland	47-5402460
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

245 Park Avenue, 41^st Floor New York, New York	10167
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 419-3000

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 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.

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

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

As of May 9, 2017, the registrant had 52,704,150 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements	3
	Consolidated Statements of Assets and Liabilities as of March 31, 2017 (Unaudited) and December 31, 2016	3
	Consolidated Statements of Operations for the Three Months Ended March 31, 2017 and 2016 (Unaudited)	4
	Consolidated Schedules of Investments as of March 31, 2017 (Unaudited) and December 31, 2016	5
	Consolidated Statements of Changes in Net Assets for the Three Months Ended March 31, 2017 and 2016 (Unaudited)	9
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 and 2016 (Unaudited)	10
	Notes to Consolidated Financial Statements (Unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
Signatures		44

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about Owl Rock Capital Corporation (the “Company,” “Owl Rock,” “we” or “our”), our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

•

an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

•

an economic downturn could disproportionately impact the companies that we intend to target for investment, potentially causing us to experience a decrease in investment opportunities and diminished demand for capital from these companies;

•

an economic downtown could also impact availability and pricing of our financing;

•

a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;

•

interest rate volatility could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;

•

currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars;

•

our future operating results;

•

our business prospects and the prospects of our portfolio companies;

•

our contractual arrangements and relationships with third parties;

•

the ability of our portfolio companies to achieve their objectives;

•

competition with other entities and our affiliates for investment opportunities;

•

the speculative and illiquid nature of our investments;

•

the use of borrowed money to finance a portion of our investments as well as any estimates regarding potential use of leverage;

•

the adequacy of our financing sources and working capital;

•

the loss of key personnel;

•

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

•

the ability of Owl Rock Capital Advisors LLC (the “Adviser”) to locate suitable investments for us and to monitor and administer our investments;

•

the ability of the Adviser to attract and retain highly talented professionals;

•

our ability to qualify for and maintain our tax treatment as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and as a business development company (“BDC”);

•

the effect of legal, tax and regulatory changes; and

•

other risks, uncertainties and other factors previously identified in the reports and other documents Owl Rock Capital Corporation has filed with the Securities and Exchange Commission.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. These forward-looking statements apply only as of the date of this report. Moreover, we assume no duty and do not undertake to update the forward-looking statements. Because we are an investment company, the forward-looking statements and projections contained in this report are excluded from the safe harbor protection provided by Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “1934 Act”).

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Owl Rock Capital Corporation

Consolidated Statement of Assets and Liabilities

(Amounts in thousands, except share and per share amounts)


	March 31, 2017 (Unaudited)		December 31, 2016
Assets
Investments at fair value (amortized cost of $1,119,746 and $959,768, respectively)	$	1,132,811	$	967,399
Cash and cash equivalents		160,724		209,353
Interest receivable		5,013		3,349
Prepaid expenses and other assets		862		723
Total Assets	$	1,299,410	$	1,180,824
Liabilities
Debt (net of unamortized debt issuance costs of $7,551 and $3,094, respectively)	$	596,949	$	491,906
Management fees payable		5,011		4,565
Payables to affiliates		957		1,860
Accrued expenses and other liabilities		2,438		1,968
Total Liabilities		605,355		500,299
Commitments and contingencies (Note 7)
Net Assets
Common shares, $0.01 par value; 500,000,000 shares authorized; 46,103,491 and 45,833,313 shares issued and outstanding, respectively		461		458
Additional paid-in-capital		668,563		664,554
Accumulated undistributed net investment income		11,966		7,882
Net unrealized gains on investments		13,065		7,631
Total Net Assets		694,055		680,525
Total Liabilities and Net Assets	$	1,299,410	$	1,180,824
Net Asset Value Per Share	$	15.05	$	14.85

The accompanying notes are an integral part of these consolidated financial statements.

Owl Rock Capital Corporation

Consolidated Statements of Operations

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	For the Three Months Ended March 31,
	2017		2016
Investment Income
Investment income from non-controlled, non-affiliated investments:
Interest income	$	23,151	$	—
Other income		162		—
Total investment income from non-controlled, non-affiliated investments		23,313		—
Total Investment Income		23,313		—
Expenses
Initial organization		—		1,224
Interest expense		3,029		—
Management fees		5,011		566
Professional fees		1,259		304
Directors’ fees		111		20
Other general and administrative		1,119		205
Total Expenses		10,529		2,319
Net Investment Income (Loss) Before Taxes		12,784		(2,319	)
Excise tax expense		—		—
Net Investment Income (Loss) After Taxes	$	12,784	$	(2,319	)
Unrealized Gains on Investments
Net unrealized gains:
Non-controlled, non-affiliated investments		5,434		—
Total Net Unrealized Gains		5,434		—
Net Increase (Decrease) in Net Assets Resulting from Operations	$	18,218	$	(2,319	)
Earnings Per Share – Basic and Diluted	$	0.40	$	(21.55	)
Weighted Average Shares Outstanding – Basic and Diluted		45,884,347		107,627

The accompanying notes are an integral part of these consolidated financial statements.

Owl Rock Capital Corporation

Consolidated Schedule of Investments

As of March 31, 2017

(Amounts in thousands, except share amounts)

(Unaudited)

			Maturity	Principal /		Amortized			Fair			Percentage
Company^{(1)(7)(12)(14)}	Investment	Interest	Date	Par		Cost⁽²⁾			Value			of Net Assets
Debt Investments
Advertising and media
PAK Acquisition Corporation⁽³⁾⁽⁵⁾	First lien senior secured loan	L + 8.00%	6/30/2022		80,975		79,414			80,165			11.6	%
Aerospace and defense
Vencore, Inc.⁽³⁾⁽⁵⁾	Second lien senior secured loan	L + 8.75%	5/23/2020		50,000		49,170			50,000			7.2	%
Business services
Access Information^(3)(5)(13)	First lien senior secured loan	L + 5.00%	10/17/2021		39,898		39,522			39,978			5.8	%
Access Information⁽³⁾⁽⁵⁾	Second lien senior secured loan	L + 8.75%	10/17/2022		20,000		19,177			19,180			2.8	%
Vestcom Parent Holdings, Inc.⁽³⁾⁽⁴⁾	Second lien senior secured loan	L + 8.50%	6/19/2024		65,000		64,051			64,350			9.3	%
					124,898		122,750			123,508			17.9	%
Distribution
ABB/Con-cise Optical Group LLC⁽³⁾⁽⁵⁾	Second lien senior secured loan	L + 9.00%	6/17/2024		25,000		24,298			24,750			3.6	%
JM Swank, LLC⁽³⁾⁽⁵⁾	First lien senior secured loan	L + 7.50%	7/25/2022		74,575		73,217			75,321			10.9	%
Medical Specialties Distributors, LLC⁽³⁾⁽⁵⁾	First lien senior secured loan	L + 5.75%	12/6/2022		79,800		79,037			79,401			11.4	%
QC Supply, LLC⁽³⁾⁽⁴⁾	First lien senior secured loan	L + 6.00%	12/29/2022		26,434		25,802			26,037			3.8	%
QC Supply, LLC^{(3)(9)(10)(11)}	First lien senior secured delayed draw term loan	L + 6.00%	12/29/2018		-		(198	)		(41	)		-	%
QC Supply, LLC^(3)(4)(9)	First lien senior secured revolving loan	L + 6.00%	12/29/2021		1,159		1,041			1,085			0.2	%
					206,968		203,197			206,553			29.9	%
Energy equipment and services
Keane Group Holdings, LLC^(3)(4)(8)	First lien senior secured loan	L + 7.25%	8/18/2022		100,000		98,257			98,250			14.2	%
Food and beverage
Candy Intermediate Holding, Inc.⁽³⁾⁽⁵⁾	Second lien senior secured loan	L + 9.00%	12/15/2023		75,000		74,303			73,500			10.6	%
Give & Go Prepared Foods Corp.^{(3)(5)(8)(13)}	First lien senior secured loan	L + 5.50%	7/29/2023		5,985		5,985			6,045			0.9	%
GG Foods Acquisition Corporation^(3)(5)(8)	Second lien senior secured loan	L + 9.75%	1/29/2024		28,500		27,830			28,358			4.1	%
Recipe Acquisition Corp.⁽³⁾⁽⁵⁾	Second lien senior secured loan	L + 9.00%	12/1/2022		32,000		31,427			32,000			4.6	%
Tall Tree Foods, Inc.⁽³⁾⁽⁴⁾	First lien senior secured loan	L + 6.75%	8/12/2022		59,350		58,535			58,460			8.4	%
					200,835		198,080			198,363			28.6	%
Healthcare and pharmaceuticals
Osmotica Pharmaceutical Corp.⁽³⁾⁽⁴⁾	First lien senior secured loan	L + 5.00%	2/3/2022		49,367		48,925			49,614			7.1	%
Healthcare equipment and services
Beaver-Visitec International Holdings, Inc.⁽³⁾⁽⁵⁾	Second lien senior secured loan	L + 9.00%	8/19/2024		35,000		34,336			34,825			5.0	%
Infrastructure and environmental services
FR Arsenal Holdings II Corp.⁽³⁾⁽⁵⁾	First lien senior secured loan	L + 7.25%	9/8/2022		64,675		63,477			64,998			9.3	%
Insurance
CD&R TZ Purchaser, Inc.⁽³⁾⁽⁵⁾	First lien senior secured loan	L + 6.00%	7/21/2023		34,825		32,880			34,476			4.9	%

Internet software and services
Infoblox Inc.⁽³⁾⁽⁴⁾	Second lien senior secured loan	L + 8.75%		11/7/2024		30,000		29,431		30,000	4.3	%
Leisure and entertainment
UFC Holdings, LLC^(3)(4)(13)	Second lien senior secured loan	L + 7.50%		8/18/2024		35,000		34,682		35,612	5.1	%
Manufacturing
Blount International, Inc.⁽³⁾⁽⁴⁾	First lien senior secured loan	L + 6.25%		4/12/2023		14,925		14,523		14,925	2.1	%
Professional services
Allied Universal Holdco LLC	Second lien senior secured notes		11.00%	7/28/2023		20,000		19,626		19,600	2.8	%
Pomeroy Group LLC⁽³⁾⁽⁶⁾	First lien senior secured loan	L + 6.00%		11/30/2021		59,548		57,420		58,357	8.4	%
						79,548		77,046		77,957	11.2	%
Specialty retail
Saje Natural Business, Inc.⁽⁷⁾⁽⁸⁾	Second lien senior secured loan	12.00% PIK		4/21/2022		34,250		33,578		33,565	4.8	%
Total Debt Investments						1,141,266		1,119,746		1,132,811	163.2	%
Total Investments					$	1,141,266	$	1,119,746	$	1,132,811	163.2	%

________________

⁽¹⁾

Certain portfolio company investments are subject to contractual restrictions on sales.

⁽²⁾

The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

⁽³⁾

Loan contains a variable rate structure, subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR) or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement.

⁽⁴⁾

The interest rate on these loans is subject to the greater of a LIBOR floor or 1 month LIBOR, which as of March 31, 2017 was 0.98%.

⁽⁵⁾

The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR, which as of March 31, 2017 was 1.15%.

⁽⁶⁾

The interest rate on these loans is subject to the greater of a LIBOR floor or 1 year LIBOR, which as of March 31, 2017 was 1.80%.

⁽⁷⁾

Unless otherwise indicated, all investments are non-controlled, non-affiliated investments. Non-controlled, non-affiliated investments are defined as investments in which the Company owns less than 5% of the portfolio company’s outstanding voting securities and does not have the power to exercise control over the management or policies of such portfolio company.

⁽⁸⁾

This portfolio company is not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 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 total assets.

⁽⁹⁾

Position or portion thereof is an unfunded loan commitment. See Note 7 “Commitments and Contingencies”.

⁽¹⁰⁾

The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

⁽¹¹⁾

The date disclosed represents the commitment period of the unfunded term loan. Upon expiration of the commitment period, the funded portion of the term loan may be subject to a longer maturity date.

⁽¹²⁾

Unless otherwise indicated, all investments are considered Level 3 investments.

⁽¹³⁾

Level 2 investment.

⁽¹⁴⁾

Unless otherwise indicated, the Company’s portfolio companies are pledged as collateral supporting the amounts outstanding under the Revolving Credit Facility. See Note 6 “Debt”.

The accompanying notes are an integral part of these consolidated financial statements.

Owl Rock Capital Corporation

Consolidated Schedule of Investments

As of December 31, 2016

(Amounts in thousands, except share amounts)

			Maturity	Principal /		Amortized			Fair			Percentage
Company⁽¹⁾⁽⁴⁾	Investment	Interest	Date	Par		Cost⁽²⁾			Value			of Net Assets
Debt Investments
Advertising and media
PAK Acquisition Corporation⁽³⁾	First lien senior secured loan	L + 8.00% (9.00%)	6/30/2022	$	82,000	$	80,362		$	80,360			11.8	%
Aerospace and defense
Vencore, Inc.⁽³⁾	Second lien senior secured loan	L + 8.75% (9.75%)	5/23/2020		50,000		49,115			49,750			7.3	%
Business services
Vestcom Parent Holdings, Inc.⁽³⁾	Second lien senior secured loan	L + 8.50% (9.50%)	6/19/2024		65,000		64,028			64,025			9.4	%
Distribution
ABB/Con-cise Optical Group LLC⁽³⁾	Second lien senior secured loan	L + 9.00% (10.00%)	6/17/2024		25,000		24,282			24,750			3.6	%
JM Swank, LLC⁽³⁾	First lien senior secured loan	L + 7.50% (8.50%)	7/25/2022		84,575		82,979			84,152			12.4	%
Medical Specialties Distributors, LLC⁽³⁾	First lien senior secured loan	L + 5.75% (6.75%)	12/6/2022		80,000		79,208			79,200			11.6	%
QC Supply, LLC⁽³⁾	First lien senior secured loan	L + 6.00% (7.00%)	12/29/2022		26,500		25,840			25,838			3.8	%
QC Supply, LLC^(3)(6)(7)(8)	First lien senior secured delayed draw term loan	L + 6.00% (7.00%)	12/29/2018		-		(207	)		(207	)		-	%
QC Supply, LLC⁽³⁾⁽⁶⁾	First lien senior secured revolving loan	L + 6.00% (7.00%)	12/29/2021		1,159		1,035			1,035			0.2	%
					217,234		213,137			214,768			31.6	%
Food and beverage
Candy Intermediate Holding, Inc.⁽³⁾	Second lien senior secured loan	L + 9.00% (10.00%)	12/15/2023		75,000		74,285			75,000			11.0	%
GG Foods Acquisition Corporation⁽³⁾⁽⁵⁾	Second lien senior secured loan	L + 9.75% (10.75%)	1/29/2024		28,500		27,814			28,215			4.1	%
Recipe Acquisition Corp.⁽³⁾	Second lien senior secured loan	L + 9.00% (10.00%)	12/1/2022		32,000		31,409			31,840			4.7	%
Tall Tree Foods, Inc.⁽³⁾	First lien senior secured loan	L + 6.75% (7.75%)	8/12/2022		60,000		59,146			59,100			8.7	%
					195,500		192,654			194,155			28.5	%
Healthcare and pharmaceuticals
Osmotica Pharmaceutical Corp.⁽³⁾	First lien senior secured loan	L + 5.00% (6.00%)	2/3/2022		49,684		49,219			49,187			7.2	%
Healthcare equipment and services
Beaver-Visitec International Holdings, Inc.⁽³⁾	Second lien senior secured loan	L + 9.00% (10.00%)	8/19/2024		35,000		34,321			34,650			5.1	%
Strategic Partners Acquisition Corp.⁽³⁾	First lien senior secured loan	L + 5.25% (6.25%)	6/30/2023		24,938		24,711			24,938			3.7	%
					59,938		59,032			59,588			8.8	%
Infrastructure and environmental services
FR Arsenal Holdings II Corp.⁽³⁾	First lien senior secured loan	L + 7.25% (8.25%)	9/8/2022		64,838		63,594			63,541			9.3	%
Insurance
CD&R TZ Purchaser, Inc.⁽³⁾	First lien senior secured loan	L + 6.00% (7.00%)	7/21/2023		34,913		32,903			34,389			5.1	%
Internet software and services

				Maturity	Principal /		Amortized		Fair		Percentage
Company⁽¹⁾⁽⁴⁾	Investment	Interest		Date	Par		Cost⁽²⁾		Value		of Net Assets
Infoblox Inc.⁽³⁾	Second lien senior secured loan	L + 8.75% (9.75%)		11/7/2024		30,000		29,419		29,400		4.3	%
Leisure and entertainment
UFC Holdings, LLC⁽³⁾	Second lien senior secured loan	L + 7.50% (8.50%)		8/18/2024		35,000		34,673		35,393		5.2	%
Manufacturing
Blount International, Inc.⁽³⁾	First lien senior secured loan	L + 6.25% (7.25%)		4/12/2023		14,963		14,546		15,037		2.2	%
Professional services
Allied Universal Holdco LLC	Second lien senior secured notes		11.00%	7/28/2023		20,000		19,616		19,600		2.9	%
Pomeroy Group LLC⁽³⁾	First lien senior secured loan	L + 6.00% (7.64%)		11/30/2021		59,698		57,470		58,206		8.6	%
						79,698		77,086		77,806		11.5	%
Total Debt Investments						978,768		959,768		967,399		142.2	%
Total Investments					$	978,768	$	959,768	$	967,399		142.2	%

________________

⁽¹⁾

Certain portfolio company investments are subject to contractual restrictions on sales.

⁽²⁾

The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

⁽³⁾

⁽⁴⁾

⁽⁵⁾

⁽⁶⁾

Position or portion thereof is an unfunded loan commitment. See Note 7 “Commitments and Contingencies”.

⁽⁷⁾

⁽⁸⁾

The date disclosed represents the commitment period of the unfunded term loan. Upon expiration of the commitment period, the funded portion of the term loan may be subject to a longer maturity date.

The accompanying notes are an integral part of these consolidated financial statements.

Owl Rock Capital Corporation

Consolidated Statements of Changes in Net Assets

(Amounts in thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2017			2016
Increase (Decrease) in Net Assets Resulting from Operations
Net investment income (loss)	$	12,784		$	(2,319	)
Net unrealized gains on investments		5,434			—
Net Increase (Decrease) in Net Assets Resulting from Operations		18,218			(2,319	)
Increase in Net Assets Resulting from Capital Share Transactions
Issuance of common shares		—			50,001
Distributions declared from net investment income		(8,700	)		—
Reinvestment of distributions		4,012			—
Increase in Net Assets Resulting from Capital Share Transactions		(4,688	)		50,001
Total Increase in Net Assets		13,530			47,682
Net Assets, Beginning of Period		680,525			—
Net Assets, End of Period	$	694,055		$	47,682
Undistributed Net Investment Income (Loss) Included in Net Assets at the End of the Period		11,966			(2,319	)

The accompanying notes are an integral part of these consolidated financial statements.

Owl Rock Capital Corporation

Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)


	For the Three Months Ended March 31,
	2017			2016
Cash Flows from Operating Activities
Net Increase (Decrease) in Net Assets Resulting from Operations	$	18,218		$	(2,319	)
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Net change in unrealized gains on investments		(5,434	)		—
Net amortization of discount on investments		(1,121	)		—
Amortization of debt issuance costs		518			—
Amortization of offering costs		235			—
Purchases of investments, net		(245,733	)		—
Proceeds from investments, net		86,888			—
Changes in operating assets and liabilities:
Interest receivable		(1,664	)		—
Prepaid expenses and other assets		(139	)		(764	)
Management fees payable to affiliate		446			566
Payables to affiliate		(903	)		1,063
Accrued expenses and other liabilities		470			1,454
Net cash used in operating activities		(148,219	)		—
Cash Flows from Financing Activities
Borrowings on Credit Facility		445,000			—
Payments on Credit Facility		(335,500	)		—
Debt issuance costs		(5,022	)		—
Proceeds from issuance of common shares		—			49,717
Offering costs		(200	)		—
Distributions paid to shareholders		(4,688	)		—
Net cash provided by financing activities		99,590			49,717
Net increase in cash and cash equivalents		(48,629	)		49,717
Cash and cash equivalents, beginning of period		209,353			—
Cash and cash equivalents, end of period	$	160,724		$	49,717

Supplemental Information
Interest paid during the period	$	2,036		$	—
Distributions declared during the period	$	8,700		$	—
Reinvestment of distributions during the period	$	4,012		$	—
Subscriptions receivable	$	—		$	284

The accompanying notes are an integral part of these consolidated financial statements.

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Organization

Owl Rock Capital Corporation (“Owl Rock” or the “Company”) is a Maryland corporation formed on October 15, 2015. The Company was formed primarily to originate and make loans to, and make debt and equity investments in, U.S. middle market companies. The Company invests in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity-related securities including warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity. The Company’s investment objective is to generate current income and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns.

The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes, the Company intends to qualify and be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Because the Company has elected to be regulated as a BDC and intends to qualify as a RIC under the Code, the Company’s portfolio is subject to diversification and other requirements.

In April 2016, the Company made its first portfolio company investment. On April 27, 2016, the Company formed a wholly-owned subsidiary, OR Lending LLC, a Delaware limited liability company, which holds a California finance lenders license and a Tennessee industrial loan and thrift certificate.

Owl Rock Capital Advisors, LLC (the “Adviser”) serves as the Company’s investment adviser. The Adviser is registered with the Securities and Exchange Commission (“SEC”) as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”). Subject to the overall supervision of the Company’s Board of Directors (the “Board”), the Adviser manages the day-to-day operations of, and provides investment advisory and management services to the Company.

The Company conducts private offerings (each, a “Private Offering”) of its common shares to accredited investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended. At the closing of each Private Offering, each investor makes a capital commitment (a “Capital Commitment”) to purchase shares of the Company’s common stock pursuant to a subscription agreement entered into with the Company. Investors are required to fund drawdowns to purchase shares of the Company’s common stock up to the amount of their respective Capital Commitment on an as-needed basis each time the Company delivers a drawdown notice to its investors.

Note 2. Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company is an investment company and, therefore, applies the specialized accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. In the opinion of management, all adjustments, consisting solely of accruals considered necessary for the fair presentation of financial statements for interim periods, have been included. The Company was initially capitalized on March 1, 2016 and commenced operations on March 3, 2016. The Company’s fiscal year ends on December 31.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such amounts could differ from those estimates and such differences could be material.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and highly liquid investments (e.g. U.S. treasury notes) with original maturities of three months or less. Cash and cash equivalents are carried at cost, which approximates fair value. The Company deposits its cash and cash equivalents with highly-rated banking corporations and, at times, may exceed the insured limits under applicable law.

Investments at Fair Value

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received and the amortized cost basis of the investment using the specific identification method without regard to unrealized

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.

Investments for which market quotations are readily available are typically valued at the bid price of those market quotations. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of the Company’s investments, are valued at fair value as determined in good faith by the Board, based on, among other things, the input of the Adviser, the Company’s Audit Committee and independent third-party valuation firm(s) engaged at the direction of the Board.

As part of the valuation process, the Board takes into account relevant factors in determining the fair value of the Company’s investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and 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, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase or sale transaction, public offering or subsequent equity sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.

The Board undertakes a multi-step valuation process, which includes, among other procedures, the following:

•

With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;

•

With respect to investments for which market quotations are not readily available, the valuation process begins with the independent valuation firm(s) providing a preliminary valuation of each investment to the Adviser’s valuation committee;

•

Preliminary valuation conclusions are documented and discussed with the Adviser’s valuation committee. Agreed upon valuation recommendations are presented to the Audit Committee;

•

The Audit Committee reviews the valuation recommendations and recommends values for each investment to the Board; and

•

The Board reviews the recommended valuations and determines the fair value of each investment.

The Company conducts this valuation process on a quarterly basis.

The Company applies Financial Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 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. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Company considers its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized 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.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfer occurs. In addition to using the above inputs in investment valuations, the Company applies the valuation policy approved by its Board that is consistent with ASC 820. Consistent with the valuation policy, the Company evaluates the source of the inputs, including any markets in which its investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When an

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

investment is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), the Company subjects those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, the Company, or the independent valuation firm(s), reviews pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs.

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 such 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 may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

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 herein.

Interest and Dividend Income Recognition

Interest income is recorded on the accrual basis and includes amortization of discounts or premiums. Discounts and premiums to par value on securities purchased are amortized into interest income over the contractual life of the respective security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the amortization of discounts or premiums, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued 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 management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Dividend income on preferred equity securities is recorded on the 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 securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

Other Income

From time to time, the Company may receive fees for services provided to portfolio companies. These fees are generally only available to the Company as a result of closing investments, are normally paid at the closing of the investments, are generally non-recurring and are recognized as revenue when earned upon closing of the investment. The services that the Adviser provides vary by investment, but can include closing, work, diligence or other similar fees and fees for providing managerial assistance to our portfolio companies.

Organization Expenses

Costs associated with the organization of the Company are expensed as incurred. These expenses consist primarily of legal fees and other costs of organizing the Company.

Offering Expenses

Costs associated with the offering of common shares of the Company are capitalized as deferred offering expenses and are included in prepaid expenses and other assets in the consolidated statement of assets and liabilities and are amortized over a twelve-month period from incurrence. These expenses consist primarily of legal fees and other costs incurred in connection with the Company’s share offerings, the preparation of the Company’s registration statement, and registration fees.

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

Debt Issuance Costs

The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized over the life of the related debt instrument. Debt issuance costs are presented on the consolidated statement of assets and liabilities as a direct deduction from the debt liability. In circumstances in which there is not an associated debt liability amount recorded in the consolidated financial statements when the debt issuance costs are incurred, such debt issuance costs will be reported on the consolidated statement of assets and liabilities as an asset until the debt liability is recorded.

Reimbursement of Transaction-Related Expenses

The Company may receive reimbursement for certain transaction-related expenses in pursuing investments. Transaction-related expenses, which are generally expected to be reimbursed by the Company’s portfolio companies, are typically deferred until the transaction is consummated and are recorded in prepaid expenses and other assets on the date incurred. The costs of successfully completed investments not otherwise reimbursed are borne by the Company and are included as a component of the investment’s cost basis.

Cash advances received in respect of transaction-related expenses are recorded as cash and cash equivalents with an offset to accrued expenses and other liabilities. Accrued expenses and other liabilities are relieved as reimbursable expenses are incurred.

Income Taxes

The Company has elected to be treated as a BDC under the 1940 Act. The Company also intends to elect to be treated as a RIC under the Code for the taxable year ending December 31, 2016. So long as the Company maintains its tax treatment as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends. Instead, any tax liability related to income earned and distributed by Owl Rock represents obligations of the Company’s investors and will not be reflected in the consolidated financial statements of the Company.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

To qualify as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its stockholders, for each taxable year, at least 90% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses. In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income.

Distributions to Common Stockholders

Distributions to common stockholders are recorded on the record date. The amount to be distributed is determined by the Board and is generally based upon the earnings estimated by the Adviser. Net realized long-term capital gains, if any, would be generally distributed at least annually, 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 cash distributions on behalf of stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes and declares a cash distribution, then the stockholders who have not “opted out” of the dividend reinvestment plan will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. The Company expects to use newly issued shares to implement the dividend reinvestment plan.

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

Consolidation

As provided under Regulation S-X and ASC Topic 946 - Financial Services - Investment Companies, the Company will generally not consolidate its investment in a company other than a wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company's wholly-owned subsidiary in its consolidated financial statements.

New Accounting Pronouncements

Management does not believe any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying consolidated financial statements.

Note 3. Agreements and Related Party Transactions

Administration Agreement

On March 1, 2016, the Company entered into an Administration Agreement (the “Administration Agreement”) with the Adviser. Under the terms of the Administration Agreement, the Adviser performs, or oversee the performance of, required administrative services, which includes providing office space, equipment and office services, maintaining financial records, preparing reports to shareholders and reports filed with the SEC, and managing the payment of expenses and the performance of administrative and professional services rendered by others.

The Administration Agreement also provides that the Company reimburses the Adviser for certain organization costs incurred prior to the commencement of the Company’s operations, and for certain offering costs.

The Company reimburses the Adviser for services performed for it pursuant to the terms of the Administration Agreement. In addition, pursuant to the terms of the Administration Agreement, the Adviser may delegate its obligations under the Administration Agreement to an affiliate or to a third party and the Company will reimburse the Adviser for any services performed for it by such affiliate or third party.

For the three months ended March 31, 2017 and 2016, the Company incurred expenses of approximately $0.9 million and $0.6 million, respectively, for costs and expenses reimbursable to the Adviser under the terms of the Administration Agreement.

Unless earlier terminated as described below, the Administration Agreement will remain in effect until March 1, 2018 and from year to year thereafter if approved annually by (1) the vote of the Board, or by the vote of a majority of its outstanding voting securities, and (2) the vote of a majority of the Company’s directors who are not “interested persons” of the Company, of the Adviser or of any of their respective affiliates, as defined in the 1940 Act. The Administration Agreement may be terminated at any time, without the payment of any penalty, on 60 days’ written notice, by the vote of a majority of the outstanding voting securities of the Company, or by the vote of the Board or by the Administrator.

No person who is an officer, director, or employee of the Adviser or its affiliates and who serves as a director of the Company receives any compensation from the Company for his or her services as a director. However, the Company reimburses the Adviser (or its affiliates) for an allocable portion of the compensation paid by the Adviser or its affiliates to the Company’s Chief Compliance Officer, Chief Financial Officer and their respective staffs (based on the percentage of time those individuals devote, on an estimated basis, to the business and affairs of the Company). Directors who are not affiliated with the Adviser receive compensation for their services and reimbursement of expenses incurred to attend meetings.

Investment Advisory Agreement

On March 1, 2016, the Company entered into an Investment Advisory Agreement (the “Investment Advisory Agreement”) with the Adviser. Under the terms of the Investment Advisory Agreement, the Adviser is responsible for managing the Company’s business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring its investments, and monitoring its portfolio companies on an ongoing basis through a team of investment professionals.

The Adviser’s services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to the Company are not impaired.

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

Under the terms of the Investment Advisory Agreement, the Company will pay the Adviser a base management fee and may also pay to it certain incentive fees. The cost of both the management fee and the incentive fee will ultimately be borne by the Company’s shareholders.

The management fee is payable quarterly in arrears. Prior to the future quotation or listing of the Company’s securities on a national securities exchange (an “Exchange Listing”) or the future quotation or listing of its securities on any other public trading market, the management fee is payable at an annual rate of 0.75% of the Company’s (i) average gross assets, excluding cash and cash equivalents but including assets purchased with borrowed amounts, at the end of the Company’s two most recently completed calendar quarters plus (ii) the average of any remaining unfunded Capital Commitments at the end of the two most recently completed calendar quarters. Following an Exchange Listing, the management fee is payable at an annual rate of 1.75% of the Company’s average gross assets excluding cash and cash equivalents but including assets purchased with borrowed amounts, at the end of the two most recently completed calendar quarters. The management fee for any partial month or quarter, as the case may be, will be appropriately prorated and adjusted for any share issuances or repurchases during the relevant calendar months or quarters, as the case may be.

For the three months ended March 31, 2017 and 2016, management fees were $5.0 million and $0.6 million, respectively.

Pursuant to the Investment Advisory Agreement, the Adviser will not be entitled to an incentive fee prior to an Exchange Listing. Following an Exchange Listing, the incentive fee will consist of two components that are independent of each other, with the result that one component may be payable even if the other is not. A portion of the incentive fee is based on the Company’s pre-incentive fee net investment income and a portion is based on the Company’s capital gains. The portion of the incentive fee based on pre-incentive fee net investment income is determined and paid quarterly in arrears commencing with the first calendar quarter following an Exchange Listing, and equals 100% of the pre-incentive fee net investment income in excess of a 1.5% quarterly “hurdle rate,” until the Adviser has received 20% of the total pre-incentive fee net investment income for that calendar quarter and, for pre-incentive fee net investment income in excess of 1.875% quarterly, 20% of all remaining pre-incentive fee net investment income for that calendar quarter.

The second component of the incentive fee, the capital gains incentive fee, payable at the end of each calendar year in arrears, equals 20% of cumulative realized capital gains from the date on which the Exchange Listing becomes effective (the “Listing Date”) to the end of each calendar year, less cumulative realized capital losses and unrealized capital depreciation from the Listing Date to the end of each calendar year, less the aggregate amount of any previously paid capital gains incentive fee for prior periods. In no event will the capital gains incentive fee payable pursuant to the Investment Advisory Agreement be in excess of the amount permitted by the Advisers Act, including Section 205 thereof.

There was no incentive fee for the three months ended March 31, 2017 and 2016.

Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect until March 1, 2018 and will remain in effect from year-to-year thereafter if approved annually by a majority of the Board or by the holders of a majority of our outstanding voting securities and, in each case, by a majority of independent directors.

The Investment Advisory Agreement will automatically terminate within the meaning of the 1940 Act and related SEC guidance and interpretations in the event of its assignment. In accordance with the 1940 Act, without payment of any penalty, the Company may terminate the Investment Advisory Agreement with the Adviser upon 60 days’ written notice. The decision to terminate the agreement may be made by a majority of the Board or the shareholders holding a majority (as defined under the 1940 Act) of the outstanding shares of the Company’s common stock or the Adviser. In addition, without payment of any penalty, the Adviser may generally terminate the Investment Advisory Agreement upon 60 days’ written notice and, in certain circumstances, the Adviser may only be able to terminate the Investment Advisory Agreement upon 120 days’ written notice.

From time to time, the Adviser may pay amounts owed by the Company to third-party providers of goods or services, including the Board, and the Company will subsequently reimburse the Adviser for such amounts paid on its behalf. Amounts payable to the Adviser are settled in the normal course of business without formal payment terms.

Note 4. Investments

Under the 1940 Act, the Company is required to separately identify non-controlled investments where it owns 5% or more of a portfolio company’s outstanding voting securities and/or had the power to exercise control over the management or policies of such

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

portfolio company as investments in “affiliated” companies. In addition, under the 1940 Act, the Company is required to separately identify investments where it owns more than 25% of a portfolio company’s outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company as investments in “controlled” companies. Under the 1940 Act, "non-affiliated investments" are defined as investments that are neither controlled investments nor affiliated investments. Detailed information with respect to the Company’s non-controlled, non-affiliated; non-controlled, affiliated; and controlled affiliated investments is contained in the accompanying consolidated financial statements, including the consolidated schedule of investments. The information in the tables below is presented on an aggregate portfolio basis, without regard to whether they are non-controlled non-affiliated, non-controlled affiliated or controlled affiliated investments.

Investments at fair value consisted of the following as of March 31, 2017 and December 31, 2016:

	March 31, 2017				December 31, 2016
($ in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
First-lien senior secured debt investments	$	677,837	$	687,071	$	570,806	$	574,776
Second-lien senior secured debt investments		441,909		445,740		388,962		392,623
Total Investments	$	1,119,746	$	1,132,811	$	959,768	$	967,399

The industry composition of investments based on fair value as of March 31, 2017 and December 31, 2016 was as follows:

	March 31, 2017			December 31, 2016
Advertising and media		7.1	%		8.3	%
Aerospace and defense		4.4			5.1
Business services		10.9			6.6
Distribution		18.2			22.2
Energy equipment and services		8.7			—
Food and beverage		17.5			20.1
Healthcare and pharmaceuticals		4.4			5.1
Healthcare equipment and services		3.1			6.2
Infrastructure and environmental services		5.7			6.6
Insurance		3.0			3.6
Internet software and services		2.6			3.0
Leisure and entertainment		3.1			3.7
Manufacturing		1.4			1.6
Professional services		6.9			7.9
Specialty retail		3.0			—
Total		100.0	%		100.0	%

The geographic composition of investments based on fair value as of March 31, 2017 and December 31, 2016 was as follows:

	March 31, 2017			December 31, 2016
United States:
Midwest		21.3	%		25.8	%
Northeast		24.7			28.8
South		33.9			29.6
West		14.1			12.9
Canada		6.0			2.9
Total		100.0	%		100.0	%

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

Note 5. Fair Value of Investments

Investments

The following tables presents the fair value hierarchy of investments as of March 31, 2017 and December 31, 2016:

	Fair Value Hierarchy as of March 31, 2017
($ in thousands)	Level 1		Level 2		Level 3		Total
First-lien senior secured debt investments	$	—	$	46,023	$	641,048	$	687,071
Second-lien senior secured debt investments		—		35,612		410,128		445,740
Total Investments at fair value	$	—	$	81,635	$	1,051,176	$	1,132,811

	Fair Value Hierarchy as of December 31, 2016
($ in thousands)	Level 1		Level 2		Level 3		Total
First-lien senior secured debt investments	$	—	$	—	$	574,776	$	574,776
Second-lien senior secured debt investments		—		35,393		357,230		392,623
Total Investments at fair value	$	—	$	35,393	$	932,006	$	967,399

The following table presents changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three months ended March 31, 2017 :

	As of and for the Three Months Ended March 31, 2017
($ in thousands)	First-lien debt investments			Second-lien debt investments			Total
Fair value, beginning of period	$	574,776		$	357,230		$	932,006
Purchases of investments, net		147,371			52,740			200,111
Proceeds from investments, net		(86,758	)		-			(86,758	)
Net change in unrealized gain		4,750			(42	)		4,708
Net amortization of discount on investments		909			200			1,109
Transfers into (out of) Level 3⁽¹⁾		—			—			—
Fair value, end of period	$	641,048		$	410,128		$	1,051,176

________________

⁽¹⁾

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.

The following table presents information with respect to net change in unrealized gains on investments for which Level 3 inputs were used in determining the fair value that are still held by the Company at March 31, 2017:

($ in thousands)	Net change in unrealized gain for the Three Months Ended March 31, 2017 on Investments Held at March 31, 2017
First-lien senior secured debt investments	$	4,976
Second-lien senior secured debt investments		(42	)
Total Investments	$	4,934

There were no investments held as of March 31, 2016.

The following tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of March 31, 2017 and December 31, 2016. The tables are not intended to be all-inclusive but instead captures the significant unobservable inputs relevant to the Company’s determination of fair value.

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

As of March 31, 2017

($ in thousands)

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted Average)

Impact to Valuation from an Increase in Input

First-lien senior secured debt investments

98,250

Recent Transaction

Transaction Price

98.3

Increase

542,798

Yield Analysis

Market Yield

6.8%-10.9% (10.8%)

Decrease

Second-lien senior secured debt investments

52,745

Recent Transaction

Transaction Price

95.9-98.0 (97.2)

Increase

357,383

Yield Analysis

Market Yield

10.9%-13.4% (12.9%)

Decrease

As of December 31, 2016

($ in thousands)

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted Average)

Impact to Valuation from an Increase in Input

First-lien senior secured debt investments⁽¹⁾

298,954

Recent Transaction

Transaction Price

97.5-99.0 (98.4)

Increase

260,785

Yield Analysis

Market Yield

7.1%-9.9 (9.1%)

Decrease

Second-lien senior secured debt investments

93,425

Recent Transaction

Transaction Price

98.0-98.5 (98.3)

Increase

263,805

Yield Analysis

Market Yield

10.8%-12.9% (11.4%)

Decrease

________________

⁽¹⁾	Excludes an investment at fair value amounting to $15,037, which the Company valued using indicative bid prices obtained from broker dealers.

The Company typically determines the fair value of its performing Level 3 debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to the expected life, portfolio company performance since close, and other terms and risks associated with an investment. Among other factors, a determinant of risk is the amount of leverage used by the portfolio company relative to its total enterprise value, and the rights and remedies of the Company’s investment within each portfolio company’s capital structure.

Significant unobservable quantitative inputs typically used in the fair value measurement of the Company’s Level 3 debt investments primarily include current market yields, including relevant market indices, but may also include quotes from brokers, dealers, and pricing services as indicated by comparable investments. For the Company’s Level 3 equity investments, a market approach, based on comparable publicly-traded company and comparable market transaction multiples of revenues, earnings before income taxes, depreciation and amortization (“EBITDA”) or some combination thereof and comparable market transactions typically would be used.

Financial Instruments Not Carried at Fair Value

The fair value of the Company’s credit facilities, which are categorized as Level 3 within the fair value hierarchy as of March 31, 2017 and December 31, 2016, approximates their carrying value.

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

The carrying amounts of the Company’s assets and liabilities, other than investments at fair value, approximate fair value due to their short maturities or their close proximity of the originations to the measurement date.

Note 6. Debt

In accordance with the 1940 Act, with certain limitations, the Company is allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 200% after such borrowing. As of March 31, 2017 and December 31, 2016, the Company’s asset coverage was 215% and 237%, respectively.

Debt obligations consisted of the following as of March 31, 2017 and December 31, 2016:

	March 31, 2017
($ in thousands)	Aggregate Principal Committed		Outstanding Principal		Amount Available⁽¹⁾		Net Carrying Value⁽²⁾
Subscription Credit Facility	$	700,000	$	554,500	$	145,500	$	550,746
Revolving Credit Facility		400,000		50,000		350,000		46,203
Total Debt	$	1,100,000	$	604,500	$	495,500	$	596,949

________________

⁽¹⁾

The amount available reflects any limitations related to each credit facility’s borrowing base.

⁽²⁾

The carrying value of the Company’s Subscription Credit Facility and Revolving Credit Facility are presented net of deferred financing costs of $3.8 million and $3.8 million, respectively.

	December 31, 2016
($ in thousands)	Aggregate Principal Committed		Outstanding Principal		Amount Available⁽¹⁾		Net Carrying Value⁽²⁾
Subscription Credit Facility	$	500,000	$	495,000	$	5,000	$	491,906
Total Debt	$	500,000	$	495,000	$	5,000	$	491,906

________________

⁽¹⁾

The amount available reflects any limitations related to the credit facility’s borrowing base.

⁽²⁾

The carrying value of the Company’s Subscription Credit Facility is presented net of deferred financing costs of $3.1 million.

For the three months ended March 31, 2017, the components of interest expense were as follows:

	Three Months Ended
($ in thousands)	March 31, 2017
Interest expense	$	2,511
Amortization of debt issuance costs		518
Total Interest Expense	$	3,029
Average interest rate		2.44	%
Average daily borrowings		341,761

The Company entered into credit facilities subsequent to the three months ended March 31, 2016, and therefore there was no interest expense for the three months ended March 31, 2016.

Subscription Credit Facility

On August 1, 2016 (the “Closing Date”), the Company entered into a subscription credit facility (the “Subscription Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent (the “Administrative Agent”), and Wells Fargo, State Street Bank and Trust Company and the banks and financial institutions from time to time party thereto, as lenders.

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

The Subscription Credit Facility permits the Company to borrow up to $250 million, subject to availability under the “Borrowing Base”. The Borrowing Base is calculated based on the unused Capital Commitments of the investors meeting various eligibility requirements above certain concentration limits based on investors’ credit ratings. The Subscription Credit Facility includes a provision permitting the Company to increase the size of the facility on or before the first anniversary of the Closing Date up to a maximum principal amount not exceeding $500 million, subject to customary conditions, and includes a further provision permitting the Company to increase the size of the facility under certain circumstances up to a maximum principal amount not exceeding $750 million, if the existing or new lenders agree to commit to such further increase.

On September 14, 2016, the Company exercised its option to increase the size of the facility to a total of $300 million. On September 26, 2016, the Company exercised its option to increase the size of the facility to a total of $500 million. On January 4, 2017, the Company increased the size of the facility to a total of $575 million. On March 13, 2017, the Company increased the size of the facility to a total of $700 million.

Borrowings under the Subscription Credit Facility bear interest, at the Company’s election at the time of drawdown, at a rate per annum equal to (i) in the case of LIBOR rate loans, an adjusted LIBOR rate for the applicable interest period plus 1.60% or (ii) in the case of reference rate loans, the greatest of (A) a prime rate plus 0.60%, (B) the federal funds rate plus 1.10%, and (C) one-month LIBOR plus 1.60%. Loans may be converted from one rate to another at any time at the Company’s election, subject to certain conditions. The Company also will pay an unused commitment fee of 0.25% per annum on the unused commitments.

The Subscription Credit Facility will mature upon the earliest of (i) the date three (3) years from the Closing Date; (ii) the date upon which the Administrative Agent declares the obligations under the Credit Facility due and payable after the occurrence of an event of default; (iii) forty-five (45) days prior to the scheduled termination of the commitment period under the Company’s Subscription Agreements (as defined below); (iv) forty-five (45) days prior to the date of any listing of the Company’s common stock on a national securities exchange; (v) the termination of the commitment period under the Company’s Subscription Agreements (if earlier than the scheduled date); and (vi) the date the Company terminates the commitments pursuant to the Subscription Credit Facility.

The Subscription Credit Facility is secured by a perfected first priority security interest in the Company’s right, title, and interest in and to the capital commitments of the Company’s private investors, including the Company’s right to make capital calls, receive and apply capital contributions, enforce remedies and claims related thereto together with capital call proceeds and related rights, and a pledge of the collateral account into which capital call proceeds are deposited.

The Subscription Credit Facility contains customary covenants, including certain limitations on the incurrence by the Company of additional indebtedness and on the Company’s ability to make distributions to its shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events, and customary events of default (with customary cure and notice provisions).

Transfers of interests in the Company by shareholders must comply with certain sections of the Subscription Credit Facility and the Company shall notify the Administrative Agent before such transfers take place. Such transfers may trigger mandatory prepayment obligations.

Revolving Credit Facility

On February 1, 2017, the Company entered into a senior secured revolving credit agreement (the “Revolving Credit Facility”). The parties to the Revolving Credit Facility include the Company, as Borrower, the lenders from time to time parties thereto (each a “Lender” and collectively, the “Lenders”) and SunTrust Robinson Humphrey, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Joint Lead Arrangers and Joint Book Runners, SunTrust Bank as Administrative Agent and Bank of America, N.A. as Syndication Agent.

The Revolving Credit Facility is guaranteed by OR Lending, LLC, a subsidiary of the Company, and will be guaranteed by certain domestic subsidiaries of the Company that are formed or acquired by the Company in the future (collectively, the “Guarantors”). Proceeds of the Revolving Credit Facility may be used for general corporate purposes, including the funding of portfolio investments.

The maximum principal amount of the Facility is $400 million, subject to availability under the borrowing base, which is based on the Company’s portfolio investments and other outstanding indebtedness. Maximum capacity under the Facility may be increased to $750 million through the exercise by the Borrower of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Revolving Credit Facility includes a $50 million limit for swingline loans and is secured by a perfected first-priority interest in substantially all of the portfolio investments held by the Company and each Guarantor, subject to certain exceptions.

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

The availability period under the Revolving Credit Facility will terminate on January 31, 2020 (“Commitment Termination Date”) and the Facility will mature on February 1, 2021 (“Maturity Date”). During the period from the Commitment Termination Date to the Maturity Date, the Company will be obligated to make mandatory prepayments under the Revolving Credit Facility out of the proceeds of certain asset sales and other recovery events and equity and debt issuances.

The Company may borrow amounts in U.S. dollars or certain other permitted currencies. Amounts drawn under the Revolving Credit Facility will bear interest at either LIBOR plus 2.25%, or the prime rate plus 1.25%. The Company may elect either the LIBOR or prime rate at the time of drawdown, and loans may be converted from one rate to another at any time at the Company’s option, subject to certain conditions. The Company also pays a fee of 0.375% on undrawn amounts under the Revolving Credit Facility.

The Revolving Credit Facility includes customary covenants, including certain limitations on the incurrence by the Company of additional indebtedness and on the Company’s ability to make distributions to its shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants related to asset coverage and liquidity and other maintenance covenants, as well as customary events of default.

Note 7. Commitments and Contingencies

Portfolio Company Commitments

From time to time, the Company may enter into commitments to fund investments. As of March 31, 2017 and December 31, 2016, the Company had outstanding commitments to fund a revolver and delayed draw term loan totaling $20.4 million and $20.4 million, respectively.

Other Commitments and Contingencies

As of March 31, 2017, the Company had $2.5 billion in total Capital Commitments from investors ($1.8 billion unfunded), of which $112.4 million is from executives of the Adviser ($63.8 million unfunded). Subsequent to March 31, 2017, the Company entered into $261.0 million of Subscription Agreements with investors providing for the private placement of the Company’s common shares, which increased total Capital Commitments from investors to $2.7 billion ($2.0 billion unfunded).

As of December 31, 2016, the Company had $2.3 billion in total Capital Commitments from investors ($1.6 billion unfunded), of which $112.4 million is from executives of the Adviser ($63.8 million unfunded).

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. At March 31, 2017, management is not aware of any pending or threatened litigation.

Note 8. Net Assets

Subscriptions and Drawdowns

In connection with its formation, the Company has the authority to issue 500,000,000 common shares at $0.01 per share par value.

On March 1, 2016, the Company issued 100 common shares for $1,500 to the Adviser.

The Company has entered into subscription agreements (the “Subscription Agreements”) with investors providing for the private placement of the Company’s common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase the Company’s common shares up to the amount of their respective Capital Commitment on an as-needed basis each time the Company delivers a drawdown notice to its investors.

During the three months ended March 31, 2017, the Company did not deliver any capital call notices to investors. On April 14, 2017, the Company delivered a capital drawdown notice to its investors relating to the sale of approximately 6,600,659 shares of the Company’s common stock, par value $0.01 per share, for an aggregate offering price of $100 million.

During the three months ended March 31, 2016, the Company delivered the following capital call notices to its investors:

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

Capital Drawdown Notice Date	Common Share Issuance Date	Number of Common Shares Issued			Aggregate Offering Price ($ in millions)
March 17, 2016	March 30, 2016		3,333,344	$		50.0
March 30, 2016	April 12, 2016		17,214			0.3
Total			3,350,558	$		50.3

Distributions

The following table reflects the distributions declared on shares of the Company’s common stock during three months ended March 31, 2017:

Date Declared		Record Date		Payment Date		Distribution per Share
March 7, 2017		March 7, 2017		March 15, 2017		$	0.19

The distributions declared during the three months ended March 31, 2017 were derived from net investment income, determined on a tax basis.

On May 9, 2017, the Board of Directors declared a distribution of $12.8 million for shareholders of record on May 9, 2017, payable on May 15, 2017.

The Board of Directors did not declare a distribution for the three months ended March 31, 2016.

Dividend Reinvestment

With respect to distributions, the Company has adopted an “opt out” dividend reinvestment plan for common shareholders. As a result, in the event of a declared distribution, each shareholder that has not “opted out” of the dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of our common stock rather than receiving cash distributions. Shareholders who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.

The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the three months ended March 31, 2017:

Date Declared		Record Date		Payment Date		Shares
March 7, 2017		March 7, 2017		March 15, 2017			270,178

Repurchase Offers

Note 9. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per common share:

	For the Three Months Ended March 31,
($ in thousands)	2017		2016
Increase (decrease) in net assets resulting from operations	$	18,218	$	(2,319	)
Weighted average shares of common stock outstanding—basic and diluted		45,884,347		107,627
Earnings per common share-basic and diluted	$	0.40	$	(21.55	)

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) - Continued

Note 10. Financial Highlights

The following are the financial highlights for a common share outstanding during the three months ended March 31, 2017 and 2016:

	For the Three Months Ended March 31,
(amounts in thousands, except share and per share data)	2017				2016
Per Share Data
Net asset value, beginning of period		14.85			$	—
Net investment income (loss)⁽¹⁾		0.28				(0.70	)
Net unrealized gains		0.11				—
Total from operations		0.39				(0.70	)
Issuance of common shares		—				15.00
Distributions declared from net investment income⁽²⁾		(0.19	)			—
Total increase in net assets		0.20				14.30
Net asset value, end of period	$	15.05			$	14.30
Shares outstanding, end of period		46,103,491				3,333,444
Total Return⁽³⁾		2.7		%	N/M
Ratios / Supplemental Data
Ratio of total expenses to average net assets⁽⁴⁾		6.3		%		9.7		%
Ratio of net investment income (loss) to average net assets⁽⁴⁾		7.6		%		(9.7	)	%
Net assets, end of period	$	694,055			$	47,682
Weighted-average shares outstanding		45,884,347				107,627
Total capital commitments, end of period	$	2,475,262			$	973,250
Ratios of total contributed capital to total committed capital, end of period		26.9		%		5.1		%
Portfolio turnover rate		4.8		%		—		%
Year of formation	2015				2015

________________

⁽¹⁾

The per share data was derived by using the weighted average shares outstanding during the period.

⁽²⁾

The per share data was derived using actual shares outstanding at the date of the relevant transaction.

⁽³⁾

Total return is calculated as the change in net asset value (“NAV”) per share during the period, plus distributions per share (if any), divided by the beginning NAV per share. Total return is not annualized.

⁽⁴⁾

The ratios reflect an annualized amount, except in the case of non-recurring expenses (e.g. initial organization expense).

N/MNot meaningful.

Note 11. Subsequent Events

The Company’s management evaluated subsequent events through the date of issuance of these consolidated financial statements. Other than those previously disclosed, there have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in, these consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. This discussion contains forward-looking statements, which relate to future events or the future performance or financial condition of Owl Rock Capital Corporation and involves numerous risks and uncertainties. This discussion also should be read in conjunction with the “Cautionary Statement Regarding Forward Looking Statements” set forth on page 1 of this Quarterly Report on Form 10-Q. Actual results could differ materially from those implied or expressed in any forward-looking statements.

Overview

Owl Rock Capital Corporation (the “Company”, “we”, “us” or “our”) is a Maryland corporation formed on October 15, 2015. We were formed primarily to originate and make loans to, and make debt and equity investments in, U.S. middle market companies. We invest in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity-related securities including warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity. Our investment objective is to generate current income, and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns.

We are managed by Owl Rock Capital Advisors LLC (the “Adviser”). The Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”). Subject to the overall supervision of our Board of Directors (the “Board”), the Adviser manages our day-to-day operations, and provides investment advisory and management services to us. The Adviser or its affiliates may engage in certain origination activities and receive attendant arrangement, structuring or similar fees. The Adviser is responsible for managing our business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring our investments, and monitoring our portfolio companies on an ongoing basis through a team of investment professionals. The Board consists of seven directors, four of whom are independent.

Placement activities will be conducted by our officers and the Adviser. In addition, we have entered and may, from time to time, enter into agreements with placement agents or broker-dealers to solicit Capital Commitments. Fees paid pursuant to these agreements will be paid by our Adviser.

The Adviser also serves as investment adviser to Owl Rock Capital Corporation II. Owl Rock Capital Corporation II is a corporation formed under the laws of the State of Maryland that, like us, has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). Owl Rock Capital Corporation II’s investment objective is similar to ours, which is to generate current income, and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. On April 4, 2017, Owl Rock Capital Corporation II met its minimum offering requirement of $2.5 million and issued 277,778 shares of common stock.

We, the Adviser and certain of its affiliates have been granted exemptive relief by the SEC to permit us to co-invest with other funds managed by the Adviser or its affiliates in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. Pursuant to such exemptive relief, we generally are permitted to co-invest with certain of our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching by us or our stockholders on the part of any person concerned, (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies, and (3) the investment by our affiliates would not disadvantage us, and our participation would not be on a basis different from or less advantageous than that on which our affiliates are investing.

On April 27, 2016, we formed a wholly-owned subsidiary, OR Lending LLC, a Delaware limited liability company, which holds a California finance lenders license and a Tennessee industrial loan and thrift certificate.

We have elected to be regulated as a BDC under the 1940 Act and intend to qualify and be treated as a regulated investment company (“RIC”) for tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). As a result, we are required to comply with various statutory and regulatory requirements, such as:

•

the requirement to invest at least 70% of our assets in “qualifying assets”, as such term is defined in the 1940 Act;

•

source of income limitations;

•

asset diversification requirements; and

•

the requirement to distribute (or be treated as distributing) in each taxable year at least 90% of our investment company taxable income and tax-exempt interest for that taxable year.

In addition, we will not invest more than 20% of our total assets in companies whose principal place of business is outside the United States.

Our Investment Framework

We are a Maryland corporation organized primarily to originate and make loans to, and make debt and equity investments in, U.S. middle market companies. Our investment objective is to generate current income, and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. Since we began our investment activities in April 2016 through March 31, 2017, we have originated $1.4 billion aggregate principal amount of investments and retained $1.2 billion aggregate principal amount of these investments on our balance sheet prior to any subsequent exits or repayments. We seek to generate current income primarily in U.S. middle market companies through direct originations of senior secured loans or originations of unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, investments in equity-related securities including warrants, preferred stock and similar forms of senior equity.

We define “middle market companies” generally to mean companies with earnings before interest expense, income tax expense, depreciation and amortization, or “EBITDA,” between $10 million and $250 million annually and/or annual revenue of $50 million to $2.5 billion at the time of investment, although we may on occasion invest in smaller or larger companies if an opportunity presents itself.

As of March 31, 2017, our average investment size in each of our portfolio companies was approximately $49.3 million based on fair value. As of March 31, 2017, our portfolio companies had weighted average annual revenue of $532 million and weighted average annual EBITDA of $78 million.

The companies in which we invest use our capital to support their growth, acquisitions, market or product expansion, refinancings and/or recapitalizations. The debt in which we invest typically is not rated by any rating agency, but if these instruments were rated, they would likely receive a rating of below investment grade (that is, below BBB- or Baa3), which is often referred to as “junk”.

Key Components of Our Results of Operations

Investments

We focus primarily on the direct origination of loans to middle market companies domiciled in the United States.

Our level of investment activity (both the number of investments and the size of each investment) can and will vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make.

In addition, as part of our risk strategy on investments, we may reduce the levels of certain investments through partial sales or syndication to additional lenders.

Revenues

We generate revenues primarily in the form of interest income from the investments we hold. In addition, we may generate income from dividends on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights. Our debt investments typically have a term of three to ten years. As of March 31, 2017, 95.3% of our investments based on fair value bear interest at a floating rate, subject to interest rate floors. Interest on our debt investments is generally payable either monthly or quarterly.

Our investment portfolio consists of floating rate loans, and our credit facilities bear interest at floating rates. Macro trends in base interest rates like LIBOR may affect our net investment income over the long term. However, because we generally originate loans to a small number of portfolio companies each quarter, and those investments vary in size, our results in any given period, including the interest rate on investments that were sold or repaid in a period compared to the interest rate of new investments made during that period, often are idiosyncratic, and reflect the characteristics of the particular portfolio companies that we invested in or exited during the period and not necessarily any trends in our business or macro trends.

Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income using the effective yield method for term instruments and the straight-line method for revolving or delayed draw instruments. Repayments of our debt investments can reduce interest income from period to period. The frequency or volume of these repayments may fluctuate significantly. We record prepayment premiums on loans as interest income. We may also generate revenue in the form of commitment, loan origination, structuring, or due diligence fees, fees for providing managerial assistance to our portfolio companies and possibly consulting fees.

Dividend income on equity investments is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded companies.

Our portfolio activity also reflects the proceeds from sales of investments. We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the amortized cost basis of the investment without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized gains (losses) on investments in the consolidated statement of operations.

Expenses

Our primary operating expenses include the payment of the management fee and, in the event of the future quotation or listing of our securities on a national securities exchange, the incentive fee, and expenses reimbursable under the Administration Agreement and Investment Advisory Agreement. The management fee and incentive fee compensate our Adviser for work in identifying, evaluating, negotiating, closing, monitoring and realizing our investments.

Except as specifically provided below, all investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory and management services to us, the base compensation, bonus and benefits, and the routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Adviser. We bear our allocable portion of the compensation paid by the Adviser (or its affiliates) to our Chief Compliance Officer and Chief Financial Officer and their respective staffs (based on a percentage of time such individuals devote, on an estimated basis, to our business affairs). We bear all other costs and expenses of our operations, administration and transactions, including, but not limited to (i) investment advisory fees, including management fees and incentive fees, to the Adviser, pursuant to the Investment Advisory Agreement; (ii) our allocable portion of overhead and other expenses incurred by the Adviser in performing its administrative obligations under the Investment Advisory Agreement; and (iii) all other expenses of its operations and transactions including, without limitation, those relating to:

•

the cost of our organization and offerings;

•

the cost of calculating our net asset value, including the cost of any third-party valuation services;

•

the cost of effecting any sales and repurchases of our common stock and other securities;

•

fees and expenses payable under any dealer manager agreements, if any;

•

debt service and other costs of borrowings or other financing arrangements;

•

costs of hedging;

•

expenses, including travel expense, incurred by the Adviser, or members of the investment team, or payable to third parties, performing due diligence on prospective portfolio companies and, if necessary, enforcing our rights;

•

transfer agent and custodial fees;

•

fees and expenses associated with marketing efforts;

•

federal and state registration fees, any stock exchange listing fees and fees payable to rating agencies;

•

federal, state and local taxes;

•

independent directors’ fees and expenses including certain travel expenses;

•

costs of preparing financial statements and maintaining books and records and filing reports or other documents with the Securities and Exchange Commission (or other regulatory bodies) and other reporting and compliance costs, including registration and listing fees, and the compensation of professionals responsible for the preparation of the foregoing;

•

the costs of any reports, proxy statements or other notices to our shareholders (including printing and mailing costs), the costs of any shareholder or director meetings and the compensation of investor relations personnel responsible for the preparation of the foregoing and related matters;

•

commissions and other compensation payable to brokers or dealers;

•

research and market data;

•

fidelity bond, directors’ and officers’ errors and omissions liability insurance and other insurance premiums;

•

direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;

•

fees and expenses associated with independent audits, outside legal and consulting costs;

•

costs of winding up;

•

costs incurred in connection with the formation or maintenance of entities or vehicles to hold our assets for tax or other purposes;

•

extraordinary expenses (such as litigation or indemnification); and

•

costs associated with reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws.

We expect, but cannot assure, that our general and administrative expenses will increase in dollar terms during periods of asset growth, but will decline as a percentage of total assets.

Leverage

The amount of leverage we use in any period depends on a variety of factors, including cash available for investing, the cost of financing and general economic and market conditions. However, our total borrowings are limited so that our asset coverage ratio cannot fall below 200%, as defined in the 1940 Act. In any period, our interest expense will depend largely on the extent of our borrowing and we expect interest expense will increase as we increase our leverage over time subject to the limits of the 1940 Act. In addition, we may dedicate assets to financing facilities.

Market Trends

We believe the middle-market lending environment provides opportunities for us to meet our goal of making investments that generate attractive risk-adjusted returns based on a combination of the following factors:

Limited Availability of Capital for Middle Market Companies. We believe that regulatory and structural changes in the market have reduced the amount of capital available to U.S. middle-market companies. In particular, we believe there are currently fewer traditional providers of capital to middle market companies. Traditional middle market lenders, such as commercial and regional banks and commercial finance companies, have contracted their origination and lending activities and are focusing on more liquid asset classes, or have exited the business altogether. We believe the Basel III accord, and implemented regulations by the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have significantly increased capital and liquidity requirements for banks, decreasing their capacity to hold non-investment grade leveraged loans on their balance sheets. Coupled with new risk retention requirements for collateralized loan vehicles, we believe these developments reduce the capacity of traditional lenders to serve this market segment and, as a result, have restricted the access to capital and increased the cost of borrowing for U.S. middle market companies.

Capital Markets Have Been Unable to Fill the Void in U.S. Middle Market Finance Left by Banks. While underwritten bond and syndicated loan markets have been robust in recent years, middle market companies are less able to access these markets for reasons including the following:

High Yield Market – Middle market companies generally are not issuing debt in an amount large enough to be an attractively sized bond. High yield bonds are generally purchased by institutional investors who, among other things, are highly focused on the liquidity characteristics of the bond being issued. For example, mutual funds and exchange traded funds (“ETFs”) are significant buyers of underwritten bonds. However, mutual funds and ETFs generally require the ability to liquidate their investments quickly in order to fund investor redemptions and/or comply with regulatory requirements. Accordingly, the existence of an active secondary market for bonds is an important consideration in these entities’ initial investment decision. Because there is typically little or no active secondary market for the debt of U.S. middle market companies, mutual funds and ETFs generally do not provide debt capital to U.S. middle market companies. We believe this is likely to be a persistent problem and creates an advantage for those like us who have a more stable capital base and have the ability to invest in illiquid assets.

Syndicated Loan Market – While the syndicated loan market is modestly more accommodating to middle market issuers, as with bonds, loan issue size and liquidity are key drivers of institutional appetite and, correspondingly, underwriters’ willingness to underwrite the loans. Loans arranged through a bank are done either on a “best efforts” basis or are underwritten with terms plus “flex” – a set of terms, coupon and fee cushion that underwriters have the right to impose on the loan as a means to help the loan clear the market in the event the terms initially marketed are insufficiently attractive to investors. Furthermore, banks are generally reluctant to underwrite middle market loans because the arrangement fees they may earn on the placement of the debt generally is not sufficient to meet the banks’ return hurdles. Loans provided by companies such as ours provide certainty to issuers in that we can commit to a given amount of debt on specific terms, at stated coupons and with agreed upon fees. As we are the ultimate holder of the loans, we do not require market “flex” or other arrangements that banks may require when acting on an agency basis.

Robust Demand for Debt Capital. We believe U.S. middle market companies will continue to require access to debt capital to refinance existing debt, support growth and finance acquisitions. In addition, we believe the large amount of uninvested capital held by funds of private equity firms, estimated by Preqin Ltd., an alternative assets industry data and research company, to be $1.47 trillion as of December 2016, will continue to drive deal activity. We expect that private equity sponsors will continue to pursue acquisitions and leverage their equity investments with secured loans provided by companies such as us.

The Middle Market is a Large Addressable Market. According to GE Capital’s National Center for the Middle Market 4th Quarter 2016 Middle Market Indicator, there are approximately 200,000 U.S. middle market companies, which have approximately 47.9 million aggregate employees. Moreover, the U.S. middle market accounts for approximately $5.9 trillion of private sector gross domestic product (“GDP”) which, measured on a global scale, would be the fifth largest global economy. GE defines U.S. middle market companies as those between $10 million and $1 billion in annual revenue, which we believe has significant overlap with our definition of U.S. middle market companies.

Attractive Investment Dynamics. An imbalance between the supply of, and demand for, middle market debt capital creates attractive pricing dynamics. We believe the directly negotiated nature of middle market financings also generally provides more favorable terms to the lender, including stronger covenant and reporting packages, better call protection, and lender-protective change of control provisions. Additionally, we believe BDC managers’ expertise in credit selection and ability to manage through credit cycles has generally resulted in BDCs experiencing lower loss rates than U.S. commercial banks through credit cycles. Further, we believe that historical middle market default rates have been lower, and recovery rates have been higher, as compared to the larger market capitalization, broadly distributed market, leading to lower cumulative losses.

Conservative Capital Structures. Following the credit crisis, which we define broadly as occurring between mid-2007 and mid-2009, lenders have generally required borrowers to maintain more equity as a percentage of their total capitalization, specifically to protect lenders during economic downturns. With more conservative capital structures, U.S. middle market companies have exhibited higher levels of cash flows available to service their debt. In addition, U.S. middle market companies often are characterized by simpler capital structures than larger borrowers, which facilitates a streamlined underwriting process and, when necessary, restructuring process.

Attractive Opportunities in Investments in Loans. We intend to invest in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity-related securities. We believe that opportunities in senior secured loans are significant because of the floating rate structure of most senior secured debt issues and because of the strong defensive characteristics of these types of investments. Given the current low interest rate environment, we believe that debt issues with floating interest rates offer a superior return profile as compared with fixed-rate investments, since floating rate structures are generally less susceptible to declines in value experienced by fixed-rate securities in a rising interest rate environment. Senior secured debt also provides strong defensive characteristics. Senior secured debt has priority in payment among an issuer’s security holders whereby holders are due to receive payment before junior creditors and equity holders. Further, these investments are secured by the issuer’s assets, which may provide protection in the event of a default.

Portfolio and Investment Activity

As of March 31, 2017, based on fair value, our portfolio consisted of 60.7% first lien debt investments and 39.3% second lien debt investments.

As of March 31, 2017, our weighted average total yield of debt and income producing securities at fair value was 9.0%, and our weighted average total yield of debt and income producing securities at amortized cost was 9.1%.

As of March 31, 2017 we had investments in 23 portfolio companies with an aggregate fair value of $1.1 billion.

Our investment activity for the three months ended March 31, 2017 is presented below (information presented herein is at par value unless otherwise indicated). The Company began investment activities in April 2016; therefore, there was no investment activity for the three months ended March 31, 2016.

($ in thousands, except as otherwise indicated)	Three Months Ended March 31, 2017
New investment commitments:
Gross originations	$	250,250
Less: Sell downs		(50,000	)
Total new investment commitments	$	200,250
Principal amount of investments funded:
First-lien senior secured debt investments	$	146,000
Second-lien senior secured debt investments		54,250
Total principal amount of investments funded	$	200,250
Principal amount of investments sold or repaid:
First-lien senior secured debt investments	$	(35,000	)
Second-lien senior secured debt investments		—
Total principal amount of investments sold or repaid	$	(35,000	)
Number of new investment commitments in new portfolio companies⁽¹⁾	3
Average new investment commitment amount	$	64,750
Weighted average term for new investment commitments (in years)		5.3
Percentage of new debt investment commitments at floating rates		83.0		%
Percentage of new debt investment commitments at fixed rates		17.0		%
Weighted average interest rate of new investment commitments		8.5		%
Weighted average spread over LIBOR of new floating rate investment commitments		7.8		%

________________

⁽¹⁾

Number of new investment commitments represents commitments to a particular portfolio company.

As of March 31, 2017 and December 31, 2016, our investments consisted of the following:

	March 31, 2017				December 31, 2016
($ in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
First-lien senior secured debt investments	$	677,837	$	687,071	$	570,806	$	574,776
Second-lien senior secured debt investments		441,909		445,740		388,962		392,623
Total Investments	$	1,119,746	$	1,132,811	$	959,768	$	967,399

The table below describes investments by industry composition based on fair value as of March 31, 2017 and December 31, 2016:

	March 31, 2017			December 31, 2016
Advertising and media		7.1	%		8.3	%
Aerospace and defense		4.4			5.1
Business services		10.9			6.6
Distribution		18.2			22.2
Energy equipment and services		8.7			—
Food and beverage		17.5			20.1
Healthcare and pharmaceuticals		4.4			5.1
Healthcare equipment and services		3.1			6.2
Infrastructure and environmental services		5.7			6.6
Insurance		3.0			3.6
Internet software and services		2.6			3.0
Leisure and entertainment		3.1			3.7
Manufacturing		1.4			1.6
Professional services		6.9			7.9
Specialty retail		3.0			—
Total		100.0	%		100.0	%

The table below describes investments by geographic composition based on fair value as of March 31, 2017 and December 31, 2016:

	March 31, 2017			December 31, 2016
United States:
Midwest		21.3	%		25.8	%
Northeast		24.7			28.8
South		33.9			29.6
West		14.1			12.9
Canada		6.0			2.9
Total		100.0	%		100.0	%

The weighted average yields and interest rate of our debt investments at fair value as of March 31, 2017 and December 31, 2016 were as follows:

	March 31, 2017			December 31, 2016
Weighted average total yield of debt and income producing securities		9.0	%		9.0	%
Weighted average interest rate of debt and income producing securities		8.6	%		8.5	%
Weighted average spread over LIBOR of all floating rate investments		7.4	%		7.4	%

The weighted average yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of all of our and our subsidiaries’ fees and expenses. The weighted average yield was computed using the effective interest rates as of each respective date, including accretion of original issue discount and loan origination fees, but excluding investments on non-accrual status, if any. There can be no assurance that the weighted average yield will remain at its current level.

Our Adviser monitors our portfolio companies on an ongoing basis. It monitors the financial trends of each portfolio company to determine if they are meeting their respective business plans and to assess the appropriate course of action with respect to each portfolio company. Our Adviser has a number of methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:

•

assessment of success of the portfolio company in adhering to its business plan and compliance with covenants;

•

periodic and regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor, to discuss financial position, requirements and accomplishments;

•

comparisons to other companies in the portfolio company’s industry; and

•

review of monthly or quarterly financial statements and financial projections for portfolio companies.

As part of the monitoring process, our Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our investment Adviser rates the credit risk of all investments on a scale of 1 to 5. 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 the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The rating system is as follows:


Investment Rating		Description
1		Investments with a rating of 1 involve the least amount of risk to our initial cost basis. The borrower is performing above expectations, and the trends and risk factors for this investment since origination or acquisition are generally favorable;
2		Investments rated 2 involve an acceptable level of risk that is similar to the risk at the time of origination or acquisition. The borrower is generally performing as expected and the risk factors are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a rate of 2;
3		Investments rated 3 involve a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination or acquisition;
4		Investments rated 4 involve a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination or acquisition. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 120 days past due); and
5		Investments rated 5 involve a borrower performing substantially below expectations and indicates that the loan’s risk has increased substantially since origination or acquisition. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 5 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.

Our Adviser rates the investments in our portfolio at least quarterly and it is possible that the rating of a portfolio investment may be reduced or increased over time. For investments rated 3, 4 or 5, our Adviser enhances its level of scrutiny over the monitoring of such portfolio company.

The following table shows the composition of our portfolio on the 1 to 5 rating scale as of March 31, 2017 and December 31, 2016.

	March 31, 2017					December 31, 2016
Investment Rating	Investments at Fair Value ($ in thousands)		Percentage of Total Portfolio			Investments at Fair Value ($ in thousands)		Percentage of Total Portfolio
1	$	—		—	%	$	—		—	%
2		1,059,311		93.5			967,399		100.0
3		73,500		6.5			—		—
4		—		—			—		—
5		—		—			—		—
Total	$	1,132,811		100.0	%	$	967,399		100.0	%

The following table shows the amortized cost of our performing and non-accrual investments as of March 31, 2017 and December 31, 2016:

	March 31, 2017					December 31, 2016
($ in thousands)	Amortized Cost		Percentage			Amortized Cost		Percentage
Performing	$	1,119,746		100.0	%	$	959,768		100.0	%
Non-accrual		—		—			—		—
Total	$	1,119,746		100.0	%	$	959,768		100.0	%

Results of Operations

The following table represents the operating results for the three months ended March 31, 2017 and 2016. We were initially capitalized on March 1, 2016 and commenced operations on March 3, 2016.

	For the Three Months Ended March 31,
($ in millions)	2017		2016
Total Investment Income	$	23.3	$	—
Less: Expenses		10.5		2.3
Net Investment Income (Loss) Before Taxes		12.8		(2.3	)
Less: Income taxes, including excise taxes		—		—
Net Investment Income (Loss) After Taxes		12.8		(2.3	)
Net change in unrealized gains		5.4		—
Net Increase (Decrease) in Net Assets Resulting from Operations	$	18.2	$	(2.3	)

Net increase in net assets resulting from operations can vary from period to period as a result of various factors, including acquisitions, the level of new investment commitments, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio. Additionally, we were initially capitalized on March 1, 2016 and commenced investing activities in April 2016. As a result, comparisons may not be meaningful.

Investment Income

Investment income for the three months ended March 31, 2017 and 2016, were as follows:

	For the Three Months Ended March 31,
($ in millions)	2017		2016
Interest from investments	$	23.2	$	—
Other income		0.1		—
Total investment income	$	23.3	$	—

Investment income increased for the three months ended March 31, 2017 due to an increase in our investment portfolio.

Expenses

Expenses for the three months ended March 31, 2017 and 2016 were as follows:

	For the Three Months Ended March 31,
($ in millions)	2017		2016
Initial organization	$	—	$	1.2
Interest expense		3.0		—
Management fees		5.0		0.6
Professional fees		1.3		0.3
Directors’ fees		0.1		—
Other general and administrative		1.1		0.2
Total expenses	$	10.5	$	2.3

Under the terms of the Administration Agreement, we reimburse the Adviser for services performed for us. In addition, pursuant to the terms of the Administration Agreement, the Adviser may delegate its obligations under the Administration Agreement to an affiliate or to a third party and we reimburse the Adviser for any services performed for us by such affiliate or third party.

Total expenses increased by $8.2 million for the three months ended March 31, 2016 to the three months ended March 31, 2017 due to an increase in management fees, interest expense and other expenses of $4.4 million, $3.0 million and $2.0 million, respectively, partially offset by initial organization expenses incurred during the three months ended March 2016 of $1.2 million.

Income Taxes, Including Excise Taxes

We intend to elect to be treated as a RIC under Subchapter M of the Code, and we intend to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, we must, among other things, distribute to our shareholders in each taxable year generally at least 90% of our investment company taxable income, as defined by the Code, and net tax-exempt income for that taxable year. To maintain our tax treatment as a RIC, we, among other things, intend to make the requisite distributions to our shareholders, which generally relieves us from corporate-level U.S. federal income taxes.

Depending on the level of taxable income earned in a tax year, we can be expected to carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, we will accrue excise tax on estimated excess taxable income.

For the three months ended March 31, 2017 and 2016, there was no accrued U.S. federal excise tax.

Net Unrealized Gains on Investments

We fair value our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses. During the three months ended March 31, 2017, net unrealized gains on our investment portfolio were comprised of the following:

	For the Three Months Ended March 31,
($ in millions)	2017		2016
Net unrealized gains on investments	$	5.4	$	—
Net unrealized gains on investments	$	5.4	$	—

Financial Condition, Liquidity and Capital Resources

Our liquidity and capital resources are generated primarily from the proceeds of capital drawdowns of our privately placed Capital Commitments and our credit facilities. The primary uses of our cash and cash equivalents are for (i) investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements, (ii) the cost of operations (including paying our Adviser), (iii) debt service, repayment and other financing costs of any borrowings and (iv) cash distributions to the holders of our shares.

We may from time to time enter into additional debt facilities, increase the size of our existing credit facilities or issue debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to incur borrowings, issue debt securities or issue preferred stock, if immediately after the borrowing or issuance, the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock, is at least 200%. As of March 31, 2017, our asset coverage ratio was 215%. We seek to carefully consider our unfunded commitments for the purpose of planning our ongoing financial leverage. Further, we maintain sufficient borrowing capacity within the 200% asset coverage limitation to cover any outstanding unfunded commitments we are required to fund.

Cash and cash equivalents as of March 31, 2017, taken together with our uncalled Capital Commitments of $1.8 billion, is expected to be sufficient for our investing activities and to conduct our operations in the near term. As of March 31, 2017, we had $495.5 million available under our credit facilities.

As of March 31, 2017, we had $160.7 million in cash and cash equivalents. During the three months ended March 31, 2017, we used $148.2 million in cash for operating activities, primarily as a result of funding portfolio investments of $245.7 million, partially offset by sells downs of $86.9 million, and other operating activity of $10.6 million. Lastly, cash provided by financing activities was $99.6 million during the period, which was the result of proceeds from net borrowings on our credit facilities, net of debt issuance costs, of $104.5 million, partially offset by distributions and offering costs paid of $4.7 million and $0.2 million.

Equity

Subscriptions and Drawdowns

In connection with its formation, the Company has the authority to issue 500,000,000 common shares at $0.01 per share par value.

On March 1, 2016, the Company issued 100 common shares for $1,500 to the Adviser.

During the three months ended March 31, 2016, the Company delivered the following capital call notices to its investors:

Capital Drawdown Notice Date	Common Share Issuance Date	Number of Common Shares Issued			Aggregate Offering Price ($ in millions)
March 17, 2016	March 30, 2016		3,333,344	$		50.0
March 30, 2016	April 12, 2016		17,214			0.3
Total			3,350,558	$		50.3

Distributions

The following table reflects the distributions declared on shares of the Company’s common stock during three months ended March 31, 2017:

Date Declared		Record Date		Payment Date		Distribution per Share
March 7, 2017		March 7, 2017		March 15, 2017		$	0.19

The distributions declared during the three months ended March 31, 2017 were derived from net investment income, determined on a tax basis.

On May 9, 2017, the Board of Directors declared a distribution of $12.8 million for shareholders of record on May 9, 2017, payable on May 15, 2017.

The Board of Directors did not declare a distribution for the three months ended March 31, 2016.

Dividend Reinvestment

The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the three months ended March 31, 2017:

Date Declared		Record Date		Payment Date		Shares
March 7, 2017		March 7, 2017		March 15, 2017			270,178

Repurchase Offers

The Company offered to repurchase up to $50 million of issued and outstanding shares of common stock at a purchase price of $15.09 per share. The offer to repurchase commenced on March 15, 2017 and expired on April 11, 2017. No shares were repurchased in connection with the tender offer. We will not effect any other repurchase prior to the earlier of (i) an Exchange Listing and (ii) such time as all of the capital commitments to us have been fully drawn down.

Debt

Aggregate Borrowings

Debt obligations consisted of the following as of March 31, 2017 and December 31, 2016:

	March 31, 2017
($ in thousands)	Aggregate Principal Committed		Outstanding Principal		Amount Available⁽¹⁾		Net Carrying Value⁽²⁾
Subscription Credit Facility	$	700,000	$	554,500	$	145,500	$	550,746
Revolving Credit Facility		400,000		50,000		350,000		46,203
Total Debt	$	1,100,000	$	604,500	$	495,500	$	596,949

________________

⁽¹⁾

The amount available reflects any limitations related to the Credit Facility’s borrowing base.

⁽²⁾

The carrying value of the Company’s Subscription Credit Facility and Revolving Credit Facility are presented net of deferred financing costs of $3.8 million and $3.8 million, respectively.

Subscription Credit Facility

On August 1, 2016 (the “Closing Date”), we entered into a subscription credit facility (the “ Subscription Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent (the “Administrative Agent”), and Wells Fargo, State Street Bank and Trust Company and the banks and financial institutions from time to time party thereto, as lenders.

The Subscription Credit Facility permits us to borrow up to $250 million, subject to availability under the “Borrowing Base”. The Borrowing Base is calculated based on the unused Capital Commitments of the investors meeting various eligibility requirements above certain concentration limits based on investors’ credit ratings. The Subscription Credit Facility includes a provision permitting us to increase the size of the facility on or before the first anniversary of the Closing Date up to a maximum principal amount not exceeding $500 million, subject to customary conditions, and includes a further provision permitting us to increase the size of the

facility under certain circumstances up to a maximum principal amount not exceeding $750 million, if the existing or new lenders agree to commit to such further increase.

On September 14, 2016 we exercised our option to increase the size of the facility to a total of $300 million. On September 26, 2016 we exercised our option to increase the size of the facility to a total of $500 million. On January 4, 2017, the Company increased the size of the facility to a total of $575 million. On March 13, 2017, the Company increased the size of the facility to a total of $700 million.

Borrowings under the Subscription Credit Facility bear interest, at our election at the time of drawdown, at a rate per annum equal to (i) in the case of LIBOR rate loans, an adjusted LIBOR rate for the applicable interest period plus 1.60% or (ii) in the case of reference rate loans, the greatest of (A) a prime rate plus 0.60%, (B) the federal funds rate plus 1.10%, and (C) one-month LIBOR plus 1.60%. Loans may be converted from one rate to another at any time at our election, subject to certain conditions. We also will pay an unused commitment fee of 0.25% per annum on the unused commitments.

The Subscription Credit Facility will mature upon the earliest of (i) the date three (3) years from the Closing Date; (ii) the date upon which the Administrative Agent declares the obligations under the Credit Facility due and payable after the occurrence of an event of default; (iii) forty-five (45) days prior to the scheduled termination of the commitment period under our Subscription Agreements (as defined below); (iv) forty-five (45) days prior to the date of any listing of our common stock on a national securities exchange; (v) the termination of the commitment period under our Subscription Agreements (if earlier than the scheduled date); and (vi) the date we terminate the commitments pursuant to the Subscription Credit Facility.

The Subscription Credit Facility is secured by a perfected first priority security interest in our right, title, and interest in and to the capital commitments of our private investors. including our right to make capital calls, receive and apply capital contributions, enforce remedies and claims related thereto together with capital call proceeds and related rights, and a pledge of the collateral account into which capital call proceeds are deposited.

The Subscription Credit Facility contains customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events, and customary events of default (with customary cure and notice provisions).

Transfers of interests in the Company by investors must comply with certain sections of the Subscription Credit Facility and we shall notify the Administrative Agent before such transfers take place. Such transfers may trigger mandatory prepayment obligations.

Revolving Credit Facility

On February 1, 2017, we entered into a senior secured revolving credit agreement (the “Revolving Credit Facility”). The parties to the Revolving Credit Facility include us, as Borrower, the lenders from time to time parties thereto (each a “Lender” and collectively, the “Lenders”) and SunTrust Robinson Humphrey, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Joint Lead Arrangers and Joint Book Runners, SunTrust Bank as Administrative Agent and Bank of America, N.A. as Syndication Agent.

The Revolving Credit Facility is guaranteed by OR Lending, LLC, one of our subsidiaries, and will be guaranteed by certain of our domestic subsidiaries that are formed or acquired by us in the future (collectively, the “Guarantors”). Proceeds of the Revolving Credit Facility may be used for general corporate purposes, including the funding of portfolio investments.

The maximum principal amount of the Revolving Credit Facility is $400 million, subject to availability under the borrowing base, which is based on our portfolio investments and other outstanding indebtedness. Maximum capacity under the Revolving Credit Facility may be increased to $750 million through the exercise by the Borrower of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Revolving Credit Facility includes a $50 million limit for swingline loans and is secured by a perfected first-priority interest in substantially all of the portfolio investments held by us and each Guarantor, subject to certain exceptions.

The availability period under the Revolving Credit Facility will terminate on January 31, 2020 (“Commitment Termination Date”) and the Revolving Credit Facility will mature on February 1, 2021 (“Maturity Date”). During the period from the Commitment Termination Date to the Maturity Date, we will be obligated to make mandatory prepayments under the Revolving Credit Facility out of the proceeds of certain asset sales and other recovery events and equity and debt issuances.

We may borrow amounts in U.S. dollars or certain other permitted currencies. Amounts drawn under the Revolving Credit Facility will bear interest at either LIBOR plus 2.25%, or the prime rate plus 1.25%. We may elect either the LIBOR or prime rate at the time of drawdown, and loans may be converted from one rate to another at any time at our option, subject to certain conditions. We will also pay a fee of 0.375% on undrawn amounts under the Revolving Credit Facility.

The Revolving Credit Facility includes customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the

occurrence of certain events and certain financial covenants related to asset coverage and liquidity and other maintenance covenants, as well as customary events of default.

Off-Balance Sheet Arrangements

Portfolio Company Commitments

Other Commitments and Contingencies

Contractual Obligations

A summary of our contractual payment obligations under our Credit Facility as of March 31, 2017, is as follows:

	Payments Due by Period
($ in millions)	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
Subscription Credit Facility	$	554.5	$	—	$	554.5	$	—	$	—
Revolving Credit Facility		50.0		—		—		50.0		—
Total Contractual Obligations	$	604.5	$	—	$	554.5	$	50.0	$	—

Related-Party Transactions

We have entered into a number of business relationships with affiliated or related parties, including the following:

•

the Investment Advisory Agreement;

•

the Administration Agreement; and

•

the License Agreement.

Critical Accounting Policies

The preparation of the 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 any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies should be read in connection with our risk factors as disclosed in our Form 10-K.

Investments at Fair Value

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received (excluding prepayment fees, if any) 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. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.

Investments for which market quotations are readily available are typically valued at the bid price of those market quotations. To validate market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including

the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of our investments, are valued at fair value as determined in good faith by our Board, based on, among other things, the input of the Adviser, our Audit Committee and independent third-party valuation firm(s) engaged at the direction of the Board.

As part of the valuation process, the Board takes into account relevant factors in determining the fair value of our investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and 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, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.

The Board undertakes a multi-step valuation process, which includes, among other procedures, the following:

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With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;

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With respect to investment for which market quotations are not readily available, the valuation process begins with the independent valuation firm(s) providing a preliminary valuation of each investment to the Adviser’s valuation committee;

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Preliminary valuation conclusions are documented and discussed with the Adviser’s valuation committee. Agreed upon valuation recommendations are presented to the Audit Committee;

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The Audit Committee reviews the valuations recommendations and recommends values for each investment to the Board; and

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The Board reviews the recommended valuations and determines the fair value of each investment.

We conduct this valuation process on a quarterly basis.

We apply Financial Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 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. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, we consider its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below:

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

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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.

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

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfer occurred. In addition to using the above inputs in investment valuations, we apply the valuation policy approved by our Board that is consistent with ASC 820. Consistent with the valuation policy, we evaluate the source of the 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. When an investment is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), we subject those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, we, or the independent valuation firm(s), review pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs.

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 such 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 may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and

may be subject to contractual and other restrictions on resale. If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

Interest and Dividend Income Recognition

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued 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 management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Distributions

We intend to elect to be treated for U.S. federal income tax purposes, and qualify annually thereafter, as a RIC under Subchapter M of the Code. To obtain and maintain our tax treatment as a RIC, we must distribute (or be deemed to distribute) in each taxable year distribution for tax purposes equal to at least 90 percent of the sum of our:

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investment company taxable income (which is generally our ordinary income plus the excess of realized short-term capital gains over realized net long-term capital losses), determined without regard to the deduction for dividends paid, for such taxable year; and

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net tax-exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions) for such taxable year.

As a RIC, we (but not our shareholders) generally will not be subject to U.S. federal tax on investment company taxable income and net capital gains that we distribute to our shareholders.

We intend to distribute annually all or substantially all of such income. To the extent that we retain our net capital gains or any investment company taxable income, we generally will be subject to corporate-level U.S. federal income tax. We can be expected to carry forward our net capital gains or any investment company taxable income in excess of current year dividend distributions, and pay the U.S. federal excise tax as described below.

Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% U.S. federal excise tax payable by us. To avoid this tax, we must distribute (or be treated as distributing) during each calendar year an amount at least equal to the sum of:

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98% of our net ordinary income excluding certain ordinary gains or losses for that calendar year;

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98.2% of our capital gain net income, adjusted for certain ordinary gains and losses, recognized for the twelve-month period ending on October 31 of that calendar year; and

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100% of any income or gains recognized, but not distributed, in preceding years.

While we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the 4% U.S. federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed and as a result, in such cases, the excise tax will be imposed. In such an event, we will be liable for this tax only on the amount by which we do not meet the foregoing distribution requirement.

We intend to pay quarterly distributions to our shareholders out of assets legally available for distribution. All distributions will be paid at the discretion of our Board and will depend on our earnings, financial condition, maintenance of our tax treatment as a RIC, compliance with applicable BDC regulations and such other factors as our Board may deem relevant from time to time.

To the extent our current taxable earnings for a year fall below the total amount of our distributions for that year, a portion of those distributions may be deemed a return of capital to our shareholders for U.S. federal income tax purposes. Thus, the source of a distribution to our shareholders may be the original capital invested by the shareholder rather than our income or gains. Shareholders should read written disclosure carefully and should not assume that the source of any distribution is our ordinary income or gains.

We have adopted an “opt out” dividend reinvestment plan for our common shareholders. As a result, if we declare a cash dividend or other distribution, each shareholder that has not “opted out” of our dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of our common stock rather than receiving cash distributions. Shareholders who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.

Income Taxes

We have elected to be treated as a BDC under the 1940 Act. We also intend to elect to be treated as a RIC under the Code for the taxable year ending December 31, 2016. So long as we maintain our tax treatment as a RIC, we generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we distribute at least annually to our stockholders as distributions. Rather, any tax liability related to income earned and distributed by us represents obligations of our investors and will not be reflected in our consolidated financial statements.

We evaluate tax positions taken or expected to be taken in the course of preparing our consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, we must distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable income” for that year, which is generally our ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to financial market risks, including valuation risk and interest rate risk.

Valuation Risk

We have invested, and plan to continue to invest, primarily in illiquid debt and equity securities of private companies. Most of our investments will not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board, based on, among other things, the input of the Adviser, our Audit Committee and independent third-party valuation firm(s) engaged at the direction of the Board, and in accordance with our valuation policy. There is no single standard for determining fair value. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material.

Interest Rate Risk

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. We intend to fund portions of our investments with borrowings, and at such time, our net investment income will be affected by the difference between the rate at which we invest and the rate at which we borrow. Accordingly, we cannot assure you that a significant change in market interest rates will not have a material adverse effect on our net investment income.

As of March 31, 2017, 95.3% of the investments based on fair value in our portfolio were at floating rates.

Based on our consolidated balance sheet as of March 31, 2017, the following table shows the annualized impact on net income of hypothetical base rate changes in interest rates (considering interest rate floors for floating rate instruments) assuming each floating rate investment is subject to 3 month LIBOR and there are no changes in our investment and borrowing structure.

($ in thousands)		Interest Income				Interest Expense				Net Income
Up 300 basis points	$		32,610		$		18,135		$		14,475
Up 200 basis points			21,740				12,090				9,650
Up 100 basis points			10,870				6,045				4,825
Down 25 basis points			(1,654	)			(1,511	)			(143	)

Currency Risk

From time to time, we may make investments that are denominated in a foreign currency. These investments are translated into U.S. dollars at each balance sheet date, exposing us to movements in foreign exchange rates. 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 seek to utilize instruments such as, but not limited to, forward contracts to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates. We also have the ability to borrow in certain foreign currencies under our credit facilities. Instead of entering into a foreign currency exchanges forward contract in connection with loans or other investments we have made that are denominated in a foreign currency, we may borrow in that currency to establish a natural hedge against our loan or investment. To the extent the loan or investment is based on a floating rate other than a rate under which we can borrow under our credit facilities, we may seek to utilize interest rate derivatives to hedge our exposure to changes in the associated rate.

Item 4. Controls and Procedures.

(a)

Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective as of the end of the period covered by the Quarterly Report on Form 10-Q.

(b)

Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of any such future legal or regulatory proceedings cannot be predicted with certainty, we do not expect that any such future proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors.

There have been no material changes from the risk factors previously disclosed in our Form 10-K, filed with the SEC on March 7, 2017.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None, other than those already disclosed in certain Form 8-Ks filed with the SEC.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On May 9, 2017, the Company amended and restated its Dividend Reinvestment Plan to allow for the issuance of fractional shares.

Item 6. Exhibits.

(a)

Exhibits

Exhibit Number		Description
10.1*		Lender Joinder Agreement between the Company and Wells Fargo Bank, National Association, dated March 13, 2017.

10.2*		Amended and Restated Dividend Reinvestment Plan Effective as of May 9, 2017.

11.1		Computation of Per Share Earnings (included in the notes to the unaudited consolidated financial statements contained in this report).

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Filed herewith.

SIGNATURES

Pursuant to the requirements 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.

	Owl Rock Capital Corporation

Date: May 9, 2017	By:	/s/ Craig W. Packer
		Craig W. Packer
		Chief Executive Officer

Date: May 9, 2017	By:	/s/ Alan Kirshenbaum
		Alan Kirshenbaum
		Chief Financial Officer and Chief Operating Officer