Important
Information
This report is transmitted
to the stockholders of Eagle Point Income Company Inc. (“we”, “us”, “our” or the “Company”).
This report and the information and views included herein do not constitute investment advice, or a recommendation or an offer
to enter into any transaction with the Company or any of its affiliates. This report is provided for informational purposes only,
does not constitute an offer to sell securities of the Company or a solicitation of an offer to purchase any such securities, and
is not a prospectus. From time to time, the Company may have a registration statement relating to one or more of its securities
on file with the Securities and Exchange Commission (“SEC”). Any registration statement that has not yet been declared
effective by the SEC, and any prospectus relating thereto, is not complete and may be changed. Any securities that are the subject
of such a registration statement may not be sold until the registration statement filed with the SEC is effective.
The information and its
contents are the property of Eagle Point Income Management LLC (the “Adviser”) and/or the Company. Any unauthorized
dissemination, copying or use of this presentation is strictly prohibited and may be in violation of law. This presentation is
being provided for informational purposes only.
Investors
should read the Company’s prospectus and SEC filings (which are publicly available on the EDGAR Database on the SEC website
at http://www.sec.gov) carefully and consider their investment
goals, time horizons and risk tolerance before investing in the Company. Investors should consider the Company’s investment
objectives, risks, charges and expenses carefully before investing in securities of the Company, as described in the prospectus.
There is no guarantee that any of the goals, targets or objectives described in this report will be achieved.
An investment in the Company
is not appropriate for all investors. The investment program of the Company is speculative, entails substantial risk and includes
investment techniques not employed by traditional mutual funds. An investment in the Company is not intended to be a complete investment
program. Shares of closed-end investment companies, such as the Company, frequently trade at a discount from their net asset value
(“NAV”), which may increase investors’ risk of loss. Past performance is not indicative of, or a guarantee of,
future performance. The performance and certain other portfolio information quoted herein represents information as of March 31,
2024. Nothing herein shall be relied upon as a representation as to the future performance or portfolio holdings of the Company.
Investment return and principal value of an investment will fluctuate, and shares, when sold, may be worth more or less than their
original cost. The Company’s performance is subject to change since the end of the period noted in this report and may be
lower or higher than the performance data shown herein.
Neither the Adviser nor
the Company provides legal, accounting or tax advice. Any statement regarding such matters is explanatory and may not be relied
upon as definitive advice. Investors should consult with their legal, accounting and tax advisers regarding any potential investment.
The information presented herein is as of the dates noted and is derived from financial and other information of the Company, and,
in certain cases, from third party sources and reports (including reports of third party custodians, CLO collateral managers and
trustees) that have not been independently verified by the Company. As noted herein, certain of this information is estimated and
unaudited, and therefore subject to change. The Company does not represent that such information is accurate or complete, and it
should not be relied upon as such. This report does not purport to be complete and no obligation to update or revise any information
herein is being assumed.
About Eagle Point Income
Company Inc.
The Company is a publicly-traded, diversified,
closed-end management investment company. The Company’s primary investment objective is to generate high current income,
with a secondary objective to generate capital appreciation, by investing primarily in junior debt tranches of CLOs. In addition,
the Company may invest up to 35% of its total assets (at the time of investment) in CLO equity securities. The Company is externally
managed and advised by Eagle Point Income Management LLC.
The Company
makes certain unaudited portfolio information available each month on its website in addition to making certain other unaudited
financial information available on its website (www.eaglepointincome.com).
This information includes (1) an estimated range of the Company’s net investment income (“NII”) and realized
capital gains or losses per share of common stock for each calendar quarter end, generally made available within the first
fifteen days after the
applicable calendar month end, (2) an estimated range of the Company’s net asset value (“NAV”) per share of common
stock for the prior month end and certain additional portfolio-level information, generally made available within the first fifteen
days after the applicable calendar month end, and (3) during the latter part of each month, an updated estimate of NAV, if applicable,
and, with respect to each calendar quarter end, an updated estimate of the Company’s NII and realized capital gains or losses
per share for the applicable quarter, if available.
Forward-Looking Statements
This report may contain
“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements
other than statements of historical facts included in this report may constitute forward-looking statements and are not guarantees
of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those
in the forward-looking statements as a result of a number of factors, including those described in the prospectus and the Company’s
other filings with the SEC. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking
statements speak only as of the date of this report.
Financial Statements
for the Three Months Ended
March 31, 2024 (Unaudited)
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated Statement of Assets and Liabilities
As of March 31, 2024
(expressed in U.S. dollars)
(Unaudited)
ASSETS | |
| |
Investments,
at fair value (cost $291,237,986) | |
$ | 280,886,381 | |
Cash
and cash equivalents | |
| 114,936 | |
Interest
receivable | |
| 7,568,272 | |
Receivable
for shares of common stock issued pursuant to the Company's dividend reinvestment plan | |
| 276,196 | |
Excise
tax refund receivable | |
| 55,413 | |
Prepaid
expenses | |
| 638,195 | |
Total
Assets | |
| 289,539,393 | |
| |
| | |
| |
| | |
LIABILITIES | |
| | |
5.00%
Series A Term Preferred Stock due 2026, at fair value under the fair value option (1,521,649 shares outstanding) (Note 6) | |
| 35,682,669 | |
| |
| | |
7.75%
Series B Term Preferred Stock due 2028, at fair value under the fair value option (1,486,049 shares outstanding) (Note 6) | |
| 37,299,830 | |
Unamortized
share issuance premium associated with 7.75% Series B Term Preferred Stock due 2028 | |
| 4,871 | |
7.75%
Series B Term Preferred Stock due 2028, at fair value, plus associated unamortized share issuance premium | |
| 37,304,701 | |
| |
| | |
Borrowings
under credit facility (less unamortized deferred financing costs of $20,833 (Note 9)) | |
| 18,829,167 | |
Management
fees payable | |
| 825,474 | |
Payable
for securities purchased | |
| 540,100 | |
Professional
fees payable | |
| 173,000 | |
Administration
fees payable | |
| 153,120 | |
Directors'
fees payable | |
| 63,750 | |
Interest
expense payable | |
| 29,120 | |
Tax
expense payable | |
| 26,150 | |
Other
expenses payable | |
| 7,535 | |
Total
Liabilities | |
| 93,634,786 | |
| |
| | |
COMMITMENTS
AND CONTINGENCIES (Note 7) | |
| | |
| |
| | |
NET
ASSETS applicable to 12,958,326 shares of $0.001 par value common stock outstanding | |
$ | 195,904,607 | |
| |
| | |
NET
ASSETS consist of: | |
| | |
Paid-in
capital (Note 5) | |
$ | 223,282,065 | |
Aggregate
distributable earnings (losses) | |
| (26,458,129 | ) |
Accumulated
other comprehensive income (loss) | |
| (919,329 | ) |
Total
Net Assets | |
$ | 195,904,607 | |
Net
asset value per share of common stock | |
$ | 15.12 | |
| See accompanying notes to the consolidated financial statements | 1 |
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated Schedule of Investments
As of March 31, 2024
(expressed in U.S. dollars)
(Unaudited)
Issuer
⁽¹⁾ | |
Investment
Description ⁽²⁾ ⁽³⁾ | |
Acquisition
Date ⁽⁴⁾ | |
Principal
Amount | | |
Cost | | |
Fair
Value ⁽⁵⁾ | | |
%
of Net Assets | |
Investments,
at fair value | |
| |
| |
| | | |
| | | |
| | | |
| | |
CLO
Debt ⁽⁶⁾ | |
| |
| |
| | | |
| | | |
| | | |
| | |
Structured
Finance | |
| |
| |
| | | |
| | | |
| | | |
| | |
AGL
CLO 12 Ltd. | |
Secured
Note - Class E, 11.73%, (3M SOFR + 6.41%, due 07/20/2034) | |
08/18/2023 | |
$ | 1,800,000 | | |
$ | 1,725,638 | | |
$ | 1,782,000 | | |
| 0.91 | % |
AMMC
CLO 24, Limited | |
Secured
Note - Class E, 12.15%, (3M SOFR + 6.83%, due 01/20/2035) | |
07/26/2023 | |
| 5,000,000 | | |
| 4,669,961 | | |
| 4,844,000 | | |
| 2.47 | % |
AMMC
CLO 25, Limited | |
Secured
Note - Class E, 12.90%, (3M SOFR + 7.59%, due 04/15/2035) | |
08/08/2023 | |
| 5,000,000 | | |
| 4,735,950 | | |
| 4,939,000 | | |
| 2.52 | % |
Ares
XXXIV CLO Ltd. | |
Secured
Note - Class E-R, 12.43%, (3M SOFR + 7.11%, due 04/17/2033) | |
08/08/2023 | |
| 1,517,600 | | |
| 1,373,717 | | |
| 1,491,042 | | |
| 0.76 | % |
Ares
XLV CLO Ltd. | |
Secured
Note - Class E, 11.68%, (3M SOFR + 6.36%, due 10/15/2030) | |
05/30/2019 | |
| 800,000 | | |
| 790,483 | | |
| 794,560 | | |
| 0.41 | % |
Ares
LII CLO Ltd. | |
Secured
Note - Class E-R, 12.03%, (3M SOFR + 6.71%, due 04/22/2031) | |
03/20/2024 | |
| 5,000,000 | | |
| 4,980,000 | | |
| 4,980,000 | | |
| 2.54 | % |
Ares
LIV CLO Ltd. | |
Secured
Note - Class E, 12.92%, (3M SOFR + 7.60%, due 10/15/2032) | |
03/20/2024 | |
| 1,425,000 | | |
| 1,425,754 | | |
| 1,425,713 | | |
| 0.73 | % |
Bain
Capital Credit CLO 2019-2, Limited | |
Secured
Note - Class E-R, 11.90%, (3M SOFR + 6.58%, due 10/17/2032) | |
03/19/2024 | |
| 3,000,000 | | |
| 2,911,875 | | |
| 2,911,800 | | |
| 1.49 | % |
Barings
CLO Ltd. 2018-IV | |
Secured
Note - Class E, 11.40%, (3M SOFR + 6.08%, due 10/15/2030) | |
10/26/2018 | |
| 840,000 | | |
| 836,585 | | |
| 811,944 | | |
| 0.41 | % |
Barings
CLO Ltd. 2019-II | |
Secured
Note - Class D-R, 12.36%, (3M SOFR + 7.04%, due 04/15/2036) | |
03/19/2024 | |
| 500,000 | | |
| 490,523 | | |
| 490,450 | | |
| 0.25 | % |
Battalion
CLO XII Ltd. | |
Secured
Note - Class E, 11.67%, (3M SOFR + 6.35%, due 05/17/2031) | |
10/04/2018 | |
| 5,060,000 | | |
| 4,925,663 | | |
| 4,679,994 | | |
| 2.39 | % |
Battalion
CLO XXI Ltd. | |
Secured
Note - Class E, 12.04%, (3M SOFR + 6.72%, due 07/15/2034) | |
06/08/2022 | |
| 5,000,000 | | |
| 4,685,661 | | |
| 4,589,500 | | |
| 2.34 | % |
Black
Diamond CLO 2016-1, Ltd. | |
Secured
Note - Class D-R, 11.19%, (3M SOFR + 5.86%, due 04/26/2031) | |
10/04/2018 | |
| 1,050,000 | | |
| 1,004,173 | | |
| 978,285 | | |
| 0.50 | % |
Black
Diamond CLO 2017-1, Ltd. | |
Secured
Note - Class D, 12.18%, (3M SOFR + 6.86%, due 04/24/2029) | |
10/04/2018 | |
| 3,600,000 | | |
| 3,594,036 | | |
| 3,523,680 | | |
| 1.80 | % |
Carlyle
US CLO 2017-1, Ltd. | |
Secured
Note - Class D, 11.58%, (3M SOFR + 6.26%, due 04/20/2031) | |
09/15/2020 | |
| 2,000,000 | | |
| 1,728,989 | | |
| 1,913,000 | | |
| 0.98 | % |
Carlyle
US CLO 2018-2, Ltd. | |
Secured
Note - Class D, 10.83%, (3M SOFR + 5.51%, due 10/15/2031) | |
10/04/2018 | |
| 5,500,000 | | |
| 5,341,961 | | |
| 5,166,150 | | |
| 2.64 | % |
Carlyle
US CLO 2019-1, Ltd. | |
Secured
Note - Class D, 12.28%, (3M SOFR + 6.96%, due 04/20/2031) | |
08/19/2019 | |
| 3,475,000 | | |
| 3,321,067 | | |
| 3,347,468 | | |
| 1.71 | % |
Carlyle
US CLO 2021-1, Ltd. | |
Secured
Note - Class D, 11.58%, (3M SOFR + 6.26%, due 04/15/2034) | |
03/26/2024 | |
| 4,000,000 | | |
| 3,965,060 | | |
| 3,965,200 | | |
| 2.02 | % |
CIFC
Funding 2015-I, Ltd. | |
Secured
Note - Class E-RR, 11.58%, (3M SOFR + 6.26%, due 01/22/2031) | |
10/04/2018 | |
| 5,000,000 | | |
| 4,777,183 | | |
| 4,956,500 | | |
| 2.53 | % |
CIFC
Funding 2017-II, Ltd. | |
Secured
Note - Class E, 11.53%, (3M SOFR + 6.21%, due 04/20/2030) | |
01/11/2024 | |
| 3,750,000 | | |
| 3,651,000 | | |
| 3,703,875 | | |
| 1.89 | % |
CIFC
Funding 2018-II, Ltd. | |
Secured
Note - Class D, 11.43%, (3M SOFR + 6.11%, due 04/20/2031) | |
10/04/2018 | |
| 1,225,000 | | |
| 1,197,477 | | |
| 1,212,015 | | |
| 0.62 | % |
CIFC
Funding 2018-III, Ltd. | |
Secured
Note - Class E, 11.06%, (3M SOFR + 5.76%, due 07/18/2031) | |
08/16/2023 | |
| 4,750,000 | | |
| 4,418,098 | | |
| 4,655,950 | | |
| 2.38 | % |
CIFC
Funding 2018-IV, Ltd. | |
Secured
Note - Class E, 13.28%, (3M SOFR + 7.96%, due 10/17/2031) | |
05/22/2019 | |
| 2,000,000 | | |
| 1,888,147 | | |
| 1,758,600 | | |
| 0.90 | % |
CIFC
Funding 2021-III, Ltd. | |
Secured
Note - Class E-1, 11.98%, (3M SOFR + 6.66%, due 07/15/2036) | |
08/18/2023 | |
| 3,750,000 | | |
| 3,651,563 | | |
| 3,715,125 | | |
| 1.90 | % |
Cook
Park CLO, Ltd. | |
Secured
Note - Class E, 10.98%, (3M SOFR + 5.66%, due 04/17/2030) | |
10/04/2018 | |
| 1,250,000 | | |
| 1,205,031 | | |
| 1,189,250 | | |
| 0.61 | % |
Dryden
37 Senior Loan Fund, Ltd. | |
Secured
Note - Class E-R, 10.73%, (3M SOFR + 5.41%, due 01/15/2031) | |
10/04/2018 | |
| 500,000 | | |
| 486,884 | | |
| 451,950 | | |
| 0.23 | % |
Eaton
Vance CLO 2018-1, Ltd. | |
Secured
Note - Class E, 11.58%, (3M SOFR + 6.26%, due 10/15/2030) | |
07/26/2023 | |
| 750,000 | | |
| 664,564 | | |
| 707,550 | | |
| 0.36 | % |
First
Eagle BSL CLO 2019-1 Ltd. | |
Secured
Note - Class D, 13.28%, (3M SOFR + 7.96%, due 01/20/2033) | |
12/17/2019 | |
| 5,000,000 | | |
| 4,822,745 | | |
| 4,689,500 | | |
| 2.39 | % |
Gilbert
Park CLO, Ltd. | |
Secured
Note - Class E, 11.98%, (3M SOFR + 6.66%, due 10/15/2030) | |
12/19/2023 | |
| 5,327,000 | | |
| 5,117,437 | | |
| 5,319,010 | | |
| 2.72 | % |
Harbor
Park CLO, Ltd. | |
Secured
Note - Class E, 11.18%, (3M SOFR + 5.86%, due 01/20/2031) | |
08/08/2023 | |
| 4,250,000 | | |
| 4,100,238 | | |
| 4,227,050 | | |
| 2.16 | % |
Invesco
CLO 2022-1, Ltd. | |
Secured
Note - Class E, 11.62%, (3M SOFR + 6.30%, due 04/20/2035) | |
03/19/2024 | |
| 1,500,000 | | |
| 1,440,000 | | |
| 1,440,000 | | |
| 0.74 | % |
KKR
CLO 14 Ltd. | |
Secured
Note - Class E-R, 11.73%, (3M SOFR + 6.41%, due 07/15/2031) | |
12/20/2023 | |
| 2,700,000 | | |
| 2,579,739 | | |
| 2,671,380 | | |
| 1.36 | % |
KKR
CLO 22 Ltd. | |
Secured
Note - Class E, 11.58%, (3M SOFR + 6.26%, due 07/20/2031) | |
10/27/2021 | |
| 5,075,000 | | |
| 4,900,245 | | |
| 5,038,968 | | |
| 2.57 | % |
KKR
CLO 26 Ltd. | |
Secured
Note - Class E-R, 12.73%, (3M SOFR + 7.41%, due 10/15/2034) | |
08/08/2023 | |
| 2,650,000 | | |
| 2,575,896 | | |
| 2,600,180 | | |
| 1.33 | % |
KKR
CLO 29 Ltd. | |
Secured
Note - Class F, NM, (3M SOFR + 9.26%, due 01/15/2032) | |
12/14/2021 | |
| 589,812 | | |
| — | | |
| — | | |
| 0.00 | % |
LCM
XVIII, L.P. | |
Secured
Note - Class E-R, 11.53%, (3M SOFR + 6.21%, due 04/20/2031) | |
10/04/2018 | |
| 600,000 | | |
| 598,757 | | |
| 486,480 | | |
| 0.25 | % |
Madison
Park Funding XX, Ltd. | |
Secured
Note - Class E-R, 10.88%, (3M SOFR + 5.56%, due 07/27/2030) | |
10/20/2023 | |
| 1,250,000 | | |
| 1,126,245 | | |
| 1,200,750 | | |
| 0.61 | % |
Madison
Park Funding XXVII, Ltd. | |
Secured
Note - Class D, 10.58%, (3M SOFR + 5.26%, due 04/20/2030) | |
10/04/2018 | |
| 3,050,000 | | |
| 2,888,429 | | |
| 2,971,005 | | |
| 1.52 | % |
Madison
Park Funding XLII, Ltd. | |
Secured
Note - Class E, 11.63%, (3M SOFR + 6.31%, due 11/21/2030) | |
08/15/2019 | |
| 3,375,000 | | |
| 3,258,372 | | |
| 3,332,475 | | |
| 1.70 | % |
Madison
Park Funding LI, Ltd. | |
Secured
Note - Class E, 11.84%, (3M SOFR + 6.53%, due 07/19/2034) | |
10/28/2021 | |
| 4,250,000 | | |
| 4,235,624 | | |
| 4,255,950 | | |
| 2.17 | % |
Marathon
CLO XIII, Ltd. | |
Secured
Note - Class D, 12.56%, (3M SOFR + 7.24%, due 04/15/2032) | |
06/04/2019 | |
| 3,500,000 | | |
| 3,371,344 | | |
| 3,231,200 | | |
| 1.65 | % |
Neuberger
Berman Loan Advisers CLO 33, Ltd. | |
Secured
Note - Class E-R, 11.83%, (3M SOFR + 6.51%, due 10/16/2033) | |
07/24/2023 | |
| 5,000,000 | | |
| 4,690,398 | | |
| 4,928,000 | | |
| 2.52 | % |
OCP
CLO 2017-13, Ltd. | |
Secured
Note - Class D-R, 12.08%, (3M SOFR + 6.76%, due 07/15/2030) | |
03/19/2024 | |
| 2,000,000 | | |
| 1,987,500 | | |
| 1,987,600 | | |
| 1.01 | % |
Octagon
Investment Partners 37, Ltd. | |
Secured
Note - Class D, 10.99%, (3M SOFR + 5.66%, due 07/25/2030) | |
10/04/2018 | |
| 2,575,000 | | |
| 2,413,126 | | |
| 2,372,348 | | |
| 1.21 | % |
Octagon
Investment Partners 38, Ltd. | |
Secured
Note - Class D, 11.28%, (3M SOFR + 5.96%, due 07/20/2030) | |
10/04/2018 | |
| 3,725,000 | | |
| 3,664,873 | | |
| 3,513,793 | | |
| 1.79 | % |
Octagon
Investment Partners 39, Ltd. | |
Secured
Note - Class E, 11.33%, (3M SOFR + 6.01%, due 10/20/2030) | |
10/24/2018 | |
| 1,550,000 | | |
| 1,506,153 | | |
| 1,488,000 | | |
| 0.76 | % |
Octagon
Investment Partners 41, Ltd. | |
Secured
Note - Class E-R, 12.71%, (3M SOFR + 7.39%, due 10/15/2033) | |
09/24/2021 | |
| 5,000,000 | | |
| 4,816,990 | | |
| 4,877,000 | | |
| 2.49 | % |
OZLM
XXI, Ltd. | |
Secured
Note - Class D, 11.12%, (3M SOFR + 5.80%, due 01/20/2031) | |
10/04/2018 | |
| 4,150,000 | | |
| 4,081,174 | | |
| 3,902,660 | | |
| 1.99 | % |
Pikes
Peak CLO 1 | |
Secured
Note - Class E, 11.63%, (3M SOFR + 6.31%, due 07/24/2031) | |
10/28/2021 | |
| 3,500,000 | | |
| 3,417,443 | | |
| 3,370,850 | | |
| 1.72 | % |
Rockford
Tower CLO 2018-1, Ltd. | |
Secured
Note - Class E, 11.43%, (3M SOFR + 6.11%, due 05/20/2031) | |
09/30/2021 | |
| 2,250,000 | | |
| 2,198,180 | | |
| 2,120,400 | | |
| 1.08 | % |
Rockford
Tower CLO 2018-2, Ltd. | |
Secured
Note - Class E, 11.58%, (3M SOFR + 6.26%, due 10/20/2031) | |
10/04/2018 | |
| 5,000,000 | | |
| 4,861,655 | | |
| 4,708,500 | | |
| 2.40 | % |
Rockford
Tower CLO 2019-2, Ltd. | |
Secured
Note - Class E, 11.63%, (3M SOFR + 6.31%, due 08/20/2032) | |
01/13/2021 | |
| 3,000,000 | | |
| 2,965,956 | | |
| 2,795,100 | | |
| 1.43 | % |
Rockford
Tower CLO 2021-3, Ltd. | |
Secured
Note - Class E, 12.30%, (3M SOFR + 6.98%, due 10/20/2034) | |
10/17/2023 | |
| 4,975,000 | | |
| 4,447,336 | | |
| 4,558,095 | | |
| 2.33 | % |
RR
4 Ltd. | |
Secured
Note - Class D, 11.43%, (3M SOFR + 6.11%, due 04/15/2030) | |
10/28/2021 | |
| 5,000,000 | | |
| 4,827,647 | | |
| 4,952,000 | | |
| 2.53 | % |
RR
7 Ltd. | |
Secured
Note - Class D-1B, 11.82%, (3M SOFR + 6.50%, due 01/15/2037) | |
08/10/2023 | |
| 3,000,000 | | |
| 2,911,250 | | |
| 2,973,600 | | |
| 1.52 | % |
Sculptor
CLO XXIX, Ltd. | |
Secured
Note - Class E, 13.18%, (3M SOFR + 7.86%, due 10/22/2034) | |
03/26/2024 | |
| 3,800,000 | | |
| 3,764,375 | | |
| 3,764,280 | | |
| 1.92 | % |
Shackleton
2019-XIV CLO, Ltd. | |
Secured
Note - Class E-R, 12.90%, (3M SOFR + 7.58%, due 07/20/2034) | |
03/26/2024 | |
| 1,025,000 | | |
| 1,023,365 | | |
| 1,023,360 | | |
| 0.52 | % |
Southwick
Park CLO, Ltd. | |
Secured
Note - Class E-R, 11.83%, (3M SOFR + 6.51%, due 07/20/2032) | |
03/20/2024 | |
| 4,250,000 | | |
| 4,250,000 | | |
| 4,250,000 | | |
| 2.17 | % |
TCI-Symphony
CLO 2016-1 Ltd. | |
Secured
Note - Class E-R2, 12.33%, (3M SOFR + 7.01%, due 10/13/2032) | |
01/13/2022 | |
| 3,000,000 | | |
| 3,000,000 | | |
| 2,878,800 | | |
| 1.47 | % |
TICP
CLO VIII, Ltd. | |
Secured
Note - Class D-R, 12.28%, (3M SOFR + 6.96%, due 10/20/2034) | |
07/27/2023 | |
| 2,000,000 | | |
| 1,917,994 | | |
| 2,000,200 | | |
| 1.02 | % |
TICP
CLO IX, Ltd. | |
Secured
Note - Class E, 11.18%, (3M SOFR + 5.86%, due 01/20/2031) | |
08/22/2019 | |
| 1,375,000 | | |
| 1,282,419 | | |
| 1,373,900 | | |
| 0.70 | % |
TICP
CLO XI, Ltd. | |
Secured
Note - Class E, 11.58%, (3M SOFR + 6.26%, due 10/20/2031) | |
10/29/2021 | |
| 5,050,000 | | |
| 5,021,309 | | |
| 5,050,000 | | |
| 2.58 | % |
Venture
36 CLO, Limited | |
Secured
Note - Class E, 12.50%, (3M SOFR + 7.18%, due 04/20/2032) | |
01/21/2021 | |
| 5,607,455 | | |
| 5,085,689 | | |
| 4,166,339 | | |
| 2.13 | % |
Venture
43 CLO, Limited | |
Secured
Note - Class E, 12.73%, (3M SOFR + 7.41%, due 04/15/2034) | |
11/02/2021 | |
| 2,500,000 | | |
| 2,445,132 | | |
| 2,303,750 | | |
| 1.18 | % |
Vibrant
CLO VI, Ltd. | |
Secured
Note - Class E, 11.34%, (3M SOFR + 6.01%, due 06/20/2029) | |
10/04/2018 | |
| 4,350,000 | | |
| 3,864,739 | | |
| 4,222,980 | | |
| 2.16 | % |
Vibrant
CLO VIII, Ltd. | |
Secured
Note - Class D, 11.33%, (3M SOFR + 6.01%, due 01/20/2031) | |
10/04/2018 | |
| 1,750,000 | | |
| 1,713,897 | | |
| 1,581,650 | | |
| 0.81 | % |
Wellfleet
CLO 2018-1, Ltd. | |
Secured
Note - Class E, 11.08%, (3M SOFR + 5.76%, due 07/17/2031) | |
10/27/2021 | |
| 4,025,000 | | |
| 3,893,900 | | |
| 3,504,970 | | |
| 1.79 | % |
Wind
River 2014-1 CLO Ltd. | |
Secured
Note - Class E-R, 11.86%, (3M SOFR + 6.56%, due 07/18/2031) | |
08/16/2021 | |
| 2,550,000 | | |
| 2,401,331 | | |
| 1,897,200 | | |
| 0.97 | % |
Wind
River 2021-3 CLO Ltd. | |
Secured
Note - Class E, 12.18%, (3M SOFR + 6.86%, due 07/20/2033) | |
10/28/2021 | |
| 5,000,000 | | |
| 4,796,840 | | |
| 4,725,000 | | |
| 2.41 | % |
York
CLO-2 Ltd. | |
Secured
Note - Class E-R, 11.23%, (3M SOFR + 5.91%, due 01/22/2031) | |
05/16/2019 | |
| 2,855,000 | | |
| 2,545,240 | | |
| 2,851,574 | | |
| 1.46 | % |
| |
| |
| |
| | | |
| 211,258,025 | | |
| 210,590,498 | | |
| 107.53 | % |
CLO
Equity ⁽⁷⁾ ⁽⁸⁾ | |
| |
| |
| | | |
| | | |
| | | |
| | |
Structured
Finance | |
| |
| |
| | | |
| | | |
| | | |
| | |
Ares
XLIV CLO Ltd. | |
Subordinated
Note (effective yield 15.23%, maturity 04/15/2034) | |
06/08/2021 | |
| 10,505,000 | | |
| 3,764,063 | | |
| 3,152,237 | | |
| 1.61 | % |
Ares
LVIII CLO Ltd. | |
Subordinated
Note (effective yield 17.15%, maturity 01/15/2035) | |
06/17/2021 | |
| 4,000,000 | | |
| 2,666,623 | | |
| 2,465,048 | | |
| 1.26 | % |
Bain
Capital Credit CLO 2021-2, Limited | |
Subordinated
Note (effective yield 27.02%, maturity 07/16/2034) | |
08/09/2023 | |
| 3,250,000 | | |
| 1,720,077 | | |
| 1,733,360 | | |
| 0.88 | % |
Bain
Capital Credit CLO 2021-7, Limited | |
Subordinated
Note (effective yield 26.09%, maturity 01/22/2035) | |
09/05/2023 | |
| 5,750,000 | | |
| 3,434,282 | | |
| 3,521,982 | | |
| 1.80 | % |
Bardin
Hill CLO 2021-2 Ltd. | |
Subordinated
Note (effective yield 27.31%, maturity 10/25/2034) ⁽⁹⁾ | |
09/24/2021 | |
| 5,000,000 | | |
| 3,312,389 | | |
| 3,149,487 | | |
| 1.61 | % |
Barings
CLO Ltd. 2021-I | |
Subordinated
Note (effective yield 14.81%, maturity 04/25/2034) | |
11/03/2021 | |
| 4,000,000 | | |
| 3,054,293 | | |
| 2,482,763 | | |
| 1.27 | % |
Barings
CLO Ltd. 2021-III | |
Subordinated
Note (effective yield 11.57%, maturity 01/18/2035) | |
11/17/2021 | |
| 5,000,000 | | |
| 3,671,657 | | |
| 2,868,697 | | |
| 1.46 | % |
Boyce
Park CLO, Ltd. | |
Subordinated
Note (effective yield 22.15%, maturity 04/21/2035) | |
09/27/2023 | |
| 3,000,000 | | |
| 2,133,581 | | |
| 2,316,568 | | |
| 1.18 | % |
Boyce
Park CLO, Ltd. | |
Class
M-2 Notes (effective yield 22.15%, maturity 04/21/2035) | |
09/27/2023 | |
| 3,214,286 | | |
| 65,303 | | |
| 57,949 | | |
| 0.03 | % |
Carlyle
US CLO 2021-2, Ltd. | |
Subordinated
Note (effective yield 13.45%, maturity 04/20/2034) | |
10/28/2021 | |
| 3,000,000 | | |
| 2,406,980 | | |
| 2,010,178 | | |
| 1.03 | % |
Carlyle
US CLO 2021-5, Ltd. | |
Subordinated
Note (effective yield 13.82%, maturity 07/20/2034) | |
11/02/2021 | |
| 5,000,000 | | |
| 3,919,662 | | |
| 3,150,026 | | |
| 1.61 | % |
Carlyle
US CLO 2022-2, Ltd. | |
Subordinated
Note (effective yield 20.49%, maturity 04/20/2035) | |
08/15/2023 | |
| 5,004,700 | | |
| 3,579,200 | | |
| 3,521,286 | | |
| 1.80 | % |
CIFC
Funding 2022-IV, Ltd. | |
Subordinated
Note (effective yield 19.37%, maturity 07/16/2035) | |
10/23/2023 | |
| 1,100,000 | | |
| 903,596 | | |
| 923,515 | | |
| 0.47 | % |
CIFC
Funding 2019-VI, Ltd. | |
Subordinated
Note (effective yield 20.15%, maturity 01/16/2033) | |
12/02/2019 | |
| 6,000,000 | | |
| 4,258,608 | | |
| 4,036,288 | | |
| 2.06 | % |
Clover
CLO 2021-2, Ltd. | |
Subordinated
Note (effective yield 20.65%, maturity 07/20/2034) | |
08/09/2023 | |
| 2,350,000 | | |
| 1,597,808 | | |
| 1,726,576 | | |
| 0.88 | % |
Elmwood
CLO 21 Ltd. | |
Subordinated
Note (effective yield 16.66%, maturity 10/20/2036) | |
10/26/2023 | |
| 5,000,000 | | |
| 3,387,536 | | |
| 3,396,896 | | |
| 1.73 | % |
| See accompanying notes to the consolidated financial statements | 2 |
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated Schedule of Investments
As of March 31, 2024
(expressed in U.S. dollars)
(Unaudited)
Issuer
⁽¹⁾ | |
Investment
Description ⁽²⁾ ⁽³⁾ | |
Acquisition
Date ⁽⁴⁾ | |
Principal
Amount | | |
Cost | | |
Fair
Value ⁽⁵⁾ | | |
%
of Net Assets | |
CLO
Equity ⁽⁷⁾ ⁽⁸⁾ (continued) | |
| |
| |
| | | |
| | | |
| | | |
| | |
Structured
Finance | |
| |
| |
| | | |
| | | |
| | | |
| | |
Kings
Park CLO, Ltd. | |
Subordinated
Note (effective yield 26.19%, maturity 01/21/2035) | |
04/27/2023 | |
| 1,150,000 | | |
| 697,324 | | |
| 799,791 | | |
| 0.41 | % |
KKR
CLO 29 Ltd. | |
Subordinated
Note (effective yield 19.53%, maturity 01/15/2032) | |
12/14/2021 | |
| 5,500,000 | | |
| 3,973,694 | | |
| 3,699,606 | | |
| 1.89 | % |
Madison
Park Funding XXXVII, Ltd. | |
Subordinated
Note (effective yield 33.18%, maturity 07/15/2049) | |
03/11/2020 | |
| 4,000,000 | | |
| 2,307,218 | | |
| 2,498,154 | | |
| 1.28 | % |
Marathon
CLO XIII, Ltd. | |
Subordinated
Note (effective yield 9.40%, maturity 04/15/2032) | |
06/04/2019 | |
| 5,300,000 | | |
| 2,996,846 | | |
| 1,268,404 | | |
| 0.65 | % |
Octagon
Investment Partners 37, Ltd. | |
Subordinated
Note (effective yield 7.31%, maturity 07/25/2030) | |
01/31/2020 | |
| 6,000,000 | | |
| 2,834,912 | | |
| 1,643,712 | | |
| 0.84 | % |
Octagon
Investment Partners 43, Ltd. | |
Income
Note (effective yield 8.11%, maturity 10/25/2032) | |
08/02/2019 | |
| 5,750,000 | | |
| 3,928,153 | | |
| 2,704,235 | | |
| 1.38 | % |
Octagon
Investment Partners 49, Ltd. | |
Subordinated
Note (effective yield 20.22%, maturity 04/15/2037) | |
03/25/2024 | |
| 8,250,000 | | |
| 4,620,000 | | |
| 4,610,667 | | |
| 2.35 | % |
Point
Au Roche Park CLO, Ltd. | |
Subordinated
Note (effective yield 15.98%, maturity 07/20/2034) | |
02/02/2022 | |
| 5,945,000 | | |
| 4,599,097 | | |
| 4,026,928 | | |
| 2.06 | % |
RR
23 LTD | |
Subordinated
Note (effective yield 18.23%, maturity 10/15/2035) | |
10/12/2023 | |
| 5,000,000 | | |
| 2,994,231 | | |
| 3,143,769 | | |
| 1.60 | % |
Venture
37 CLO, Limited | |
Subordinated
Note (effective yield 1.96%, maturity 07/15/2032) | |
05/21/2019 | |
| 5,200,000 | | |
| 3,008,775 | | |
| 1,391,824 | | |
| 0.71 | % |
Wind
River 2022-1 CLO Ltd. | |
Subordinated
Note (effective yield 28.51%, maturity 07/20/2035) | |
08/15/2023 | |
| 5,490,000 | | |
| 3,484,411 | | |
| 3,284,514 | | |
| 1.68 | % |
| |
| |
| |
| | | |
| 79,320,319 | | |
| 69,584,460 | | |
| 35.53 | % |
| |
| |
| |
| | | |
| | | |
| | | |
| | |
CFO
Debt ⁽⁷⁾ | |
| |
| |
| | | |
| | | |
| | | |
| | |
Structured
Finance | |
| |
| |
| | | |
| | | |
| | | |
| | |
Glendower
Capital Secondaries CFO, LLC | |
Class
B Loan, Delayed Draw, 11.50% (due 07/12/2038) ⁽¹¹⁾ ⁽¹²⁾ | |
07/13/2023 | |
| 266,521 | | |
| 261,635 | | |
| 269,879 | | |
| 0.14 | % |
Glendower
Capital Secondaries CFO, LLC | |
Class
C Loan, Delayed Draw, 14.50% (due 07/12/2038) ⁽¹¹⁾ ⁽¹²⁾ | |
07/13/2023 | |
| 122,039 | | |
| 119,802 | | |
| 123,723 | | |
| 0.06 | % |
| |
| |
| |
| | | |
| 381,437 | | |
| 393,602 | | |
| 0.20 | % |
CFO
Equity ⁽⁷⁾ ⁽⁸⁾ | |
| |
| |
| | | |
| | | |
| | | |
| | |
Structured
Finance | |
| |
| |
| | | |
| | | |
| | | |
| | |
Glendower
Capital Secondaries CFO, LLC | |
Subordinated
Loan, Delayed Draw (effective yield 44.85%, maturity 07/12/2038) ⁽¹¹⁾ | |
07/13/2023 | |
| 278,205 | | |
| 278,205 | | |
| 317,821 | | |
| 0.16 | % |
| |
| |
| |
| | | |
| | | |
| | | |
| | |
Total
investments at fair value as of March 31, 2024 | |
| |
| | | |
$ | 291,237,986 | | |
$ | 280,886,381 | | |
| 143.42 | % |
| |
| |
| |
| | | |
| | | |
| | | |
| | |
Liabilities,
at fair value ⁽¹⁰⁾ | |
| |
| |
| | | |
| | | |
| | | |
| | |
5.00%
Series A Term Preferred Stock due 2026 | |
Preferred
Stock | |
| |
$ | (38,041,225 | ) | |
$ | (38,041,225 | ) | |
$ | (35,682,669 | ) | |
| -18.21 | % |
7.75%
Series B Term Preferred Stock due 2028 | |
Preferred
Stock | |
| |
| (37,151,225 | ) | |
| (37,146,354 | ) | |
| (37,299,830 | ) | |
| -19.04 | % |
Total
liabilities at fair value as of March 31, 2024 | |
| |
| |
| | | |
$ | (75,187,579 | ) | |
$ | (72,982,499 | ) | |
| -37.25 | % |
| |
| |
| |
| | | |
| | | |
| | | |
| | |
Net
assets above (below) fair value of investments and liabilities at fair value | |
| |
| | | |
| | | |
| (11,999,275 | ) | |
| | |
| |
| |
| |
| | | |
| | | |
| | | |
| | |
Net
assets as of March 31, 2024 | |
| |
| |
| | | |
| | | |
$ | 195,904,607 | | |
| | |
| ⁽¹⁾ | The
Company is not affiliated with, nor does it "control" (as such term is defined
in the Investment Company Act of 1940 (the "1940 Act")), any of the issuers
listed. In general, under the 1940 Act, the Company would be presumed to "control"
an issuer if we owned 25% or more of its voting securities. |
| ⁽²⁾ | All
securities are exempt from registration under the Securities Act of 1933, as amended,
are deemed to be "restricted" securities, are categorized as structured finance
securities and the country of risk is the United States. |
| ⁽³⁾ | Pursuant
to the terms of the credit facility agreement, a security interest in favor of the lender
has been granted with respect to all investments. See Note 9 "Revolving Credit Facility"
for further discussion. |
| ⁽⁴⁾ | Acquisition
date represents the initial purchase date or the date when the investment was contributed
to the Company. See Note 1 "Organization" for further discussion. |
| ⁽⁵⁾ | Fair
value is determined by the Adviser in accordance with written valuation policies and
procedures, subject to oversight by the Company’s Board of Directors, in accordance
with Rule 2a-5 under the 1940 Act. |
| ⁽⁶⁾ | Variable
rate investment. Interest rate shown reflects the rate in effect at the reporting date.
Investment description includes the reference rate and spread. |
| ⁽⁷⁾ | Classified
as Level III investment. See Note 3 "Investments" for further discussion. |
| ⁽⁸⁾ | CLO
equity and CFO equity are entitled to recurring distributions which are generally equal
to the remaining cash flow of payments made by underlying assets less contractual payments
to debt holders and fund expenses. The effective yield is estimated based on the current
projection of the amount and timing of these recurring distributions in addition to the
estimated amount of terminal principal payment. The effective yield and investment cost
may ultimately not be realized. As of March 31, 2024, the Company's weighted average
effective yield on its aggregate CLO equity positions, based on current amortized cost,
was 17.63%. |
| ⁽⁹⁾ | Fair
value includes the Company's interest in fee rebates on CLO equity. |
| ⁽¹⁰⁾ | The
Company has accounted for its 5.00% Series A Term Preferred Stock due 2026 and 7.75%
Series B Term Preferred Stock due 2028 utilizing the fair value option election under
ASC Topic 825. Accordingly, the aforementioned preferred stock is carried at fair value.
See Note 2 "Summary of Significant Accounting Policies" for further discussion. |
| ⁽¹¹⁾ | This
investment has an unfunded commitment as of March 31, 2024. See Note 7 "Commitments
and Contingencies" for further discussion. |
| ⁽¹²⁾ | Fixed
rate investment. |
| See accompanying notes to the consolidated financial statements | 3 |
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated Statement of Operations
For the three months ended March 31, 2024
(expressed in U.S. dollars)
(Unaudited)
INVESTMENT
INCOME | |
| |
Interest
income | |
$ | 9,099,511 | |
Other
income | |
| 32,068 | |
Total
Investment Income | |
| 9,131,579 | |
| |
| | |
EXPENSES | |
| | |
Interest
expense | |
| 1,238,890 | |
Management
fees | |
| 825,590 | |
Administration
fees | |
| 153,120 | |
Professional
fees | |
| 112,891 | |
Tax
expense | |
| 75,000 | |
Directors'
fees | |
| 63,750 | |
Commission
expense | |
| 56,850 | |
Amortization
of deferred financing costs | |
| 12,500 | |
Other
expenses | |
| 98,572 | |
Total
Expenses | |
| 2,637,163 | |
| |
| | |
NET
INVESTMENT INCOME | |
| 6,494,416 | |
| |
| | |
NET
REALIZED AND UNREALIZED GAIN (LOSS) | |
| | |
Net
realized gain (loss) on investments | |
| 238,124 | |
Net
change in unrealized appreciation (depreciation) on investments | |
| 9,541,754 | |
Net
change in unrealized (appreciation) depreciation on liabilities at fair value under the fair value option | |
| 694,600 | |
NET
REALIZED AND UNREALIZED GAIN (LOSS) | |
| 10,474,478 | |
| |
| | |
NET
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | |
$ | 16,968,894 | |
| See accompanying notes to the consolidated financial statements | 4 |
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated Statement of Comprehensive Income
For the three months ended March 31, 2024
(expressed in U.S. dollars)
(Unaudited)
NET
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | |
$ | 16,968,894 | |
| |
| | |
OTHER
COMPREHENSIVE INCOME (LOSS) (1) | |
| | |
Change
in unrealized (appreciation) depreciation on liabilities at fair value under the fair value option | |
| (1,353,549 | ) |
| |
| | |
NET
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM COMPREHENSIVE INCOME | |
$ | 15,615,345 | |
| (1) | See
Note 2 "Summary of Significant Accounting Policies - Other Financial Assets and
Financial Liabilities at Fair Value" for further discussion relating to other
comprehensive income. |
| See accompanying notes to the consolidated financial statements | 5 |
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated
Statements of Operations
(expressed
in U.S. dollars)
(Unaudited)
| |
For
the | | |
For
the | |
| |
three months ended | | |
three months ended | |
| |
March
31, 2024 | | |
March
31, 2023 | |
INVESTMENT
INCOME | |
| | | |
| | |
Interest
income | |
$ | 9,099,511 | | |
$ | 5,488,926 | |
Other
income | |
| 32,068 | | |
| 12,323 | |
Total
Investment Income | |
| 9,131,579 | | |
| 5,501,249 | |
| |
| | | |
| | |
EXPENSES | |
| | | |
| | |
Interest
expense | |
| 1,238,890 | | |
| 516,056 | |
Management
fees | |
| 825,590 | | |
| 470,589 | |
Administration
fees | |
| 153,120 | | |
| 150,921 | |
Professional
fees | |
| 112,891 | | |
| 114,203 | |
Tax
expense | |
| 75,000 | | |
| 16,250 | |
Commission
expense | |
| 56,850 | | |
| — | |
Directors'
fees | |
| 63,750 | | |
| 63,750 | |
Amortization
of deferred financing costs | |
| 12,500 | | |
| 1,899 | |
Other
expenses | |
| 98,572 | | |
| 106,861 | |
Total
Expenses | |
| 2,637,163 | | |
| 1,440,529 | |
| |
| | | |
| | |
NET
INVESTMENT INCOME | |
| 6,494,416 | | |
| 4,060,720 | |
| |
| | | |
| | |
REALIZED
AND UNREALIZED GAIN (LOSS) | |
| | | |
| | |
Net
realized gain (loss) on investments | |
| 238,124 | | |
| — | |
Net
change in unrealized appreciation (depreciation) on investments | |
| 9,541,754 | | |
| 1,209,088 | |
Net
change in unrealized (appreciation) depreciation on liabilities at fair value under the fair value option | |
| 694,600 | | |
| (668,070 | ) |
NET
REALIZED AND UNREALIZED GAIN (LOSS) | |
| 10,474,478 | | |
| 541,018 | |
| |
| | | |
| | |
NET
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | |
$ | 16,968,894 | | |
$ | 4,601,738 | |
| See
accompanying notes to the consolidated financial statements |
6 |
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated
Statements of Changes in Net Assets
(expressed
in U.S. dollars, except share amounts)
(Unaudited)
| |
For
the | | |
For
the | |
| |
three months ended | | |
year ended | |
| |
March
31, 2024 | | |
December
31, 2023 | |
Net
increase (decrease) in net assets resulting from operations: | |
| | | |
| | |
Net
investment income | |
$ | 6,494,416 | | |
$ | 17,392,665 | |
Net
realized gain (loss) on investments | |
| 238,124 | | |
| (12,614 | ) |
Net
change in unrealized appreciation (depreciation) on investments | |
| 9,541,754 | | |
| 13,153,774 | |
Net
change in unrealized (appreciation) depreciation on liabilities at fair value under the fair value option | |
| 694,600 | | |
| (1,246,996 | ) |
Total
net increase (decrease) in net assets resulting from operations | |
| 16,968,894 | | |
| 29,286,829 | |
| |
| | | |
| | |
Other
comprehensive income (loss): | |
| | | |
| | |
Net
change in unrealized (appreciation) depreciation on liabilities at fair value under the fair value option | |
| (1,353,549 | ) | |
| 2,259,484 | |
Total
other comprehensive income (loss) | |
| (1,353,549 | ) | |
| 2,259,484 | |
| |
| | | |
| | |
Common
stock distributions: | |
| | | |
| | |
Common
stock distributions from net investment income | |
| (7,279,772 | ) | |
| (18,077,406 | ) |
Common
stock distributions from tax return of capital | |
| — | | |
| — | |
Total
common stock distributions | |
| (7,279,772 | ) | |
| (18,077,406 | ) |
| |
| | | |
| | |
Capital
share transactions: | |
| | | |
| | |
Issuance
of shares of common stock pursuant to the Company's "at the market" program and the Committed Equity Financing (Note 5), net
of commissions and offering expenses | |
| 28,551,896 | | |
| 42,319,019 | |
Issuance
of shares of common stock pursuant to the Company's dividend reinvestment plan | |
| 809,718 | | |
| 475,654 | |
Total
capital share transactions | |
| 29,361,614 | | |
| 42,794,673 | |
| |
| | | |
| | |
Total
increase (decrease) in net assets | |
| 37,697,187 | | |
| 56,263,580 | |
Net
assets at beginning of period | |
| 158,207,420 | | |
| 101,943,840 | |
Net
assets at end of period | |
$ | 195,904,607 | | |
$ | 158,207,420 | |
| |
| | | |
| | |
Capital
share activity: | |
| | | |
| | |
Shares
of common stock issued pursuant to the Company's "at the market" program and the Committed Equity Financing | |
| 1,907,452 | | |
| 3,065,862 | |
Shares
of common stock issued pursuant to the Company's dividend reinvestment plan | |
| 53,476 | | |
| 34,779 | |
Total
increase (decrease) in capital share activity | |
| 1,960,928 | | |
| 3,100,641 | |
| See
accompanying notes to the consolidated financial statements |
7 |
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated
Statement of Cash Flows
For
the three months ended March 31, 2024
(expressed
in U.S. dollars)
(Unaudited)
CASH
FLOWS FROM OPERATING ACTIVITIES | |
| |
Net
increase (decrease) in net assets resulting from operations | |
$ | 16,968,894 | |
| |
| | |
Adjustments
to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating
activities: | |
| | |
Purchases
of investments | |
| (49,310,004 | ) |
Proceeds
from sales of investments and repayments of principal ⁽¹⁾ | |
| 13,800,613 | |
Net
realized (gain) loss on investments | |
| (238,124 | ) |
Net
change in unrealized (appreciation) depreciation on investments | |
| (9,541,754 | ) |
Net
change in unrealized appreciation (depreciation) on liabilities at fair value under the fair value option | |
| (694,600 | ) |
Amortization
(accretion) included in interest expense | |
| (1,404 | ) |
Amortization
(accretion) of premiums or discounts on debt securities | |
| (169,249 | ) |
Amortization
of deferred financing costs | |
| 12,500 | |
Changes
in assets and liabilities: | |
| | |
Interest
receivable | |
| (672,394 | ) |
Prepaid
expenses | |
| 132,677 | |
Management
fees payable | |
| 119,125 | |
Professional
fees payable | |
| 23,961 | |
Administration
fees payable | |
| 26,048 | |
Directors'
fees payable | |
| (63,750 | ) |
Interest
expense payable | |
| (114,683 | ) |
Tax
expense payable | |
| (202,330 | ) |
Due
to affiliates | |
| (28,072 | ) |
Other
expenses payable | |
| (798 | ) |
Net
cash provided by (used in) operating activities | |
| (29,953,344 | ) |
| |
| | |
CASH
FLOWS FROM FINANCING ACTIVITIES | |
| | |
Borrowings
under credit facility | |
| 22,750,000 | |
Repayments
under credit facility | |
| (18,420,000 | ) |
Common
stock distributions paid to stockholders | |
| (7,279,772 | ) |
Proceeds
from issuance of shares of common stock pursuant to the Company's "at the market" program, net of commissions and offering
expenses (Note 5) | |
| 28,551,896 | |
Proceeds
from issuance of shares of common stock pursuant to the Company's dividend reinvestment plan | |
| 678,050 | |
Proceeds
from issuance of shares of 7.75% Series B Term Preferred Stock due 2028 pursuant to the Company's "at the market" program | |
| 2,844,046 | |
Net
cash provided by (used in) financing activities | |
| 29,124,220 | |
| |
| | |
NET
INCREASE (DECREASE) IN CASH | |
| (829,124 | ) |
| |
| | |
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD | |
| 944,060 | |
| |
| | |
CASH
AND CASH EQUIVALENTS, END OF PERIOD | |
$ | 114,936 | |
| |
| | |
Supplemental
disclosures: | |
| | |
Cash
paid for interest expense | |
$ | 1,354,978 | |
Cash
paid for excise taxes | |
$ | 250,000 | |
Cash
paid for franchise taxes | |
$ | 27,330 | |
(1)
Proceeds from sales or maturity of investments includes $1,640,613 of return of capital on CLO equity investments from recurring
cash flows.
| See
accompanying notes to the consolidated financial statements |
8 |
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
Eagle
Point Income Company Inc. (the “Company”) is an externally managed, diversified closed-end management investment company
registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company’s primary investment
objective is to generate high current income, with a secondary objective to generate capital appreciation. The Company seeks to
achieve its investment objectives by investing primarily in junior debt tranches of collateralized loan obligations, or “CLOs,”
that are collateralized by a portfolio consisting primarily of below investment grade U.S. senior secured loans with a large number
of distinct underlying borrowers across various industry sectors. The Company focuses on CLO debt tranches rated “BB”
(e.g., BB+, BB or BB-, or their equivalent) by Moody’s Investors Service, Inc., or “Moody’s,” Standard
& Poor’s, or “S&P,” or Fitch Ratings, Inc., or “Fitch,” and/or other applicable nationally
recognized statistical rating organizations. The Company may invest up to 35% of its total assets (at the time of investment)
in unrated CLO equity securities and related securities and instruments. The Company may also invest in other junior debt tranches
of CLOs, senior debt tranches of CLOs, loan accumulation facilities (“LAF”) and other related securities and instruments.
The
Company was initially formed on September 28, 2018 and commenced operations on October 4, 2018. On July 23, 2019, the Company
priced its initial public offering (the “IPO”) and on July 24, 2019, the Company’s shares began trading on the
New York Stock Exchange (“NYSE”) under the symbol “EIC”.
The
Company intends to operate so as to qualify to be taxed as a regulated investment company (“RIC”) under subchapter
M of the Internal Revenue Code of 1986, as amended (the “Code”), for federal income tax purposes.
Eagle
Point Income Management LLC (the “Adviser”) is the investment adviser of the Company and manages the investments of
the Company subject to the supervision of the Company’s Board of Directors (the “Board”). The Adviser is registered
as an investment adviser with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Advisers
Act of 1940, as amended. Eagle Point Administration LLC, an affiliate of the Adviser, is the administrator of the Company (the
“Administrator”).
The
consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries- Eagle Point Income Company
Sub II (Cayman) Ltd. (the “Cayman Subsidiary”), a Cayman Islands exempted company, and Eagle Point Income Company
Sub (US) LLC (the “US Subsidiary), a Delaware limited liability company (together the “Subsidiaries”). All intercompany
accounts have been eliminated upon consolidation. As of March 31, 2024, the US Subsidiary and the Cayman Subsidiary represented
0.1% and 0.0% of the Company’s net assets, respectively.
| 2. | SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES |
Basis
of Accounting
The
consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S.
GAAP”). The Company is an investment company and follows the accounting and reporting guidance applicable to investment
companies in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 946 Financial Services – Investment Companies. Items included in the consolidated financial statements are measured
and presented in United States dollars.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions which affect
the reported amounts included in the consolidated financial statements and accompanying notes as of the reporting date. Actual
results may differ from those estimates.
Valuation
of Investments
The
most significant estimate inherent in the preparation of the consolidated financial statements is the valuation of investments.
The
Company accounts for its investments in accordance with U.S. GAAP, and fair values its investment portfolio in
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
accordance with
the provisions of the FASB ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes
a framework for measuring fair value and requires enhanced disclosures about fair value measurements. Investments are reflected
in the consolidated financial statements at fair value. Fair value is the estimated amount that would be received to sell an asset,
or paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the exit
price).
Pursuant
to Rule 2a-5 under the 1940 Act adopted by the SEC in December 2020 (“Rule 2a-5”), the Board has elected to designate
the Adviser as “valuation designee” to perform fair value determinations, subject to Board oversight and certain other
conditions. In the absence of readily available market quotations, as defined by Rule 2a-5, the Adviser determines the fair value
of the Company’s investments in accordance with its written valuation policy approved by the Board. There is no single method
for determining fair value in good faith. As a result, determining fair value requires 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
held by the Company. Due to the uncertainty of valuation, this estimate may differ significantly from the value that would have
been used had a ready market for the investments existed, and the differences could be material.
The
Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in an orderly
transaction at the measurement date. When considering market participant assumptions in fair value measurements, the following
fair value hierarchy prioritizes and ranks the level of market price observability used in measuring investments:
| ● | Level
I – Unadjusted quoted prices in active markets for identical assets or liabilities that the Company is able to access
as of the reporting date. |
| ● | Level
II – Inputs, other than quoted prices included in Level I, that are observable either directly or indirectly as of the
reporting date. These inputs may include (a) quoted prices for similar assets in active markets, (b) quoted prices for identical
or similar assets in markets that are not active, (c) inputs other than quoted prices that are observable for the asset, or (d)
inputs derived principally from or corroborated by observable market data by correlation or other means. |
| ● | Level
III – Pricing inputs are unobservable for the investment and little, if any, active market exists as of the reporting
date. Fair value inputs require significant judgment or estimation from the Adviser. |
In
certain cases, inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the
determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest
level of input significant to that fair value measurement. The assessment of the significance of a particular input to the fair
value measurement in its entirety requires judgment and consideration of factors specific to the investment.
Market
price observability is impacted by a number of factors, including the type of investment, the characteristics specific to the
investment and the state of the marketplace (including the existence and transparency of transactions between market participants).
Investments with readily available actively quoted prices, or for which fair value can be measured from actively quoted prices
in an orderly market, will generally have a higher degree of market price observability and a lesser degree of judgment used in
measuring fair value.
Investments
for which observable, quoted prices in active markets do not exist are reported at fair value based on Level III inputs. The amount
determined to be fair value may incorporate the Adviser’s own assumptions (including assumptions the Adviser believes market
participants would use in valuing investments and assumptions relating to appropriate risk adjustments for nonperformance and
lack of marketability), as provided for in the Adviser’s valuation policy.
An
estimate of fair value is made for each investment at least monthly taking into account information available as of the reporting
date and is subject to review by the Board on a quarterly basis.
See
Note 3 “Investments” for further discussion relating to the Company’s investments.
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
Other
Financial Assets and Financial Liabilities at Fair Value
The
Fair Value Option (“FVO”) under FASB ASC Subtopic 825-10, Fair Value Option (“ASC 825”), allows
companies to make an irrevocable election to use fair value as the initial and subsequent accounting measurement for certain financial
assets and liabilities. The decision to elect the FVO is determined on an instrument-by-instrument basis and must be applied to
an entire instrument. Assets and liabilities measured at fair value are required to be reported separately from those instruments
measured using another accounting method and changes in fair value attributable to instrument-specific credit risk on financial
liabilities for which the FVO is elected are required to be presented separately in other comprehensive income. Additionally,
upfront offering costs related to such instruments, inclusive of costs associated with issuances under the Company’s at-the-market
(“ATM”) program, are recognized in earnings as incurred and are not deferred.
The
Company elected to account for its 5.00% Series A Term Preferred Stock due 2026 (the “Series A Term Preferred Stock”)
and its 7.75% Series B Term Preferred Stock due 2028 (“Series B Term Preferred Stock”, and collectively with the Series
A Term Preferred Stock, the “Preferred Stock”) utilizing the FVO under ASC 825. The primary reason for electing the
FVO is to reflect economic events in the same period in which they are incurred and address simplification of reporting and presentation.
Investment
Income Recognition
Interest
income from investments in CLO debt and collateralized fund obligation (“CFO”) debt is recorded using the accrual
basis of accounting to the extent such amounts are expected to be collected. Interest income on such investments is generally
expected to be received in cash. The Company applies the provisions of Accounting Standards Update No. 2017-08, Premium Amortization
on Purchased Callable Debt Securities (“ASU 2017-08”), in calculating amortization of premium for applicable investments.
Amortization of premium or accretion of discount is recognized using the effective interest method.
In
certain circumstances, all or a portion of interest income from a given investment may be paid in the form of additional investment
principal, often referred to as payment-in-kind (“PIK”) interest. PIK interest is included in interest income and
interest receivable through the payment date. The PIK interest rate represents the coupon rate at payment date when PIK interest
is received. On the payment date, all or a portion of interest receivable is capitalized as additional principal in the investment.
To the extent the Company does not believe it will ultimately be able to collect PIK interest, the investment will be placed on
non-accrual status, and previously recorded PIK interest income will be reversed.
CLO
equity investments, fee rebates and CFO equity investments recognize investment income for U.S. GAAP purposes on the accrual basis
utilizing an effective interest methodology based upon an effective yield to maturity utilizing projected cash flows. ASC Topic
325-40, Beneficial Interests in Securitized Financial Assets, requires investment income from such investments to be recognized
under the effective interest method, with any difference between cash distributed and the amount calculated pursuant to the effective
interest method being recorded as an adjustment to the cost basis of the investment. It is the Adviser’s policy to update
the effective yield for each CLO equity and fee rebate position held within the Company’s portfolio at the initiation of
each investment and each subsequent quarter thereafter. It is the Adviser’s policy to review the effective yield for each
CFO equity position at each measurement date and update periodically based on the facts and circumstances known to the Adviser.
Other
Income
Other
income includes the Company’s share of income under the terms of fee rebate agreements and commitment fee income.
Interest
Expense
Interest
expense includes the Company’s distributions associated with its Series A Term Preferred Stock, Series B Term Preferred
Stock and amounts due under the credit facility agreement in relation to the outstanding borrowings and unused commitment fees.
Interest expense also includes the Company’s amortization of original issue premiums and discounts associated with its Preferred
Stock.
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
The
following table summarizes the components of interest expense for the three months ended March 31, 2024:
| |
Series
A Term
Preferred Stock | | |
Series
B Term
Preferred Stock | | |
Revolving
Credit
Facility | | |
Total | |
Distributions
declared and paid | |
$ | 475,517 | | |
$ | 690,319 | | |
$ | — | | |
$ | 1,165,836 | |
Interest
expense on credit facility | |
| | | |
| | | |
| 74,458 | | |
| 74,458 | |
Amortization
of issuance premium | |
| — | | |
| (1,404 | ) | |
| | | |
| (1,404 | ) |
| |
$ | 475,517 | | |
$ | 688,915 | | |
$ | 74,458 | | |
$ | 1,238,890 | |
Interest
expense is recorded as an expense on the Consolidated Statement of Operations. The Company’s Preferred Stock has no interest
payable as of March 31, 2024.
Please
refer to Note 6 “Mandatory Redeemable Preferred Stock” and Note 9 “Revolving Credit Facility” for further
discussion relating to the Preferred Stock issuances and on the interest expense due under the credit facility agreement, respectively.
Original
Issue Discounts and Premiums
Original
issue discounts and premiums on liabilities consist of discounts or premiums recorded in connection with the issuance of the Preferred
Stock as part of the Company’s ATM program, consistent with FASB ASC Topic 835-30-35-2. The original issue discounts and
premiums are capitalized at the time of issuance and amortized using the effective interest method over the respective terms of
each of the Preferred Stock. Amortization and accretion of original issue discounts and premiums are reflected as an expense and
a contra expense within interest expense in the Consolidated Statement of Operations, respectively.
Securities
Transactions
The
Company records the purchase and sale of securities on the trade date. Realized gains and losses on investments sold are recorded
on the basis of the specific identification method.
In
certain circumstances where the Adviser determines it is unlikely to fully amortize a CLO equity or CLO debt investment’s
remaining amortized cost, such remaining cost is written-down to its current fair value and recognized as a realized loss in the
Consolidated Statement of Operations.
Cash
and Cash Equivalents
The
Company has defined cash and cash equivalents as cash and short-term, highly liquid investments with original maturities of three
months or less from the date of purchase. The Company maintains its cash in bank accounts which, at times, may exceed federal
insured limits. The Adviser monitors the performance of the financial institution where the accounts are held in order to manage
any risk associated with such accounts.
Expense
Recognition
Expenses
are recorded on the accrual basis of accounting.
Prepaid
Expenses
Prepaid
expenses consist primarily of insurance premiums, shelf registration expenses, ATM program expenses and the Committed Equity Financing
(as defined in Note 5 “Common Stock”) expenses. Prepaid shelf registration expenses, ATM program expenses and Committed
Equity Financing expenses represent fees and expenses incurred in connection with the initial registration of the Company’s
current shelf registration, ATM program and the Committed Equity Financing. Such costs are allocated pro-rata based on the amount
issued relative to the total respective offering amount to paid-in-capital or expense depending on the security being issued pursuant
to the shelf registration, ATM program and the Committed Equity Financing. Any subsequent costs incurred to maintain the Company’s
ATM program and the Committed Equity Financing are expensed as incurred.
Any
unallocated prepaid expense balance associated with the shelf registration, ATM program and the Committed Equity Financing are
accelerated into expense at the earlier of the end of the program period or at the effective date of a new shelf registration
or ATM program.
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
Deferred
Financing Costs
Deferred
financing costs consist of fees and expenses incurred in connection with the Revolving Credit Facility (refer to Note 9 “Revolving
Credit Facility”). Deferred financing costs are capitalized and amortized over the term of the Revolving Credit Facility,
and are reflected in borrowings under the credit facility on the Consolidated Statement of Asset and Liabilities (if any). Amortization
of deferred financing costs are recorded as an expense on the Consolidated Statement of Operations on a straight-line basis, which
approximates the effective interest method.
Offering
Expenses
Offering
expenses associated with the issuance and sale of shares of common stock, inclusive of expenses incurred associated with offerings
under the ATM program, are charged to paid-in capital at the time the shares are sold in accordance with guidance noted in FASB
ASC Topic 946-20-25-5, Investment Companies – Investment Company Activities – Recognition, during the period
incurred.
Federal
and Other Taxes
The
Company intends to continue to operate so as to qualify to be taxed as a RIC under subchapter M of the Code and, as such, to not
be subject to federal income tax on the portion of its taxable income and gains distributed to stockholders. To qualify for RIC
tax treatment, among other requirements, the Company is required to distribute at least 90% of its investment company taxable
income, as defined by the Code.
Because
U.S. federal income tax regulations differ from U.S. GAAP, distributions in accordance with tax regulations may differ from net
investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent
differences are reclassified among capital accounts in the consolidated financial statements to reflect their tax character. Temporary
differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in
classification may also result from the treatment of short-term gains as ordinary income for federal income tax purposes. The
tax basis components of distributable earnings may differ from the amounts reflected in the Consolidated Statement of Assets and
Liabilities due to temporary book/tax differences arising primarily from partnerships and passive foreign investment company investments.
As
of March 31, 2024, the federal income tax cost and net unrealized depreciation on securities were as follows:
Cost
for federal income tax purposes | |
$ | 295,516,278 | |
Gross
unrealized appreciation | |
$ | 5,356,472 | |
Gross
unrealized depreciation | |
| (20,017,577 | ) |
Net
unrealized depreciation | |
$ | (14,661,104 | ) |
For
the three months ended March 31, 2024, the Company incurred $75,000 in tax expenses which is comprised of $25,000 of Delaware
franchise tax expense related to the 2024 tax year, and $50,000 of excise tax expense related to the 2023 tax year, and is reported
on the Consolidated Statement of Operations.
Distributions
The
composition of distributions paid to common stockholders from net investment income and capital gains are determined in accordance
with U.S. federal income tax regulations, which differ from U.S. GAAP. Distributions to common stockholders and can be comprised
of net investment income, net realized capital gains and return of capital for U.S. federal income tax purposes and are intended
to be paid monthly. Distributions payable to common stockholders are recorded as a liability on ex-dividend date. Unless a common
stockholder opts out of the Company’s dividend reinvestment plan (the “DRIP”), distributions are automatically
reinvested in full shares of the Company as of the payment date, pursuant to the DRIP. The Company’s common stockholders
who opt-out of participation in the DRIP (including those common stockholders whose shares are held through a broker who has opted
out of participation in the DRIP) generally will receive all distributions in cash.
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
In
addition to the regular monthly distributions, and subject to available taxable earnings of the Company, the Company may make
periodic special and/or supplemental distributions representing the excess of the Company’s net taxable income over the
Company’s aggregate monthly distributions paid during the year.
The
characterization of distributions paid to common stockholders, as set forth in the Consolidated Financial Highlights, reflect
estimates made by the Company for federal income tax purposes. Such estimates are subject to change once the final determination
of the source of all distributions has been made and the final tax return has been filed by the Company.
For
the three months ended March 31, 2024, the Company declared and paid monthly distributions on common stock of approximately $7.3
million or $0.60 per share.
For
the three months ended March 31, 2024, the Company declared and paid dividends on the Series A Term Preferred Stock of approximately
$0.5 million or approximately $0.31 per share of Series A Term Preferred Stock.
For
the three months ended March 31, 2024, the Company declared and paid dividends on the Series B Term Preferred Stock of approximately
$0.7 million or approximately $0.48 per share of Series B Term Preferred Stock.
Fair
Value Measurement
The
following table summarizes the valuation of the Company’s investments measured and reported at fair value under the fair
value hierarchy levels described in Note 2 “Summary of Significant Accounting Policies” as of March 31, 2024:
Fair
Value Measurement (in millions) | |
| | |
| | |
| | |
| |
| |
Level
I | | |
Level
II | | |
Level
III | | |
Total | |
Assets
at Fair Value Investments
at Fair Value
CLO
Debt | |
$ | — | | |
$ | 210.59 | | |
$ | — | | |
$ | 210.59 | |
CLO
Equity | |
| — | | |
| — | | |
| 69.58 | | |
| 69.58 | |
CFO
Debt | |
| | | |
| — | | |
| 0.39 | | |
| 0.39 | |
CFO
Equity | |
| | | |
| — | | |
| 0.32 | | |
| 0.32 | |
Total
Investentments at Fair Value ⁽¹⁾ | |
$ | — | | |
$ | 210.59 | | |
$ | 70.30 | | |
$ | 280.89 | |
Total
Assets at Fair Value ⁽¹⁾ | |
$ | — | | |
$ | 210.59 | | |
$ | 70.30 | | |
$ | 280.89 | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities
at Fair Value Under FVO | |
| | | |
| | | |
| | | |
| | |
Series
A Term Preferred Stock
| |
$ | 35.68 | | |
$ | — | | |
$ | — | | |
$ | 35.68 | |
Series
B Term Preferred Stock | |
| 37.30 | | |
| — | | |
| — | | |
| 37.30 | |
Total
Liabilities at Fair Value Under FVO ⁽¹⁾ | |
$ | 72.98 | | |
$ | — | | |
$ | — | | |
$ | 72.98 | |
⁽¹⁾
Amounts may not foot due to rounding. | |
| | | |
| | | |
| | | |
| | |
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
Significant
Unobservable Inputs
The
following table summarizes the quantitative inputs and assumptions used for investments categorized as Level III of the fair value
hierarchy as of March 31, 2024.
| |
Quantitative
Information about Level III Fair Value Measurements |
Assets | |
Fair
Value (in millions) | | |
Valuation
Techniques/Methodologies | |
Unobservable
Inputs | |
Range
/ Weighted Average(1) |
CLO
Equity | |
$ | 69.58 | | |
Discounted
Cash Flows | |
Annual
Default Rate ⁽²⁾ | |
0.00%
- 4.01% |
| |
| | | |
| |
Annual
Prepayment Rate ⁽²⁾ ⁽³⁾ | |
25.00% |
| |
| | | |
| |
Reinvestment
Spread | |
3.50%
- 4.00% / 3.69% |
| |
| | | |
| |
Reinvestment
Price ⁽²⁾ | |
99.50% |
| |
| | | |
| |
Recovery
Rate | |
68.64%
- 69.97% / 69.58% |
| |
| | | |
| |
Expected
Yield | |
14.93%
- 89.73% / 26.03% |
CFO
Debt | |
| 0.39 | | |
Discounted
Cash Flows | |
Discount
Rate | |
11.40%
- 14.70% / 12.44% |
CFO
Equity | |
| 0.32 | | |
Discounted
Cash Flows | |
Discount
Rate ⁽⁴⁾ | |
41.01% |
Total
Fair Value of Level III Investments⁽⁵⁾ | |
$ | 70.30 | | |
| |
| |
|
(1)
Weighted average calculations are based on the fair value of investments.
(2)
A weighted average is not presented as the input in the discounted cash flow model varies over the life of an investment.
(3)
0% is assumed for defaulted and non-performing assets.
(4)
Range not shown as only one position is included in the category.
(5)
Amounts may not foot due to rounding.
In
addition to the techniques and inputs noted in the above table, the Adviser may use other valuation techniques and methodologies
when determining the fair value measurements of the Company’s investments, as provided for in the Adviser’s valuation
policy approved by the Board. Please refer to Note 2 “Summary of Significant Accounting Policies” for further discussion.
The above table is not intended to be all-inclusive, but rather provides information on the significant Level III inputs as they
relate to the Company’s fair value measurements as of March 31, 2024. Unobservable inputs and assumptions are reviewed at
each measurement date and updated as necessary to reflect current market conditions.
Increases
(decreases) in the annual default rate, reinvestment price, expected yield and discount rate in isolation would result in a lower
(higher) fair value measurement. Increases (decreases) in the reinvestment spread and recovery rate in isolation would result
in a higher (lower) fair value measurement. Changes in the annual prepayment rate may result in a higher (lower) fair value, depending
on the circumstances. Generally, a change in the assumption used for the annual default rate may be accompanied by a directionally
opposite change in the assumption used for the annual prepayment rate and recovery rate.
Change
in Investments Classified as Level III
The
changes in investments classified as Level III are as follows for the three months ended March 31, 2024:
Change
in Investments Classified as Level III (in millions) | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| |
| |
CLO
Equity | | |
CFO
Debt | | |
CFO
Equity | | |
Total | |
Balance
as of January 1, 2024 | |
$ | 63.33 | | |
$ | 0.27 | | |
$ | 0.22 | | |
$ | 63.82 | |
Purchases
of investments | |
| 6.57 | | |
| 0.12 | | |
| 0.09 | | |
| 6.78 | |
Proceeds
from sales or maturity of investments ⁽¹⁾ | |
| (1.64 | ) | |
| | | |
| — | | |
| (1.64 | ) |
Net
realized gains (losses) and net change in unrealized appreciation (depreciation) | |
| 1.32 | | |
| 0.00 | | |
| 0.01 | | |
| 1.34 | |
Balance
as of March 31, 2024 ⁽²⁾ ⁽³⁾ | |
$ | 69.58 | | |
$ | 0.39 | | |
$ | 0.32 | | |
$ | 70.30 | |
Change
in unrealized appreciation (depreciation) on investments still held as of March 31, 2024 | |
$ | 1.32 | | |
$ | 0.00 | | |
$ | 0.01 | | |
$ | 1.34 | |
(1)
Proceeds from sales or maturity of investments represent the return of capital on portfolio investments from recurring cash
flows.
(2)
There were no transfers in or out of Level III during the period.
(3)
Amounts may not foot due to rounding.
The
net realized gains (losses) recorded for Level III investments, if any, are reported in the net realized gain (loss)
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
on
investments balance in the Consolidated Statement of Operations. Net changes in unrealized appreciation (depreciation) are reported
in the net change in unrealized appreciation (depreciation) on investments balance in the Consolidated Statement of Operations.
Fair
Value – Valuation Techniques and Inputs
The
Adviser establishes valuation processes and procedures to ensure the valuation techniques are fair and consistent, and valuation
inputs are supportable. The Adviser has a Valuation Committee comprised of various senior personnel of the Adviser, the majority
of which are not members of the Company’s portfolio management function. The Valuation Committee is responsible for overseeing
the valuation process, evaluating the overall fairness and consistent application of the Adviser’s written valuation policies
approved by the Board. The Valuation Committee reviews and approves the valuation on a monthly basis.
Valuation
of CLO Debt
The
Company’s investments in CLO debt have been valued using an independent pricing service. The valuation methodology of the
independent pricing service includes incorporating data comprised of observable market transactions, executable bids, broker quotes
from dealers with two sided markets, as well as transaction activity from comparable securities to those being valued. As the
independent pricing service contemplates real time market data and no unobservable inputs or significant judgment has been used
by the Adviser in the valuation of the Company’s investment in CLO debt, such positions are considered Level II assets.
Valuation
of CLO Equity
The
Adviser estimates the fair value of CLO equity investments utilizing the output from a third-party financial tool based on
assumptions derived from internal and external (market) data. The tool contains detailed information on the characteristics of each
CLO, including recent information about assets and liabilities from data sources such as trustee reports, and uses market data
inputs to project future cash flows to CLO equity tranches. Key inputs to the tool, including, but not limited to assumptions for
future loan default rates, recovery rates, prepayment rates, reinvestment rates and discount rates are determined by considering
both observable and third-party market data and prevailing general market assumptions and conventions as well as those of the
Adviser. Additionally, a third-party independent valuation firm is used as an input by the Adviser to determine the fair value of
the Company’s investments in CLO equity. The valuation firm’s advice is only one factor considered in the valuation of
such investments, and the Adviser does not solely rely on such advice in determining the fair value of the Company’s
investments in accordance with the 1940 Act.
The
Adviser categorizes CLO equity as Level III investments. Certain pricing inputs may be unobservable. An active market may exist,
but not necessarily for CLO equity investments that the Company holds as of the reporting date.
Valuation
of CFO Debt and CFO Equity
The
Adviser engages a nationally recognized independent valuation agent to determine fair value of the CFO debt and CFO equity held
by the Company. The independent valuation agent performs a discounted cash flow analysis, or other valuation techniques appropriate
for the facts and circumstances, to determine the fair value of such investments, ultimately providing a high and low valuation
for each investment. The final valuation recorded is within the high and low band provided by the valuation agent. Given the illiquidity
of these investments and lack of observable inputs, the Adviser categorizes these investments as Level III investments.
The
Adviser may also utilize the mid-point of an indicative broker quotation, if available, to value such investments as of the reporting
date. The Adviser generally categorizes investments valued utilizing indicative broker quotations as Level II or Level III depending
on whether an active market exists as of the reporting date.
Valuation
of Preferred Stock
The
Preferred Stock is considered a Level I security and is valued at the official closing price, taken from the NYSE.
Investment
Risk Factors
The
following list is not intended to be a comprehensive list of all of the potential risks associated with the Company.
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
The
Company’s prospectus provides a detailed discussion of the Company’s risks and considerations. The risks described
in the prospectus are not the only risks the Company faces. Additional risks and uncertainties not currently known to the Company
or that are currently deemed to be immaterial also may materially and adversely affect its business, financial condition and/or
operating results.
Risks
of Investing in CLOs and Other Structured Debt Securities
CLOs
and other structured finance securities are generally backed by a pool of credit-related assets that serve as collateral. Accordingly,
CLO and structured finance securities present risks similar to those of other types of credit investments, including default (credit),
interest rate and prepayment risks. In addition, CLOs and other structured finance securities are often governed by a complex
series of legal documents and contracts, which increases the risk of dispute over the interpretation and enforceability of such
documents relative to other types of investments. There is also a risk that the trustee of a CLO does not properly carry out its
duties to the CLO, potentially resulting in loss to the CLO. CLOs are also inherently leveraged vehicles and are subject to leverage
risk.
Subordinated
Securities Risk
CLO
junior debt and equity securities that the Company may acquire are subordinated to more senior tranches of CLO debt. CLO junior
debt and equity securities are subject to increased risks of default relative to the holders of superior priority interests in
the same CLO. In addition, at the time of issuance, CLO equity securities are under-collateralized in that the face amount of
the CLO debt and CLO equity of a CLO at inception exceed its total assets. The Company will typically be in a subordinated or
first loss position with respect to realized losses on the underlying assets held by the CLOs in which the Company is invested.
High-Yield
Investment Risk
The
CLO junior debt and equity securities that the Company acquires are typically rated below investment grade or, in the case of
CLO equity securities, unrated and are therefore considered “higher-yield” or “junk” securities and are
considered speculative with respect to timely payment of interest and repayment of principal. The senior secured loans and other
credit-related assets underlying CLOs are also higher-yield investments. Investing in CLO junior debt and equity securities and
other high-yield investments typically involves greater credit and liquidity risk than investment grade obligations, which may
adversely impact the Company’s performance.
Leverage
Risk
The
use of leverage, whether directly or indirectly through investments such as CLO junior debt and equity securities that inherently
involve leverage, may magnify the Company’s risk of loss. CLO junior debt and equity securities are very highly leveraged
(with CLO equity securities typically being leveraged ten times), and therefore the CLO securities in which the Company invests
are subject to a higher degree of risk of loss since the use of leverage magnifies losses.
Credit
Risk
If
(1) a CLO in which the Company invests, (2) an underlying asset of any such CLO or (3) any other type of credit investment in
the Company’s portfolio declines in price or fails to pay interest or principal when due because the issuer or debtor, as
the case may be, experiences a decline in its financial status, the Company’s income, net asset value (“NAV”)
and/or market price would be adversely impacted.
Key
Personnel Risk
The
Adviser manages our investments. Consequently, the Company’s success depends, in large part, upon the services of the Adviser
(including Eagle Point Credit Management LLC, which provides the Adviser with investment professionals and other resources under
a personnel and resources agreement) and the skill and expertise of the Adviser’s professional personnel. There can be no
assurance that the professional personnel of the Adviser (or Eagle Point Credit Management LLC) will continue to serve in their
current positions or continue to be employed by the Adviser. We can offer no assurance that their services will be available for
any length of time or that the Adviser will continue indefinitely as the Company’s investment adviser.
Conflicts
of Interest Risk
The
Company’s executive officers and directors, and the Adviser and certain of its affiliates and their officers and
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
employees,
including the members of the Investment Committee, have several conflicts of interest as a result of the other activities in which
they engage.
Prepayment
Risk
The
assets underlying the CLO securities in which the Company invests are subject to prepayment by the underlying corporate borrowers.
As such, the CLO securities and related investments in which the Company invests are subject to prepayment risk. If the Company
or a CLO collateral manager are unable to reinvest prepaid amounts in a new investment with an expected rate of return at least
equal to that of the investment repaid, the Company’s investment performance will be adversely impacted.
Liquidity
Risk
Generally,
there is no public market for the CLO investments in which the Company invests. As such, the Company may not be able to sell such
investments quickly, or at all. If the Company is able to sell such investments, the prices the Company receives may not reflect
the Adviser’s assessment of their fair value or the amount paid for such investments by the Company.
Management
Fee Risk
The
Company’s management fee structure may incentivize the Adviser to use leverage in a manner that adversely impacts the Company’s
performance.
Fair
Valuation of the Company’s Portfolio Investments
Generally,
there is no public market for the CLO investments and certain other credit assets in which the Company may invest. The Adviser
values these securities at least quarterly, or more frequently as may be required from time to time, at fair value. The Adviser’s
determinations of the fair value of the Company’s investments have a material impact on the Company’s net earnings
through the recording of unrealized appreciation or depreciation of investments and may cause the Company’s NAV on a given
date to understate or overstate, possibly materially, the value that the Company ultimately realizes on one or more of the Company’s
investments.
Limited
Investment Opportunities Risk
The
market for CLO securities is more limited than the market for other credit related investments. The Company can offer no assurances
that sufficient investment opportunities for the Company’s capital will be available. In recent years there has been a marked
increase in the number of, and flow of capital into, investment vehicles established to pursue investments in CLO securities whereas
the size of this market is relatively limited. While the Company cannot determine the precise effect of such competition, such
increase may result in greater competition for investment opportunities, which may result in an increase in the price of such
investments relative to the risk taken on by holders of such investments. Such competition may also result under certain circumstances
in increased price volatility or decreased liquidity with respect to certain positions.
Market
Risk
Political,
regulatory, economic and social developments, and developments that impact specific economic sectors, industries or segments of
the market, can affect the value of the Company’s investments. A disruption or downturn in the capital markets and the credit
markets could impair the Company’s ability to raise capital, reduce the availability of suitable investment opportunities
for the Company, or adversely and materially affect the value of the Company’s investments, any of which would negatively
affect the Company’s business. These risks may be magnified if certain events or developments adversely interrupt the global
supply chain, and could affect companies worldwide.
Loan
Accumulation Facilities Risk
The
Company may invest in LAFs, which are short to medium term facilities often provided by the bank that will serve as placement
agent or arranger on a CLO transaction and which acquire loans on an interim basis which are expected to form part of the portfolio
of a future CLO. Investments in LAFs have risks similar to those applicable to investments in CLOs. Leverage is typically utilized
in such a facility and as such the potential risk of loss will be increased for such facilities employing leverage. In the event
a planned CLO is not consummated, or the loans are not eligible for purchase by the CLO, the Company may be responsible for either
holding or disposing of the loans.
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
This
could expose the Company to credit and/or mark-to-market losses, and other risks.
Synthetic
Investments Risk
The
Company may invest in synthetic investments, such as significant risk transfer securities and credit risk transfer securities
issued by banks or other financial institutions, or acquire interests in lease agreements that have the general characteristics
of loans and are treated as loans for withholding tax purposes. In addition to the credit risks associated with the applicable
reference assets, the Company will usually have a contractual relationship only with the counterparty of such synthetic investment,
and not with the reference obligor of the reference asset. Accordingly, the Company generally will have no right to directly enforce
compliance by the reference obligor with the terms of the reference asset nor will it have any rights of setoff against the reference
obligor or rights with respect to the reference asset. The Company will not directly benefit from the collateral supporting the
reference asset and will not have the benefit of the remedies that would normally be available to a holder of such reference asset.
In addition, in the event of the insolvency of the counterparty, the Company may be treated as a general creditor of such counterparty,
and will not have any claim with respect to the reference asset.
Currency
Risk
Although
the Company primarily makes investments denominated in U.S. dollars, the Company may make investments denominated in other currencies.
The Company’s investments denominated in currencies other than U.S. dollars will be subject to the risk that the value of
such currency will decrease in relation to the U.S. dollar. The Company may or may not hedge currency risk.
Hedging
Risk
Hedging
transactions seeking to reduce risks may result in poorer overall performance than if the Company had not engaged in such hedging
transactions. Additionally, such transactions may not fully hedge the Company’s risks.
Reinvestment
Risk
CLOs
will typically generate cash from asset repayments and sales that may be reinvested in substitute assets, subject to compliance
with applicable investment tests. If the CLO collateral manager causes the CLO to purchase substitute assets at a lower yield
than those initially acquired or sale proceeds are maintained temporarily in cash, it would reduce the excess interest-related
cash flow, thereby having a negative effect on the fair value of the Company’s assets and the market value of the Company’s
securities. In addition, the reinvestment period for a CLO may terminate early, which would cause the holders of the CLO’s
securities to receive principal payments earlier than anticipated. There can be no assurance that the Company will be able to
reinvest such amounts in an alternative investment that provides a comparable return relative to the credit risk assumed.
Interest
Rate Risk
The
price of certain of the Company’s investments may be significantly affected by changes in interest rates, including recent
increases in interest rates. Although senior secured loans are generally floating rate instruments, the Company’s investments
in senior secured loans through investments in junior equity and debt tranches of CLOs are sensitive to interest rate levels and
volatility. For example, because CLO debt securities are floating rate securities, a reduction in interest rates would generally
result in a reduction in the coupon payment and cash flow the Company receives on the Company’s CLO debt investments. Further,
in the event of a significant rising interest rate environment and/or economic downturn, loan defaults may increase and result
in credit losses that may adversely affect the Company’s cash flow, fair value of the Company’s assets and operating
results. Because CLOs generally issue debt on a floating rate basis, an increase in the relevant benchmark index will increase
the financing costs of CLOs.
Refinancing
Risk
If
the Company incurs debt financing and subsequently refinances such debt, the replacement debt may be at a higher cost and on less
favorable terms and conditions. If the Company fails to extend, refinance or replace such debt financings prior to their maturity
on commercially reasonable terms, the Company’s liquidity will be lower than it would have been with the benefit of such
financings, which would limit the Company’s ability to grow, and holders of the Company’s common stock would not benefit
from the potential for increased returns on equity that incurring leverage creates.
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
Tax
Risk
If
the Company fails to qualify for tax treatment as a RIC under Subchapter M of the Code for any reason, or otherwise becomes subject
to corporate income tax, the resulting corporate taxes (and any related penalties) could substantially reduce the Company’s
net assets, the amount of income available for distributions to the Company’s stockholders, and the amount of income available
for payment of the Company’s other liabilities.
Counterparty
Risk
The
Company may be exposed to counterparty risk, which could make it difficult for the Company or the issuers in which the Company
invests to collect on obligations, thereby resulting in potentially significant losses.
Price
Risk
Investors
who buy shares at different times will likely pay different prices.
Global
Risks
Due
to highly interconnected global economies and financial markets, the value of the Company’s securities and its underlying
investments may go up or down in response to governmental actions and/or general economic conditions throughout the world. Events
such as war, military conflict, acts of terrorism, social unrest, natural disasters, recessions, inflation, rapid interest rate
changes, supply chain disruptions, sanctions, the spread of infectious illness or other public health threats could also significantly
impact the Company and its investments.
Banking
Risk
The
possibility of future bank failures poses risks of reduced financial market liquidity at clearing, cash management and other custodial
financial institutions. The failure of banks which hold cash on behalf of the Company, the Company's underlying obligors, the
collateral managers of the CLOs in which the Company invests (or managers of other securitized or pooled vehicles in which the
Company invests), or the Company’s service providers could adversely affect the Company’s ability to pursue its investment
strategies and objectives. For example, if an underlying obligor has a commercial relationship with a bank that has failed or
is otherwise distressed, such company may experience delays or other disruptions in meeting its obligations and consummating business
transactions. Additionally, if a collateral manager has a commercial relationship with a distressed bank, the manager may experience
issues conducting its operations or consummating transactions on behalf of the CLOs it manages, which could negatively affect
the performance of such CLOs (and, therefore, the performance of the Company).
| 4. | RELATED
PARTY TRANSACTIONS Investment Adviser |
Investment
Adviser
On
October 5, 2018, the Company entered into an investment advisory agreement with the Adviser (the “Advisory Agreement”).
Pursuant to the terms of the Advisory Agreement, the Company pays the Adviser, for its services, a management fee equal to an
annual rate of 1.25% of the Company’s “Managed Assets”. Managed Assets are defined as the Company’s total
assets (including assets attributable to the Company’s use of leverage) minus the sum of the Company’s accrued liabilities
(other than liabilities incurred for the purpose of creating leverage). The management fee is calculated monthly and payable quarterly
in arrears based on the Company’s Managed Assets at the end of each calendar month. For the three months ended March 31,
2024, the Company was charged a management fee of approximately $0.83 million, of which $0.83 million was payable as of March
31, 2024.
Administrator
Effective
October 5, 2018, the Company entered into an administration agreement (the “Administration Agreement”) with the Administrator,
an affiliate of the Adviser. Pursuant to the Administration Agreement, the Administrator performs, or arranges for the performance
of, the Company’s required administrative services, which include being responsible for the financial records which the
Company is required to maintain and preparing reports which are disseminated to the Company’s stockholders. In addition,
the Administrator provides the Company with accounting services, assists the Company in determining and publishing its NAV, oversees
the preparation and filing of the Company’s tax returns, monitors the Company’s compliance with tax laws and regulations,
and prepares and assists the Company with any audits by an independent public accounting firm of the consolidated financial statements.
The Administrator is also responsible for printing and disseminating reports to the Company’s
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
stockholders
and maintaining the Company’s website, providing support to investor relations, generally overseeing the payment of the
Company’s expenses and the performance of administrative and professional services rendered to the Company by others, and
providing such other administrative services as the Company may from time to time designate.
Payments
under the Administration Agreement are equal to an amount based upon the Company’s allocable portion of the Administrator’s
overhead in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with
performing compliance functions and the Company’s allocable portion of the compensation of the Company’s chief compliance
officer, chief financial officer, chief operating officer and the Company’s allocable portion of the compensation of any
related support staff. The Company’s allocable portion of such compensation is based on an allocation of the time spent
on the Company relative to other matters. To the extent the Administrator outsources any of its functions, the Company pays the
fees on a direct basis, without profit to the Administrator. Certain accounting and other administrative services have been delegated
by the Administrator to SS&C Technologies, Inc. (“SS&C”). The Administration Agreement may be terminated by
the Company without penalty upon not less than sixty days’ written notice to the Administrator and by the Administrator
upon not less than ninety days’ written notice to the Company. The Administration Agreement is approved by the Board, including
by a majority of the Company’s independent directors, on an annual basis.
For
the three months ended March 31, 2024, the Company was charged a total of approximately $0.15 million in administration fees,
consisting of approximately $0.12 million and $0.03 million relating to services provided by the Administrator and SS&C, respectively,
which are included in the Consolidated Statement of Operations, and of which approximately $0.15 million was payable as of March
31, 2024 and reflected on the Consolidated Statement of Assets and Liabilities.
Affiliated
Ownership
As
of March 31, 2024, the Adviser and its affiliates and senior investment team held an aggregate of 0.4% of the Company’s
common stock. Additionally, the senior investment team held an aggregate of 0.1% of the Series A Term Preferred Stock as of March
31, 2024. An affiliate of Enstar Group Limited (“Enstar”) holds an indirect non-controlling ownership interest in
the Adviser. As of March 31, 2024, subsidiaries of Enstar held an aggregate of 29.1% of the Company’s common stock.
Exemptive
Relief
On
March 17, 2015, the SEC issued an order granting the Company exemptive relief to co-invest in certain negotiated investments with
affiliated investment funds managed by the Adviser, subject to certain conditions.
As
of December 31, 2023, there were 150,000,000 shares of common stock authorized, of which 10,997,398 shares were issued and outstanding.
On
June 29, 2023, the Company filed a new shelf registration statement with 150,000,000 shares of common stock authorized.
On
June 30, 2023, the Company launched a new ATM offering to sell up to $75.0 million aggregate amount of its common stock, pursuant
to a prospectus filed with the SEC on June 29, 2023.
On
August 16, 2022, the Company entered into an agreement (the “Purchase Agreement”) with B. Riley Principal Capital
II, LLC (“BRPC II”) in which BRPC II has committed to purchase from the Company, at the Company’s discretion,
up to $20.0 million of the Company’s common stock, subject to terms and conditions specified in the Purchase Agreement (referred
to as the “Committed Equity Financing”). The Company filed a registration statement on December 15, 2022 in relation
to the Committed Equity Financing.
For
the three months ended March 31, 2024, the Company sold 1,907,452 shares of its common stock, pursuant to the ATM offerings, for
total net proceeds to the Company of approximately $28.6 million. In connection with such
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
sales,
the Company paid a total of approximately $0.6 million in sales agent commissions.
For
the three months ended March 31, 2024, 53,476 shares of common stock were issued in connection with the DRIP for total net proceeds
to the Company of approximately $0.8 million.
As
of March 31, 2024, there were 150,000,000 shares of common stock authorized, of which 12,958,326 shares were issued and outstanding.
| 6. | MANDATORY
REDEEMABLE PREFERRED STOCK |
As
of March 31, 2024, there were 20,000,000 shares of preferred stock authorized, par value $0.001 per share, of which 1,521,649
shares of Series A Term Preferred Stock and 1,486,049 of Series B Term Preferred were issued and outstanding.
The
Company has accounted for its Preferred Stock as a liability under ASC 480 due to their mandatory redemption requirements.
Except
where otherwise stated in the 1940 Act or the Company’s certificate of incorporation, each holder of Preferred Stock will
be entitled to one vote for each share of preferred stock held on each matter submitted to a vote of the Company’s stockholders.
The Company’s preferred stockholders and common stockholders will vote together as a single class on all matters submitted
to the Company’s stockholders. Additionally, the Company’s preferred stockholders will have the right to elect two
Preferred Directors at all times, while the Company’s preferred stockholders and common stockholders, voting together as
a single class, will elect the remaining members of the Board. Under the terms of the Company’s Revolving Credit Facility
(described under Note 9, below), the Company cannot optionally redeem any shares of its Preferred Stock prior to the Revolving
Credit Facility’s scheduled maturity date and cannot make any distributions or other payments on the Preferred Stock during
the existence of a default or margin deficiency (each as defined under the applicable credit agreement).
The
Company has elected the FVO under ASC 825 for its Preferred Stock. Accordingly, the Preferred Stock is measured at fair value.
Series
A Term Preferred Stock
The
Company is required to redeem all outstanding shares of the Series A Term Preferred Stock on October 30, 2026, at a redemption
price of $25 per share (the “Series A Liquidation Preference”), plus accumulated but unpaid dividends, if any. At
any time on or after October 31, 2023, the Company may, at its sole option, redeem the outstanding shares of the Series A Term
Preferred Stock.
The
estimated change in fair value of the Series A Term Preferred Stock attributable to market risk for the three months ended March
31, 2024 is approximately ($0.2) million, which is recorded as unrealized (appreciation) depreciation on liabilities at fair value
under the FVO on the Consolidated Statement of Operations.
The
estimated change in fair value of the Series A Term Preferred Stock attributable to instrument-specific credit risk for the three
months ended March 31, 2024 is approximately $0.6 million, which is recorded as unrealized (appreciation) depreciation on liabilities
at fair value under the FVO on the Consolidated Statement of Comprehensive Income. The Company defines the change in fair value
attributable to instrument-specific credit risk as the excess of the total change in fair value over the change in fair value
attributable to changes in a base market rate, such as a United States treasury bond index with a similar maturity to the instrument
being valued.
On
June 30, 2023, the Company launched a new ATM offering to sell up to 1,000,000 shares of Series A Term Preferred Stock with an
aggregate liquidation preference of $25 million, pursuant to a prospectus filed with the SEC on June 29, 2023.
Series
B Term Preferred Stock
The
Company is required to redeem all outstanding shares of the Series B Term Preferred Stock on July 31, 2028,
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
at
a redemption price of $25 per share (the “Series B Liquidation Preference”), plus accumulated but unpaid dividends,
if any. At any time on or after July 31, 2025, the Company may, at its sole option, redeem the outstanding shares of the Series
B Term Preferred Stock.
The
estimated change in fair value of the Series B Term Preferred Stock attributable to market risk for the three months ended March
31, 2024 is approximately ($0.5) million, which is recorded as unrealized (appreciation) depreciation on liabilities at fair value
under the FVO on the Consolidated Statement of Operations.
The
estimated change in fair value of the Series B Term Preferred Stock attributable to instrument-specific credit risk for the three
months ended March 31, 2024 is approximately $0.7 million, which is recorded as unrealized (appreciation) depreciation on liabilities
at fair value under the FVO on the Consolidated Statement of Comprehensive Income. The Company defines the change in fair value
attributable to instrument-specific credit risk as the excess of the total change in fair value over the change in fair value
attributable to changes in a base market rate, such as a United States treasury bond index with a similar maturity to the instrument
being valued.
Pursuant
to a prospectus supplement filed with the SEC on August 22, 2023, the Company updated the ATM offering to allow the Company to
sell up to 1,000,000 shares of Series B Term Preferred Stock with an aggregate liquidation preference of $25 million, pursuant
to a prospectus filed with the SEC on June 29, 2023.
For
the three months ended March 31, 2024, the Company sold 113,567 shares of its Series B Term Preferred Stock pursuant to the ATM
offering for total proceeds to the company of approximately $2.8 million. In connection with such sales, the Company paid a total
of approximately $0.06 million in sales commissions.
See
Note 10 “Asset Coverage” for further discussion on the Company’s calculation of asset coverage with respect
to its Preferred Stock.
| 7. | COMMITMENTS
AND CONTINGENCIES |
The
Company is not currently subject to any material legal proceedings. From time to time, the Company may be a party to certain legal
proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights
under contracts. While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect
these proceedings will have a material effect upon its financial condition or results of operations.
As
of March 31, 2024, the Company had total unfunded commitments of $0.6 million arising from CFO debt and CFO equity investments.
Under
the Company’s organizational documents, its officers and directors are indemnified against certain liabilities arising out
of the performance of their duties to the Company. In addition, during the normal course of business, the Company enters into
contracts containing a variety of representations which provide general indemnifications. The Company’s maximum exposure
under these agreements cannot be known; however, the Company expects any risk of loss to be remote.
| 9. | REVOLVING
CREDIT FACILITY |
The
Company may utilize leverage to the extent permitted by the 1940 Act. The Company may obtain leverage using any form of financial
leverage instruments, including funds borrowed from banks or other financial institutions, margin facilities, notes or preferred
stock and leverage attributable to repurchase agreements or similar transactions. Instruments that create leverage are generally
considered to be senior securities under the 1940 Act. The use of leverage creates an opportunity for increased net income and
capital appreciation, but also creates additional risks and expenses which will be borne entirely by common stock holders. The
Company’s leverage strategy may not ultimately be successful.
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
On
September 24, 2021 the Company entered into a credit agreement, which was amended on September 6, 2022 and September 18, 2023,
with BNP Paribas, as lender, that established a revolving credit facility (the “Revolving Credit Facility”). Pursuant
to the terms of the Revolving Credit Facility, the Company can borrow up to an aggregate principal balance of $25.0 million (the
“Commitment Amount”). The Revolving Credit facility is collateralized by certain investments held by the Company.
The Company has granted a security interest in certain assets to BNP Paribus, as lender. Such borrowings under the Revolving Credit
Facility bore interest at 1-month LIBOR plus a spread under the original credit agreement, and bear interest at Term SOFR plus
a spread under the amended credit agreement. The Company is required to pay a commitment fee on the unused amount.
The
Revolving Credit Facility will mature on the earlier of (i) the termination of the Commitment, as defined by the terms of the
Revolving Credit Facility or (ii) the scheduled maturity date of September 21, 2024. The Company has the option to extend the
maturity from time to time in accordance with the Revolving Credit Facility agreement.
For
the three months ended March 31, 2024, the Company had an average outstanding borrowing and average interest rate of approximately
$3.2 million and 7.45%, respectively. The interest expense for the three months ended March 31, 2024 on the Revolving Credit Facility
was approximately $0.1 million, inclusive of the unused fee, and is recorded on the Consolidated Statement of Operations. As of
March 31, 2024, the Company had an outstanding borrowing amount of $18.9 million.
See
Note 10 “Asset Coverage” for further discussion on the Company’s calculation of asset coverage with respect
to the Revolving Credit Facility.
Under
the provisions of the 1940 Act, the Company is permitted to issue senior securities, including debt securities and preferred stock,
and borrow from banks or other financial institutions, provided that the Company satisfies certain asset coverage requirements.
With
respect to senior securities that are stocks, such as the Preferred Stock, the Company is required to have asset coverage of at
least 200%, as measured at the time of issuance of any such senior securities that are stocks and calculated as the ratio of the
Company’s total consolidated assets, less all liabilities and indebtedness not represented by senior securities, over the
aggregate amount of the Company’s outstanding senior securities representing indebtedness plus the aggregate liquidation
preference of any outstanding shares of senior securities that are stocks.
With
respect to senior securities representing indebtedness, such as the Revolving Credit Facility or any bank borrowings (other than
temporary borrowings as defined under the 1940 Act), the Company is required to have asset coverage of at least 300%, as measured
at the time of borrowing and calculated as the ratio of the Company’s total consolidated assets, less all liabilities and
indebtedness not represented by senior securities, over the aggregate amount of the Company’s outstanding senior securities
representing indebtedness.
If
the Company’s asset coverage declines below 300% (or 200%, as applicable), the Company would be prohibited under the 1940
Act from incurring additional debt or issuing additional preferred stock and from declaring certain distributions to its stockholders.
In addition, the terms of the Revolving Credit Facility require the Company to cure any breach of the applicable asset coverage
if the Company fails to maintain the applicable asset coverage, and the terms of the Preferred Stock require the Company to redeem
shares of the Preferred Stock, if such failure to maintain the applicable asset coverage is not cured by a certain date.
The
following table summarizes the Company’s asset coverage with respect to its Preferred Stock and Revolving Credit Facility
as of March 31, 2024, and as of December 31, 2023:
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
| |
As
of March
31, 2024 | | |
As
of December
31, 2023 | |
T
otal Assets | |
$ | 289,539,393 | | |
$ | 243,728,043 | |
Less
liabilities and debts not represented by senior securities | |
| (1,797,416 | ) | |
| (1,513,315 | ) |
Net
total assets and liabilities | |
$ | 287,741,977 | | |
$ | 242,214,728 | |
| |
| | | |
| | |
Preferred
Stock | |
$ | 75,192,450 | | |
$ | 72,353,275 | |
Revolving
Credit Facility | |
| 18,850,000 | | |
| 14,520,000 | |
| |
$ | 94,042,450 | | |
$ | 86,873,275 | |
| |
| | | |
| | |
Asset
coverage for preferred stock ⁽¹⁾ | |
| 306 | % | |
| 279 | % |
Asset
coverage for debt securities ⁽²⁾ | |
| 1526 | % | |
| 1668 | % |
⁽¹⁾
Asset coverage of the preferred stock is calculated in accordance with Section 18(h) of the 1940 act , as generally described
above.
⁽²⁾
Asset coverage of the debt securities is calculated in accordance with Sect ion 18(h) of the 1940 act , as generally described
above.
| 11. | RECENT
ACCOUNTING PRONOUCEMENT |
In
June 2022, the FASB issued Accounting Standards Update No. 2022-03 (“ASU 2022-03”) related to FASB ASC Topic 820 Fair
Value Measurements - Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This change prohibits
entities from taking into account contractual restrictions on the sale of equity securities when estimating fair value and introduces
required disclosures for such transactions. The Company has fully adopted the provisions of ASU 2022-03, which did not have a
material impact on the Company’s consolidated financial statements and related disclosures.
On
April 2, 2024, the Company closed an underwritten public offering of 1,220,00 shares of its 8.00% term preferred stock due April
30, 2029 (the “Series C Term Preferred Stock”) at a public offering price of $25 per share, which resulted in net
proceeds to the Company of approximately $29.3 million after payment of underwriting discounts and commissions and estimated offering
expenses payable by the Company. The Company listed the Series C Term Preferred Stock on the New York Stock Exchange under the
symbol “EICC.” In addition, the underwriters exercised their option to purchase an additional 180,000 shares of the
Series C Term Preferred Stock, which resulted in net proceeds to the Company of approximately $4.4 million after payment of the
underwriters discount and commissions.
In
connection with the Series C Term Preferred Stock offering described above, the Company declared the initial distribution of $0.150000
per share payable on April 30, 2024 to holders of record as of April 10, 2024, and subsequent distributions of $0.166667 per share
payable on each of May 31, 2024, June 28, 2024, July 31, 2024, August 30, 2024 and September 30, 2024 to holders of record as
of May 13, 2024, June 10, 2024, July 11, 2024, August 12, 2024 and September 10, 2024, respectively.
On
April 30, 2024, the Company paid a monthly distribution of $0.20 per share on its common stock to holders of record as of April
10, 2024. Additionally, on May 15, 2024, the Company declared three separate distributions of $0.20 per share on its common stock.
The distributions are payable on each of July 31, 2024, August 30, 2024 and September 30, 2024 to holders of record as of July
11, 2024, August 12, 2024 and September 10, 2024, respectively.
On
April 30, 2024, the Company paid a monthly distribution of $0.104167 per share on its Series A Preferred Stock to holders of record
as of April 10, 2024. Additionally, on May 15, 2024, the Company declared three separate distributions of $0.104167 per share
on its Series A Preferred Stock. The distributions are payable on each of July 31, 2024, August 30, 2024 and September 30, 2024
to holders of record as of July 11, 2024, August 12, 2024 and September 10, 2024, respectively.
Eagle
Point Income Company Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
March
31, 2024
(Unaudited)
On
April 30, 2024, the Company paid a monthly distribution of $0.161459 per share on its Series B Preferred Stock to holders of record
as of April 10, 2024. Additionally, on May 15, 2024, the Company declared three separate distributions of $0.161459 per share
on its Series B Preferred Stock. The distributions are payable on each of July 31, 2024, August 30, 2024 and September 30, 2024
to holders of record as of July 11, 2024, August 12, 2024 and September 10, 2024, respectively.
The
Company filed a prospectus supplement with the SEC dated April 24, 2024, updating the aggregate offering price of its common stock
to be sold under the ATM offering from $75 million to $175 million, pursuant to a prospectus filed with the SEC on June 29, 2023.
For
the period from April 1, 2024 to May 17, 2024, the Company sold 1,169,305 shares of its common stock, pursuant to the ATM offering,
for total net proceeds to the Company of approximately $18.2 million. In connection with such sales, the Company paid a total
of approximately $0.3 million in sales agent commissions.
For
the period from April 1, 2024 to May 17, 2024, the Company sold 30,920 shares of its Series B Preferred Stock, pursuant to the
ATM offering, for total net proceeds to the Company of approximately $0.8 million. In connection with such sales, the Company
paid a total of approximately $0.02 million in sales agent commissions.
As
of May 17, 2024, the BNP Credit Facility was fully undrawn.
Management’s
unaudited estimate of the range of the Company’s NAV per common share as of April 30, 2024 was $15.16 to $15.26.
Management
of the Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date of
release of this report, and has determined there are no events in addition to those described above which would require adjustment
to or disclosure in the consolidated financial statements and related notes through the date of release of this report.
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated Financial Highlights
(Unaudited)
Per
Share Data | |
For
the three months ended March 31, 2024 | | |
For
the year ended December 31, 2023 | | |
For
the year ended December 31, 2022 | | |
For
the year ended December 31, 2021 | | |
For
the year ended December 31, 2020 | |
| |
| | |
| | |
| | |
| | |
| |
Net
asset value, beginning of period | |
$ | 14.39 | | |
$ | 12.91 | | |
$ | 16.76 | | |
$ | 16.89 | | |
$ | 19.34 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net
investment income, before fee waivers and expenses reimbursed (1) (2) | |
| 0.54 | | |
| 1.90 | | |
| 1.64 | | |
| 0.98 | | |
| 1.27 | |
Management
fee voluntarily waived by the Adviser (1) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Expenses
reimbursed by the Adviser (1) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Administration
fee voluntarily waived by the Administrator (1) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Net
investment income | |
| 0.54 | | |
| 1.90 | | |
| 1.64 | | |
| 0.98 | | |
| 1.27 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net
realized gain (loss) and change in unrealized appreciation (depreciation) on investments (1) (3) | |
| 0.79 | | |
| 1.32 | | |
| (4.45 | ) | |
| 0.38 | | |
| (2.21 | ) |
Net
change in unrealized (appreciation) depreciation on liabilities at fair value | |
| | | |
| | | |
| | | |
| | | |
| | |
under
the fair value option | |
| 0.06 | | |
| (0.14 | ) | |
| 0.53 | | |
| (0.01 | ) | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net
income (loss) and net increase (decrease) in net assets resulting from operations | |
| 1.39 | | |
| 3.08 | | |
| (2.28 | ) | |
| 1.35 | | |
| (0.94 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common
stock distributions from net investment income (4) | |
| (0.60 | ) | |
| (1.98 | ) | |
| (1.53 | ) | |
| (1.33 | ) | |
| (1.32 | ) |
Common
stock distributions from net realized gains on investments (4) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Common
stock distributions from tax return of capital (4) | |
| — | | |
| — | | |
| — | | |
| — | | |
| (0.18 | ) |
Total
common stock distributions declared to stockholders (4) | |
| (0.60 | ) | |
| (1.98 | ) | |
| (1.53 | ) | |
| (1.33 | ) | |
| (1.50 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common
stock distributions based on weighted average shares impact (5) | |
| — | | |
| — | | |
| — | | |
| (0.02 | ) | |
| — | |
Total
common stock distributions | |
| (0.60 | ) | |
| (1.98 | ) | |
| (1.53 | ) | |
| (1.35 | ) | |
| (1.50 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Effect
of other comprehensive income | |
| (0.11 | ) | |
| 0.25 | | |
| (0.15 | ) | |
| (0.13 | ) | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Effect
of shares issued (6) | |
| 0.09 | | |
| 0.20 | | |
| 0.14 | | |
| 0.10 | | |
| — | |
Effect
of underwriting discounts, commissions and offering expenses associated with shares issued (6) | |
| (0.04 | ) | |
| (0.07 | ) | |
| (0.03 | ) | |
| (0.10 | ) | |
| (0.01 | ) |
Effect
of offering expenses associated with shares issued (7) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Effect
of shares issued in accordance with the Company's dividend reinvestment plan | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Effect
of paid-in capital contribution (8) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Net
effect of shares issued | |
| 0.05 | | |
| 0.13 | | |
| 0.11 | | |
| — | | |
| (0.01 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net
asset value at end of period | |
$ | 15.12 | | |
$ | 14.39 | | |
$ | 12.91 | | |
$ | 16.76 | | |
$ | 16.89 | |
Per
share market value at beginning of period (9) | |
$ | 14.57 | | |
$ | 13.87 | | |
$ | 17.03 | | |
$ | 14.41 | | |
$ | 18.76 | |
Per
share market value at end of period | |
$ | 16.65 | | |
$ | 14.57 | | |
$ | 13.87 | | |
$ | 17.03 | | |
$ | 14.41 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total
return, based on market value (10) | |
| 18.87 | % | |
| 21.37 | % | |
| (8.67 | %) | |
| 26.55 | % | |
| (14.07 | %) |
Total
return, based on net asset value | |
| 9.24 | % | |
| 26.80 | % | |
| (13.84 | %) | |
| 7.22 | % | |
| (4.91 | %) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Shares
of common stock outstanding at end of period | |
| 12,958,326 | | |
| 10,997,398 | | |
| 7,896,757 | | |
| 6,881,964 | | |
| 6,106,458 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Ratios
and Supplemental Data: | |
| | | |
| | | |
| | | |
| | | |
| | |
Net
asset value at end of period | |
$ | 195,904,607 | | |
$ | 158,207,420 | | |
$ | 101,943,840 | | |
$ | 115,349,167 | | |
$ | 103,120,136 | |
Ratio
of net investment income to average net assets (11) (13) | |
| 14.11 | % | |
| 13.83 | % | |
| 11.20 | % | |
| 5.66 | % | |
| 8.65 | % |
Ratio
of expenses, before fee waivers and expenses reimbursed, to average net assets (11) (12) (13) | |
| 5.57 | % | |
| 7.44 | % | |
| 7.16 | % | |
| 5.36 | % | |
| 3.99 | % |
Ratio
of expenses, after fee waivers and expenses reimbursed, to average net assets (11) (12) (13) | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | |
Portfolio
turnover rate (14) | |
| 5.47 | % | |
| 3.18 | % | |
| 6.32 | % | |
| 27.98 | % | |
| 29.14 | % |
Asset
coverage of preferred stock | |
| 306 | % | |
| 279 | % | |
| 313 | % | |
| 313 | % | |
| N/A | |
Asset
coverage of debt securities | |
| 1526 | % | |
| 1668 | % | |
| 1630 | % | |
| 873 | % | |
| 796 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Credit
Facility: | |
| | | |
| | | |
| | | |
| | | |
| | |
Principal
amount outstanding at end of period | |
$ | 18,850,000 | | |
$ | 14,520,000 | | |
$ | 9,030,000 | | |
$ | 19,550,000 | | |
$ | 14,815,000 | |
Asset
coverage per $1,000 at end of period (15) | |
$ | 15,264.83 | | |
$ | 16,681.46 | | |
$ | 16,296.64 | | |
$ | 8,732.75 | | |
$ | 7,960.52 | |
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated Financial Highlights
(Unaudited)
Per
Share Data | |
For
the year ended December 31, 2019 | | |
For
the period from October 16, 2018 to December 31, 2018 | |
| |
| | |
| |
Net
asset value, beginning of period | |
$ | 18.28 | | |
$ | 20.00 | |
| |
| | | |
| | |
Net
investment income, before fee waivers and expenses reimbursed (1) (2) | |
| 1.15 | | |
| 0.10 | |
Management
fee voluntarily waived by the Adviser (1) | |
| 0.08 | | |
| 0.05 | |
Expenses
reimbursed by the Adviser (1) | |
| 0.06 | | |
| 0.20 | |
Administration
fee voluntarily waived by the Administrator (1) | |
| 0.03 | | |
| — | |
Net
investment income | |
| 1.32 | | |
| 0.35 | |
| |
| | | |
| | |
Net
realized gain (loss) and change in unrealized appreciation (depreciation) on investments (1) (3) | |
| 0.70 | | |
| (1.72 | ) |
Net
change in unrealized (appreciation) depreciation on liabilities at fair value | |
| | | |
| | |
under
the fair value option | |
| | | |
| | |
| |
| | | |
| | |
Net
income (loss) and net increase (decrease) in net assets resulting from operations | |
| 2.02 | | |
| (1.37 | ) |
| |
| | | |
| | |
Common
stock distributions from net investment income (4) | |
| (0.69 | ) | |
| (0.35 | ) |
Common
stock distributions from net realized gains on investments (4) | |
| — | | |
| — | |
Common
stock distributions from tax return of capital (4) | |
| — | | |
| — | |
Total
common stock distributions declared to stockholders (4) | |
| (0.69 | ) | |
| (0.35 | ) |
| |
| | | |
| | |
Common
stock distributions based on weighted average shares impact (5) | |
| (0.15 | ) | |
| — | |
Total
common stock distributions | |
| (0.84 | ) | |
| (0.35 | ) |
| |
| | | |
| | |
Effect
of other comprehensive income | |
| | | |
| | |
| |
| | | |
| | |
Effect
of shares issued (6) | |
| (0.19 | ) | |
| | |
Effect
of underwriting discounts, commissions and offering expenses associated | |
| | | |
| | |
with
shares issued (6) | |
| | | |
| | |
Effect
of offering expenses associated with shares issued (7) | |
| (0.12 | ) | |
| | |
Effect
of shares issued in accordance with the Company's dividend reinvestment plan | |
| — | | |
| | |
Effect
of paid-in capital contribution (8) | |
| 0.19 | | |
| | |
Net
effect of shares issued | |
| (0.12 | ) | |
| — | |
| |
| | | |
| | |
Net
asset value at end of period | |
$ | 19.34 | | |
$ | 18.28 | |
Per
share market value at beginning of period (9) | |
$ | 19.89 | | |
| N/A
| |
Per
share market value at end of period | |
$ | 18.76 | | |
| N/A
| |
| |
| | | |
| | |
Total
return, based on market value (10) | |
| (2.27 | %) | |
| N/A | |
Total
return, based on net asset value | |
| 9.56 | % | |
| (6.85 | %) |
| |
| | | |
| | |
Shares
of common stock outstanding at end of period | |
| 6,018,273 | | |
| 3,769,596 | |
| |
| | | |
| | |
Ratios
and Supplemental Data: | |
| | | |
| | |
Net
asset value at end of period | |
$ | 116,408,383 | | |
$ | 68,923,362 | |
Ratio
of net investment income to average net assets (11) (13) | |
| 6.67 | % | |
| 8.54 | % |
Ratio
of expenses, before fee waivers and expenses reimbursed, to average net assets (11) (12) (13) | |
| 2.75 | % | |
| 3.12 | % |
Ratio
of expenses, after fee waivers and expenses reimbursed, to average net assets (11) (12) (13) | |
| 1.89 | % | |
| 0.00 | % |
Portfolio
turnover rate (14) | |
| 11.42 | % | |
| 2.35 | % |
Asset
coverage of preferred stock | |
| N/A | | |
| | |
Asset
coverage of debt securities | |
| 947 | % | |
| | |
| |
| | | |
| | |
Credit
Facility: | |
| | | |
| | |
Principal
amount outstanding at end of period | |
$ | 13,743,000 | | |
$ | — | |
Asset
coverage per $1,000 at end of period (15) | |
$ | 9,470.38 | | |
$ | — | |
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated
Financial Highlights
(Unaudited)
Footnotes
to the Financial Highlights:
| (1) | Per
share amounts are based on the weighted average of shares of common stock outstanding
for the period. |
| (2) | Per
share distributions paid to preferred stockholders are reflected in net investment income,
and totaled ($0.10), ($0.33), ($0.27) and ($0.05) per share of common stock for the three
months ended March 31, 2024, and the years ended December 31, 2023, December 31, 2022
and December 31, 2021, respectively. |
| (3) | Net
realized gain (loss) and change in unrealized appreciation (depreciation) on investments
may include a balancing figure to reconcile to the change in NAV per share at the end
of each period. The amount shown for a share outstanding throughout the period may not
agree with the change in the aggregate net realized gain (loss) and change in unrealized
appreciation (depreciation) on investments for the period because of the timing of sales
of the Company’s common stock in relation to fluctuating market values for the
portfolio. |
| (4) | The
information provided is based on estimates available at each respective period. The Company’s
final taxable income and the actual amount required to be distributed will be finally
determined when the Company files its final tax returns and may vary from these estimates. |
| (5) | Represents
the difference between the per share amount distributed to common stockholders of record
and the per share amount distributed based on the weighted average of shares of common
stock outstanding for the period. |
| (6) | Represents
the effect per share of the Company’s issuance of shares of common stock pursuant
to a private placement in May 2019 and the Company’s ATM and follow on offerings.
Effect of shares issued reflect the impact of the offering price when compared to management’s
estimated NAV per share at the time of each respective offering. |
| (7) | Represents
the effect per share of offering expenses incurred prior to or in connection with the
Company’s IPO. |
| (8) | Represents
the effect of the paid-in capital contribution made by an affiliate of the Adviser pursuant
to a private placement in May 2019. |
| (9) | Represents
the IPO price as of July 23, 2019 for the year ended December 31, 2019. |
| (10) | Total
return based on market value is calculated assuming shares of the Company’s common
stock were purchased at the market price as of the beginning of the period, and distributions
paid to common stockholders during the period were reinvested at prices obtained by the
Company’s dividend reinvestment plan, and the total number of shares were sold
at the closing market price per share on the last day of the period. For the year ended
December 31, 2019 the total return on market value is calculated as the change in market
value per share for the period commencing July 23, 2019, the date of the Company’s
IPO, through December 31, 2019. The beginning market value per share is based on the
initial public offering price of $19.89 per share. Total return does not reflect any
sales load. |
| (11) | Ratios
for the three months ended March 31, 2024, and the period from October 16, 2018 to December
31, 2018 are annualized. Ratios include the impact of the fee waivers and expenses reimbursed
by the Adviser, where applicable. |
| (12) | Expenses
of the Company for the period from October 16, 2018 to December 31, 2018 and for the
period from January 1, 2019 to May 31, 2019 were reimbursed by the Adviser. In addition,
the Adviser has voluntarily waived the management fee and the Administrator has voluntarily
waived the administration fee for the same periods from October 16, 2018 to December
31, 2018 and from January 1, 2019 to May 31, 2019. |
| (13) | Ratios
for the three months ended March 31, 2024, and for the years ended December 31, 2023,
December 31, 2022, December 31, 2021, December 31, 2020 and December 31, 2019 include
interest expense on the credit facility of 0.16%, 0.21%, 0.63%, 0.40%, 0.60% and 0.04%
of average net assets, respectively. Ratios for the three months ended March 31, 2024,
and for the years ended December 31, 2023, December 31, 2022 and December 31, 2021 include
interest expense on the Series A Term Preferred Stock and Series B Term Preferred Stock
of 2.51%, 2.38%, 1.83% and 0.31% of average net assets, respectively. Ratios for the
three months ended March 31, 2024, and for the years ended December 31, 2023, December
31, 2022, December 31, 2021 and December 31, 2019 include excise tax expense of 0.03%,
0.11%, 0.27%, 0.06% and 0.10% of average net assets, respectively. |
| (14) | The
portfolio turnover rate is calculated as the lesser of total investment purchases executed
during the period or the total of investment sales and repayments of principal executed
during the period, divided by the average fair value of the investments for the same
period. |
| (15) | The
asset coverage per unit figure is the ratio of the Company’s total assets, less
liabilities and indebtedness not represented by the credit facility, to the aggregate
dollar amount of outstanding borrowings of the credit facility, in accordance with section
18(h) of the 1940 Act. The asset coverage per unit figure is expressed in terms of dollar
amounts per $1,000 principal amount. |
Eagle
Point Income Company Inc. and Subsidiaries
Consolidated
Financial Highlights
(Unaudited)
Financial
highlights for the period from October 4, 2018 (Commencement of Operations) to October 15, 2018 for the Members are as follows:
Per
Unit Data | |
For
the period from October 4, 2018 (Commencement of Operations) to October 15, 2018 | |
| |
| |
Net
asset value at beginning of period | |
$ | 1,000.00 | |
Net
investment income | |
| 2.69 | |
Net
change in unrealized appreciation (depreciation) on investments | |
| 0.51 | |
Net
income (loss) and net increase (decrease) in net assets resulting from operations | |
| 3.20 | |
| |
| | |
Net
asset value at end of period | |
$ | 1,003.20 | |
| |
| | |
Total
return (1) | |
| 0.32 | % |
| |
| | |
Ratios
and Supplemental Data: | |
| | |
Net asset value
at end of period | |
$ | 75,391,911 | |
Ratio
of net investment income to average net assets (1) | |
| 0.27 | % |
Ratio
of expenses to average net assets (2) | |
| 0.00 | % |
Portfolio
turnover rate (3) | |
| 0.00 | % |
| (1) | Total
return and ratio of net investment income to average net assets for the period from October
4, 2018 (Commencement of Operations) to October 15, 2018 are not annualized. |
| (2) | No
expenses were borne by the Company from October 4, 2018 (Commencement of Operations)
to October 15, 2018. |
| (3) | The
Company did not enter transactions to purchase or sell securities from October 4, 2018
(Commencement of Operations) to October 15, 2018. As such, the portfolio turnover rate
is 0.00%. |
Note:
The above Financial Highlights for the period from October 4, 2018 (Commencement of Operations) to October 15, 2018 for Members
represents the period when the Company was initially organized as a Delaware limited liability company.
Eagle
Point Income Company Inc.
Supplemental
Information
(Unaudited)
Senior
Securities Table
Information
about the Company’s senior securities shown in the following table has been derived from the Company’s consolidated
financial statements as of and for the dates noted.
Class |
|
Total
Amount Outstanding Exclusive of Treasury Securities (in millions) |
|
Asset
Coverage Per Unit (1) |
|
Involuntary
Liquidating Preference Per Unit (2) |
|
Average
Market Value Per Unit (3) |
|
|
|
|
|
|
|
|
|
For
the three months ended March 31, 2024 |
|
|
|
|
|
|
|
|
Preferred
Stock |
|
$75,192,450 |
|
$76.49 |
|
$25 |
|
$24.26 |
Revolving
Credit Facility (BNP Paribas) |
|
$18,850,000 |
|
$15,264.83 |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
|
For
the year ended December 31, 2023 |
|
|
|
|
|
|
|
|
Preferred
Stock |
|
$72,353,275 |
|
$69.70 |
|
$25 |
|
$23.81 |
Revolving
Credit Facility (BNP Paribas) |
|
$14,520,000 |
|
$16,681.46 |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
|
For
the year ended December 31, 2022 |
|
|
|
|
|
|
|
|
Preferred
Stock |
|
$38,041,225 |
|
$78.16 |
|
$25 |
|
$23.68 |
Revolving
Credit Facility (BNP Paribas) |
|
$9,030,000 |
|
$16,296.64 |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
|
For
the year ended December 31, 2021 |
|
|
|
|
|
|
|
|
Preferred
Stock |
|
$35,000,000 |
|
$78.24 |
|
$25 |
|
$25.32 |
Revolving
Credit Facility (BNP Paribas) |
|
$19,550,000 |
|
$8,732.75 |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
|
For
the year ended December 31, 2020 |
|
|
|
|
|
|
|
|
Revolving
Credit Facility (Société Générale) |
|
$14,815,000 |
|
$7,960.52 |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
|
For
the year ended December 31, 2019 |
|
|
|
|
|
|
|
|
Revolving
Credit Facility (Société Générale) |
|
$13,743,000 |
|
$9,470.38 |
|
N/A |
|
N/A |
| (1) | The
asset coverage per unit figure is the ratio of the Company’s total assets, less
all liabilities and indebtedness not represented by senior securities, to the aggregate
dollar amount of senior securities, as calculated separately for each of the Preferred
Stock and Revolving Credit Facility in accordance with section 18(h) of the 1940 Act.
With respect to the Preferred Stock, the asset coverage per unit figure is expressed
in terms of dollar amounts per share of outstanding preferred stock (based on a per share
liquidation preference of $25). With respect to the Revolving Credit Facility, the asset
coverage per unit figure is expressed in terms of dollar amounts per $1,000 of indebtedness. |
| (2) | The
involuntary liquidating preference per unit is the amount to which a share of Preferred
Stock would be entitled in preference to any security junior to it upon our involuntary
liquidation. |
| (3) | The
average market value per unit is calculated by taking the average of the closing price
of the Series A Term Preferred Stock (NYSE: EICA) and Series B Term Preferred Stock (NYSE:
EICB). |
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