Owl Rock Capital Corp (ORCC) Q4 2020 Earnings Call Transcript

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Owl Rock Capital Corp (OBDC 0.45%)
Q4 2020 Earnings Call
Feb 24, 2021, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning and welcome to our Rock Capital Corporation's 4th quarter and year ended 2020 earnings call. I would like to remind our listeners that past performance is not indicative of future results and remarks made during the call may contain forward-looking statements. Forward-looking statements are not guarantees of future performance or results and involve a number of risks and uncertainties that are outside the company's control. Actual results may differ materially from those forward-looking statements as a result of a number of factors, including those described from time to time in Owl Rock Capital Corporation's filings with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements. As a reminder, this call is being recorded for replay purposes. Yesterday, the company issued its earnings press release and posted an earnings presentation for the 4th quarter and year ended December 31, 2020, the presentation should be reviewed in conjunction with the company's Form 10-K filed on February 23 with the SEC. The company will refer to the earnings presentation throughout the call today. So please have a presentation available to you. As a reminder, the earnings presentation is available on the company's website. I will now turn the call over to Craig Packer, Chief Executive Officer of Owl Capital Corporation.

Craig Packer -- Chief Executive Officer

Thank you, operator. Good morning everyone and thank you for joining us today for our 4th quarter earnings call. This is Craig Packer and I am CEO of Owl Rock Capital Corporation and a co-founder of Owl Rock Capital Partners. Joining me today is Alan Kirshenbaum, our CFO and COO and Dana Sclafan, our Head of Investor Relations. Welcome to everyone who is joining us on the call today. We hope you and your family's remain safe and well. I will start today's call by briefly discussing our financial highlights for the 4th quarter before providing an update on our portfolio and deal activity in the quarter. Then after Alan covers our financial results, I will discuss our outlook and make some closing remarks. Getting into the 4th quarter financial highlights, net investment income per share was $0.29. I would note that the fee waiver, which was put in place in conjunction with our IPO expired on October 18, 2020 and culminated in total fee waivers of over $200 million that were passed on to shareholders via special dividends. As a result, the 4th quarter NII reflects the impact of our full fee structure for almost the entire quarter. We ended the year with net asset value per share of $14.74 up $0.07 from the 3rd quarter or $0.15 excluding the payment of the final special dividend distribution. This reflects our 3rd consecutive quarterly now have increased since the COVID crisis hit in the first quarter of 2012, which is a result of both the improved market conditions and demonstrated resilience of our borrowers. As a result, our current NAV is only down only 3% versus the end of 2019. Looking forward for the first quarter of 2021, our Board has declared a regular dividend of $0.31 per share, the same amount we have paid each quarter since our IPO. As a reminder, in addition to our regular dividend for the 4th quarter, we also paid the final of our 6 previously declared special dividends of $0.08 per share for shareholders of record as of December 31. We saw very strong origination activity this quarter a topic I will spend more time on shortly and this provided for solid portfolio growth and an increase in leverage. We ended the quarter with leverage of 0.87 times, which is up from 0.46 times at year-end 2019. We continue to be pleased with the progress we have made toward our targeted range of 0.9 to 1 in the quarter times. We are optimistic about the current market opportunity set and believe our favorable market position will allow us to continue to invest in attractive opportunities as we work to grow the portfolio, which when fully deployed we expect will be approximately $11.5 billion. Regarding our balance sheet, we remain very well capitalized with $2.1 billion of liquidity. I would highlight that on December 8, we issued $1 billion of unsecured notes at our most attractive pricing level to date.

We believe having a significant portion of our financing liabilities as unsecured provides us with optimal financial flexibility and allows us to prudently manage our capital structure. In addition, we are pleased with the continued progress we've made on lowering our cost of financing. We'd also like to welcome Melissa Weiler who is joined ORCC's Board of Directors as an Independent Director. Melissa brings a great deal of experience in the credit space, including most recently at Crescent Capital, where she served on the management committee and oversaw several credit businesses and we look forward to working with her as we continue to pursue our objectives for our shareholders.

Lastly, on December 23, Owl Rock Capital Group, which is the parent of ORCC's investment advisor and Owl Capital Partners announced that they are merging to form [Indecipherable] will enter the public market via business combination with Baltimore Acquisition Corp, a special purpose acquisition company. As noted in our definitive proxy statement filed on January 27, this triggers a change of control and the advisory agreement, a special meeting has been scheduled for March 17 for shareholders to vote whether to approve the proposals outlined in the proxy. We are pleased to note that we recently received word that the independent proxy advisory firms ISS and Glass Lewis both recommended that ORCC's shareholders vote for the proposals. We also note that there are no expected changes to ORCC's Investment Strategy Team or process as a result of the transaction.

While there are many steps prior to the closing of the merger, we are certainly excited about the opportunities that this expanded platform may provide for ORCC. Turning to the portfolio, we continue to be proud of the strength of our credit performance over the course of a very challenging year. We are pleased that the core thesis of our investment strategy has borne such strong results and our focus on credit selection and downside protection have served us well. Looking at our internal credit ratings, our portfolio remains quite stable with overall results largely consistent with last quarter. Means in our one or two rating categories which are names performing in line with or exceeding our expectations at time of underwriting comprise approximately 90% of the fair value of the portfolio.

The percentage of our lower names is 10% of fair value, down from 12% last quarter. While we certainly have a small number of credits, which were made challenged the vast majority of our portfolio continues to demonstrate solid financial performance and has proved to be resilient in the face when uncertain economic environment. While we remain vigilant about the economic impacts of COVID and recognize that the winter months have seen stricter locked downs in certain geographies, we would note that the adverse economic impact has been less severe than what we experienced in the spring of last year. Businesses have adopted and based on what we are hearing from our borrowers, many are continuing to recover toward pre-COVID operating levels despite these ongoing challenges [Indecipherable] activity this quarter were made modest with 3 material amendments. Our amendment activity peaked in the second quarter at 8 amendments. For the last 2 quarters, our pace of amendments has moderated to more ordinary levels where we do have amendments, we continue to see financial sponsors provide support in these situations either through material debt pay-downs or additional equity support. PIK interest represents less than 5% of 2020 annual total investment income and no new borrowers for move to PIK interest in the quarter.

As a quarter end, we had one name on non-accrual representing 0.5% of the total cost of the portfolio and 0.3% of fair value down from 2 names representing 2.1% of the portfolio on a cost basis last quarter. CIBC Global remains on non-accrual status and no new borrowers were added to non-accrual status in the quarter. Swipe Acquisition Corp, a manufacturer of gift cards and hotel key cards, which was placed on non-accrual in the 3rd quarter, let's move back to accrual status in the 4th quarter as a result of the capital structure right sizing. As I noted on our last earnings call, commensurate with Swipe's debt restructuring, Owl Rock has become a controlling shareholder of the company. As this is the first time in our history, where we've had to take control of a borrower, I would like to spend a minute here.

We remain very supportive of the business and management team and continue to believe in the long-term sustainability of the company. In order to best position of the company in the near term, we rightsized the outstanding debt amount and equitized the remainder of the debt down. In contrast, the quick resolution we had on National Dentex last quarter, which was repaid at par. We recognize that this process will likely have a longer runway. We are working closely with the company to maximize the long-term value of our position. We are well prepared for this moment by having proactively made significant investments in our workout and portfolio management team over the last 2 years and we will bring the full resources of our platform to bear in order to support the company going forward.

Moving onto originations, we saw a robust investment activity in the 4th quarter, reflecting increased levels of M&A across the market. As I noted on last quarter's call, improving economic conditions and market strength stimulated M&A activity for private equity firms with increased sales processes and tack-on acquisitions for portfolio companies, particularly for those least impacted by COVID, Owl Rock was well positioned to capture share in this more active market environment. We are very pleased with the investments we made. Gross originations for the quarter were $1.5 billion with funded originations of $1.3 billion, we had sales and repayments of $520 million for net funded activity of $755 million. For context, while this is one of our strongest quarters ever, it is not a record for us and we've exceeded these quarterly volumes on multiple occasions before. Three positions were fully repaid or exited and we had partial paydowns or sales across 10 borrowers.

Given the strong market conditions, we took the opportunity to sell some high quality, but lower spread paper at attractive prices. This is the type of mix shift. You can expect to continue to the sheet as we optimize the portfolio as it reaches full deployment. In the quarter, we added 12 new portfolio companies and provided incremental capital for 14 existing borrowers. As we saw a significant amount of strategic acquisition activity across our borrowers. We are pleased to see the benefits of our growing incumbency positions as our borrowers are able to turn to us to support their strategic initiatives. We're able to deploy additional capital into businesses we know well and where, in some cases we have years of experience for the company. We are pleased with the volume of investments we closed in the 4th quarter. Which include 3 large unitranche or stretch first-lien facilities and our sole commitment to a second-lien facility for PCI pharma services as well as the increased yield, we were able to achieve while still maintaining our focus on credit quality.

The weighted average spread of new investments was roughly 690-basis points, which helped increase our total portfolio spread to 655-basis points. Per frame of reference, at the time of our IPO, the portfolio spread was 610-basis points and has increased consistently in each quarter since then. In addition to the economic terms, the leverage levels, covenants and documentation terms were all attractive on the investments we made. As I noted earlier, our portfolio at quarter-end now stands at over $10.8 billion across 119 portfolio companies. We are very happy with the continued strong credit performance of our borrowers. Now, I'll turn it over to Alan to discuss our financial results in more detail.

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Thank you, Craig. Good morning, everyone. I'm going to start off on slide 7 of our earnings presentation. But you can see that we ended the 4th quarter with total portfolio investments of $10.8 billion, outstanding debt of $5.3 billion, and total net assets of 5.7 billion. Our net asset value per share increased to $40 in $0.74 as of December 31 compared to $14 in $0.67 as of September 30. We ended the quarter with leverage of 0.87 times debt-to-equity and $2.1 billion in liquidity. Our dividend for the 4th quarter was $0.31 per share, plus our final special dividend of $0.08 per share and our net investment income was $0.29 per share. On the next slide, slide 8, I'm going to talk through in a bit of detail the results of our revenues and expenses for the 4th quarter. You can see, total investment income for the 4th quarter was $221 million up $34.2 million or 18% from last quarter. This increase was primarily driven by increased interest income. The result of our ability to continue to grow the portfolio and progress toward our leverage target. This increase also includes income we booked in the 4th quarter related to the full pay down of National Dentex, which was $0.02 per share. On the expense side, what you'll see is a large increase in net expenses primarily driven by our fee waiver expiration and increased interest expense. Total expenses were $112.9 million, up $11.5 million or 11% from last quarter. You will also see net expenses, which is total expenses net of our fee waiver of $104.9 million, up $44.1 million for the quarter. We did still have $8 million of fee waivers in the 4th quarter since the fee waiver didn't terminate until October 18, which is about $0.02 per share benefit to NII this quarter. That will go away for next quarter.

So to try to summarize here a bit. We're really pleased with our progress in building the portfolio, the activity level in the quarter allowed us to grow the portfolio at attractive spreads, which will help us -- which will help allow us to generate the expected earnings power to cover our dividend by the second half of the year. As we look to the first quarter, there are few items I want to call attention here. As I've mentioned, there are 2 non-recurring items in the 4th quarter that we will not have the benefit of in the first quarter. The $0.02 per share of revenue from the National Dentex pay down and the $0.02 per share from the partial quarter fee waiver. Some of this $0.04 per share, we expect, will be partially offset by interest from new investments in the first quarter and a full quarter's benefit of income from our investments made in the 4th quarter, the majority of which closed in December.

As a reminder, we had previously expected our NII would get at the fee waivers expired and then improve as we approached our leverage target. So consistent with that, we should see NII per share down a little in the first quarter versus the 4th quarter before coming back up in the second and third quarters this year; however, I would note, there are a number of factors that will impact NII in any given quarter including origination and repayment levels.

A few final closing comments before handing back over to Craig, we continue to be well positioned in the industry given the strength of our balance sheet. We issued the largest bond ever in the BDC space in December a $1 billion issuance at our lowest cost to date and our credit spreads have continued to tighten since that issuance. We very intentionally have built a well diversified financing landscape, diversifying the number of facilities we have, the types of facilities, a number of lenders we partner with. Matching duration between the left and right sides of our balance sheet is another important aspect of our landscape.

Our weighted average debt maturity is over 6 years and we do not have any debt maturities until June of 2023. We continued to have one of the lowest leverage levels in the industry at 0.87 times debt-to-equity. As of December 31, we had $2.1 billion of liquidity. In total, now we have issued $3 billion of unsecured debt, which brings us to a current funding mix of 56% unsecured debt. Because of this, we continue to have a meaningful amount of excess collateral for our secured facilities and we continue to have a significant cushion to our regulatory asset coverage of 150%. Overall, we believe our funding profile continues to be very sound and we continue to be in a very good position. Thank you all very much for your support and for joining us on today's call Greg, back to you.

Craig Packer -- Chief Executive Officer

Thanks, Alan. To close, I wanted to share our thoughts on the current market and touch on some of the earnings levers we have available to us. Market conditions in the 4th quarter were very constructive as we saw a robust investment activity across the direct lending space. Given how well our platform perform during coded and our strong balance sheet, liquidity and relationships, we believe private equity firms wanted to work with us on their most important transactions as we look to the first quarter, market conditions remain strong and we have continued to see M&A financings drive activity levels. There was some pull forward of deals and the strength seasonally strong 4th quarter, so we expect the activity will be down in the sector in the first quarter relative to Q4.

Repayments may pick up given the robust syndicated market conditions. While it's hard to predict, specific timing, we do expect many sponsors will look to refinance or engage in sale processes. The deal opportunities we are seeing are broad based across industries. We remain focused on less COVID impacted sectors, and our finding interesting opportunities across some of our largest sectors where we tend to have deep industry knowledge and high conviction in the broader industry fundamentals. Before I close, I want to touch on some of the levers we have to drive higher earnings over the next few quarters. The topic I've spoken on in previous calls, this remains a focus for us given the expiration of the fee waiver. As I've highlighted previously, the biggest driver of expected earnings growth is the continued expansion of our portfolio as we move toward our target leverage level.

With that in mind, we are certainly pleased with our origination activity this quarter. It's allowed us to make significant progress on our leverage metrics. Based on our current progress, we expect to get to target leverage by the second half of the year although the case of portfolio growth will depend on both repayments and origination activity. In addition, as our portfolio matures, we expect to benefit from higher levels of repayments, which should result in increased income and prepayment fees. Further, we have continued to originate loans at higher spreads in recent quarters. We expect to be able to continue to lift our overall portfolio spread as we deploy capital into new investments get repaid on some higher quality, but lower spread investments.

In addition, we believe we had continued to lower our overall cost of debt, which will further benefit earnings. Taking these factors into consideration, we feel confident that there are a number of levers that we can use to increase our NII. As I've said on previous calls, we believe we are on track to cover our dividend from earnings by the second half of this year and until then we expect to continue to pay our regular dividend of $0.31 per share each quarter subject to our Board's approval. To close, I'd like to highlight what we've built over the last 5 years and the significant progress we've made over the past year. We believe our market position is strong and we remain well positioned to be a direct lender of choice for private equity sponsors and borrowers in a very active time in the market.

The portfolio stands today at $10.8 billion in investments comprised of roughly 80% first-lien positions with an average spread on investments of 655-basis points. From a credit perspective, we have only one name on non-accrual status, which accounts for 0.3% of the fair value and 0.5% of the cost of the portfolio. We maintain meaningful downside protection on our investments with an average loan to value below 50%, which has remained consistent since inception. Our platform is bolstered by the strength of our balance sheet. We maintain four investment grade ratings, which have allowed us to raise a significant amount of unsecured debt at attractive levels. Taken together, we feel we have built a diverse and defensive portfolio of scale, supported by an attractive financing profile, which we believe provides a strong foundation for us to build on for years to come. Thank you for joining us today. We appreciate your continued interest and support and look forward to speaking to you again next quarter. Operator, please up on the line for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Robert Dodd with Raymond James, your line is now open.

Robert Dodd -- Raymond James -- Analyst

Hi guys. [Indecipherable] question, Craig. On slide 13, obviously, we can see that. Yeah, I mean, yes, your spreads have been the light blue line like 63 after 655 now. I mean given the competitiveness of the environment, I mean you made comments about that, that could be refinancing ways as well given how aggressive some areas of the market are? Let me [Indecipherable] market, which is not exactly what you did, but where should we get, if you sound very confident that you can continue to take that spread higher [Indecipherable] the higher, so how should we reconcile the very, very competitive environment and the fact that you expect that spread to continue to expand somewhat. I mean, is there a mix shift that you are talking about within that, could you clarify that?

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Sure. Robert, thank you very much. So the first point I would make is we don't need very much spread expansion to cover our dividend. The significant increase in earnings is going to come just getting to our target leverage and repayments, the smallest factors is spread expansion. So it's maybe a penny of share based on our math. So it's not the driver. We have been able to achieve spread expansion and you touched on it, it's really more about mix shift. Part of the way, we scaled ORCC familiar with us as we were investing and we want, we're so careful about credit quality and so we put a pretty substantial amount of the portfolio, a billion plus of paper that was true first-lien paper at relatively low spreads, in many cases below 500 over. And so, part of what we're saying is, as that paper as we paid or we sell it this quarter, we sold a couple of positions to their other dry cleaners, or into the syndicated market when we can replace that paper with unitranche paper that carries at least 100 to 150 basis points more on spread. We have found opportunities to increase our spread or just organically on new deals. In the 4th quarter, we had very attractive pricing on new deals unitranche in particular, we did one or 2 second liens, we'll continue to do those, but I acknowledge the premise of your question. At this moment in time, sitting here on February 24, it's a competitive market, but we all know that comes and goes over the course of the quarter, over the course of the year, and I suspect we'll continue to find you a nice market opportunities to get wider spreads, but I think the bigger driver is mix shift.

Robert Dodd -- Raymond James -- Analyst

Got it. I really appreciate that color I'd like to tell you, kind of follow-on the other side, the compression we're seeing in borrowing cost. I mean, as you said, you did a billion of 3, 4 without asking you to put it down exactly, I mean how low do you think you can take either you unsecured borrowing costs or may be all in borrowing cost versus where it is today?

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Thanks, Robert. We do think we can continue to tighten costs on the right side of the balance sheet over time. And we've been in the process of optimizing how we look at our financing landscape, costs are definitely ripping tighter there as well. Our bonds trade 50-basis points tighter today than when we get, we saw 3.4 is pretty good, but they're trading 50-basis points tighter than that we're well aware of some of the more recent [Indecipherable] bonds. But you could take 50-basis points across a $3 billion bond complex, obviously the bonds are not callable, but there are some real opportunities there over the next year or two, to reduce our borrowing costs further.

Robert Dodd -- Raymond James -- Analyst

Yeah, I mean to that point, there has been 2 more add-ons to some BDCs this week. We will add that premiums to what the issue not that long.

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Just because we brought out Roberts, I think it's a broader point for the space. I think it's a very encouraging sign for BDC shareholders. The strong reception that BDC bond deals are getting and the investment grade bond market and I speak of all off, but I speak of some of the other high-quality managers as well. I think this is a bit of a sea change. I'd like to think we in a part helped drive, which is getting more investment grade bond buyers into the unsecured bond market for BDCs. I still think [Indecipherable] my opinion, but I think it's nice to see spreads continue to tighten. I think that there is general opportunities for spreads across the sector to continue to take beyond what we might do relative to the others.

Robert Dodd -- Raymond James -- Analyst

Got it. Thank you. And I agree with you [Indecipherable] as well.

Craig Packer -- Chief Executive Officer

Thank you.

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Thanks Robert.

Operator

Our next question comes from Ryan Lynch with KBW. Your line is now open.

Ryan Lynch -- KBW -- Analyst

Hey, good morning. Thanks for taking my questions. First, I wanted to discuss you with their leverage where you guys plan and operate now? How do you guys have a leverage target of 0.9 to 1.25, that's a pretty wide range, given the current market dynamics today given where we're just kind of coming out of this significant economic downturn where within the net debt target range, would you like to operate?

Craig Packer -- Chief Executive Officer

Sure, I'll start and Alan can chime in, Ryan. Thanks. So, the range is, as you said 0.9 to one or quarter and we are balancing a number of constituencies when we think about exactly where we're going to land there. Obviously leverage is accretive for our shareholders, particularly with our low borrowing costs, but we obviously also want to make sure that we have a real strong balance sheet, in the eyes of the rating agencies and the investment grade bond buyers as well. I think if you were modeling us right now, I think probably and the-right now the appropriate place to model us would be 1 time. I think that's the right balance of those 2 and we still have some work to do to get to that one time. So I think that's really where I would set your expectations. We certainly think our portfolio, particularly the high quality portfolio that we've built in great credit performance could withstand higher leverage, but from a financial policy standpoint, we really want to make sure we've got a super strong balance sheet and making sure leverage is comfortable as part of that and that's the commitment we've made to the agencies and to the investment grade bond community. We were proud of earning the trust of the agencies and the investment bombard people, our private BDC, and want to continue to deliver strong results there. So one time is probably a good number of modeling.

Ryan Lynch -- KBW -- Analyst

Okay, understood. And then you guys obviously have a good view of market dynamics and see a wide range of deal flow in the market. I would just wanted to get your guys take on what are you guys seeing in terms of terms structures and leverage today in the market in February 2021 timeframe? And how does that compare, which was levels than we were seeing kind of pre-COVID.

Craig Packer -- Chief Executive Officer

Sure. So I'm going to extend the lens of debt because I think it's instructive of how things have migrated, obviously when cold, it hit, spreads, blew out and we all know that. In the summer, and -- we were active in the summer, we didn't do a lot or [Indecipherable] to do, but at that point, you can get significant premiums to pre-COVID levels, I would say, directionally by 150-basis point premiums to pre-COVID levels. By the 4th quarter, we are still getting a very nice premium the pre-COVID levels, but it was not as wide as the COVID wise. So that premium might have been more like 75 to 100 instead of 150. Today, my view is, we are still wider than pre-COVID levels, but it's probably more like 50-basis points wider, not 75 to 100. There are certainly deals that might be inside of the 50 and there are deals that are wider than the 50, but if I was just going to give you a metric to give you a sense beyond just a pure spread, though, I think the leverage levels remain reasonable the covenant structures remain reasonable, the private equity firms are putting in significant tracks into the deals that they do. So the loan to values are reasonable and with even at only a 50-basis point premium to pre-COVID levels. If you're talking about printing unitranche, I'll just to pick a number of plus 600 with a floor, you're earning close to 8% on that. It's going to move up and down, but that's to give you a sense.

Ryan Lynch -- KBW -- Analyst

That's helpful. That's all from me. I appreciate the time today.

Craig Packer -- Chief Executive Officer

Thanks Ryan.

Operator

Our next question comes from Mickey Schleien with Ladenburg. Your line is now open.

Mickey Schleien -- Ladenburg -- Analyst

Yes, good morning everyone. Craig, I wanted to follow up on the asset mix question, I noticed that a fair value, the proportion, the portfolio in unitranche has been trending down. I realize that, that ratio skewed by appreciation in the equity portfolio, but I would like to understand whether you still like the unitranche markets risk adjusted return in the current environment, since that seems to be an important part of your plan, tuck-ins, dividend from NII.

Craig Packer -- Chief Executive Officer

Sure. I don't think it's moved too much maybe a couple of percentage points, unitranche we very much like, and I would say it's probably the type of loan were most interested in making and frankly part of what you're seeing in the reduction in the percentage is we have to make a judgement every quarter and what's considered a unitranche and we do that in a try to be a pretty analytical way and over time as our company, some of our unitranche, original unitranche loans are doing really well, and so they're deleveraging and so their characteristics are becoming that of first lien rather than unitranche. So it's not that we're seeking like unitranche, but it's really a sign of the quality of the unitranches that we are investing in. So don't read anything into a lack of appetite for unitranche we are concerned. It's our first priority. I would say we like the additional spread, you can get that's star one attachment, if it fits really well with that upper middle market sponsor on target base and you should expect us to continue to see on unitranche. In a meaningful way, just like we did in the 4th quarter where it was our 2 [Indecipherable] biggest charge for the quarter.

Mickey Schleien -- Ladenburg -- Analyst

I understand. Thank you for that. And looking at the market overall, how do you feel about the loan markets balance between supply and demand? When you think about the key shape recovery, capital providers including folks like you are all eager to find borrowers who are performing well during the pandemic, they seem to have an endless supply of capital available, and I could 10 more compression in loan spreads as the year progresses. So I'd like to get your view on supply and demand and also just what level of LIBOR fingers, you're able to get right now?

Craig Packer -- Chief Executive Officer

I'm sure, just to clarify are you and you see the loan market, you're talking about the public market or our market or sort of combo.

Mickey Schleien -- Ladenburg -- Analyst

Your markets leveraged loan markets EBITDA on lower.

Craig Packer -- Chief Executive Officer

Look, I think that there is a very healthy balance between supply and demand. In any one month or any one quarter, it can move to be one direction or the other. It was not only ago where I would say there were borrowers that wanted to borrow that couldn't easily obtain attractive terms right set to go back to late summer and into September and I think the borrowers would not have said they could have get whatever they want. But as the economy has improved given the Fed's action certainly opened up by the 4th quarter, but we got really attractive terms in the 4th quarter. I mean, look at the rates that we got in the 4th quarter. So I say I think that speaks to a pretty healthy environment where high quality companies can get financing in the direct lending market from high quality firms like Owl Rock at a fair rate and 8% plus, which we think is very attractive. There'll be periods of time where that tightens in, periods of time where that widens out, we really focused on the private equity community and the private equity firms have multiples of the amount of capital that the direct lenders out. Trillion plus of the dry powder in the private equity community, and so that's really what we serve they're trying to the syndicated market gets very strong and that can be a competitive alternative. Right now we're in one of those moments where the syndicated markets really strong. Then in this market for 30 years in my experience that doesn't last forever, and I'll spend and so that pendulum can move a bit, but I feel really good that we'll continue to find deals we doing that we like at good terms that terms, may be a bit better or a bit worse in any one moment of time, but we're in for the long-term building out a long-term portfolio, the once we make a 5 to 7 years or so, we're not trading these things in and out, and I think we're going to continue to find plenty of things to do.

Mickey Schleien -- Ladenburg -- Analyst

Thank you for that. Craig, that's very helpful. I have a couple of more questions but I'll get back in the queue. Thanks.

Craig Packer -- Chief Executive Officer

Thanks Mick.

Operator

Our next question comes from Devin Ryan with JMP Securities. Your line is open.

Devin Ryan -- JMP Securities -- Analyst

Thanks, good morning everyone.

Craig Packer -- Chief Executive Officer

Good morning Devin. How are you doing.

Devin Ryan -- JMP Securities -- Analyst

I doing terrific. Thanks. A follow-up just on the leverage question and conversation I just want to get a little bit more context as possible. Here you clearly you're making good progress and there is still room to get to the 1 times, but should we be thinking about the one times is more kind of an intermediate term level is just the portfolio you settles in and then we could maybe start to think about getting toward the midpoint, which is like 1.0-8 times or something about the mid point over a longer period or a change in the operating backdrop, more context would be helpful. As I appreciate, there's still room to get to one time. So now to put the cart before the horse here.

Craig Packer -- Chief Executive Officer

Sure. Again, I think if you're modeling us I would run at a 1 times. Obviously, the investments we make are a bit lumpy and repayments are lumpy. And so we can't measure it as precisely down to 200-basis points of leverage and so I suppose at any one moment in time. One times could be slightly higher, slightly lower, but I think you should model at one times now we evolve at Owl Rock and then we evolved over the last 5 years as folks will remember there was a regulatory change where you couldn't get to 2 times and that changed. I certainly wouldn't want to describe this as a set in stone forever, but I think in the near term, we're not signaling, it's an intermediate stock were so going, that's our target, but I suppose that there may be a quarter where it's slightly higher, slightly lower based on deal flow.

Devin Ryan -- JMP Securities -- Analyst

Okay, got it. Thank you and then follow up here. Just with the [Indecipherable] moving forward. It doesn't seem that much change for ORCC holders, but you guys have been able to spend more time with the dial team in recent months since that was announced. I'm curious if there is any other synergies you guys see there that could flow down to ORCC or any other, your thought with that transaction.

Craig Packer -- Chief Executive Officer

Sure. Obviously unlimited. What I can say at this point and we put a lot of information out publicly. We, in particular have pointed to opportunities on the origination side obviously dial has wonderful relationships with many leading private equity firms and that's Owl Rock has been butter in terms of the client base that we serve. So, in particular, we think that's a very attractive opportunity, we are limited at how much do you feel I can go into, but we're excited about the merger, everything is on track and when the deal closes, we will be sure to come back to this group and talk in more detail about the power of the combination.

Devin Ryan -- JMP Securities -- Analyst

Okay, appreciate it. I'll leave it there but. Congrats on another quarter of a notable progress here.

Craig Packer -- Chief Executive Officer

Okay, thank you.

Operator

Next question comes from Casey Alexander with Compass Point. Your line is open.

Casey Alexander -- Compass Point -- Analyst

Yeah, hi, good morning. I mean, I think part of the reason that you best 6 times about the leverage question is that, yeah, the analytical community has seen people who target one time and given the vintage that you originated so many of your assets and you're about to see a quarter sometime in the next few quarters where you get $1 billion of repayments and you're going to constantly be chasing that one time if that's where you believe full deployment is and so when you shouldn't, you couldn't, you try to flex that a little higher just to protect yourself from the vintage that you've previously originated that's about to go into some really significant repayments.

Craig Packer -- Chief Executive Officer

I'm sure, Casey. Thanks. So what the first thing I want to highlight is if and when we do get the $1 billion of repayments, it's going to be really accretive to NII. We're going to have a significant pick up in NII, which will go a long way to covering our dividend and it will be very valuable for our shareholders. So while you're right, repayments create work. Just, we have been below we came in pace first peers for years and I think we're, based on what I'm seeing right now on conversations we're having with the private equity firms. I think there's a good chance that's going to change in the short term and I think that's going to be very accretive and. And so in the sense I'm looking forward to that. Again, we don't have the ability to measure this down to a tiny increment, but I guess the part of your question that I just wanted to point out, because it's what we're being very transparent about this. We care deeply about our investment grade ratings that's part of this and we have to balance what we want to accomplish this get at one times with making sure that we maintain those ratings. We will find the right balance. We have like in everything we do will find that right dollars and if there is and -- you're right, we need to leave some cushion for repayments. But we have a prolific ability to originate and as we demonstrated again this quarter and $1 billion trade. So, even if we got $1 billion of repayments, our platform has the ability to put out $1 billion plus in a given quarter. So we're not far off from our target leverage, we're going to work on the hard to get there, recognized and will be repayments and we will try to balance, getting the most attractive earnings profile with the strongest perception from the investment grade bond and we'll continue to deliver it, just like we have for 5 years.

Casey Alexander -- Compass Point -- Analyst

Great, thank you for that. Secondly, would you guys like to take this opportunity to give any sort of update on the share repurchase program that you announced last quarter?

Craig Packer -- Chief Executive Officer

I'm sure. I'm happy to do that. We did not use. So sure, just for folks remind folks, we approved $100 million last quarter, unlike the share repurchase program, we put in place at the IPO, which was programmatic $150 million programmatically, which we used to all of that, this $100 million is not programmatic, so it's discretionary, but it is subject to blackout windows, like many as is typical with public share repurchase programs. We did not use any of the $100 million this quarter. The blackout programs constrained when we are able to use it and just candidly to line up the most attractive market opportunities to buy the stock to mine up at the blackout program, we're going to continue to work hard at it. And I would expect, we would do some. I'm pleased to see the stock has been moving up nicely over the last few weeks, but we continue to think the stock is undervalued, then will look to use the program based on market opportunities.

Casey Alexander -- Compass Point -- Analyst

Great. Thank you. That's all my questions.

Craig Packer -- Chief Executive Officer

Great, thanks, Casey.

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Thanks, Casey.

Operator

Our next question comes from Finian O'Shea, Wells Fargo Securities. Your line is open.

Finian O'Shea -- Wells Fargo Securities -- Analyst

Hi, everyone. Good morning [Indecipherable] Craig, first question on the portfolio company operating performance you outline that, it is returning to pre-COVID levels, which is obviously great. Looking at your I think 3rd slide, where you give the revenue and EBITDA lately for $16,000 million respectively. Those figures have shown really good performance margin etc. over the whole year. So I understand that's adjusted you footnote that, but just for context, now that we've gone through hold it, can you give us a recap of what happens to say actual revenue and EBITDA for your portfolio and where it stands most recently?

Craig Packer -- Chief Executive Officer

Well, I mean these numbers are a reflection of actual revenues and EBITDA. That's why we're showing them, but if your question is more just sort of give you some color on how the companies are doing, just generally what I would say is one of the reasons why I think our portfolio has performed as well as it has, in particular, our biggest positions are in sectors that we're not heavily impacted by COVID. Our software and tech businesses grew during this period of time they didn't shrink, our food and beverages businesses grew during this period of time, our healthcare businesses did very well, our insurance services that we did really well, so the biggest sectors that we go through our 6, 7 biggest sectors generally those businesses continue to do well. Certainly, there are some that had revenues that declined, but as you know on the overall impact on our portfolio was not significant. There were companies that were more heavily impacted. They were small positions. Certainly we have handful businesses that are travel related. That's a sector obviously those end markets were down considerably. And so for example, we've got a couple of space businesses. The top lines were down considerably. And I would say the companies in the sponsors do a really nice job of offsetting as much as possible the revenue declines with significant cost cuts. And so in a lot of cases, they were able to offset the revenue drops with the margin improvements. So the EBITDA drop wasn't as much as we had done might have feared. But overall, I would say just based on the end markets are company serve and the quality of the businesses, they held up well, and that's why the performance has been a strong as it is. That's why the average mark in the book is 97.5, so why we have only one nonaccrual of the company, so continuing to do just fine.

Finian O'Shea -- Wells Fargo Securities -- Analyst

Great. Appreciate that. And then just a second question another on the potential merger with your manager and we've all seen the headlines related to push back from a couple of your peers that doesn't concern us obviously on this call, but as it relates to the BDC and direct lending franchise. Are you seeing any push back from the private equity manager constituencies within the dial network?

Craig Packer -- Chief Executive Officer

Not at all. No, I think -- not at all. I think that we've built our business around being a great partner for private equity firms and dial has done the same thing. The dial and we have terrific brands and with the pickup of the private equity community. And this is an opportunity to do more with the private equity firms and the reception we've gotten has been very supportive and encouraging and I think that I'm excited about what we're going to be able to do going forward on a combined basis when the deal closes, so not only no push back I think it's been encouraging and endorsement of the transaction.

Finian O'Shea -- Wells Fargo Securities -- Analyst

Great, thank you, Craig.

Craig Packer -- Chief Executive Officer

Thanks Fin.

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Thanks Fin.

Operator

Our next question comes from Kenneth Lee with RBC Capital Markets. Your line is open.

Kenneth Lee -- RBC Capital Markets -- Analyst

Hi, thanks for taking my question. Just in terms of potential new investments over the near term. I think the past you've talked about aiming toward the upper middle-market segments. I'm wondering, is this going to be any change or could we see even potentially larger EBITDA ranges for new borrowers and lately but I'm wondering if you just comment on any expectations for average new investment sizes going forward?

Craig Packer -- Chief Executive Officer

Sure. In terms of size of Company I think we really feel validated during COVID is to our sweet spot being that upper middle market. The average $100 million EBITDA, I think it's actually been pretty consistent over the last couple of years.

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Yeah. We love financing bigger companies than that. I mean I'd love to -- we love $200 million, $300 million EBITDA companies we tend to do those more with the second liens those bigger companies generally, although there are exceptions, and we have seen $1 billion plus unitranches, the bigger the company and more likely they are not doing unitranche and it might be more of a second lien opportunities. We also look at smaller deals. They don't influence the numbers terribly so you won't see them, but we do finance businesses that might be 25 to 30 million of EBITDA, it's a credit that we really like and our sweet spot is in that $70 million to $110 million EBITDA business and the good news is that opportunity set is growing, 5 to 6 years ago, those companies didn't do direct deals, the pool of capital wasn't there for them to take advantage of and now with us in the rise of some other large direct lenders. The private equity firms have now realized that they can do large financings direct and not go the syndicated markets and many of them become more and more comfortable with that. I think the opportunities that will continue to grow. So I don't think you'll see a change. I think in any one moment in time, we could scale higher lowered particularly depending on what's going on in the unsecured markets and it was a second part to your question, but maybe if you could just remind me of that.

Kenneth Lee -- RBC Capital Markets -- Analyst

It was just expectation for average investment sizes.

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

I mean we've been right around $90 million pretty consistently as you know, when we make an investment at Owl Rock, one of the benefits of our larger platform as we can speak for a bigger check and be a more feeling our financing party so very routinely and investment into ORCC is coming at the same time investment in other Owl Rock managed funds. So we've been averaging about $90 million or so. So I think that's it -- that's good assumption as any, but it depends upon how big the dealer is, sizing appropriately like 1% and 2% position sizes, so if you not basically 99 boxes, just under 1%. Couple of hundred million boxes just under 2%, we have very few north of that.

Kenneth Lee -- RBC Capital Markets -- Analyst

Great. That's all I have. Thank you very much.

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Thank you.

Craig Packer -- Chief Executive Officer

Thanks Ken.

Operator

Last question comes from Mickey Schleien, with Ladenburg. Your line is open.

Mickey Schleien -- Ladenburg -- Analyst

Yes, just a few follow-up questions. Alan, was there anything material and dividend income other than more holdings and what is the outlook for dividend income given that you sold more?

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

We did not sell the more positions so that, you should expect similar on a go-forward basis, more has been a strong contributor, and so you should expect similar.

Mickey Schleien -- Ladenburg -- Analyst

Okay. And what were the main drivers of the realized loss this quarter other than more in Swipe?

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Not a realized loss on more Swipe would have been the realized loss.

Mickey Schleien -- Ladenburg -- Analyst

Okay. And just thinking about the right side of the balance sheet, Alan. How do you think about mitigating the potential squeeze on earnings down the road when the Fed begins to potentially raise rates. In other words, would you consider increasing the proportion of your debt liabilities at fixed rates are swapping into fixed rate?

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

I think the great way about how we're set up here is we're entirely floating rate on the left side of the balance sheet. So, Micki, if you look at the back of the Q or K, we always put that interest sensitivity table in there and you could see that as rates rise, our NII rises has been quite considerably, so I feel very comfortable about how we're set up there.

Mickey Schleien -- Ladenburg -- Analyst

So what is the average LIBOR floor in the portfolio?

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

I don't know -- about 85 bps yeah.

Mickey Schleien -- Ladenburg -- Analyst

Okay, that's helpful. Thank you, Alan.

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Just one more. I will call you offline on what you're looking at, but we haven't sold more, it's been a great performer generating lots of dividend income, so I will, if there is something that makes it look like we either took a loss we sold that will help to grow that

Mickey Schleien -- Ladenburg -- Analyst

I must say, it could be my mistake [Indecipherable]. Thank you.

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

All right, thanks Mickey. Thank you.

Operator

There are no further questions in queue at this time, I'll turn the call back over to Craig Packer for closing comments.

Craig Packer -- Chief Executive Officer

Okay, thank you all for joining. We appreciate your support and look forward to talking to you again in the future, hope you all and your families remain safe and well and have a great day.

Operator

[Operator Closing Remarks]

Duration: 55 minutes

Call participants:

Craig Packer -- Chief Executive Officer

Alan Kirshenbaum -- Chief Financial Officer and Chief Operating Officer

Robert Dodd -- Raymond James -- Analyst

Ryan Lynch -- KBW -- Analyst

Mickey Schleien -- Ladenburg -- Analyst

Devin Ryan -- JMP Securities -- Analyst

Casey Alexander -- Compass Point -- Analyst

Finian O'Shea -- Wells Fargo Securities -- Analyst

Kenneth Lee -- RBC Capital Markets -- Analyst

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