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 September 30, 2023. 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.
Consolidated
financial statements for the Nine Months Ended
September 30, 2023 (Unaudited)
Eagle
Point Income Company Inc.
Consolidated Statement
of Assets and Liabilities
As
of September 30, 2023
(expressed
in U.S. dollars)
(Unaudited)
| ASSETS |
|
|
|
|
| Investments,
at fair value (cost $230,458,840) |
|
$ |
206,654,575 |
|
| Cash
and cash equivalents |
|
|
489 |
|
| Interest
receivable |
|
|
5,866,025 |
|
| Prepaid
expenses |
|
|
514,070 |
|
| Excise
tax refund receivable |
|
|
55,413 |
|
| Receivable
for shares of common stock issued pursuant to the Company’s dividend reinvestment plan |
|
|
35,530 |
|
| Total
Assets |
|
|
213,126,102 |
|
| |
|
|
|
|
| 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) |
|
|
34,708,814 |
|
| Unamortized
share issuance premium associated with 5.00% Series A Term Preferred Stock due 2026 |
|
|
1,050 |
|
| 5.00%
Series A Term Preferred Stock due 2026, at fair value, plus associated unamortized share issuance premium |
|
|
34,709,864 |
|
| |
|
|
|
|
| 7.75%
Series B Term Preferred Stock due 2028, at fair value under the fair value option (1,315,631 shares outstanding) (Note 6) |
|
|
32,747,767 |
|
| Unamortized
share issuance discount associated with 7.75% Series B Term Preferred Stock due 2028 |
|
|
(721) |
|
| 7.75%
Series B Term Preferred Stock due 2028, at fair value, plus associated unamortized share issuance premium |
|
|
32,747,046 |
|
| |
|
|
|
|
| Borrowings
under credit facility (less unamortized deferred financing costs of $45,833 (Note 9)) |
|
|
4,074,167 |
|
| Management
fees payable |
|
|
623,945 |
|
| Professional
fees payable |
|
|
263,789 |
|
| Administration
fees payable |
|
|
119,622 |
|
| Directors’
fees payable |
|
|
63,750 |
|
| Tax
expense payable |
|
|
13,860 |
|
| Interest
expense payable |
|
|
11,436 |
|
| Net
unrealized depreciation on unfunded commitments (Note 7) |
|
|
1,029 |
|
| Due
to affiliates |
|
|
110 |
|
| Other
expenses payable |
|
|
51,016 |
|
| Total
Liabilities |
|
|
72,679,634 |
|
| |
|
|
|
|
| COMMITMENTS
AND CONTINGENCIES (Note 7) |
|
|
|
|
| |
|
|
|
|
| NET
ASSETS applicable to 9,972,506 shares of $0.001 par value common stock outstanding |
|
$ |
140,446,468 |
|
| |
|
|
|
|
| NET
ASSETS consist of: |
|
|
|
|
| Paid-in
capital (Note 5) |
|
$ |
174,420,350 |
|
| Aggregate
distributable earnings (losses) |
|
|
(33,100,634) |
|
| Accumulated
other comprehensive income (loss) |
|
|
(873,248) |
|
| Total
Net Assets |
|
$ |
140,446,468 |
|
| Net
asset value per share of common stock |
|
$ |
14.08 |
|
| See accompanying notes to the consolidated financial statements | 1 |
Eagle
Point Income Company Inc.
Consolidated
Schedule of Investments
As
of September 30, 2023
(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, 11.74%, (3M SOFR + 6.41%, due 07/20/2034) |
|
08/18/2023 |
|
$ |
1,500,000 |
|
$ |
1,429,346 |
|
$ |
1,420,650 |
|
|
1.01% |
|
| AMMC
CLO 24, Limitted |
|
Secured
Note - Class E, 12.16%, (3M SOFR + 6.83%, due 01/20/2035) |
|
07/26/2023 |
|
|
5,000,000 |
|
|
4,656,250 |
|
|
4,704,500 |
|
|
3.35% |
|
| AMMC
CLO 25, Limitted |
|
Secured
Note - Class E, 12.90%, (3M SOFR + 7.59%, due 04/15/2035) |
|
08/08/2023 |
|
|
5,000,000 |
|
|
4,735,950 |
|
|
4,799,500 |
|
|
3.42% |
|
| Ares
XXXIV CLO Ltd. |
|
Secured
Note - Class E-R, 12.42%, (3M SOFR + 7.11%, due 04/17/2033) |
|
08/08/2023 |
|
|
1,517,600 |
|
|
1,367,833 |
|
|
1,385,265 |
|
|
0.99% |
|
| Ares
XLV CLO Ltd. |
|
Secured
Note - Class E, 11.67%, (3M SOFR + 6.36%, due 10/15/2030) |
|
05/30/2019 |
|
|
800,000 |
|
|
789,847 |
|
|
728,000 |
|
|
0.52% |
|
| Barings
CLO Ltd. 2018-IV |
|
Secured
Note - Class E, 11.39%, (3M SOFR + 6.08%, due 10/15/2030) |
|
10/26/2018 |
|
|
840,000 |
|
|
836,290 |
|
|
751,464 |
|
|
0.54% |
|
| Battalion
CLO XII Ltd. |
|
Secured
Note - Class E, 11.73%, (3M SOFR + 6.35%, due 05/17/2031) |
|
10/04/2018 |
|
|
5,060,000 |
|
|
4,916,449 |
|
|
4,236,232 |
|
|
3.02% |
|
| Battalion
CLO XXI Ltd. |
|
Secured
Note - Class E, 12.03%, (3M SOFR + 6.72%, due 07/15/2034) |
|
06/08/2022 |
|
|
5,000,000 |
|
|
4,675,688 |
|
|
4,125,000 |
|
|
2.94% |
|
| Black
Diamond CLO 2016-1, Ltd. |
|
Secured
Note - Class D-R, 11.21%, (3M SOFR + 5.86%, due 04/26/2031) |
|
10/04/2018 |
|
|
1,050,000 |
|
|
1,001,236 |
|
|
854,700 |
|
|
0.61% |
|
| Black
Diamond CLO 2017-1, Ltd. |
|
Secured
Note - Class D, 12.21%, (3M SOFR + 6.86%, due 04/24/2029) |
|
10/04/2018 |
|
|
3,600,000 |
|
|
3,593,801 |
|
|
3,421,440 |
|
|
2.44% |
|
| Carlyle
US CLO 2017-1, Ltd. |
|
Secured
Note - Class D, 11.59%, (3M SOFR + 6.26%, due 04/20/2031) |
|
09/15/2020 |
|
|
2,000,000 |
|
|
1,712,302 |
|
|
1,721,600 |
|
|
1.23% |
|
| Carlyle
US CLO 2018-1, Ltd. |
|
Secured
Note - Class D, 11.34%, (3M SOFR + 6.01%, due 04/20/2031) |
|
10/04/2018 |
|
|
665,000 |
|
|
659,852 |
|
|
575,292 |
|
|
0.41% |
|
| Carlyle
US CLO 2018-2, Ltd. |
|
Secured
Note - Class D, 10.82%, (3M SOFR + 5.51%, due 10/15/2031) |
|
10/04/2018 |
|
|
5,500,000 |
|
|
5,331,931 |
|
|
4,758,050 |
|
|
3.39% |
|
| Carlyle
US CLO 2019-1, Ltd. |
|
Secured
Note - Class D, 12.29%, (3M SOFR + 6.96%, due 04/20/2031) |
|
08/19/2019 |
|
|
3,125,000 |
|
|
2,983,246 |
|
|
2,865,938 |
|
|
2.04% |
|
| CIFC
Funding 2015-I, Ltd. |
|
Secured
Note - Class E-RR, 11.61%, (3M SOFR + 6.26%, due 01/22/2031) |
|
10/04/2018 |
|
|
2,600,000 |
|
|
2,568,436 |
|
|
2,361,580 |
|
|
1.68% |
|
| CIFC
Funding 2018-II, Ltd. |
|
Secured
Note - Class D, 11.44%, (3M SOFR + 6.11%, due 04/20/2031) |
|
10/04/2018 |
|
|
1,225,000 |
|
|
1,195,617 |
|
|
1,172,325 |
|
|
0.83% |
|
| CIFC
Funding 2018-III, Ltd. |
|
Secured
Note - Class E, 11.07%, (3M SOFR + 5.76%, due 07/18/2031) |
|
08/16/2023 |
|
|
2,500,000 |
|
|
2,348,750 |
|
|
2,364,000 |
|
|
1.68% |
|
| CIFC
Funding 2018-IV, Ltd. |
|
Secured
Note - Class E, 13.27%, (3M SOFR + 7.96%, due 10/17/2031) |
|
05/22/2019 |
|
|
2,000,000 |
|
|
1,881,777 |
|
|
1,656,400 |
|
|
1.18% |
|
| CIFC
Funding 2019-II, Ltd. |
|
Secured
Note - Class E-R, 12.16%, (3M SOFR + 6.85%, due 04/17/2034) |
|
08/03/2023 |
|
|
2,650,000 |
|
|
2,603,625 |
|
|
2,594,880 |
|
|
1.85% |
|
| CIFC
Funding 2019-V, Ltd. |
|
Secured
Note - Class D-R, 12.35%, (3M SOFR + 7.04%, due 01/15/2035) |
|
08/03/2023 |
|
|
950,000 |
|
|
933,557 |
|
|
934,610 |
|
|
0.67% |
|
| CIFC
Funding 2021-III, Ltd. |
|
Secured
Note - Class E-1, 11.97%, (3M SOFR + 6.66%, due 07/15/2036) |
|
08/18/2023 |
|
|
3,750,000 |
|
|
3,651,563 |
|
|
3,630,375 |
|
|
2.58% |
|
| Cook
Park CLO, Ltd. |
|
Secured
Note - Class E, 10.97%, (3M SOFR + 5.66%, due 04/17/2030) |
|
10/04/2018 |
|
|
1,250,000 |
|
|
1,202,044 |
|
|
1,050,750 |
|
|
0.75% |
|
| Dryden
37 Senior Loan Fund, Ltd. |
|
Secured
Note - Class E-R, 10.72%, (3M SOFR + 5.41%, due 01/15/2031) |
|
10/04/2018 |
|
|
500,000 |
|
|
486,614 |
|
|
406,800 |
|
|
0.29% |
|
| Eaton
Vance CLO 2018-1, Ltd. |
|
Secured
Note - Class E, 11.57%, (3M SOFR + 6.26%, due 10/15/2030) |
|
07/26/2023 |
|
|
750,000 |
|
|
658,952 |
|
|
668,325 |
|
|
0.48% |
|
| First
Eagle BSL CLO 2019-1 Ltd. |
|
Secured
Note - Class D, 13.29%, (3M SOFR + 7.96%, due 01/20/2033) |
|
12/17/2019 |
|
|
5,000,000 |
|
|
4,820,075 |
|
|
4,400,000 |
|
|
3.13% |
|
| Harbor
Park CLO, Ltd. |
|
Secured
Note - Class E, 11.19%, (3M SOFR + 5.86%, due 01/20/2031) |
|
08/08/2023 |
|
|
2,250,000 |
|
|
2,125,238 |
|
|
2,128,500 |
|
|
1.52% |
|
| KKR
CLO 22 Ltd. |
|
Secured
Note - Class E, 11.59%, (3M SOFR + 6.26%, due 07/20/2031) |
|
10/27/2021 |
|
|
3,950,000 |
|
|
3,794,258 |
|
|
3,689,695 |
|
|
2.63% |
|
| KKR
CLO 26 Ltd. |
|
Secured
Note - Class E-R, 12.72%, (3M SOFR + 7.41%, due 10/15/2034) |
|
08/08/2023 |
|
|
750,000 |
|
|
713,787 |
|
|
711,750 |
|
|
0.51% |
|
| 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, 11.54%, (3M SOFR + 6.21%, due 04/20/2031) |
|
10/04/2018 |
|
|
600,000 |
|
|
598,713 |
|
|
452,520 |
|
|
0.32% |
|
| Madison
Park Funding XXVII, Ltd. |
|
Secured
Note - Class D, 10.59%, (3M SOFR + 5.26%, due 04/20/2030) |
|
10/04/2018 |
|
|
3,050,000 |
|
|
2,877,481 |
|
|
2,808,135 |
|
|
2.00% |
|
| Madison
Park Funding XLII, Ltd. |
|
Secured
Note - Class E, 11.66%, (3M SOFR + 6.31%, due 11/21/2030) |
|
08/15/2019 |
|
|
1,875,000 |
|
|
1,770,536 |
|
|
1,774,500 |
|
|
1.26% |
|
| Madison
Park Funding LI, Ltd. |
|
Secured
Note - Class E, 11.85%, (3M SOFR + 6.53%, due 07/19/2034) |
|
10/28/2021 |
|
|
4,000,000 |
|
|
3,994,273 |
|
|
3,876,800 |
|
|
2.76% |
|
| Marathon
CLO IX, Ltd. |
|
Secured
Note - Class D, 11.62%, (3M SOFR + 6.31%, due 04/15/2029) |
|
10/04/2018 |
|
|
4,050,000 |
|
|
4,012,275 |
|
|
3,031,830 |
|
|
2.16% |
|
| Marathon
CLO XIII, Ltd. |
|
Secured
Note - Class D, 12.55%, (3M SOFR + 7.24%, due 04/15/2032) |
|
06/04/2019 |
|
|
3,500,000 |
|
|
3,367,656 |
|
|
2,571,800 |
|
|
1.83% |
|
| Neuberger
Berman Loan Advisers CLO 33, Ltd. |
|
Secured
Note - Class E-R, 11.82%, (3M SOFR + 6.51%, due 10/16/2033) |
|
07/24/2023 |
|
|
5,000,000 |
|
|
4,670,000 |
|
|
4,740,000 |
|
|
3.37% |
|
| OZLM
XXI, Ltd. |
|
Secured
Note - Class D, 11.13%, (3M SOFR + 5.80%, due 01/20/2031) |
|
10/04/2018 |
|
|
4,150,000 |
|
|
4,078,261 |
|
|
3,642,870 |
|
|
2.59% |
|
| Octagon
Investment Partners 37, Ltd. |
|
Secured
Note - Class D, 11.01%, (3M SOFR + 5.66%, due 07/25/2030) |
|
10/04/2018 |
|
|
2,575,000 |
|
|
2,402,230 |
|
|
2,204,715 |
|
|
1.57% |
|
| Octagon
Investment Partners 38, Ltd. |
|
Secured
Note - Class D, 11.29%, (3M SOFR + 5.96%, due 07/20/2030) |
|
10/04/2018 |
|
|
3,725,000 |
|
|
3,662,336 |
|
|
3,221,380 |
|
|
2.29% |
|
| Octagon
Investment Partners 39, Ltd. |
|
Secured
Note - Class E, 11.34%, (3M SOFR + 6.01%, due 10/20/2030) |
|
10/24/2018 |
|
|
1,550,000 |
|
|
1,503,445 |
|
|
1,383,685 |
|
|
0.99% |
|
| Octagon
Investment Partners 41, Ltd. |
|
Secured
Note - Class E-R, 12.70%, (3M SOFR + 7.39%, due 10/15/2033) |
|
09/24/2021 |
|
|
5,000,000 |
|
|
4,811,050 |
|
|
4,646,500 |
|
|
3.31% |
|
| Palmer
Square CLO 2018-1, Ltd. |
|
Secured
Note - Class D, 10.72%, (3M SOFR + 5.41%, due 04/18/2031) |
|
05/30/2019 |
|
|
1,120,000 |
|
|
1,051,456 |
|
|
1,049,104 |
|
|
0.75% |
|
| Pikes
Peak CLO 1 |
|
Secured
Note - Class E, 11.66%, (3M SOFR + 6.31%, due 07/24/2031) |
|
10/28/2021 |
|
|
3,000,000 |
|
|
2,948,482 |
|
|
2,589,900 |
|
|
1.84% |
|
| RR
4 Ltd. |
|
Secured
Note - Class D, 11.42%, (3M SOFR + 6.11%, due 04/15/2030) |
|
10/28/2021 |
|
|
5,000,000 |
|
|
4,815,855 |
|
|
4,570,500 |
|
|
3.25% |
|
| RR
7 Ltd. |
|
Secured
Note - Class D-1B, 11.81%, (3M SOFR + 6.50%, due 01/15/2037) |
|
08/10/2023 |
|
|
2,000,000 |
|
|
1,920,000 |
|
|
1,922,200 |
|
|
1.37% |
|
| Rockford
Tower CLO 2018-1, Ltd. |
|
Secured
Note - Class E, 11.49%, (3M SOFR + 6.11%, due 05/20/2031) |
|
09/30/2021 |
|
|
2,250,000 |
|
|
2,195,480 |
|
|
1,995,975 |
|
|
1.42% |
|
| Rockford
Tower CLO 2018-2, Ltd. |
|
Secured
Note - Class E, 11.59%, (3M SOFR + 6.26%, due 10/20/2031) |
|
10/04/2018 |
|
|
5,000,000 |
|
|
4,853,250 |
|
|
4,489,500 |
|
|
3.20% |
|
| Rockford
Tower CLO 2019-2, Ltd. |
|
Secured
Note - Class E, 11.69%, (3M SOFR + 6.31%, due 08/20/2032) |
|
01/13/2021 |
|
|
3,000,000 |
|
|
2,965,115 |
|
|
2,628,000 |
|
|
1.87% |
|
| Rockford
Tower CLO 2020-1, Ltd. |
|
Secured
Note - Class E, 12.49%, (3M SOFR + 7.16%, due 01/20/2032) |
|
12/04/2020 |
|
|
1,600,000 |
|
|
1,574,471 |
|
|
1,508,000 |
|
|
1.07% |
|
| TCI-Symphony
CLO 2016-1 Ltd. |
|
Secured
Note - Class E-R2, 12.31%, (3M SOFR + 7.01%, due 10/13/2032) |
|
01/13/2022 |
|
|
3,000,000 |
|
|
3,000,000 |
|
|
2,684,400 |
|
|
1.91% |
|
| TICP
CLO VIII, Ltd. |
|
Secured
Note - Class D-R, 12.29%, (3M SOFR + 6.96%, due 10/20/2034) |
|
07/27/2023 |
|
|
1,000,000 |
|
|
935,647 |
|
|
950,600 |
|
|
0.68% |
|
| TICP
CLO IX, Ltd. |
|
Secured
Note - Class E, 11.19%, (3M SOFR + 5.86%, due 01/20/2031) |
|
08/22/2019 |
|
|
2,500,000 |
|
|
2,377,568 |
|
|
2,354,500 |
|
|
1.68% |
|
| TICP
CLO XI, Ltd. |
|
Secured
Note - Class E, 11.59%, (3M SOFR + 6.26%, due 10/20/2031) |
|
10/29/2021 |
|
|
5,050,000 |
|
|
5,019,306 |
|
|
4,812,650 |
|
|
3.43% |
|
| Venture
36 CLO, Limited |
|
Secured
Note - Class E, 12.51%, (3M SOFR + 7.18%, due 04/20/2032) |
|
01/21/2021 |
|
|
5,607,455 |
|
|
5,062,025 |
|
|
3,979,611 |
|
|
2.83% |
|
| Venture
43 CLO, Limited |
|
Secured
Note - Class E, 12.72%, (3M SOFR + 7.41%, due 04/15/2034) |
|
11/02/2021 |
|
|
2,500,000 |
|
|
2,443,240 |
|
|
2,099,500 |
|
|
1.49% |
|
| Vibrant
CLO VI, Ltd. |
|
Secured
Note - Class E, 11.41%, (3M SOFR + 6.01%, due 06/20/2029) |
|
10/04/2018 |
|
|
4,350,000 |
|
|
3,823,154 |
|
|
3,647,040 |
|
|
2.60% |
|
| Vibrant
CLO VIII, Ltd. |
|
Secured
Note - Class D, 11.34%, (3M SOFR + 6.01%, due 01/20/2031) |
|
10/04/2018 |
|
|
1,750,000 |
|
|
1,711,526 |
|
|
1,353,625 |
|
|
0.96% |
|
| Wellfleet
CLO 2018-1, Ltd. |
|
Secured
Note - Class E, 11.07%, (3M SOFR + 5.76%, due 07/17/2031) |
|
10/27/2021 |
|
|
4,025,000 |
|
|
3,886,816 |
|
|
3,124,205 |
|
|
2.22% |
|
| Wind
River 2014-1 CLO Ltd. |
|
Secured
Note - Class E-R, 11.87%, (3M SOFR + 6.56%, due 07/18/2031) |
|
08/16/2021 |
|
|
2,550,000 |
|
|
2,391,950 |
|
|
1,818,405 |
|
|
1.29% |
|
| Wind
River 2021-3 CLO Ltd. |
|
Secured
Note - Class E, 12.19%, (3M SOFR + 6.86%, due 07/20/2033) |
|
10/28/2021 |
|
|
4,500,000 |
|
|
4,325,794 |
|
|
4,022,550 |
|
|
2.86% |
|
| York
CLO-2 Ltd. |
|
Secured
Note - Class E-R, 11.26%, (3M SOFR + 5.91%, due 01/22/2031) |
|
05/16/2019 |
|
|
4,105,000 |
|
|
3,736,553 |
|
|
3,877,994 |
|
|
2.76% |
|
| |
|
|
|
|
|
|
|
|
|
166,460,258 |
|
|
153,950,615 |
|
|
109.62% |
|
| CLO
Equity (7) (8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Structured
Finance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ares
XLIV CLO Ltd. |
|
Subordinated
Note (effective yield 11.65%, maturity 04/15/2034) |
|
06/08/2021 |
|
|
8,000,000 |
|
|
3,194,820 |
|
|
2,324,839 |
|
|
1.66% |
|
| Ares
LVIII CLO Ltd. |
|
Subordinated
Note (effective yield 17.09%, maturity 01/15/2035) |
|
06/17/2021 |
|
|
4,000,000 |
|
|
2,666,623 |
|
|
2,222,679 |
|
|
1.58% |
|
| Bain
Capital Credit CLO 2021-2, Limited |
|
Subordinated
Note (effective yield 28.76%, maturity 07/16/2034) |
|
08/09/2023 |
|
|
3,250,000 |
|
|
1,771,250 |
|
|
1,790,097 |
|
|
1.27% |
|
| Bain
Capital Credit CLO 2021-7, Limited |
|
Subordinated
Note (effective yield 27.70%, maturity 01/22/2035) |
|
09/05/2023 |
|
|
4,000,000 |
|
|
2,505,000 |
|
|
2,601,111 |
|
|
1.85% |
|
| Bardin
Hill CLO 2021-2 Ltd. |
|
Subordinated
Note (effective yield 25.07%, maturity 10/25/2034) (9) |
|
09/24/2021 |
|
|
4,000,000 |
|
|
2,814,850 |
|
|
2,572,284 |
|
|
1.83% |
|
| Barings
CLO Ltd. 2021-I |
|
Subordinated
Note (effective yield 15.85%, maturity 04/25/2034) |
|
11/03/2021 |
|
|
4,000,000 |
|
|
3,206,773 |
|
|
2,752,214 |
|
|
1.96% |
|
| Barings
CLO Ltd. 2021-III |
|
Subordinated
Note (effective yield 15.76%, maturity 01/18/2035) |
|
11/17/2021 |
|
|
5,000,000 |
|
|
3,823,622 |
|
|
3,084,885 |
|
|
2.20% |
|
| Boyce
Park CLO, Ltd. |
|
Subordinated
Note (effective yield 22.80%, maturity 04/21/2035) |
|
09/27/2023 |
|
|
3,000,000 |
|
|
2,253,058 |
|
|
2,338,763 |
|
|
1.67% |
|
| Boyce
Park CLO, Ltd. |
|
Class
M-2 Notes (effective yield 26.88%, maturity 04/21/2035) |
|
09/27/2023 |
|
|
3,214,286 |
|
|
71,903 |
|
|
72,175 |
|
|
0.05% |
|
| Carlyle
US CLO 2021-2, Ltd. |
|
Subordinated
Note (effective yield 14.68%, maturity 04/20/2034) |
|
10/28/2021 |
|
|
3,000,000 |
|
|
2,492,645 |
|
|
2,091,712 |
|
|
1.49% |
|
| Carlyle
US CLO 2021-5, Ltd. |
|
Subordinated
Note (effective yield 15.32%, maturity 07/20/2034) |
|
11/02/2021 |
|
|
5,000,000 |
|
|
4,030,952 |
|
|
3,385,055 |
|
|
2.41% |
|
| Carlyle
US CLO 2022-2, Ltd. |
|
Subordinated
Note (effective yield 21.74%, maturity 04/20/2035) |
|
08/15/2023 |
|
|
2,200,000 |
|
|
1,655,192 |
|
|
1,654,284 |
|
|
1.18% |
|
| CIFC
Funding 2019-VI, Ltd. |
|
Subordinated
Note (effective yield 17.21%, maturity 01/16/2033) |
|
12/02/2019 |
|
|
6,000,000 |
|
|
4,426,150 |
|
|
3,511,175 |
|
|
2.50% |
|
| Clover
CLO 2021-2, Ltd. |
|
Subordinated
Note (effective yield 21.58%, maturity 07/20/2034) |
|
08/09/2023 |
|
|
2,350,000 |
|
|
1,639,713 |
|
|
1,718,016 |
|
|
1.22% |
|
| Kings
Park CLO, Ltd. |
|
Subordinated
Note (effective yield 27.24%, maturity 01/21/2035) |
|
04/27/2023 |
|
|
1,000,000 |
|
|
599,252 |
|
|
681,246 |
|
|
0.49% |
|
| KKR
CLO 29 Ltd. |
|
Subordinated
Note (effective yield 18.41%, maturity 01/15/2032) |
|
12/14/2021 |
|
|
5,500,000 |
|
|
4,253,766 |
|
|
3,530,634 |
|
|
2.51% |
|
| Madison
Park Funding XXXVII, Ltd. |
|
Subordinated
Note (effective yield 36.13%, maturity 07/15/2049) |
|
03/11/2020 |
|
|
4,000,000 |
|
|
2,382,176 |
|
|
2,679,856 |
|
|
1.91% |
|
| Marathon
CLO XIII, Ltd. |
|
Subordinated
Note (effective yield 14.64%, maturity 04/15/2032) |
|
06/04/2019 |
|
|
5,300,000 |
|
|
3,301,752 |
|
|
1,705,468 |
|
|
1.21% |
|
| Octagon
Investment Partners 37, Ltd. |
|
Subordinated
Note (effective yield 5.64%, maturity 07/25/2030) |
|
01/31/2020 |
|
|
6,000,000 |
|
|
3,266,083 |
|
|
1,887,094 |
|
|
1.34% |
|
| Octagon
Investment Partners 43, Ltd. |
|
Income
Note (effective yield 9.75%, maturity 10/25/2032) |
|
08/02/2019 |
|
|
5,750,000 |
|
|
4,187,212 |
|
|
2,802,896 |
|
|
2.00% |
|
| Point
Au Roche Park CLO, Ltd. |
|
Subordinated
Note (effective yield 14.43%, maturity 07/20/2034) |
|
02/15/2022 |
|
|
5,945,000 |
|
|
4,741,165 |
|
|
3,974,352 |
|
|
2.83% |
|
| Venture
37 CLO, Limited |
|
Subordinated
Note (effective yield 6.55%, maturity 07/15/2032) |
|
05/21/2019 |
|
|
5,200,000 |
|
|
3,343,537 |
|
|
1,930,942 |
|
|
1.37% |
|
| Wind
River 2022-1 CLO Ltd. |
|
Subordinated
Note (effective yield 27.77%, maturity 07/20/2035) |
|
08/15/2023 |
|
|
1,390,000 |
|
|
955,973 |
|
|
958,241 |
|
|
0.68% |
|
| |
|
|
|
|
|
|
|
|
|
63,583,467 |
|
|
52,270,018 |
|
|
37.21% |
|
| See accompanying notes to the consolidated financial statements | 2 |
Eagle
Point Income Company Inc.
Consolidated
Schedule of Investments
As
of September 30, 2023
(expressed
in U.S. dollars)
(Unaudited)
| Issuer (1) | |
Investment
Description (2) (3) | |
Acquisition
Date (4) | |
Principal
Amount | |
Cost | |
Fair
Value (5) | |
%
of Net Assets |
| CFO
Debt (7) | |
| |
| |
| | | |
| | | |
| | | |
| | |
| Structured
Finance | |
| |
| |
| | | |
| | | |
| | | |
| | |
| Glendower
Capital Secondaries CFO, LLC | |
Class B Loan, Delayed Draw,
11.50% (due 07/12/2038) (11) | |
07/13/2023 | |
| 168,778 | | |
| 163,892 | | |
| 168,432 | | |
| 0.12 | % |
| Glendower
Capital Secondaries CFO, LLC | |
Class C Loan, Delayed Draw, 14.50% (due
07/12/2038) (11) | |
07/13/2023 | |
| 77,283 | | |
| 75,046 | | |
| 77,086 | | |
| 0.05 | % |
| | |
| |
| |
| | | |
| 238,938 | | |
| 245,518 | | |
| 0.17 | % |
| 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 | |
| 176,177 | | |
| 176,177 | | |
| 188,424 | | |
| 0.13 | % |
| | |
| |
| |
| | | |
| | | |
| | | |
| | |
| Total
investments at fair value as of September 30, 2023 | |
| |
| |
| | | |
$ | 230,458,840 | | |
$ | 206,654,575 | | |
| 147.13 | % |
| | |
| |
| |
| | | |
| | | |
| | | |
| | |
| Liabilities,
at fair value (10) | |
| |
| |
| | | |
| | | |
| | | |
| | |
| 5.00%
Series A Term Preferred Stock due 2026 | |
Preferred Stock | |
| |
$ | (38,041,225 | ) | |
$ | (38,040,175 | ) | |
$ | (34,708,814 | ) | |
| -24.71 | % |
| 7.75%
Series B Term Preferred Stock due 2028 | |
Preferred Stock | |
| |
| (32,890,775 | ) | |
| (32,891,496 | ) | |
| (32,747,767 | ) | |
| -23.32 | % |
| Total
liabilities at fair value as of September 30, 2023 | |
| |
| |
| | | |
$ | (70,931,671 | ) | |
$ | (67,456,581 | ) | |
| -48.03 | % |
| | |
| |
| |
| | | |
| | | |
| | | |
| | |
| Net
assets above (below) fair value of investments and liabilities at fair value | |
| |
| |
| | | |
| | | |
| 1,248,474 | | |
| | |
| | |
| |
| |
| | | |
| | | |
| | | |
| | |
| Net
assets as of September 30, 2023 | |
| |
| |
| | | |
| | | |
$ | 140,446,468 | | |
| | |
| (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, are deemed to be "restricted" securities and
are categorized as structured finance securities. |
| (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) | CLO
debt and CFO debt positions reflect interest rates as of the reporting date. |
| (7) | The
fair value of the investments were determined using significant, unobservable inputs. 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 September 30, 2023, the Company's weighted average effective yield on its aggregate CLO equity positions,
based on current amortized cost, was 17.13%. |
| (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 and 7.75% Series B Term Preferred Stock due 2028 utilizing the
fair value option election under ASC Topic 825. Accordingly, the Series A Term Preferred Stock and Series
B Term Preferred Stock are carried at its fair value. See Note 2 "Summary of Significant Accounting Policies" for further
discussion. |
| (11) | This
investment has an unfunded commitment as of September 30, 2023. |
| See accompanying notes to the consolidated financial statements | 3 |
| Eagle
Point Income Company Inc. |
| Consolidated
Statement of Operations |
| For
the nine months ended September 30, 2023 |
| (expressed
in U.S. dollars) |
| (Unaudited) |
| INVESTMENT
INCOME | |
|
| Interest
income | |
$ | 18,193,721 | |
| Other
income | |
| 37,856 | |
| Total
Investment Income | |
| 18,231,577 | |
| | |
| | |
| EXPENSES | |
| | |
| Interest
expense | |
| 1,966,264 | |
| Management
fees | |
| 1,561,709 | |
| Commission
expense | |
| 1,023,447 | |
| Professional
fees | |
| 813,485 | |
| Administration
fees | |
| 431,474 | |
| Directors'
fees | |
| 191,250 | |
| Amortization
of deferred financing costs | |
| 9,230 | |
| Tax
expense ⁽¹⁾ | |
| (3,633 | ) |
| Other
expenses | |
| 407,604 | |
| Total
Expenses | |
| 6,400,830 | |
| | |
| | |
| NET
INVESTMENT INCOME | |
| 11,830,747 | |
| | |
| | |
| REALIZED
AND UNREALIZED GAIN (LOSS) | |
| | |
| Net
change in unrealized appreciation (depreciation) on investments | |
| 9,241,844 | |
| Net
change in unrealized (appreciation) depreciation on liabilities at fair value under the fair value option | |
| 666,992 | |
| NET
REALIZED AND UNREALIZED GAIN (LOSS) | |
| 9,908,836 | |
| | |
| | |
| NET
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | |
$ | 21,739,583 | |
| | |
| | |
| (1) | Tax expense consists
of $51,780 of estimated Delaware franchise tax, offset by $55,413 of excise tax refund
related to the 2022 tax year. |
| See accompanying notes to the consolidated financial statements | 4 |
| Eagle
Point Income Company Inc. |
| Consolidated Statement
of Comprehensive Income |
| For
the nine months ended September 30, 2023 |
| (expressed
in U.S. dollars) |
| (Unaudited) |
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS | |
$ | 21,739,583 | |
| | |
| | |
| OTHER
COMPREHENSIVE INCOME (LOSS) (1) | |
| | |
| Change in unrealized (appreciation)
depreciation on liabilities at fair value under the fair value option | |
| 952,016 | |
| Total Other Comprehensive Income (Loss) | |
| 952,016 | |
| | |
| | |
| NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM COMPREHENSIVE INCOME | |
$ | 22,691,599 | |
(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.
Consolidated
Statements of Operations
(expressed
in U.S. dollars)
(Unaudited)
| |
|
|
For
the
three
months ended
September
30, 2023 |
|
For
the
six
months ended
June
30, 2023 |
|
For
the
nine
months ended
September
30, 2023 |
|
| INVESTMENT
INCOME |
|
|
|
|
|
|
|
|
|
|
|
| Interest
income |
|
|
$ |
6,961,272 |
|
$ |
11,232,449 |
|
$ |
18,193,721 |
|
| Other
income |
|
|
|
13,476 |
|
|
24,380 |
|
|
37,856 |
|
| Total
Investment Income |
|
|
|
6,974,748 |
|
|
11,256,829 |
|
|
18,231,577 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
| Interest
expense |
|
|
|
943,329 |
|
|
1,022,935 |
|
|
1,966,264 |
|
| Management
fees |
|
|
|
623,945 |
|
|
937,764 |
|
|
1,561,709 |
|
| Commission
expense |
|
|
|
1,023,447 |
|
|
— |
|
|
1,023,447 |
|
| Professional
fees |
|
|
|
473,715 |
|
|
339,770 |
|
|
813,485 |
|
| Administration
fees |
|
|
|
152,141 |
|
|
279,333 |
|
|
431,474 |
|
| Directors’
fees |
|
|
|
63,750 |
|
|
127,500 |
|
|
191,250 |
|
| Tax
expense |
|
|
|
(35,413) |
|
|
31,780 |
|
|
(3,633) |
|
| Amortization
of deferred financing costs |
|
|
|
5,433 |
|
|
3,797 |
|
|
9,230 |
|
| Other
expenses |
|
|
|
186,639 |
|
|
220,965 |
|
|
407,604 |
|
| Total
Expenses |
|
|
|
3,436,986 |
|
|
2,963,844 |
|
|
6,400,830 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| NET
INVESTMENT INCOME |
|
|
|
3,537,762 |
|
|
8,292,985 |
|
|
11,830,747 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| REALIZED
AND UNREALIZED GAIN (LOSS) |
|
|
|
|
|
|
|
|
|
|
|
| Net
change in unrealized appreciation (depreciation) on investments |
|
|
|
9,828,575 |
|
|
(586,731) |
|
|
9,241,844 |
|
| Net
change in unrealized (appreciation) depreciation on liabilities at fair value under the fair value option |
|
|
|
736,490 |
|
|
(69,498) |
|
|
666,992 |
|
| NET
REALIZED AND UNREALIZED GAIN (LOSS) |
|
|
|
10,565,065 |
|
|
(656,229) |
|
|
9,908,836 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| NET
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
|
|
$ |
14,102,827 |
|
$ |
7,636,756 |
|
$ |
21,739,583 |
|
Note:
The above Statements of Operations represents the three months ended September 30, 2023, the six months ended June 30, 2023 and
the nine months ended September 30, 2023 and has been provided as supplemental information to the financial statements.
| See accompanying notes to the consolidated financial statements | 6 |
Eagle
Point Income Company Inc.
Consolidated
Statements of Operations
(expressed
in U.S. dollars)
(Unaudited)
| | |
For the
nine months ended
September 30, 2023 | | |
For the
nine months ended
September 30, 2022 | |
| INVESTMENT INCOME | |
| | | |
| | |
| Interest income | |
$ | 18,193,721 | | |
$ | 13,446,613 | |
| Other income | |
| 37,856 | | |
| 40,531 | |
| Total Investment Income | |
| 18,231,577 | | |
| 13,487,144 | |
| | |
| | | |
| | |
| EXPENSES | |
| | | |
| | |
| Interest expense | |
| 1,966,264 | | |
| 1,825,627 | |
| Management fees | |
| 1,561,709 | | |
| 1,508,915 | |
| Commission expense | |
| 1,023,447 | | |
| 61,255 | |
| Professional fees | |
| 813,485 | | |
| 459,887 | |
| Administration fees | |
| 431,474 | | |
| 413,459 | |
| Directors' fees | |
| 191,250 | | |
| 191,250 | |
| Commitment fees | |
| — | | |
| 500,000 | |
| Amortization of deferred financing costs | |
| 9,230 | | |
| 85,374 | |
| Tax expense (1) | |
| (3,633 | ) | |
| 62,905 | |
| Other expenses | |
| 407,604 | | |
| 369,203 | |
| Total Expenses | |
| 6,400,830 | | |
| 5,477,875 | |
| | |
| | | |
| | |
| NET INVESTMENT INCOME | |
| 11,830,747 | | |
| 8,009,269 | |
| | |
| | | |
| | |
| REALIZED AND UNREALIZED GAIN (LOSS) | |
| | | |
| | |
| Net realized gain (loss) on investments | |
| — | | |
| 38,548 | |
| Net change in unrealized appreciation (depreciation) on investments | |
| 9,241,844 | | |
| (30,988,903 | ) |
| Net change in unrealized (appreciation) depreciation on liabilities at fair value under the fair value option | |
| 666,992 | | |
| 597,770 | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) | |
| 9,908,836 | | |
| (30,352,585 | ) |
| | |
| | | |
| | |
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | |
$ | 21,739,583 | | |
$ | (22,343,316 | ) |
(1)
Tax expense for the nine months ended September 30, 2023 consists of $51,780 of estimated Delaware franchise tax, offset
by $55,413 of excise tax refund related to the 2022 tax year end.
| See accompanying notes to the consolidated financial statements | 7 |
Eagle
Point Income Company Inc.
Consolidated
Statements of Changes in Net Assets
(expressed
in U.S. dollars, except share amounts)
(Unaudited)
| | |
For
the
nine months ended
September 30, 2023 | | |
For
the
year ended
December 31, 2022 | |
| Net
increase (decrease) in net assets resulting from operations: | |
| | | |
| | |
| Net
investment income | |
$ | 11,830,747 | | |
$ | 11,590,146 | |
| Net
realized gain (loss) on investments | |
| — | | |
| 38,548 | |
| Net
change in unrealized appreciation (depreciation) on investments | |
| 9,241,844 | | |
| (31,296,039 | ) |
| Net
change in unrealized (appreciation) depreciation on liabilities at fair value under the fair value option | |
| 666,992 | | |
| 3,721,302 | |
| Total
net increase (decrease) in net assets resulting from operations | |
| 21,739,583 | | |
| (15,946,043 | ) |
| | |
| | | |
| | |
| Other
comprehensive income (loss): | |
| | | |
| | |
| Net
change in unrealized (appreciation) depreciation on liabilities at fair value under the fair value option | |
| 952,016 | | |
| (1,038,890 | ) |
| Total
other comprehensive income (loss) | |
| 952,016 | | |
| (1,038,890 | ) |
| | |
| | | |
| | |
| Common
stock distributions: | |
| | | |
| | |
| Common
stock distributions from net investment income | |
| (12,568,667 | ) | |
| (10,788,143 | ) |
| Common
stock distributions from tax return of capital | |
| — | | |
| — | |
| Total
common stock distributions | |
| (12,568,667 | ) | |
| (10,788,143 | ) |
| | |
| | | |
| | |
| 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 | |
| 28,137,657 | | |
| 14,243,028 | |
| Issuance
of shares of common stock pursuant to the Company's dividend reinvestment plan | |
| 242,039 | | |
| 124,721 | |
| Total
capital share transactions | |
| 28,379,696 | | |
| 14,367,749 | |
| | |
| | | |
| | |
| Total
increase (decrease) in net assets | |
| 38,502,628 | | |
| (13,405,327 | ) |
| Net
assets at beginning of period | |
| 101,943,840 | | |
| 115,349,167 | |
| Net
assets at end of period | |
$ | 140,446,468 | | |
$ | 101,943,840 | |
| | |
| | | |
| | |
| Capital
share activity: | |
| | | |
| | |
| Shares
of common stock issued pursuant to the Company's "at the market" program and and the Committed Equity Financing | |
| 2,057,840 | | |
| 1,006,487 | |
| Shares
of common stock issued pursuant to the Company's dividend reinvestment plan | |
| 17,909 | | |
| 8,306 | |
| Total
increase (decrease) in capital share activity | |
| 2,075,749 | | |
| 1,014,793 | |
| See accompanying notes to the consolidated financial statements | 8 |
Eagle
Point Income Company Inc.
Consolidated
Statement of Cash Flows
For
the nine months ended September 30, 2023
(expressed in U.S. dollars)
(Unaudited)
| CASH
FLOWS FROM OPERATING ACTIVITIES | |
| |
| Net
increase (decrease) in net assets resulting from operations | |
$ | 21,739,583 | |
| |
| | |
| Adjustments
to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: | |
| | |
| Purchases
of investments | |
| (56,412,028 | ) |
| Proceeds
from sales of investments and repayments of principal ⁽¹⁾ | |
| 2,640,426 | |
| Net
change in unrealized (appreciation) depreciation on investments | |
| (9,241,844 | ) |
| Net
change in unrealized appreciation (depreciation) on liabilities at fair value under the fair value option | |
| (666,992 | ) |
| Amortization
(accretion) included in interest expense | |
| (9,209 | ) |
| Amortization
(accretion) of premiums or discounts on debt securities | |
| (259,923 | ) |
| Amortization
of deferred financing costs | |
| 9,230 | |
| Changes
in assets and liabilities: | |
| | |
| Interest
receivable | |
| (1,300,894 | ) |
| Prepaid
expenses | |
| 66,605 | |
| Excise
tax refund receivable | |
| (55,413 | ) |
| Management
fees payable | |
| 167,500 | |
| Professional
fees payable | |
| (16,413 | ) |
| Administration
fees payable | |
| (17,761 | ) |
| Directors'
fees payable | |
| (63,750 | ) |
| Interest
expense payable | |
| (131,950 | ) |
| Tax
expense payable | |
| (248,784 | ) |
| Due
to affiliates | |
| 110 | |
| Other
expenses payable | |
| 48,933 | |
| Net
cash provided by (used in) operating activities | |
| (43,752,574 | ) |
| | |
| | |
| CASH
FLOWS FROM FINANCING ACTIVITIES | |
| | |
| Borrowings
under credit facility | |
| 16,495,000 | |
| Repayments
under credit facility | |
| (21,405,000 | ) |
| Payment
for deferred financing costs | |
| (50,000 | ) |
| Common
stock distributions paid to stockholders | |
| (12,568,667 | ) |
| Issuance
of shares of common stock pursuant to the Company’s “at the market” program, net of commissions and offering expenses, and
the Committed Equity Financing (Note 5) | |
| 28,137,657 | |
| Issuance
of shares of common stock pursuant to the Company’s dividend reinvestment plan | |
| 216,961 | |
| Issuance
of 7.75% Series B Term Preferred Stock due 2028 | |
| 32,501,875 | |
| Issuance
of shares of 7.75% Series B Term Preferred Stock due 2028 pursuant to the Company’s “at the market” program | |
| 388,900 | |
| Share
issuance (premium)discount associated with 7.75% Series B Term Preferred Stock due 2028 | |
| (721 | ) |
| Net
cash provided by (used in) financing activities | |
| 43,716,005 | |
| | |
| | |
| NET
INCREASE (DECREASE) IN CASH | |
| (36,570 | ) |
| | |
| | |
| CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD | |
| 37,059 | |
| | |
| | |
| CASH
AND CASH EQUIVALENTS, END OF PERIOD | |
$ | 489 | |
| | |
| | |
| Supplemental
disclosures: | |
| | |
| Cash
paid for interest expense | |
$ | 1,882,893 | |
| Cash
paid for excise taxes | |
$ | 244,914 | |
| Cash
paid for interest expense on credit facility | |
$ | 224,530 | |
| Cash
paid for franchise taxes | |
$ | 55,650 | |
⁽¹⁾
Proceeds from sales or maturity of investments includes $2,640,426 of return of capital on portfolio investments from recurring
cash flows.
| See accompanying notes to the consolidated financial statements | 9 |
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(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’s common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “EIC”.
As
of September 30, 2023, the Company had two 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”). As of September 30, 2023, the US Subsidiary and
the Cayman Subsidiary represented 0.1% and 0.0% of the Company’s net assets.
The
Company was initially formed on September 28, 2018 as EP Income Company LLC, a Delaware limited liability company. The Company
commenced operations on October 4, 2018, the date Eagle Point Income Management LLC (the “Adviser”) contributed $100,000
in exchange for 100 units of the Company and Cavello Bay Reinsurance Limited (“Cavello Bay” and collectively with
the Adviser, the “Members”) contributed to the Company, at fair value, the entire portfolio of BB-rated CLO debt held
in a separately managed account managed by an affiliate of the Adviser, totaling $75,051,650, inclusive of accrued interest of
$1,371,697, in exchange for 75,051.65 units of the Company. Cavello Bay is a subsidiary of Enstar Group Limited, or “Enstar.”
On
October 16, 2018, the Company converted from a Delaware limited liability company into a Delaware corporation (the “Conversion”).
At the time of the Conversion, the Members became stockholders of Eagle Point Income Company Inc. In connection with the Conversion,
the Members converted 75,151.65 units of the Delaware limited liability company into shares of common stock in the Delaware corporation
at $20 per share, resulting in 3,769,596 shares and an effective conversion rate of approximately 50.15985069 per unit.
On
July 23, 2019, the Company priced its initial public offering (the “IPO”) and sold an additional 1,200,000 shares
of its common stock at a public offering price of $19.89 per share. On July 24, 2019, the Company’s shares began trading
on the NYSE. On August 2, 2019, the Company sold an additional 162,114 shares pursuant to the exercise by the underwriters of
the over-allotment option granted to them in connection with the IPO at a public offering price of $19.89 per share.
Computershare Trust Company , N.A. serves as the Company’s custodian.
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.
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”).
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
| 2. | SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES |
Basis
of Accounting
The consolidated
financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts have been
eliminated upon consolidation. The Company is considered an investment company under accounting principles generally accepted
in the United States of America (“U.S. GAAP”). The Company 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.
Pursuant to Rule 2a-5 under the 1940 Act, the Board has elected to designate the Adviser as “valuation designee” to
perform fair value determinations in respect of the Company’s portfolio investments that do not have readily available market
quotations. In the absence of readily available market quotations, as defined by Rule 2a-5 under the 1940 Act, the Adviser determines
the fair value of the Company’s investments in accordance with its valuation policy, subject to Board oversight. 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.
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.
The
Company accounts for its investments in accordance with U.S. GAAP, and fair values its investment portfolio in 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). In accordance with Rule 2a-5 under the 1940 Act adopted by the SEC in December 2020, the Board has designated the Adviser
to perform the determination of fair value of the Company’s investment portfolio, subject to Board oversight and certain
other conditions.
The
fair value hierarchy prioritizes and ranks the level of market price observability used in measuring investments at fair value.
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
measured and reported at fair value are classified and disclosed in one of the following categories based on inputs:
| ● | Level
I – Observable, quoted prices for identical investments in active markets as
of the reporting date. |
| ● | Level
II – Quoted prices for similar investments in active markets or quoted prices
for identical investments in markets that are not active as of the reporting date. |
| ● | Level
III – Pricing inputs are unobservable for the investment and little, if any,
active market exists as of the |
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
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.
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. For financial reporting purposes, valuations are determined by the Adviser on a quarterly basis.
See
Note 3 “Investments” for further discussion relating to the Company’s investments.
In
valuing the Company’s investments the Adviser considers a variety of relevant factors, including, as applicable, price indications
from a third-party pricing service, recent trading prices for specific investments, recent purchases and sales known to the Adviser
in similar securities and output from a third-party financial model. The third-party financial model contains detailed information
on the characteristics of CLOs, including recent information about assets and liabilities, and is used to project future cash
flows. Key inputs to the model, 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.
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.
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 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
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
calculating amortization of premium for applicable investments.
Amortization of premium or accretion of discount is recognized using the effective interest method.
In
certain circumstances interest income 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, interest receivable
is capitalized as additional investment 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 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.
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.
The
following table summarizes the components of interest expense for the nine months ended September 30, 2023:
| | |
| | |
| | |
| | |
| |
| | |
Series A Term
Preferred Stock | | |
Series B Term
Preferred Stock | | |
Revolving
Credit Facility | | |
Total | |
| Distributions declared and paid | |
$ | 1,426,550 | | |
$ | 456,343 | | |
$ | — | | |
$ | 1,882,893 | |
| Interest expense on credit facility | |
| | | |
| | | |
| 92,952 | | |
| 92,952 | |
| Amortization of issuance premium | |
| (9,238 | ) | |
| 30 | | |
| | | |
| (9,208 | ) |
| | |
$ | 1,417,312 | | |
$ | 456,373 | | |
$ | 92,952 | | |
$ | 1,966,637 | |
Interest
expense is recorded as an expense on the Consolidated Statement of Operations. The Company’s Preferred Stock has no interest
payable as of September 30, 2023.
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 at-the-market (“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 of original issue discounts and premiums are reflected
as an expense and a contra expense within interest expense in
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
the Consolidated Statement of Operations, respectively.
Securities
Transactions
The
Company records the purchases and sales of securities on the trade date. Realized gains and losses on investments sold are recorded
on the basis of the specific identification method.
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 a bank account which, at times, may exceed federal
insured limits. The Adviser monitors the performance of the financial institution where the account is held in order to manage
any risk associated with such account.
As
of September 30, 2023, the Company held cash in a Computershare Corporate Trust interest earning cash deposit account with a balance
of $489. This account is classified as Level I in the fair value hierarchy.
Expense
Recognition
Expenses
are recorded on the accrual basis of accounting.
Prepaid
Expenses
Prepaid
expenses consist primarily of filing fees, 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.
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
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
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 September 30, 2023, the federal income tax cost and net unrealized depreciation on securities were as follows:
| Cost for federal income tax purposes | |
$ | 231,544,154 | |
| | |
| | |
| Gross unrealized appreciation | |
$ | 1,342,501 | |
| | |
| | |
| Gross unrealized depreciation | |
| (26,232,080 | ) |
| Net unrealized depreciation | |
$ | (24,889,579 | ) |
For
the nine months ended September 30, 2023, the Company incurred $51,780 in Delaware franchise tax expense related to the 2023 tax
year, which was offset by $55,413 of excise tax refund related to the 2022 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 are 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.
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 (or for other purposes).
For
the nine months ended September 30, 2023, the Company declared and paid monthly distributions on common stock of approximately
$12.6 million or $1.44 per share.
The
characterization of distributions paid to common stockholders, as set forth in the 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 by the Company.
For
the nine months ended September 30, 2023, the Company declared and paid dividends on the Series A Term Preferred Stock of approximately
$1.4 million or approximately $0.94 per share of Series A Term Preferred Stock.
For
the nine months ended September 30, 2023, the Company declared and paid dividends on the Series B Term Preferred Stock of approximately
$0.5 million or approximately $0.35 per share of Series B Term Preferred Stock.
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
Fair
Value Measurement
The following
table summarize 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 September 30, 2023:
Fair Value
Measurement (in millions)
| | |
Level I | | |
Level II | | |
Level III | | |
Total | |
| Assets | |
| | |
| | |
| | |
| |
| Cash and Cash Equivalents | |
$ | 0.00 | | |
$ | — | | |
$ | — | | |
$ | 0.00 | |
| Investments at Fair Value | |
| | | |
| | | |
| | | |
| | |
| CLO Debt | |
| — | | |
| 153.95 | | |
| — | | |
| 153.95 | |
| CLO Equity | |
| — | | |
| — | | |
| 52.27 | | |
| 52.27 | |
| CFO Debt | |
| | | |
| — | | |
| 0.25 | | |
| 0.25 | |
| CFO Equity | |
| | | |
| — | | |
| 0.19 | | |
| 0.19 | |
| Total Investentments at Fair Value (1) | |
$ | — | | |
$ | 153.95 | | |
$ | 52.70 | | |
$ | 206.65 | |
| Total Assets at Fair Value (1) | |
$ | 0.00 | | |
$ | 153.95 | | |
$ | 52.70 | | |
$ | 206.66 | |
| | |
| | | |
| | | |
| | | |
| | |
| Liabilities at Fair Value Under FVO | |
| | | |
| | | |
| | | |
| | |
| Series A Term Preferred Stock | |
$ | 34.71 | | |
$ | — | | |
$ | — | | |
$ | 34.71 | |
| Series B Term Preferred Stock | |
$ | 32.75 | | |
| — | | |
| — | | |
| 32.75 | |
| Total Liabilities at Fair Value Under FVO (1) | |
$ | 67.46 | | |
$ | — | | |
$ | — | | |
$ | 67.46 | |
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
utilizes the output of a third-party financial model to estimate the fair value of CLO equity investments. The model contains detailed
information on the characteristics of each CLO, including recent information about assets and liabilities from data sources such
as trustee reports, and is used to project future cash flows to the CLO note tranches, as well as management fees.
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 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 technique 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.
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
The changes
in investments classified as Level III are as follows for the nine months ended September 30, 2023:
Change
in Investments Classified as Level III (in millions)
| | |
CLO Equity | | |
CFO Debt | | |
CFO Equity | | |
Total | |
| Balance as of January 1, 2023 | |
$ | 41.11 | | |
$ | — | | |
$ | — | | |
$ | 41.11 | |
| Purchases of investments | |
| 11.39 | | |
| 0.25 | | |
| 0.18 | | |
| 11.81 | |
| Proceeds from sales or maturity of investments
(1) | |
| (2.64 | ) | |
| — | | |
| — | | |
| (2.64 | ) |
| Net realized gains (losses) and net change in unrealized appreciation (depreciation) | |
| 2.41 | | |
| (0.00 | ) | |
| 0.01 | | |
| 2.42 | |
| Balance as of September 30, 2023(2) | |
$ | 52.27 | | |
$ | 0.25 | | |
$ | 0.19 | | |
$ | 52.70 | |
| Change in unrealized appreciation (depreciation) on investments still held as of September 30, 2023 | |
$ | 2.41 | | |
$ | (0.00 | ) | |
$ | 0.01 | | |
$ | 2.42 | |
| (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. |
The net realized
gains (losses) recorded for Level III investments, if any, are reported in the net realized gain (loss) 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.
The following
table summarizes the quantitative inputs and assumptions used for investments categorized as Level III of the fair value hierarchy
as of September 30, 2023. In addition to the techniques and inputs noted in the table below, 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. The table below 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 September 30,
2023. Unobservable inputs and assumptions are periodically reviewed and updated as necessary to reflect current market conditions.
| | |
| Quantitative Information about Level
III Fair Value Measurements | |
| Assets | |
| Fair Value as of
September 30, 2023 | | |
Valuation
Techniques/Methodologies | |
Unobservable Inputs | |
| Range
/ Weighted Average (1) | |
| CLO Equity | |
$ | 52.27 | | |
Discounted Cash Flows | |
Annual Default Rate (2) | |
| 0.00% - 5.24% | |
| | |
| | | |
| |
Annual Prepayment Rate (2) (3) | |
| 20.00% - 25.00% | |
| | |
| | | |
| |
Reinvestment Spread | |
| 3.60% - 3.96% / 3.76% | |
| | |
| | | |
| |
Reinvestment Price | |
| 98.00% - 99.50% | |
| | |
| | | |
| |
Recovery Rate | |
| 68.39% - 69.90% / 69.54% | |
| | |
| | | |
| |
Expected Yield | |
| 19.87% - 77.26% / 29.74% | |
| CFO Debt | |
| 0.25 | | |
Discounted Cash Flows | |
Discount Rate | |
| 12.28% - 15.56% / 13.3% | |
| CFO Equity | |
| 0.19 | | |
Discounted Cash Flows | |
Discount Rate | |
| 45.00% | |
| Total
Fair Value of Level III Investments(5) | |
$ | 52.70 | | |
| |
| |
| | |
(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.
Increases (decreases)
in the annual default rate, reinvestment price and 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.
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
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. 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.
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 typically higher-yield investments. Investing in CLO junior debt and equity securities
and other high-yield investments 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 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
Company is dependent upon the key personnel of the Adviser for its future success.
Conflicts
of Interest Risk
The
Company’s executive officers and directors, and the Adviser and certain of its affiliates and their officers and employees,
including the Senior Investment Team, have several conflicts of interest as a result of the other activities in which they engage.
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
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.
LIBOR
Risk
The
London Interbank Offered Rate (“LIBOR”) is no longer published by its administrator as of June 30, 2023. LIBOR and
other inter-bank lending rates and indices have been the subject of ongoing national and international regulatory reform due to
concerns around their susceptibility to manipulation. Most, but not all, LIBOR settings have transitioned to alternative near
risk-free rates, including Secured Overnight Financing Rate (SOFR, which is intended to replace U.S. dollar LIBOR and measures
the cost of overnight borrowings through repurchase agreement transactions collateralized with U.S. Treasury securities) and the
Sterling Overnight Index Average Rate (SONIA, which is intended to replace pound sterling LIBOR and measures the overnight interest
rate paid by banks for unsecured transactions in the sterling market). Although LIBOR has ceased to be published, certain CLO
securities in which the Company may invest continue to earn interest at (or, from the perspective of the Company as CLO equity
investor, obtain financing at) a floating rate based on a synthetically calculated LIBOR.
Furthermore,
certain senior secured loans that constitute the collateral of the CLOs in which the Company invests may continue to pay interest
at a floating rate based on LIBOR (or a “synthetic” calculation of LIBOR which is currently expected to continue to
be published until September 30, 2024) or may convert to a fixed rate of interest. To the extent that any LIBOR replacement rate
utilized for senior secured loans differs from that utilized for debt of a CLO that holds those loans, for the duration of such
mismatch, the CLO would experience an interest rate mismatch between its assets and liabilities, which could have an adverse impact
on the cash flows distributed to CLO equity investors (and, therefore, the Company’s net investment income and portfolio
returns) until such mismatch is corrected or minimized.
Certain
underlying loans held by CLOs do not include a “fall back” provision that addresses how interest rates will be determined
once LIBOR stops being published, or otherwise leave certain aspects of the replacement rate to be negotiated between the loan
issuer and the lender group. For example, certain loans held by CLOs in which the Company invests provide for a negotiated “credit
spread adjustment” (i.e., a marginal increase in the applicable replacement rate to compensate lenders for the tendency
of SOFR and other alternative rates to price lower than LIBOR). If a CLO’s collateral manager and other members of the lending
group agree to (or fail to reject) an amendment to an underlying loan that provides for a below-market spread adjustment, then
the equity investors in such CLO (such as the Company) would be disadvantaged if the debt securities issued by the CLO have a
larger spread adjustment. While LIBOR has ceased to be published, the replacement rate used for such underlying loans may not
be known until the interest rate is reset for the next accrual period.
Given
the foregoing, the impact of LIBOR transition on the Company’s net investment income and overall portfolio returns remains
uncertain.
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 in which the Company invests. The Adviser values
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
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.
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.
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 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).
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. 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.
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
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.
Refinancing
Risk
If
the Company incurs debt financing and subsequently refinance 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.
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.
Derivatives
Risk
Derivative
instruments in which the Company may invest may be volatile and involve various risks different from, and in certain cases greater
than, the risks presented by other instruments. The primary risks related to derivative transactions include counterparty, correlation,
liquidity, leverage, volatility, over-the-counter trading, operational and legal risks. In addition, a small investment in derivatives
could have a large potential impact on the Company’s performance, effecting a form of investment leverage on the Company’s
portfolio. In certain types of derivative transactions, the Company could lose the entire amount of the Company’s investment;
in other types of derivative transactions the potential loss is theoretically unlimited.
Counterparty
Risk
The
Company may be exposed to counterparty risk, which could make it difficult for the Company or the CLOs in which the Company invests
to collect on obligations, thereby resulting in potentially significant losses.
Global
Economy Risk
Global
economies and financial markets are highly interconnected, and conditions and events in one country, region or financial market
may adversely impact issuers in a different country, region or financial market.
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
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.
| 4. |
RELATED
PARTY TRANSACTIONS |
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 nine months ended September
30, 2023, the Company was charged a management fee of approximately $1.6 million, of which $0.6 million was payable as of September
30, 2023.
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 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 nine months ended September 30, 2023, the Company was charged a total of approximately $0.43 million in administration fees
consisting of approximately $0.33 million and $0.10 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 $0.12 million was payable
as of September 30, 2023 and reflected on the Consolidated
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
Statement of Assets and Liabilities.
Affiliated
Ownership
As
of September 30, 2023, the Adviser and its affiliates and senior investment team held an aggregate of 0.5% 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 September
30, 2023. An affiliate of Enstar holds an indirect non-controlling ownership interest in the Adviser. As of September 30, 2023,
subsidiaries of Enstar, including Cavello Bay, held an aggregate of 37.7% of the Company’s common stock.
Exemptive
Relief
On
March 17, 2015, the SEC granted exemptive relief to the Adviser and its affiliates which permits the Company to participate in
certain negotiated co-investments alongside other accounts managed by the Adviser, or its affiliates, subject to certain conditions.
Due
to Affiliates
Due
to affiliates reported in the Consolidated Statement of Assets and Liabilities represents amounts payable to the Adviser for expenses
paid on behalf of the Company.
As
of December 31, 2022, there were 150,000,000 shares of common stock authorized, of which 7,896,757 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. As a result
of the new shelf registration, $123,158 in remaining prepaid expense balance associated with the previous shelf registration was
expensed into professional fees in the Consolidated Statement of Operations.
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 nine months ended September 30, 2023, the Company sold 2,057,840 shares of its common stock, pursuant to the ATM offerings
and Committed Equity Financing, for total net proceeds to the Company of approximately $28.1 million. In connection with such
sales, the Company paid a total of approximately $0.5 million in sales agent commissions.
For
the nine months ended September 30, 2023, 17,909 shares of common stock were issued in connection with the DRIP for total net
proceeds to the Company of approximately $0.2 million.
As
of September 30, 2023, there were 150,000,000 shares of common stock authorized, of which 9,972,506 shares were issued and outstanding.
| 6. |
MANDATORY
REDEEMABLE PREFERRED STOCK |
As
of September 30, 2023, 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 1,315,631 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
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
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.
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 nine months ended September
30, 2023 is approximately $11 thousand, 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 nine
months ended September 30, 2023 is approximately ($1.5) 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 million 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
On
July 26, 2023, the Company closed an underwritten public offering of 1,130,500 shares of its Series B Term Preferred Stock, resulting
in net proceeds to the Company of approximately $27.1 million after payment of underwriting discounts and commissions of approximately
$0.9 million and offering expenses of approximately $0.3 million. On August 3, 2023, the underwriters purchased an additional
169,575 shares of its Series B Term Preferred Stock pursuant to the underwriters’ overallotment option, which resulted in
additional net proceeds to the Company of approximately $4.1 million after payment of underwriting discounts and commissions of
approximately $0.1 million.
The
Company is required to redeem all outstanding shares of the Series B Term Preferred Stock on July 31, 2028, 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
Company has accounted for its Series A Term Preferred Stock utilizing the FVO under ASC 825. Accordingly, the Series B Term Preferred
Stock are measured at their fair value and issuance costs in the aggregate amount of approximately $1.3 million, which consisted
of approximately $1.0 million of underwriting commissions, $0.2 million of professional fees and $0.1 million of other expenses,
were expensed as incurred in the nine months ended September 30, 2023.
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
The
estimated change in fair value of the Series B Term Preferred Stock attributable to market risk for the nine months ended September
30, 2023 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 Operations.
The
estimated change in fair value of the Series B Term Preferred Stock attributable to instrument-specific credit risk for the nine
months ended September 30, 2023 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 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 nine months ended September 30, 2023, the Company sold 15,556 shares of its Series B Term Preferred Stock pursuant to the
ATM offering for total proceeds to the company of approximately $0.4 million. In connection with such sales, the Company paid
a total of 7,763 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 September 30, 2023, the Company had total unfunded commitments, which could be extended at the option of the borrower, of $0.8
million arising from CFO debt and CFO equity investments. As of September 30, 2023, the Company recorded $1,028 in unrealized
depreciation on unfunded commitments relating to CFO debt and CFO equity investments which is reflected in the Consolidated Statement
of Operations within net change in unrealized appreciation (depreciation) on 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.
Notes
to Consolidated Financial Statements
September
30, 2023
(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”). 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 nine months ended September 30, 2023, the Company had an average outstanding borrowing and average interest rate of
approximately $1.31 million and 4.89%, respectively. The interest expense for the nine months ended September 30, 2023 on the
Revolving Credit Facility was approximately $0.09 million, inclusive of the unused fee, and is recorded on the Consolidated
Statement of Operations. As of September 30, 2023, the Company had an outstanding borrowing amount of $4.12 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 the issuance of any such senior securities that are stocks and calculated as the ratio
of the Company’s total 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 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 September
30, 2023, and as of December 31, 2022:
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
| | |
As of | | |
As of | |
| | |
September 30, 2023 | | |
December 31, 2022 | |
| Total Assets | |
$ | 213,126,102 | | |
$ | 148,573,523 | |
| Less liabilities and debts not represented by senior securities | |
| (1,102,724 | ) | |
| (1,414,870 | ) |
| Net total assets and liabilities | |
$ | 212,023,378 | | |
$ | 147,158,653 | |
| | |
| | | |
| | |
| Preferred Stock | |
$ | 70,932,000 | | |
$ | 38,041,225 | |
| Revolving Credit Facility | |
| 4,120,000 | | |
| 9,030,000 | |
| | |
$ | 75,052,000 | | |
$ | 47,071,225 | |
| | |
| | | |
| | |
| Asset coverage for preferred stock (1) | |
| 283 | % | |
| 313 | % |
| Asset coverage for debt securities (2) | |
| 5146 | % | |
| 1630 | % |
| | |
| | | |
| | |
| (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 Section 18(h) of the 1940 act, as generally described above. |
| 11. |
RECENT
ACCOUNTING PRONOUCEMENT |
In
March 2020, FASB issued Accounting Standards Update No. 2020-04 (“ASU 2020-04”) related to FASB ASC Topic 848 Reference
Rate Reform– Facilitation of the Effects of Reference Rate Reform. ASU 2020-04 provides optional guidance for a limited
period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial
reporting. The Company has fully adopted the provisions of ASU 2020-04, which did not have a material impact on the Company’s
consolidated financial statements and related disclosures.
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 standard is effective for annual periods beginning after December 15, 2023, and
should be applied prospectively. The Company is currently evaluating the impact, if any, of applying ASU 2022-03.
On
October 31, 2023, the Company paid a monthly distribution of $0.18 per share on its common stock to holders of record as of October
11, 2023. Additionally, on November 8, 2023, the Company declared three separate distributions of $0.20 per share on its common
stock. The distributions are payable on each of January 31, 2024, February 29, 2024 and March 28, 2024 to holders of record as
of January 11, 2024, February 9, 2024 and March 8, 2024, respectively.
On
October 31, 2023, the Company paid a monthly distribution of $0.104167 per share on its Series A Preferred Stock to holders of
record as of October 11, 2023. Additionally, on November 8, 2023, the Company declared three separate distributions of $0.104167
per share on its Series A Preferred Stock. The distributions are payable on each of January 31, 2024, February 29, 2024 and March
28, 2024 to holders of record as of January 11, 2024, February 9, 2024 and March 8, 2024, respectively.
On
October 31, 2023, the Company paid a monthly distribution of $0.161459 per share on its Series B Preferred Stock to holders of
record as of October 11, 2023. Additionally, on November 8, 2023, the Company declared three separate distributions of $0.161459
per share on its Series B Preferred Stock. The distributions are payable on each of January 31, 2024, February 29, 2024 and March
28, 2024 to holders of record as of January 11, 2024, February 9, 2024 and March 8, 2024, respectively.
For
the period from October 1, 2023 to November 10, 2023, the Company sold 114,945 shares of its common stock,
Eagle
Point Income Company Inc.
Notes
to Consolidated Financial Statements
September
30, 2023
(Unaudited)
pursuant to the ATM
offering, for total net proceeds to the Company of approximately $1.6 million. In connection with such sales, the Company paid
a total of approximately $14.3 thousand in sales agent commissions.
As
of November 10, 2023, the Company had approximately $7.3 million of outstanding principal amount borrowed from the Revolving Credit
Facility.
Management’s
unaudited estimate of the range of the Company’s NAV per common share as of October 31, 2023 was $13.60 to $13.70.
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.
Consolidated
Financial Highlights
(Unaudited)
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Per
Share Data | |
For
the
nine months ended September 30, 2023 | | |
For
the year ended
December 31,
2022 | | |
For
the year ended
December 31,
2021 | | |
For
the year ended
December 31,
2020 | | |
For
the year ended
December 31,
2019 | | |
For
the period from
October 16, 2018
to December 31, 2018 | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Net
asset value, beginning of period | |
$ | 12.91 | | |
$ | 16.76 | | |
$ | 16.89 | | |
$ | 19.34 | | |
$ | 18.28 | | |
$ | 20.00 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net
investment income, before fee waivers and expenses reimbursed (1)
(2) | |
| 1.35 | | |
| 1.64 | | |
| 0.98 | | |
| 1.27 | | |
| 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 | |
| 1.35 | | |
| 1.64 | | |
| 0.98 | | |
| 1.27 | | |
| 1.32 | | |
| 0.35 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net
realized gain (loss) and change in unrealized appreciation (depreciation) on investments (1)
(3) | |
| 0.97 | | |
| (4.45 | ) | |
| 0.38 | | |
| (2.21 | ) | |
| 0.70 | | |
| (1.72 | ) |
| Net
change in unrealized (appreciation) depreciation on liabilities at fair value under the fair value option | |
| 0.08 | | |
| 0.53 | | |
| (0.01 | ) | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net
income (loss) and net increase (decrease) in net assets resulting from operations | |
| 2.40 | | |
| (2.28 | ) | |
| 1.35 | | |
| (0.94 | ) | |
| 2.02 | | |
| (1.37 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common
stock distributions from net investment income (4) | |
| (1.44 | ) | |
| (1.53 | ) | |
| (1.33 | ) | |
| (1.32 | ) | |
| (0.69 | ) | |
| (0.35 | ) |
| 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) | |
| (1.44 | ) | |
| (1.53 | ) | |
| (1.33 | ) | |
| (1.50 | ) | |
| (0.69 | ) | |
| (0.35 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common
stock distributions based on weighted average shares impact (5) | |
| — | | |
| — | | |
| (0.02 | ) | |
| — | | |
| (0.15 | ) | |
| — | |
| Total
common stock distributions | |
| (1.44 | ) | |
| (1.53 | ) | |
| (1.35 | ) | |
| (1.50 | ) | |
| (0.84 | ) | |
| (0.35 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Effect
of other comprehensive income | |
| 0.11 | | |
| (0.15 | ) | |
| (0.13 | ) | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Effect
of shares issued (6) | |
| 0.15 | | |
| 0.14 | | |
| 0.10 | | |
| — | | |
| (0.19 | ) | |
| | |
| Effect
of underwriting discounts, commissions and offering expenses associated with shares issued (6) | |
| (0.05 | ) | |
| (0.03 | ) | |
| (0.10 | ) | |
| (0.01 | ) | |
| | | |
| | |
| 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 | |
| 0.10 | | |
| 0.11 | | |
| — | | |
| (0.01 | ) | |
| (0.12 | ) | |
| — | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net
asset value at end of period | |
$ | 14.08 | | |
$ | 12.91 | | |
$ | 16.76 | | |
$ | 16.89 | | |
$ | 19.34 | | |
$ | 18.28 | |
| Per
share market value at beginning of period (9) | |
$ | 13.87 | | |
$ | 17.03 | | |
$ | 14.41 | | |
$ | 18.76 | | |
$ | 19.89 | | |
| N/A | |
| Per
share market value at end of period | |
$ | 14.25 | | |
$ | 13.87 | | |
$ | 17.03 | | |
$ | 14.41 | | |
$ | 18.76 | | |
| N/A | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total
return, based on market value (10) | |
| 14.19 | % | |
| (8.67 | %) | |
| 26.55 | % | |
| (14.07 | %) | |
| (2.27 | %) | |
| N/A | |
| Total
return, based on net asset value (11) | |
| 20.22 | % | |
| (13.84 | %) | |
| 7.22 | % | |
| (4.91 | %) | |
| 9.56 | % | |
| (6.85 | %) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Shares
of common stock outstanding at end of period | |
| 9,972,506 | | |
| 7,896,757 | | |
| 6,881,964 | | |
| 6,106,458 | | |
| 6,018,273 | | |
| 3,769,596 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Ratios
and Supplemental Data: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net
asset value at end of period | |
$ | 140,446,468 | | |
$ | 101,943,840 | | |
$ | 115,349,167 | | |
$ | 103,120,136 | | |
$ | 116,408,383 | | |
$ | 68,923,362 | |
| Ratio
of net investment income to average net assets (12)
(14) | |
| 13.64 | % | |
| 11.20 | % | |
| 5.66 | % | |
| 8.65 | % | |
| 6.67 | % | |
| 8.54 | % |
| Ratio
of expenses, before fee waivers and expenses reimbursed, to average net assets (12)
(13) (14) | |
| 6.80 | % | |
| 7.16 | % | |
| 5.36 | % | |
| 3.99 | % | |
| 2.75 | % | |
| 3.12 | % |
| Ratio
of expenses, after fee waivers and expenses reimbursed, to average net assets (12)
(13) (14) | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| 1.89 | % | |
| 0.00 | % |
| Portfolio
turnover rate (15) | |
| 1.66 | % | |
| 6.32 | % | |
| 27.98 | % | |
| 29.14 | % | |
| 11.42 | % | |
| 2.35 | % |
| Asset
coverage of preferred stock | |
| 283 | % | |
| 313 | % | |
| 313 | % | |
| N/A | | |
| N/A | | |
| | |
| Asset
coverage of debt securities | |
| 5146 | % | |
| 1630 | % | |
| 873 | % | |
| 796 | % | |
| 947 | % | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Credit
Facility: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Principal
amount outstanding at end of period | |
$ | 4,120,000 | | |
$ | 9,030,000 | | |
$ | 19,550,000 | | |
$ | 14,815,000 | | |
$ | 13,743,000 | | |
$ | — | |
| Asset
coverage per $1,000 at end of period (16) | |
$ | 51,461.99 | | |
$ | 16,296.64 | | |
$ | 8,732.75 | | |
$ | 7,960.52 | | |
$ | 9,470.38 | | |
$ | — | |
Eagle
Point Income Company Inc.
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 ($0.21), ($0.27) and ($0.05) per share of common stock for the nine months
ended September 30, 2023, and the years ended 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) | Total
return based on net asset value is calculated as the change in net asset value per share
during the period plus declared and paid dividends per share, divided by the beginning
net asset value per share. |
| (12) | Ratios
for the period from October 16, 2018 to December 31, 2018 and for the nine months ended
September 30, 2023 are annualized. Ratios include the impact of the fee waivers and expenses
reimbursed by the Adviser, where applicable. |
| (13) | 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. |
| (14) | Ratios
for the nine months ended September 30, 2023, and the years ended December 31, 2022,
December 31, 2021, December 31, 2020 and December 31, 2019 include interest expense on
the credit facility of 0.10%, 0.63%, 0.40%, 0.60% and 0.04% of average net assets, respectively.
Ratios for the nine months ended September 30, 2023 and the years ended December 31,
2022 and December 31, 2021 include interest expense on the Series A Term Preferred Stock
and Series B Term Preferred Stock of 2.11%, 1.83% and 0.31% of average net assets, respectively.
Ratios for the nine months ended September 30, 2023 and the years ended December 31,
2022, December 31, 2021 and December 31, 2019 include excise tax expense of -0.05%, 0.27%,
0.06% and 0.10% of average net assets, respectively. |
| (15) | 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. |
| (16) | 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.
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 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 nine months ended September 30, 2023 |
|
|
|
|
| Preferred
Stock |
$70,932,000 |
$70.63 |
$25 |
$23.78 |
| Revolving
Credit Facility (BNP Paribas) |
$4,120,000 |
$51,461.99 |
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). |
Eagle Point Income (NYSE:EIC)
Historical Stock Chart
From Dec 2024 to Jan 2025
Eagle Point Income (NYSE:EIC)
Historical Stock Chart
From Jan 2024 to Jan 2025
