Vertical Capital Income Fund Sells Majority of Investments

In advance of an anticipated new investment advisory agreement with The Carlyle Group, the closed-end fund has sold most of its investment portfolio.

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Residential investment platform Vertical Capital Income Fund has tapped two winning bidders for a large majority of its investment portfolio. Each party acquired a portion of the fund’s investment portfolio in a sales process undertaken to satisfy specific conditions necessary for the closing of a previously announced deal with The Carlyle Group, which has been approved by shareholders.

The proceeds of the sale will be invested by the fund in cash equivalents in expectation of the transaction’s closing, which is subject to other closing conditions. The fund will generate reduced investment income while the proceeds are in cash equivalents.

Investment adviser

Expected aggregate sales proceeds were lower than the book value of the combined assets in the portfolio, due to the substantial sale necessary to facilitate the transaction. As a result, the fund has adjusted its net asset value per share from $9.96 as last reported on June 30, 2023, to $8.27 as of July 11. The current fund board has ended the fund’s managed distribution plan and suspended its existing distribution policy. The fund will not declare its typical, regularly scheduled July distribution in anticipation of a new dividend declaration expected to be issued by Carlyle and the fund board before the end of the month following the closing of the transaction.

A provision of the transaction calls for Carlyle Global Credit Investment Management LLC to become the investment adviser to the fund. The fund’s investment mandate will be altered to focus on investing in equity and debt tranches of collateralized loan obligations in order to drive potential shareholder value.

Subject to the satisfaction of other closing conditions, the transaction is expected to close this week. Earlier this month, Trilogy Real Estate Group closed its fifth multifamily fund, and will deploy proceeds toward completion of three Midwest developments.

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