BlackRock Direct Lending Corp. - FORM 10-Q

Attached files

file	filename
EX-32.1 - EX-32.1 - BlackRock Direct Lending Corp.	bdlc-ex321_8.htm
EX-31.2 - EX-31.2 - BlackRock Direct Lending Corp.	bdlc-ex312_6.htm
EX-31.1 - EX-31.1 - BlackRock Direct Lending Corp.	bdlc-ex311_7.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarter Ended June 30, 2021


☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 814-01378

BLACKROCK DIRECT LENDING CORP.

(Exact Name of Registrant as Specified in Charter)


Delaware	85-3439073
(State or Other Jurisdiction of Incorporation)	(IRS Employer Identification No.)

2951 28^th Street, Suite 1000
Santa Monica, California	90405
(Address of Principal Executive Offices)	(Zip Code)

(310) 566-1094

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None		Not applicable		Not applicable
(Title of each class)		(Trading Symbol(s) )		(Name of each exchange where registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller Reporting company	☐
Emerging growth company	☒

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

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

As of June 30, 2021, there was no established public market for the Registrant's shares of common stock.

The number of the Registrant's shares of common stock outstanding on August 4, 2021 was 5,996,102.

BLACKROCK DIRECT LENDING CORP.

FORM 10-Q

FOR THE SIX MONTHS ENDED JUNE 30, 2021

TABLE OF CONTENTS


Part I.	Financial Information

Item 1.	Financial Statements

	Statements of Assets and Liabilities as of June 30, 2021 (unaudited) and December 31, 2020	3

	Statements of Operations for the three and six months ended June 30, 2021 (unaudited)	4

	Statements of Changes in Net Assets for the three and six months ended June 30, 2021 (unaudited)	5

	Statement of Cash Flows for the six months ended June 30, 2021 (unaudited)	6

	Schedule of Investments as of June 30, 2021 (unaudited) and December 31, 2020	7

	Notes to Financial Statements (unaudited)	11

	Schedule of Restricted Securities of Unaffiliated Issuers as of June 30, 2021 (unaudited) and December 31, 2020	21

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	32

Part II.	Other Information

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3.	Defaults upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34

Item 5.	Other Information	34

Item 6.	Exhibits	34

BlackRock Direct Lending Corp.

Statements of Assets and Liabilities

	June 30, 2021		December 31, 2020
Assets	(unaudited)
Investments, at fair value:
Non-controlled, non-affiliated investments (cost of $53,304,936 and $1,983,522, respectively)	$	53,833,342	$	1,954,482
Total investments (cost of $53,304,936 and $1,983,522, respectively)		53,833,342		1,954,482

Cash and cash equivalents		17,079,421		30,193,016
Interest receivable		258,260		1,187
Deferred debt issuance costs		437,437		—
Deferred offering costs		214,097		205,187
Prepaid expenses and other assets		29,125		22,086
Total assets		71,851,682		32,375,958

Liabilities
Payable for investments purchased		10,413,909		1,983,522
Debt (net of deferred issuance costs of $15,982 and $16,250, respectively)		94,018		93,750
Reimbursements due to the Advisor		58,235		110,960
Management fees payable		45,298		—
Interest and debt related payables		6,094		—
Equity offering costs payable		—		227,985
Accrued expenses and other liabilities		349,262		97,819
Total liabilities		10,966,816		2,514,036

Commitments and contingencies (Note 5)

Net assets	$	60,884,866	$	29,861,922

Composition of net assets applicable to common stockholders
Common stock, $0.001 par value; 300,000,000 shares authorized, 5,996,102 and 3,010,000 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	$	5,996	$	3,010
Paid-in capital in excess of par		60,020,682		29,954,394
Distributable earnings (loss)		858,188		(95,482	)
Total net assets		60,884,866		29,861,922
Total liabilities and net assets	$	71,851,682	$	32,375,958

Net assets per share	$	10.15	$	9.92

See accompanying notes to the financial statements.

BlackRock Direct Lending Corp.

Statements of Operations (Unaudited)

Investment income	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Interest income:
Non-controlled, non-affiliated investments	$	724,664	$	965,254
Other income:
Non-controlled, non-affiliated investments		—		30,000
Total investment income		724,664		995,254

Operating expenses
Administrative expenses		194,206		194,206
Professional fees		95,121		198,878
Director fees		46,000		87,500
Management fees		45,298		50,142
Interest and other debt expenses		17,516		20,904
Custody and transfer agent fees		11,086		21,140
Insurance expense		5,999		12,271
Other operating expenses		11,612		13,989
Total operating expenses		426,838		599,030

Net investment income		297,826		396,224

Realized and unrealized gain (loss)
Change in net unrealized appreciation (depreciation)
Non-controlled, non-affiliated investments		369,001		557,446
Net realized and unrealized gain		369,001		557,446

Net increase in net assets from operations	$	666,827	$	953,670

Earnings per share	$	0.13	$	0.23

Basic and diluted weighted average shares outstanding		5,000,499		4,060,501

See accompanying notes to the financial statements.

BlackRock Direct Lending Corp.

Statements of Changes in Net Assets (Unaudited)

	Common Stock				Paid in Capital in			Distributable
	Shares		Par Amount		Excess of Par			earnings (loss)			Total Net Assets
Balance at December 31, 2020		3,010,000	$	3,010	$	29,954,394		$	(95,482	)	$	29,861,922
Issuance of common stock		1,500,858		1,501		15,048,499			—			15,050,000
Offering costs charged to paid-in capital		—		—		(11,399	)		—			(11,399	)
Net investment income		—		—		—			98,398			98,398
Net realized and unrealized gain		—		—		—			188,445			188,445
Balance at March 31, 2021		4,510,858	$	4,511	$	44,991,494		$	191,361		$	45,187,366

Issuance of common stock		1,485,244		1,485		15,048,515			—			15,050,000
Offering costs charged to paid-in capital		—		—		(19,327	)		—			(19,327	)
Net investment income		—		—		—			297,826			297,826
Net realized and unrealized gain		—		—		—			369,001			369,001
Balance at June 30, 2021		5,996,102	$	5,996	$	60,020,682		$	858,188		$	60,884,866

See accompanying notes to the financial statements.

BlackRock Direct Lending Corp.

Statement of Cash Flows (Unaudited)

	Six Months Ended June 30, 2021
Operating activities
Net increase in net assets resulting from operations	$	953,670
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Change in net unrealized appreciation/depreciation of investments		(557,446	)
Net amortization of investment discounts and premiums		(50,427	)
Amortization of deferred debt issuance costs		8,210
Changes in assets and liabilities:
Purchases of investments		(52,212,709	)
Proceeds from sales, maturities and pay downs of investments		941,722
Decrease (increase) in interest receivable		(257,073	)
Decrease (increase) in prepaid expenses and other assets		(7,039	)
Increase (decrease) in payable for investments purchased		8,430,387
Increase (decrease) in reimbursements due to the Advisor		(52,725	)
Increase (decrease) in management fees payable		45,298
Increase (decrease) in interest and debt related payables		6,094
Increase (decrease) in accrued expenses and other liabilities		251,442
Net cash used in operating activities		(42,500,596	)

Financing activities
Proceeds from shares of common stock sold		30,100,000
Payments of debt issuance costs		(445,379	)
Payments of equity offering costs		(267,620	)
Net cash provided by financing activities		29,387,001

Net decrease in cash and cash equivalents (including restricted cash)		(13,113,595	)
Cash and cash equivalents (including restricted cash) at beginning of period		30,193,016
Cash and cash equivalents (including restricted cash) at end of period	$	17,079,421

Supplemental cash flow information
Interest payments	$	6,600

See accompanying notes to the financial statements.

BlackRock Direct Lending Corp.

Schedule of Investments (Unaudited)

June 30, 2021

Issuer	Instrument	Ref	Floor			Spread			Total Coupon			Maturity	Principal		Cost			Fair Value			% of Total Cash and Investments			Notes
Debt Investments ^(A)
Automobiles
ALCV Purchaser, Inc. (AutoLenders)	First Lien Term Loan	LIBOR(M)		1.00	%		6.75	%		7.75	%	2/25/2026	$	1,270,429	$	1,252,112		$	1,262,806			1.78	%	D
ALCV Purchaser, Inc. (AutoLenders)	First Lien Revolver	LIBOR(M)		1.00	%		6.75	%		7.75	%	2/25/2026	$	-		(1,335	)		(556	)		—		C/D
																1,250,777			1,262,250			1.78	%
Beverages
JP Intermediate B, LLC (Juice Plus)	First Lien Term Loan	LIBOR(Q)		1.00	%		5.50	%		6.50	%	11/20/2025	$	2,164,417		1,973,949			2,109,224			2.97	%

Building Products
Porcelain Acquisition Corporation (Paramount)	First Lien Term Loan	LIBOR(Q)		1.00	%		6.00	%		7.00	%	4/30/2027	$	876,042		858,677			863,777			1.22	%	D
Porcelain Acquisition Corporation (Paramount)	First Lien Delayed Draw Term Loan	LIBOR(Q)		1.00	%		6.00	%		7.00	%	4/30/2027	$	-		(7,300	)		(5,256	)		-0.01	%	C/D
																851,377			858,521			1.21	%
Construction & Engineering
Sunland Asphalt & Construction, LLC	First Lien Delayed Draw Term Loan	LIBOR(Q)		1.00	%		6.00	%		7.00	%	1/13/2026	$	339,071		332,861			337,375			0.48	%	D
Sunland Asphalt & Construction, LLC	First Lien Revolver	LIBOR(Q)		1.00	%		6.00	%		7.00	%	1/13/2022	$	169,754		167,453			168,709			0.24	%	D
Sunland Asphalt & Construction, LLC	First Lien Term Loan	LIBOR(Q)		1.00	%		6.00	%		7.00	%	1/13/2026	$	1,008,389		990,131			1,003,347			1.41	%	D
																1,490,445			1,509,431			2.13	%
Distributors
Colony Display, LLC	First Lien Term Loan	LIBOR(Q)		1.00	%		6.50	%		7.50	%	6/30/2026	$	980,519		960,909			960,909			1.36	%	D
Colony Display, LLC	First Lien Delayed Draw Term Loan	LIBOR(Q)		1.00	%		6.50	%		7.50	%	6/30/2026	$	-		(9,805	)		(9,805	)		-0.01	%	C/D
																951,104			951,104			1.35	%
Diversified Consumer Services
Razor Group GmbH (Germany)	First Lien Delayed Draw Term Loan	LIBOR(M)		1.00	%		9.00	%		10.00	%	4/30/2025	$	1,612,506		1,650,681			1,548,506			2.18	%	B/D

Diversified Financial Services
2-10 Holdco, Inc.	First Lien Incremental Term Loan	LIBOR(M)		0.75	%		6.00	%		6.75	%	3/26/2026	$	2,656,470		2,623,812			2,641,329			3.72	%	D
2-10 Holdco, Inc.	Sr Secured Revolver	LIBOR(M)		0.75	%		6.00	%		6.75	%	3/26/2026	$	-		—			(543	)		—		C/D
Oasis Financial, LLC	Second Lien Term Loan	LIBOR(M)		1.00	%		8.50	%		9.50	%	7/5/2026	$	2,723,829		2,674,018			2,685,695			3.79	%	D
Worldremit Group Limited (United Kingdom)	First Lien Incremental Term Loan	LIBOR(Q)		1.00	%		9.25	%		10.25	%	2/11/2025	$	3,000,000		2,945,462			2,880,300			4.06	%	B/D
																8,243,292			8,206,781			11.57	%
Diversified Telecommunication Services
MetroNet Systems Holdings, LLC	Second Lien Term Loan	LIBOR(M)		0.75	%		7.00	%		7.75	%	6/2/2029	$	561,180		552,805			551,864			0.78	%	D
MetroNet Systems Holdings, LLC	Second Lien Delayed Draw Term Loan	LIBOR(M)		0.75	%		7.00	%		7.75	%	6/2/2029	$	-		(22,877	)		(19,179	)		-0.03	%	C/D
																529,928			532,685			0.75	%
Health Care Technology
Appriss Health, LLC (PatientPing)	First Lien Term Loan	LIBOR(Q)		1.00	%		7.25	%		8.25	%	5/6/2027	$	1,141,285		1,119,216			1,123,025			1.58	%	D
Appriss Health, LLC (PatientPing)	First Lien Revolver	LIBOR(Q)		1.00	%		7.25	%		8.25	%	5/6/2027	$	-		(1,483	)		(1,217	)		—		C/D
ESO Solutions, Inc.	First Lien Term Loan	LIBOR(Q)		1.00	%		7.00	%		8.00	%	5/3/2027	$	2,054,314		2,014,083			2,033,771			2.87	%	D
ESO Solutions, Inc.	First Lien Revolver	LIBOR(Q)		1.00	%		7.00	%		8.00	%	5/3/2027	$	-		(4,762	)		(2,446	)		—		C/D
Gainwell Acquisition Corp.	Second Lien Term Loan	LIBOR(Q)		1.00	%		8.00	%		9.00	%	10/2/2028	$	800,332		796,330			804,333			1.13	%	D
																3,923,384			3,957,466			5.58	%

BlackRock Direct Lending Corp.

Schedule of Investments (Unaudited) (Continued)

June 30, 2021

Issuer	Instrument	Ref	Floor			Spread			Total Coupon			Maturity	Principal		Cost			Fair Value			% of Total Cash and Investments			Notes
Debt Investments (Continued)
Healthcare Providers & Services
INH Buyer, Inc. (IMS Health)	First Lien Term Loan	LIBOR(Q)		1.00	%		6.00	%		7.00	%	6/28/2028	$	3,600,000	$	3,528,000		$	3,528,000			4.98	%
Tempus, LLC (Epic Staffing)	First Lien Term Loan	LIBOR(Q)		1.00	%		6.25	%		7.25	%	2/5/2027	$	1,629,699		1,598,488			1,647,626			2.32	%	D
Tempus, LLC (Epic Staffing)	First Lien Delayed Draw Term Loan	LIBOR(Q)		1.00	%		6.25	%		7.25	%	2/5/2027	$	-		(6,030	)		3,478			—		C/D
																5,120,458			5,179,104			7.30	%
Insurance
Peter C. Foy & Associates Insurance Services, LLC (PCF Insurance)	First Lien Delayed Draw Term Loan	LIBOR(S)		1.00	%		6.25	%		7.25	%	3/31/2026	$	511,428		486,133			499,333			0.70	%	D

Internet Software & Services
McAfee, LLC	Second Lien Term Loan	LIBOR(M)		0.75	%		8.25	%		9.00	%	5/3/2029	$	3,000,000		2,955,000			2,977,500			4.20	%	D

IT Services
Ensono, Inc.	Second Lien Term Loan B	LIBOR(S)		-			8.00	%		8.17	%	6/2/2029	$	3,000,000		2,970,000			2,970,000			4.19	%	D
Idera, Inc.	Second Lien Term Loan	LIBOR(S)		0.75	%		6.75	%		7.50	%	2/4/2029	$	1,137,871		1,129,519			1,137,871			1.60	%
																4,099,519			4,107,871			5.79	%
Media
NEP II, Inc.	Second Lien Term Loan	LIBOR(M)		-			7.00	%		7.10	%	10/19/2026	$	130,856		121,096			128,893			0.18	%	D

Professional Services
GI Consilio Parent, LLC	Second Lien Term Loan	LIBOR(M)		0.50	%		7.50	%		8.00	%	5/14/2029	$	3,000,000		2,970,677			2,988,000			4.21	%	D
Jobandtalent USA, Inc. (United Kingdom)	First Lien Delayed Draw Term Loan	LIBOR(M)		1.00	%		8.75	%		9.75	%	2/17/2025	$	750,000		735,934			756,000			1.07	%	B/D
Jobandtalent USA, Inc. (United Kingdom)	First Lien Term Loan	LIBOR(M)		1.00	%		8.75	%		9.75	%	2/17/2025	$	2,250,000		2,208,129			2,268,000			3.20	%	B/D
Jobandtalent USA, Inc. (United Kingdom)	First Lien Incremental Delayed Draw Term Loan	LIBOR(M)		1.00	%		8.75	%		9.75	%	2/17/2025	$	1,000,000		980,531			1,008,000			1.42	%	B/D
																6,895,271			7,020,000			9.90	%
Road & Rail
Keep Truckin, Inc.	First Lien Incremental Term Loan	LIBOR(M)		1.00	%		7.25	%		8.25	%	4/8/2025	$	3,000,000		2,956,760			2,994,000			4.22	%	D

Software
Aras Corporation	First Lien Term Loan	LIBOR(Q)		1.00	%	3.25%Cash + 3.75%PIK				8.00	%	4/13/2027	$	1,218,885		1,195,268			1,201,820			1.69	%	D
Aras Corporation	First Lien Delayed Draw Term Loan	LIBOR(Q)		1.00	%	3.25%Cash + 3.75%PIK				8.00	%	4/13/2027	$	-		(3,134	)		(2,275	)		—		C/D
Aras Corporation	First Lien Revolver	LIBOR(Q)		1.00	%		6.50	%		7.50	%	4/13/2027	$	-		(2,350	)		(1,706	)		—		C/D
Backoffice Associates Holdings, LLC	First Lien Term Loan	LIBOR(Q)		1.00	%		7.50	%		8.50	%	4/30/2026	$	1,955,616		1,898,384			1,908,681			2.69	%	D
Backoffice Associates Holdings, LLC	First Lien Revolver	LIBOR(Q)		1.00	%		7.50	%		8.50	%	4/30/2026	$	-		(7,563	)		(6,258	)		-0.01	%	C/D
SEP Raptor Acquisition, Inc. (Loopio) (Canada)	First Lien Term Loan	LIBOR(Q)		1.00	%		7.00	%		8.00	%	3/31/2027	$	1,462,870		1,434,664			1,454,093			2.05	%	B/D
SEP Raptor Acquisition, Inc. (Loopio) (Canada)	First Lien Revolver	LIBOR(Q)		1.00	%		7.00	%		8.00	%	3/31/2027	$	-		(3,115	)		(975	)		—		B/C/D
SEP Vulcan Acquisition, Inc (Tasktop) (Canada)	First Lien Term Loan	LIBOR(Q)		1.00	%		7.00	%		8.00	%	3/16/2027	$	1,210,490		1,186,977			1,208,069			1.70	%	B/D
SEP Vulcan Acquisition, Inc (Tasktop) (Canada)	First Lien Revolver	LIBOR(Q)		1.00	%		7.00	%		8.00	%	3/16/2027	$	-		(3,292	)		(346	)		—		B/C/D
Thunder Purchaser, Inc. (Vector Solutions)	First Lien Term Loan	LIBOR(Q)		1.00	%		5.75	%		6.75	%	6/30/2028	$	2,211,449		2,167,237			2,167,220			3.06	%	D
Thunder Purchaser, Inc. (Vector Solutions)	First Lien Delayed Draw Term Loan	LIBOR(Q)		1.00	%		5.75	%		6.75	%	6/30/2028	$	-		(5,840	)		(5,841	)		-0.01	%	C/D
Thunder Purchaser, Inc. (Vector Solutions)	Senior Secured Revolver	LIBOR(Q)		1.00	%		5.75	%		6.75	%	6/30/2028	$	-		(4,088	)		(4,089	)		-0.01	%	C/D
																7,853,148			7,918,393			11.16	%
Trading Companies & Distributors
Whele, LLC (Perch)	First Lien Incremental Term Loan	LIBOR(M)		1.00	%		7.00	%		8.00	%	10/15/2025	$	1,933,430		1,952,614			1,952,764			2.75	%	D
Total Debt Investments - 88.2% of Net Assets																53,304,936			53,713,826			75.72	%

BlackRock Direct Lending Corp.

Schedule of Investments (Unaudited) (Continued)

June 30, 2021

Issuer	Instrument	Expiration	Shares		Cost		Fair Value		% of Total Cash and Investments			Notes
Equity Securities
Diversified Consumer Services
Razor Group GmbH (Germany)	Warrants to Purchase Preferred Stock	4/28/2028		61	$	—	$	63,999		0.09	%	B/D/E/F

Diversified Financial Services
Worldremit Group Limited (United Kingdom)	Warrants to Purchase Series D Stock	2/11/2031		2,394		—		55,517		0.10	%	D/E/F

Total Equity Securities - 0.2% of Net Assets						—		119,516		0.19	%

Total Investments - 88.4% of Net Assets					$	53,304,936	$	53,833,342		75.91	%

Cash and Cash Equivalents - 28.1% of Net Assets								17,079,421		24.09	%

Total Cash and Investments - 116.5% of Net Assets							$	70,912,763		100.00	%

Notes to Schedule of Investments:

(A)

Debt investments include investments in bank debt that generally are bought and sold among institutional investors in transactions not subject to registration under the Securities Act of 1933. Such transactions are generally subject to contractual restrictions, such as approval of the agent or borrower.

(B)

Non-U.S. company or principal place of business outside the U.S. and as a result the investment is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

(C)	Negative balances relate to an unfunded commitment that was acquired and/or valued at a discount.

(D)	Inputs in the valuation of this investment included certain unobservable inputs that were significant to the valuation as a whole.

(E)	Restricted security. (See Note 2)

(F)	Non-income producing investment.

LIBOR or EURIBOR resets monthly (M), quarterly (Q) or semiannually (S).

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $52,212,709 and $941,722, respectively, for the six months ended June 30, 2021. The total value of restricted securities and bank debt as of June 30, 2021 was $53,833,342 or 75.9% of total cash and investments of the Company. As of June 30, 2021, approximately 15.8% of the total assets of the Company were not qualifying assets under Section 55(a) of the 1940 Act.

See accompanying notes to the financial statements.

BlackRock Direct Lending Corp.

Schedule of Investments (Continued)

December 31, 2020

Issuer	Instrument	Ref	Floor			Spread			Total Coupon			Maturity	Principal		Cost		Fair Value		% of Total Cash and Investments
Debt Investments ^(A)
Beverages
JP Intermediate B, LLC (Juice Plus)	First Lien Term Loan	LIBOR(Q)		1.00	%		5.50	%		6.50	%	11/20/2025	$	2,191,737	$	1,983,522	$	1,954,482		6.08	%
Total Debt Investments - 6.6% of Net Assets																1,983,522		1,954,482		6.08	%

Total Investments - 6.6% of Net Assets															$	1,983,522	$	1,954,482

Cash and Cash Equivalents - 101.1% of Net Assets																		30,193,016		93.92	%

Total Cash and Investments - 107.7% of Net Assets																	$	32,147,498		100.00	%

Notes to Schedule of Investments:

(A) Debt investments include investments in bank debt that generally are bought and sold among institutional investors in transactions not subject to registration under the Securities Act of 1933. Such transactions are generally subject to contractual restrictions, such as approval of the agent or borrower.

LIBOR resets quarterly (Q).

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $1,983,522 and $0, respectively, for the period from November 30, 2020 to December 31, 2020. The total value of restricted securities and bank debt as of December 31, 2020 were $1,983,522 or 6.1% of total cash and investments of the Company. As of December 31, 2020, 0% of the total assets of the Company were not qualifying assets under Section 55(a) of the 1940 Act.

See accompanying notes to the financial statements.

BlackRock Direct Lending Corp.

Notes to Financial Statements (Unaudited)

June 30, 2021

1. Organization and Nature of Operations

BlackRock Direct Lending Corp. (the “Company”) is a Delaware corporation formed on October 12, 2020 as an externally managed, closed-end, non-diversified management investment company. The Company elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company’s investment objective is to achieve high risk-adjusted returns produced from current income generated by investing primarily in senior secured corporate debt instruments. The Company invests primarily in middle-market companies headquartered in North America. The Company commenced operations on November 30, 2020 ("inception").

The Company intends to be treated as a regulated investment company (“RIC”) for U.S. federal income tax purposes. As a RIC, the Company will not be taxed on its income to the extent that it distributes such income each year and satisfies other applicable income tax requirements.

BlackRock Capital Investment Advisors, LLC, a wholly owned, indirect subsidiary of BlackRock, Inc., serves as the Advisor of the Company. BlackRock Financial Management, Inc. serves as the administrator of the Company (the “Administrator”), and is affiliated with the Advisor. Company management consists of the Advisor and the Company’s board of directors. The Advisor directs and executes the day-to-day operations of the Company, subject to oversight from the board of directors, which sets the broad policies of the Company. The board of directors of the Company has delegated investment management of the Company’s assets to the Advisor. The board of directors consists of five persons, three of whom are independent.

2. Summary of Significant Accounting Policies

Basis of Presentation

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. The following is a summary of the significant accounting policies of the Company.

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well the reported amounts of revenues and expenses during the reporting periods presented. Although management believes these estimates and assumptions to be reasonable, actual results could differ from those estimates and such differences could be material.

Investment Valuation

Management values investments at fair value in accordance with GAAP, based upon the principles and methods of valuation set forth in policies adopted by the board of directors. Fair value is generally defined as the amount for which an investment would be sold in an orderly transaction between market participants at the measurement date.

All investments are valued at least quarterly based on quotations or other affirmative pricing from independent third-party sources, with the exception of investments priced directly by the Advisor which in the aggregate comprise less than 5% of the capitalization of the Company. Investments listed on a recognized exchange or market quotation system, whether U.S. or foreign, are valued using the closing price on the date of valuation.

Investments not listed on a recognized exchange or market quotation system, but for which reliable market quotations are readily available are valued using prices provided by a nationally recognized pricing service or by using quotations from broker-dealers.

Investments for which market quotations are either not readily available or are determined to be unreliable are priced at fair value using affirmative valuations performed by independent valuation services approved by the board of directors or, for investments aggregating less than 5% of the total capitalization of the Company, using valuations determined directly by the Advisor. Such valuations are determined under a documented valuation policy that has been reviewed and approved by the board of directors.

BlackRock Direct Lending Corp.

Notes to Financial Statements (Unaudited) (Continued)

June 30, 2021

2. Summary of Significant Accounting Policies — (Continued)

Generally, to increase objectivity in valuing the investments, the Advisor will utilize external measures of value, such as public markets or third-party transactions, whenever possible. The Advisor’s valuation is not based on long-term work-out value, immediate liquidation value, nor incremental value for potential changes that may take place in the future. The values assigned to investments are based on available information and do not necessarily represent amounts that might ultimately be realized, as these amounts depend on future circumstances and cannot reasonably be determined until the individual investments are actually liquidated. Such circumstances may include macroeconomic, geopolitical and other events and conditions such as the current COVID-19 pandemic that may significantly impact the profitability or viability of businesses in which the Company is invested, and therefore may significantly impact the return on and realizability of the Company’s investments. The foregoing policies apply to all investments, including any in companies and groups of affiliated companies aggregating more than 5% of the Company’s assets.

Fair valuations of investments in each asset class are determined using one or more methodologies including market quotations, the market approach, income approach, or, in the case of recent investments, the cost approach, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Such information may include observed multiples of earnings and/or revenues at which transactions in securities of comparable companies occur, with appropriate adjustments for differences in company size, operations or other factors affecting comparability.

The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present value amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. The discount rates used for such analyses reflect market yields for comparable investments, considering such factors as relative credit quality, capital structure, and other factors.

In following these approaches, the types of factors that may be taken into account also include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, comparable costs of capital, the principal market in which the investment trades and enterprise values, among other factors.

Investments may be categorized based on the types of inputs used in valuing such investments. The level in the GAAP valuation hierarchy in which an investment falls is based on the lowest level input that is significant to the valuation of the investment in its entirety. Transfers between levels are recognized as of the beginning of the reporting period.

At June 30, 2021, the Company’s investments were categorized as follows:

Level	Basis for Determining Fair Value	Bank Debt		Other Corporate Debt		Equity Securities		Total
1	Quoted prices in active markets for identical assets	$	—	$	—	$	—	$	—
2	Other direct and indirect observable market inputs *		3,247,095		—		—		3,247,095
3	Independent third-party valuation sources that employ significant unobservable inputs		50,466,731		—		119,516		50,586,247
3	Advisor valuations with significant unobservable inputs		—		—		—		—
Total		$	53,713,826	$	—	$	119,516	$	53,833,342

*	For example, quoted prices in inactive markets or quotes for comparable investments

BlackRock Direct Lending Corp.

Notes to Financial Statements (Unaudited) (Continued)

June 30, 2021

2. Summary of Significant Accounting Policies — (Continued)

Unobservable inputs used in the fair value measurement of Level 3 investments as of June 30, 2021 included the following:

Asset Type	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Avg.) †
Bank Debt	$	43,832,338	Income approach	Discount rate	7.1% - 13.1% (9.1%)
		6,634,393	Market quotations	Indicative bid/ask quotes	1 (1)
Equity		119,516	Option Pricing Model	EBITDA/Revenue multiples	6.0x (6.0x)
				Implied volatility	60.0%-65.0% (62.3%)
				Term	4.0 years (4.0 years)
	$	50,586,247

†	Weighted by fair value

Certain fair value measurements may employ more than one valuation technique, with each valuation technique receiving a relative weight between 0% and 100%. Generally, a change in an unobservable input may result in a change to the value of an investment as follows:

Input	Impact to Value if Input Increases	Impact to Value if Input Decreases
Discount rate	Decrease	Increase
Revenue multiples	Increase	Decrease
EBITDA multiples	Increase	Decrease
Book value multiples	Increase	Decrease
Implied volatility	Increase	Decrease
Term	Increase	Decrease
Yield	Increase	Decrease

Changes in investments categorized as Level 3 during the three months ended June 30, 2021 were as follows:

	Independent Third-Party Valuation
	Bank Debt			Other Corporate Debt		Equity Securities		Total
Beginning balance	$	18,013,736		$	—	$	47,832	$	18,061,568
Net realized and unrealized gains (losses)		276,962			—		71,684		348,646
Acquisitions *		32,926,235			—		—		32,926,235
Dispositions		(871,298	)		—		—		(871,298	)
Transfers into Level 3		121,096			—		—		121,096
Ending balance	$	50,466,731		$	—	$	119,516	$	50,586,247

Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	259,180			$ —	$	71,684	$	330,864

*	Includes payments received in kind and accretion of original issue and market discounts

BlackRock Direct Lending Corp.

Notes to Financial Statements (Unaudited) (Continued)

June 30, 2021

2. Summary of Significant Accounting Policies — (Continued)

Changes in investments categorized as Level 3 during the six months ended June 30, 2021 were as follows:

	Independent Third-Party Valuation
	Bank Debt			Other Corporate Debt		Equity Securities		Total
Beginning balance	$	—		$	—	$	—	$	—
Net realized and unrealized gains (losses)		264,903			—		119,516		384,419
Acquisitions *		50,955,416			—		—		50,955,416
Dispositions		(874,684	)		—		—		(874,684	)
Transfers into Level 3		121,096			—		—		121,096
Ending balance	$	50,466,731		$	—	$	119,516	$	50,586,247

Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	247,121			$ —	$	119,516	$	366,637

*	Includes payments received in kind and accretion of original issue and market discounts

At December 31, 2020, the Company’s investments were categorized as follows:

Level	Basis for Determining Fair Value	Bank Debt		Other Corporate Debt		Equity Securities		Total
1	Quoted prices in active markets for identical assets	$	—	$	—	$	—	$	—
2	Other direct and indirect observable market inputs *		1,954,482		—		—		1,954,482
3	Independent third-party valuation sources that employ significant unobservable inputs		—		—		—		—
3	Advisor valuations with significant unobservable inputs		—		—		—		—
Total		$	1,954,482	$	—	$	—	$	1,954,482

*	For example, quoted prices in inactive markets or quotes for comparable investments

Investment Transactions

Investment transactions are recorded on the trade date, except for private transactions that have conditions to closing, which are recorded on the closing date. The cost of investments purchased is based upon the purchase price plus those professional fees which are specifically identifiable to the investment transaction. Realized gains and losses on investments are recorded based on the specific identification method, which typically allocates the highest cost inventory to the basis of investments sold.

Cash and Cash Equivalents

Cash consists of amounts held in accounts with the custodian bank. Cash equivalents consist of highly liquid investments with an original maturity of generally three months or less and may not be insured by the FDIC or may exceed federally insured limits. Cash equivalents are carried at amortized cost which approximates fair value. Cash equivalents are classified as Level 1 in the GAAP valuation hierarchy. At June 30, 2021, included in cash and cash equivalents is $17.1 million (28.1% of net assets) held in the JP Morgan U.S. Treasury Plus Money Market Fund with a 7-day yield of 0.01%. There was no restricted cash at June 30, 2021 or December 31, 2020.

Restricted Investments

The Company may invest without limitation in instruments that are subject to legal or contractual restrictions on resale. These instruments generally may be resold to institutional investors in transactions exempt from registration or to the public if the securities

BlackRock Direct Lending Corp.

Notes to Financial Statements (Unaudited) (Continued)

June 30, 2021

2. Summary of Significant Accounting Policies — (Continued)

are registered. Disposal of these investments may involve time-consuming negotiations and additional expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted investments is included at the end of the Schedule of Investments. Restricted investments, including any restricted investments in affiliates, are valued in accordance with the investment valuation policies discussed above.

Foreign Currency Investments

The Company may invest in instruments traded in foreign countries and denominated in foreign currencies. Such positions are converted at the respective closing foreign exchange rates in effect at June 30, 2021 and December 31, 2020 and reported in U.S. dollars. Purchases and sales of investments and income and expense items denominated in foreign currencies, when they occur, are translated into U.S. dollars based on the foreign exchange rates in effect on the respective dates of such transactions. The portion of gains and losses on foreign investments resulting from fluctuations in foreign currencies is included in net realized and unrealized gain or loss from investments. The Company did not hold any investments dominated in foreign currency at June 30, 2021 and December 31, 2020.

Investments in foreign companies and securities of foreign governments may involve special risks and considerations not typically associated with investing in U.S. companies and securities of the U.S. government. These risks include, among other things, revaluation of currencies, less reliable information about issuers, different transaction clearance and settlement practices, and potential future adverse political and economic developments. Moreover, investments in foreign companies and securities of foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies and the U.S. government.

Organization and Offering Costs

Costs incurred to organize the Company are expensed as incurred. During the period from November 30, 2020 (Inception) to December 31, 2020, the Company incurred $71,685 in organizational expenses. During the six months ended June 30, 2021, the Company did not incur any additional organizational expenses. From November 30, 2020 through June 30, 2021, the Company had incurred a total of $267,620 in offering costs, of which $53,524 has been charged to paid-in capital. The Company will not bear more than $1,000,000 for organization and offering costs.

Deferred Debt Issuance Costs

Certain costs incurred in connection with the issuance of debt of the Company were capitalized and are being amortized on a straight-line basis over the estimated life of the respective instruments. The impact of utilizing the straight-line amortization method versus the effective-interest method is not material to the operations of the Company.

Revenue Recognition

Interest and dividend income, including income paid in kind, is recorded on an accrual basis, when such amounts are considered collectible. Origination, structuring, closing, commitment and other upfront fees, including original issue discounts, earned with respect to capital commitments are generally amortized or accreted into interest income over the life of the respective debt investment, as are end-of-term or exit fees receivable upon repayment of a debt investment. Other fees, including certain amendment fees, prepayment fees and commitment fees on broken deals, are recognized as earned. Prepayment fees and similar income due upon the early repayment of a loan or debt security are recognized when earned and are included in interest income.

Certain debt investments are purchased at a discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general market factors that influence the financial markets as a whole. Discounts on the acquisition of corporate bonds are generally amortized using the effective-interest or constant-yield method assuming there are no questions as to collectability. When principal payments on a loan are received in an amount in excess of the loan’s amortized cost, the excess principal payments are recorded as interest income.

Income Taxes

The Company intends to comply with the applicable provisions of the Internal Revenue Code of 1986, as amended, pertaining to regulated investment companies and to make distributions of taxable income sufficient to relieve it from substantially all federal income taxes. Accordingly, no provision for income taxes is required in the financial statements. In accordance with ASC Topic 740 - Income Taxes, the Company recognizes in its financial statements the effect of a tax position when it is determined that such position is more

BlackRock Direct Lending Corp.

Notes to Financial Statements (Unaudited) (Continued)

June 30, 2021

2. Summary of Significant Accounting Policies — (Continued)

likely than not, based on the technical merits, to be sustained upon examination.

The tax returns of the Company remain open for examination by tax authorities for a period of three years from the date they are filed. No such examinations are currently pending. Management has analyzed tax laws and regulations and their application to the Company as of June 30, 2021, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the financial statements.

The final tax characterization of distributions is determined after the fiscal year and is reported on Form 1099 and in the Company’s annual report to shareholders. Distributions can be characterized as ordinary income, capital gains and/or return of capital. As of December 31, 2020, the Company had no non-expiring capital loss carryforwards available to offset future realized capital gains.

As of December 31, 2020, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows:

	December 31, 2020
Tax basis of investments	$	1,983,522

Unrealized appreciation	$	—
Unrealized depreciation		(29,040	)
Net unrealized appreciation/ (depreciation)	$	(29,040	)

Recent Accounting Pronouncements

In May 2020, the SEC adopted rule amendments that will impact the requirements of investment companies, including BDCs, to disclose the financial statements of certain of their portfolio companies or certain acquired funds (the “Final Rules”). The Final Rules adopted a new definition of “significant subsidiary” set forth in Rule 1-02(w)(2) of Regulation S-X under the Securities Act. Rules 3-09 and 4-08(g) of Regulation S-X require investment companies to include separate financial statements or summary financial information, respectively, in such investment company’s periodic reports for any portfolio company that meets the definition of “significant subsidiary.” The Final Rules adopt a new definition of “significant subsidiary” applicable only to investment companies that (i) modifies the investment test and the income test, and (ii) eliminates the asset test currently in the definition of “significant subsidiary” in Rule 1-02(w) of Regulation S-X. The new Rule 1-02(w)(2) of Regulation S-X is intended to more accurately capture those portfolio companies that are more likely to materially impact the financial condition of an investment company. The Company adopted the Final Rules effective January 1, 2021 and the adoption did not have a material impact on its financial statements and related disclosures.

In March 2020 and January 2021, the FASB issued ASU No. 2020-04 and ASU No. 2021-01, respectively, “Reference Rate Reform

(Topic 848),” which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other

transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company is currently evaluating the impact of adopting ASU 2020-04 on its financial statements.

3. Management Fees, Incentive Fees and Other Expenses

On November 30, 2020, the Company entered into an investment management agreement with the Advisor. Under the agreement, the Advisor, for its service to the Company, is entitled to receive a management fee from the Company and an incentive fee. The management fee is calculated at an annual rate of 0.90% of the Company’s total assets (excluding cash and cash equivalents) and payable quarterly in arrears. For the period from the date the Company first issues shares of common stock to one or more investors (other than the Advisor and its affiliates) through the end of the first calendar quarter, no management fee is payable. Subsequently, the management fee is calculated based on the value of the Company’s total assets (excluding cash and cash equivalents) at the end of the most recently completed calendar quarter. The management fees for any partial quarter is appropriately prorated.

BlackRock Direct Lending Corp.

Notes to Financial Statements (Unaudited) (Continued)

June 30, 2021

3. Management Fees, Incentive Fees and Other Expenses — (Continued)

Incentive fee is only incurred to the extent the Company’s cumulative total return (after incentive fee) exceeds a 6% annual rate on daily weighted-average unreturned capital contributions. Subject to that limitation, incentive fee is calculated on ordinary income (before incentive fee) and net realized gains (net of any unrealized depreciation) at a rate of 12.5%. Incentive fee is computed as the difference between incentive fee earned and incentive fee paid, subject to the total return hurdle, on a cumulative basis, and is payable quarterly in arrears. There were no incentive fees paid or accrued as our performance did not exceed the cumulative total return threshold for the three and six months ended June 30, 2021.

The Company bears all expenses incurred in connection with its business, including fees and expenses of outside contracted services, such as custodian, administrative, legal, audit and tax preparation fees, costs of valuing investments, insurance costs, brokers’ and finders’ fees relating to investments, and any other transaction costs associated with the purchase and sale of investments.

4. Debt

On December 11, 2020, the Company issued to each of 110 separate investors an unsecured promissory note with a principal amount of $1,000, at par. The Company pays interest on the unpaid principal amount of the notes at a rate of 12.00% per annum payable semi-annually in arrears. The notes mature on December 31, 2050.

On June 18, 2021, the Company entered into a three-year revolving line of credit with Sumitomo Mitsui Banking Corporation as administrative agent, lead arranger and as a lender, with a capacity of up to $75 million, secured by the unfunded equity commitments of the Company’s stockholders (the “Capital Call Facility”). The Capital Call Facility matures on June 16, 2023. Interest on the Capital Call Facility accrues at a rate equal to LIBOR plus 1.95% per annum, or, for short-term draws, a rate equal to the Prime Rate plus 0.95%, the Federal Funds Rate plus 1.45%, or one-month LIBOR plus 1.95%, whichever is highest. Commitment fees on the Capital Call Facility accrue at a rate of 0.225% per annum on the undrawn amount of the commitment. The Capital Call Facility is carried at cost. At June 30, 2021, there were no amounts outstanding under the Capital Call Facility.

5. Commitments, Contingencies, Concentration of Credit Risk and Off-Balance Sheet Risk

The Company conducts business with brokers and dealers that are primarily headquartered in New York and Los Angeles and are members of the major securities exchanges. Banking activities are conducted with a firm headquartered in the Boston area.

In the normal course of business, investment activities involve executions, settlement and financing of various transactions resulting in receivables from, and payables to, brokers, dealers and the custodian. These activities may expose the Company to risk in the event that such parties are unable to fulfill contractual obligations. Management does not anticipate any material losses from counterparties with whom it conducts business. Consistent with standard business practice, the Company enters into contracts that contain a variety of indemnifications, and is engaged from time to time in various legal actions. The maximum exposure under these arrangements and activities is unknown. However, management expects the risk of material loss to be remote.

The Schedules of Investments include certain revolving loan facilities and other commitments with unfunded balances at June 30, 2021 and December 31, 2020 as follows:

BlackRock Direct Lending Corp.

Notes to Financial Statements (Unaudited) (Continued)

June 30, 2021

5. Commitments, Contingencies, Concentration of Credit Risk and Off-Balance Sheet Risk (Continued)

		Unfunded Balances
Issuer	Maturity	June 30, 2021		December 31, 2020
2-10 Holdco, Inc.	3/26/2026	$	95,345	N/A
ALCV Purchaser, Inc. (AutoLenders)	2/25/2026		92,636	N/A
ApprissHealth, LLC (PatientPing)	5/6/2027		76,086	N/A
Aras Corporation	4/13/2027		284,406	N/A
Backoffice Associates Holdings, LLC (Syniti)	4/30/2026		260,749	N/A
Colony Display, LLC	6/30/2026		490,260	N/A
ESO Solutions, Inc.	5/3/2027		244,561	N/A
MetroNet Systems Holdings, LLC	6/2/2029		1,155,370	N/A
Peter C. Foy & Associates Insurance Services, LLC (PCF Insurance)	3/31/2026		832,467	N/A
Porcelain Acquisition Corporation (Paramount)	4/30/2027		375,447	N/A
Razor Group GmbH (Germany)	4/30/2025		2,387,494	N/A
SEP Raptor Acquisition, Inc. (Loopio) (Canada)	3/31/2027		162,541	N/A
SEP Vulcan Acquisition, Inc. (Tasktop) (Canada)	3/16/2027		172,927	N/A
Sunland Asphalt & Construction, LLC	1/13/2022		39,271	N/A
Tempus, LLC (Epic Staffing)	2/5/2027		316,216	N/A
Thunder Purchaser, Inc. (Vector Solutions)	6/30/2028		788,551	N/A
Total Unfunded Balances		$	7,774,327	$	—

6. Other Related Party Transactions

The Company, the Advisor and affiliates may be considered related parties. From time to time, the Advisor advances payments to third parties on behalf of the Company and receives reimbursement from the Company. At June 30, 2021, amounts reimbursable to the Advisor totaled $58,235 as reflected in the Statements of Assets and Liabilities. At December 31, 2020, amounts reimbursable to the Advisor totaled $338,945, including $227,985 of equity offering costs payable and $110,960 in other payables to the Advisor.

Pursuant to an administration agreement between the Administrator and the Company (the “Administration Agreement”), the Administrator may be reimbursed for costs and expenses incurred by the Administrator for office space rental, office equipment and utilities allocable to the Company, as well as costs and expenses incurred by the Administrator or its affiliates relating to any administrative, operating, or other non-investment advisory services provided by the Administrator or its affiliates to the Company. For the six months ended June 30, 2021, $194,206 were allocated pursuant to the Administration Agreement.

7. Stockholders’ Equity and Dividends

As of June 30, 2021, the Company had received $301.0 million of equity commitments to purchase shares of the Company's common stock. As of June 30, 2021, $60.2 million (20% of total commitments) had been called. During the six months ended June 30, 2021, the Company issued 2,986,102 shares, with an average purchase price of $10.07 per share, and par value of $0.001 per share.

8. Subsequent Events

On August 4, 2021, the Company’s board of directors declared a third quarter dividend in the amount of $209,983, or approximately $0.035 per share, payable on September 15, 2021 to stockholders of record as of the close of business on September 1, 2021.

BlackRock Direct Lending Corp.

Notes to Financial Statements (Unaudited) (Continued)

June 30, 2021

9. Financial Highlights

The financial highlights below show the Company's results of operations for the six months ended June 30, 2021.

	Six Months Ended June 30, 2021
Per Common Share
Per share NAV at beginning of period	$	9.92

Investment operations:
Net investment income		0.11
Net realized and unrealized gain		0.12
Total from investment operations		0.23
Per share NAV at end of period	$	10.15

Total return based on net asset value: ⁽¹⁾		2.32	%

Shares outstanding at end of period		5,996,102

Ratios to average net asset value: ⁽²⁾
Net investment income		1.94	%
Expenses ⁽³⁾		2.94	%

Ending net asset value	$	60,884,866
Portfolio turnover rate		3.9	%
Weighted-average debt outstanding	$	94,018
Weighted-average interest rate on debt		12.0	%
Weighted-average number of shares of common stock		4,060,501
Average debt per share	$	0.02

(1)	Not annualized. Total return based on net asset value equals the change in net asset value per share during the period plus

declared dividends per share during the period, divided by the beginning net asset value per share at the beginning of the period.

(2)	Annualized.

(3)	Includes all company expenses including interest and other debt expenses.

(4)	Excludes unamortized debt issuance costs which are netted in the Statements of Assets and Liabilities.

BlackRock Direct Lending Corp.

Notes to Financial Statements (Unaudited) (Continued)

June 30, 2021

10. Senior Securities

Information about the Company's senior securities is shown in the following table as of June 30, 2021.

Class and Year

Total Amount

Outstanding⁽¹⁾

Asset

Coverage

Per Unit⁽²⁾

Involuntary

Liquidating

Preference

Per Unit⁽³⁾

Average

Market

Value Per

Unit⁽⁴⁾

Unsecured Notes

As of June 30, 2021

110,000

554,499

—

N/A

Information about the Company's senior securities is shown in the following table as of December 31, 2020.

Class and Year

Total Amount

Outstanding⁽¹⁾

Asset

Coverage

Per Unit⁽²⁾

Involuntary

Liquidating

Preference

Per Unit⁽³⁾

Average

Market

Value Per

Unit⁽⁴⁾

Unsecured Notes

As of December 31, 2020

110,000

272,472

—

N/A

(1)	Total amount of each class of senior securities outstanding at the end of the period presented.

(2)

The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our total assets, less all liabilities and indebtedness not represented by senior securities, divided by senior securities representing indebtedness. The asset coverage ratio with respect to indebtedness is multiplied by $1,000 to determine the Asset Coverage Per Unit.

(3)

The amount to which such class of senior security would be entitled upon the voluntary liquidation of the issuer in preference to any security junior to it. The “—” in this column indicates that the SEC expressly does not require this information to be disclosed for certain types of senior securities.

(4)	The Company's senior securities are not registered for public trading.

BlackRock Direct Lending Corp.

Schedule of Restricted Securities of Unaffiliated Issuers (Unaudited)

June 30, 2021

Investment

Acquisition

Date

Worldremit Group Limited (United Kingdom), Warrants to Purchase Series D Stock

2/11/2021

Razor Group GmbH (Germany), Warrants to Purchase Preferred Series A1 Shares

4/26/2021

BlackRock Direct Lending Corp.

Schedule of Restricted Securities of Unaffiliated Issuers

December 31, 2020

Investment

Acquisition

Date

N/A

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

The information contained in this section should be read in conjunction with our unaudited financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10-Q. Some of the statements in this report (including in the following discussion) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or the future performance or financial condition of BlackRock Direct Lending Corp. (the “Company,” “we,” “us” or “our”). The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:

•

our, or our portfolio companies’, future business, operations, operating results or prospects;

•

the return or impact of current and future investments;

•

the impact of a protracted decline in the liquidity of credit markets on our business;

•

the impact of fluctuations in interest rates on our business;

•

the impact of changes in laws or regulations governing our operations or the operations of our portfolio companies;

•

our contractual arrangements and relationships with third parties;

•

the general economy and its impact on the industries in which we invest;

•

the financial condition of and ability of our current and prospective portfolio companies to achieve their objectives;

•

our expected financings and investments;

•

the adequacy of our financing resources and working capital;

•

the ability of our investment advisor to locate suitable investments for us and to monitor and administer our investments;

•

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

•

the timing, form and amount of any dividend distributions; and

•

our ability to maintain our qualification as a RIC and as a business development company.

We use words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “could,” “may,” “plan” and similar words to identify forward-looking statements. The forward-looking statements contained in this quarterly report involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” in this report.

We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including annual reports on Form 10-K, registration statements on Form 10, quarterly reports on Form 10-Q and current reports on Form 8-K.

Overview

The Company is a Delaware corporation formed on October 12, 2020 and is an externally managed, closed-end, non-diversified management investment company. We have elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to achieve high risk-adjusted returns produced primarily from current income generated by investing primarily in senior secured corporate debt instruments. We seek to achieve our investment objective through investments in privately originated, performing senior secured debt primarily in North America-based companies with target enterprise values between $100 million and $1.5 billion. Performing debt is debt that at the time of investment is not defaulted or, in the view of the Advisor, distressed. The Company targets positions in first lien, second lien and unitranche debt, with a preference for floating-rate debt, which the Advisor believes provides flexibility to adapt to changing market conditions. The Company may invest in securities of any maturity and credit quality. Our investment activities will benefit from what we believe are the competitive advantages of our Advisor, including its diverse in-house skills, proprietary deal flow, and consistent and rigorous investment process focused on established, middle-market companies.

The Company intends to elect to be treated as a RIC for U.S. federal income tax purposes. As a RIC, the Company will not be taxed on its income to the extent that it distributes such income each year and satisfies other applicable income tax requirements.

To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements and timely distribute to our stockholders generally at least 90% of our investment company taxable income, as defined by the Internal

Revenue Code of 1986, as amended, for each year. Pursuant to this election, we generally will not have to pay corporate level taxes on any income that we distribute to our stockholders provided that we satisfy those requirements.

Investments

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity, the general economic environment and the competitive environment for the types of investments we make.

As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities and indebtedness of private U.S. companies, public U.S. operating companies whose securities are not listed on a national securities exchange or registered under the Securities Exchange Act of 1934, as amended, public domestic operating companies having a market capitalization of less than $250.0 million, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. We are also permitted to make certain follow-on investments in companies that were eligible portfolio companies at the time of initial investment but that no longer meet the definition. As of June 30, 2021, 84.2% of our total assets were invested in qualifying assets.

Revenues

We generate revenues primarily in the form of interest on the debt we hold. We also generate revenue from dividends on our equity interests, capital gains on the disposition of investments, and certain lease, fee, and other income. Our investments in fixed income instruments generally have an expected maturity of three to five years, although we have no lower or upper constraint on maturity. Interest on our debt investments is generally payable quarterly or semi-annually. Payments of principal of our debt investments may be amortized over the stated term of the investment, deferred for several years or due entirely at maturity. In some cases, our debt investments and preferred stock investments may defer payments of cash interest or dividends or PIK. Any outstanding principal amount of our debt investments and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of prepayment fees, commitment, origination, structuring or due diligence fees, end-of-term or exit fees, fees for providing significant managerial assistance, consulting fees and other investment related income.

Expenses

The Company is responsible for paying the compensation of the Advisor. In addition, the Company is generally responsible for all operating expenses of the Company, and shall pay, and shall reimburse the Advisor or the Administrator and their respective affiliates for, all fees, costs, expenses, liabilities and obligations of the Company relating or attributable to:

•

our organization;

•

calculating our net asset value (including the cost and expenses of any independent valuation firms);

•

interest payable on debt, if any, incurred to finance our investments;

•

the base management fee and any incentive fee;

•

dividends and distributions on our shares of common stock;

•

administration fees payable under the administration agreement;

•

fees payable to third parties relating to, or associated with, making investments;

•

transfer agent and custodial fees;

•

registration fees;

•

taxes;

•

director fees and expenses;

•

costs of preparing and filing reports or other documents with the SEC;

•

costs of any reports, proxy statements or other notices to our stockholders, including printing costs;

•

our fidelity bond;

•

directors and officers/errors and omissions liability insurance, and any other insurance premiums;

•

indemnification payments;

•

direct costs and expenses of administration, including audit and legal costs; and

•

all other expenses reasonably incurred by us and the Administrator in connection with administering our business, such as the allocable portion of overhead under the administration agreement, including rent and other allocable portions of the cost of certain of our officers and their respective staffs.

The investment management agreement provides that the base management fee be calculated at an annual rate of 0.90% of our total assets (excluding cash and cash equivalents) on the last day of each preceding calendar quarter and is payable quarterly in arrears. For purposes of calculating the base management fee, “total assets” is determined without deduction for any borrowings or other liabilities. No base management fee is payable for the period from the date of the initial drawdown purchase through the end of the first calendar quarter after the initial drawdown purchase. Subsequently, the base management fee is calculated based on the value of our total assets (excluding cash and cash equivalents) at the end of the most recently completed calendar quarter. The base management fee for any partial quarter is appropriately prorated.

Additionally, the investment management agreement provides that the Advisor or its affiliates may be entitled to incentive fee under certain circumstances. According to the terms of such agreement, the incentive fee equals the sum of (1) 12.5% of all ordinary income and (2) 12.5% of all net realized capital gains (net of any net unrealized capital depreciation) less ordinary income incentive fee and capital gains incentive fee previously paid. However, incentive fee will only be paid to the extent the cumulative total return of the Company after incentive fee and including such payment would equal or exceed a 6% annual return on daily weighted-average contributed common equity. The determination of incentive fee is subject to limitations under the 1940 Act and the Advisers Act.

Critical accounting policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. Management considers the following critical accounting policies important to understanding the financial statements. In addition to the discussion below, our critical accounting policies are further described in the notes to our financial statements.

Valuation of portfolio investments

We value our portfolio investments at fair value based upon the principles and methods of valuation set forth in policies adopted by our board of directors. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Market participants are buyers and sellers in the principal (or most advantageous) market for the asset that (i) are independent of us, (ii) are knowledgeable, having a reasonable understanding about the asset based on all available information (including information that might be obtained through due diligence efforts that are usual and customary), (iii) are able to transact for the asset, and (iv) are willing to transact for the asset or liability (that is, they are motivated but not forced or otherwise compelled to do so).

Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. We generally obtain market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker-dealers or market makers. However, short term debt investments with original maturities of generally three months or less are valued at amortized cost, which approximates fair value. Debt and equity securities for which market quotations are not readily available, which is the case for many of our investments, or for which market quotations are deemed not to represent fair value, are valued at fair value using a consistently applied valuation process in accordance with our documented valuation policy that has been reviewed and approved by our board of directors, who also approve in good faith the valuation of such securities as of the end of each quarter. Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from the values that we may ultimately realize. In addition, changes in the market environment and other events may have differing impacts on the market quotations used to value some of our investments than on the fair values of our investments for which market quotations are not readily available. Market quotations may be deemed not to represent fair value in certain circumstances where we believe that facts and circumstances applicable to an issuer, a seller or purchaser, or the market for a particular security cause current market quotations to not reflect the fair value of the security. Examples of these events could include cases where a security trades infrequently causing a quoted purchase or sale price to become stale, where there is a “forced” sale by a distressed seller, where market quotations vary substantially among market makers, or where there is a wide bid-ask spread or significant increase in the bid-ask spread.

The valuation process approved by our board of directors with respect to investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value is as follows:

•

The investment professionals of the Advisor provide recent portfolio company financial statements and other reporting materials to independent valuation firms approved by our board of directors.

•

Such firms evaluate this information along with relevant observable market data to conduct independent appraisals each quarter, and their preliminary valuation conclusions are documented and discussed with senior management of the Advisor.

•

The fair value of smaller investments comprising in the aggregate less than 5% of our total capitalization may be determined by the Advisor in good faith in accordance with our valuation policy without the employment of an independent valuation firm.

•

The audit committee of the board of directors discusses the valuations, and the board of directors approves the fair value of the investments in our portfolio in good faith based on the input of the Advisor, the respective independent valuation firms (to the extent applicable) and the audit committee of the board of directors.

Those investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued utilizing one or more methodologies, including the market approach, the income approach, or in the case of recent investments, the cost approach, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in determining the fair value of our investments include, as relevant and among other factors: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, our principal market (as the reporting entity) and enterprise values.

When valuing all of our investments, we strive to maximize the use of observable inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances.

Our investments may be categorized based on the types of inputs used in their valuation. The level in the GAAP valuation hierarchy in which an investment falls is based on the lowest level input that is significant to the valuation of the investment in its entirety. Investments are classified by GAAP into the three broad levels as follows:

Level 1 — Investments valued using unadjusted quoted prices in active markets for identical assets.

Level 2 — Investments valued using other unadjusted observable market inputs, e.g. quoted prices in markets that are not active or quotes for comparable instruments.

Level 3 — Investments that are valued using quotes and other observable market data to the extent available, but which also take into consideration one or more unobservable inputs that are significant to the valuation taken as a whole.

As of June 30, 2021, none of our investments were categorized as Level 1, 6.0% were categorized as Level 2 and 94.0% were Level 3 investments valued based on valuations by independent third-party sources.

As of December 31, 2020, 100% of our investments were categorized as Level 2.

Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on the financial statements.

Revenue recognition

prepayment fees and commitment fees on broken deals, are recognized as earned. Prepayment fees and similar income due upon the early repayment of a loan or debt security are recognized when earned and are included in interest income.

Certain of our debt investments are purchased at a discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general market factors that influence the financial markets as a whole. Discounts on the acquisition of corporate bonds are generally amortized using the effective-interest or constant-yield method assuming there are no questions as to collectability. When principal payments on a loan are received in an amount in excess of the loan’s amortized cost, the excess principal payments are recorded as interest income.

Net realized gains or losses and net change in unrealized appreciation or depreciation

We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Realized gains and losses are computed using the specific identification method. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

Portfolio and investment activity

During the three months ended June 30, 2021, we invested approximately $32.9 million in senior secured loans in 16 new portfolio companies. Additionally, we received approximately $0.9 million in proceeds from sales or repayments of investments during the three months ended June 30, 2021.

During the six months ended June 30, 2021, we invested approximately $52.2 million in senior secured loans in 28 new portfolio companies. Additionally, we received approximately $0.9 million in proceeds from sales or repayments of investments during the six months ended June 30, 2021.

At June 30, 2021, our investment portfolio of $53.8 million (at fair value) consisted of 29 portfolio companies and was invested 99.8% in debt investments, primarily in senior secured debt. In aggregate, our investment portfolio was invested 99.8% in senior secured loans and 0.2% in equity investments. Our average portfolio company investment at fair value was approximately $1.9 million. Our largest portfolio company investment by value was approximately 7.5% of our portfolio and our five largest portfolio company investments by value comprised approximately 30.7% of our portfolio at June 30, 2021.

During the period from November 30, 2020 to December 31, 2020, we invested approximately $2.0 million, comprised of one new investment in one senior secured loan.

The industry composition of our portfolio at fair value at June 30, 2021 was as follows:

Industry	Percent of Total Investments
Diversified Financial Services		15.3	%
Software		14.7	%
Professional Services		13.0	%
Healthcare Providers & Services		9.6	%
IT Services		7.6	%
Health Care Technology		7.4	%
Internet Software & Services		5.7	%
Road and Rail		5.6	%
Beverages		3.9	%
Trading Companies & Distributors		3.6	%
Diversified Consumer Services		3.0	%
Construction & Engineering		2.8	%
Automobiles		2.3	%
Distributors		1.8	%
Building Products		1.6	%
Diversified Telecommunication Services		1.0	%
Insurance		0.9	%
Media		0.2	%
Total		100.0	%

The weighted average effective yield of our debt and total portfolio was 8.7% at June 30, 2021 and 9.5% at December 31, 2020. At June 30, 2021, 100% of debt investments in our portfolio bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate, and no debt investments bore interest at fixed rates. The percentage of floating rate debt investments in our portfolio that were subject to an interest rate floor was 94.2% at June 30, 2021. No debt investments in the portfolio were on non-accrual status as of June 30, 2021. At December 31, 2020, 100% of debt investments in our portfolio bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate, and no debt investments bore interest at fixed rates. The percentage of floating rate debt investments in our portfolio that were subject to an interest rate floor was 100% at December 31, 2020. No debt investments in the portfolio were on non-accrual status as of December 31, 2020.

Results of operations

Investment income

Investment income totaled $724,664 for the three months ended June 30, 2021, of which all was attributable to interest and fees on our debt investments.

Investment income totaled $995,254 for the six months ended June 30, 2021, of which $965,254 was attributable to interest and fees on our debt investments and $30,000 to other income.

Expenses

Total operating expenses totaled $426,838 for the three months ended June 30, 2021, comprised of $194,206 in administrative expenses, $95,121 in professional fees, $45,298 in management fees, $17,516 in interest expense and other debt expenses, and $74,697 in other expenses.

Total operating expenses totaled $599,030 for the six months ended June 30, 2021, comprised of $194,206 in administrative expenses, $198,878 in professional fees, $50,142 in management fees, $20,904 in interest and other debt expenses, and $134,900 in other expenses.

Net investment income

Net investment income was $297,826 for the three months ended June 30, 2021.

Net investment income was $396,224 for the six months ended June 30, 2021.

Net realized and unrealized gain or loss

There was no net realized gain or loss for the three and six months ended June 30, 2021.

For the three months ended June 30, 2021, the change in net unrealized appreciation/depreciation was $369,001, resulting from spread tightening across our portfolio.

For the six months ended June 30, 2021, the change in net unrealized appreciation/depreciation was $557,446, resulting from spread tightening across our portfolio.

Incentive fee

There were no incentive fees paid or accrued as our performance did not exceed the cumulative total return threshold for the three and six months ended June 30, 2021.

Income tax expense, including excise tax

The Company intends to elect to be treated as a RIC under Subchapter M of the Internal Revenue Code (the "Code”) and operates in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Company must, among other things, timely distribute to its stockholders generally at least 90% of its investment company taxable income, as defined by the Code, for each year. The Company has made and intends to continue to make the requisite distributions to its stockholders which will generally relieve the Company from U.S. federal income taxes.

Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year dividend distributions from such current year taxable income into the next tax year and pay a 4% excise tax on such

income. Any excise tax expense is recorded at year end as such amounts are known. No excise tax was incurred for the three and six months ended June 30, 2021.

Net increase in net assets resulting from operations

The net increase in net assets applicable to common stockholders resulting from operations was $666,827 for the three months ended June 30, 2021 and $953,670 for the six months ended June 30, 2021.

Liquidity and capital resources

Our liquidity and capital resources are expected to be generated primarily through the initial private placement of shares of the Company's common stock, the net proceeds from debt offered by the Company, and cash flows from operations, including investments sales and repayments and income earned from investments and cash equivalents. The primary uses of cash have been investments in portfolio companies, payments to service our debt and other general corporate purposes.

The following table summarizes the total shares issued and proceeds received in connection with the Company’s private placement for the six months ended June 30, 2021.

Shares Issued		2,986,102
Average Price Per Share	$	10.07
Proceeds*	$	30,069,274

*	Net of offering costs of $30,726

Total debt outstanding as of June 30, 2021 was comprised of unsecured promissory notes with a principal amount of $110,000, at rate of 12% per annum, and a maturity date of December 31, 2050.

On June 18, 2021, the Company entered into a three-year revolving line of credit with Sumitomo Mitsui Banking Corporation as administrative agent, lead arranger and as a lender, with a capacity of up to $75 million, secured by the unfunded equity commitments of the Company’s stockholders (“The Capital Call Facility”). The Capital Call Facility matures on June 16, 2023. Interest on the Capital Call Facility accrues at a rate equal to LIBOR plus 1.95% per annum, or, for short-term draws, a rate equal to the Prime Rate plus 0.95%, the Federal Funds Rate plus 1.45%, or one-month LIBOR plus 1.95%, whichever is highest. Commitment fees on the Capital Call Facility accrue at a rate of 0.225% per annum on the undrawn amount of the commitment. The Capital Call Facility is carried at cost. At June 30, 2021, there were no amounts outstanding under the Capital Call Facility.

Under Section 61(a) of the 1940 Act, prior to March 23, 2018, a BDC was generally not permitted to issue senior securities unless after giving effect thereto the BDC met a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which includes all borrowings of the BDC, of at least 200%. On March 23, 2018, the Small Business Credit Availability Act (“SBCAA”) was signed into law, which among other things, amended Section 61(a) of the 1940 Act to add a new Section 61(a)(2) that reduces the asset coverage requirement applicable to BDCs from 200% to 150% so long as the BDC meets certain disclosure requirements and obtains certain approvals. The reduced asset coverage requirement would permit a BDC to have a ratio of total consolidated assets to outstanding indebtedness of 2:1 as compared to a maximum of 1:1 under the 200% asset coverage requirement. The Company does not currently intend to seek approval for the modified asset coverage ratio election set forth in Section 61(a)(2) of the 1940 Act, as amended by the SBCAA. As of June 30, 2021, the Company’s asset coverage ratio was 55,450%.

Net cash used in operating activities during the six months ended June 30, 2021 was $42.5 million, consisting primarily of the settlement of acquisitions of investments (net of dispositions) of $42.8 million, offset by net investment income (net of non-cash income and expenses) of approximately $0.3 million.

Net cash provided by financing activities was $29.4 million during the six months ended June 30, 2021, consisting of $30.1 million proceeds from shares of common stock sold, partially offset by the payment of $0.3 million of equity offering costs and $0.4 of debt issuance costs.

At June 30, 2021, we had $17.1 million in cash and cash equivalents.

Contractual obligations

We have entered into several contracts under which we have future commitments. Pursuant to an investment management agreement, the Advisor manages our day-to-day operations and provides investment advisory services to us. Payments under the investment management agreement are equal to a percentage of the value of our total assets (excluding cash and cash equivalents) and

an incentive fee, plus reimbursement of certain expenses incurred by the Advisor. Under our administration agreement, the Administrator provides us with administrative services, facilities and personnel. Payments under the administration agreement are equal to an allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to us, and may include rent and our allocable portion of the cost of certain of our officers and their respective staffs. We are responsible for reimbursing the Advisor for due diligence and negotiation expenses, fees and expenses of custodians, administrators, transfer and distribution agents, counsel and directors, insurance, filings and registrations, proxy expenses, expenses of communications to investors, compliance expenses, interest, taxes, portfolio transaction expenses, costs of responding to regulatory inquiries and reporting to regulatory authorities, costs and expenses of preparing and maintaining our books and records, indemnification, litigation and other extraordinary expenses and such other expenses as are approved by the directors as being reasonably related to our organization, offering, capitalization, operation or administration and any portfolio investments, as applicable. The Advisor is not responsible for any of the foregoing expenses and such services are not investment advisory services under the 1940 Act. The Company may terminate each of the Investment Management Agreement and Administration Agreement without penalty upon not less than 60 days’ written notice to the other party and the Advisor and the Administrator may terminate the Investment Management Agreement or Administration Agreement, as applicable, without penalty upon not less than 120 days’ written notice to the other party.

Distributions

Our quarterly dividends and distributions to common stockholders are recorded on the ex-dividend date. Distributions are declared considering our estimate of annual taxable income available for distribution to stockholders and the amount of taxable income carried over from the prior year for distribution in the current year. We do not have a policy to pay distributions at a specific level and expect to continue to distribute substantially all of our taxable income. We cannot assure stockholders that they will receive any distributions or distributions at a particular level.

There were no dividends declared for the six months ended June 30, 2021.

We intend to elect to be taxed as a RIC under Subchapter M of the Code. In order to maintain favorable RIC tax treatment, we must distribute annually to our stockholders at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In order to avoid certain excise taxes imposed on RICs, we must distribute during each calendar year an amount at least equal to the sum of:

•

98% of our ordinary income (not taking into account any capital gains or losses) for the calendar year;

•

98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for the one-year period generally ending on October 31 of the calendar year; and

•

certain undistributed amounts from previous years on which we paid no U.S. federal income tax.

We may, at our discretion, carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. If we choose to do so, all other things being equal, this would increase expenses and reduce the amounts available to be distributed to our stockholders. We will accrue excise tax on estimated taxable income as required. In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment.

We may not be able to achieve operating results that will allow us to make dividends and distributions at a specific level or to increase the amount of these dividends and distributions from time to time. Also, we may be limited in our ability to make dividends and distributions due to the asset coverage test applicable to us as a BDC under the 1940 Act and due to provisions in our existing and future credit facilities. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of favorable RIC tax treatment. In addition, in accordance with U.S. generally accepted accounting principles and tax regulations, we include in income certain amounts that we have not yet received in cash, such as PIK interest, which represents contractual interest added to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a RIC and may be subject to an excise tax.

In order to satisfy the annual distribution requirement applicable to RICs, we have the ability to pay a large portion of a dividend in shares of our common stock instead of in cash. As long as a sufficient portion of such dividend is paid in cash (which portion can generally be as low as 20%) and certain requirements are met, the entire distribution would be treated as a dividend for U.S. federal income tax purposes.

Related Parties

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

•

The Company has entered into an investment management agreement with the Advisor.

•

The Administrator provides us with administrative services necessary to conduct our day-to-day operations. For providing these services, facilities and personnel, the Administrator may be reimbursed by us for expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our officers and the Administrator’s administrative staff and providing, at our request and on our behalf, significant managerial assistance to our portfolio companies to which we are required to provide such assistance. The Administrator is an affiliate of the Advisor.

•

We have entered into a royalty-free license agreement with BlackRock and the Advisor, pursuant to which each of BlackRock and the Advisor has agreed to grant us a non-exclusive, royalty-free license to use the name "BlackRock".

The Advisor and its affiliates, employees and associates currently do and in the future may manage other funds and accounts. The Advisor and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds or accounts. Accordingly, conflicts may arise regarding the allocation of investments or opportunities among us and those accounts. In general, the Advisor will allocate investment opportunities pro rata among us and the other funds and accounts (assuming the investment satisfies the objectives of each) based on the amount of committed capital each then has available. The allocation of certain investment opportunities in private placements is subject to independent director approval pursuant to the terms of the co-investment exemptive order applicable to us. In certain cases, investment opportunities may be made other than on a pro rata basis. For example, we may desire to retain an asset at the same time that one or more other funds or accounts desire to sell it or we may not have additional capital to invest at a time the other funds or accounts do. If the Advisor is unable to manage our investments effectively, we may be unable to achieve our investment objective. In addition, the Advisor may face conflicts in allocating investment opportunities between us and certain other entities that could impact our investment returns. While our ability to enter into transactions with our affiliates is restricted under the 1940 Act, we have received an exemptive order from the SEC permitting certain affiliated investments subject to certain conditions. As a result, we may face conflict of interests and investments made pursuant to the exemptive order conditions which could in certain circumstances affect adversely the price paid or received by us or the availability or size of the position purchased or sold by us.

Recent Developments

On June 23, 2021, the Company filed a Form 8-K announcing that the Company entered into a three-year revolving line of credit with Sumitomo Mitsui Banking Corporation as administrative agent, lead arranger and as a lender, with a capacity of up to $75 million, secured by the unfunded equity commitments of the Company’s stockholders, subject to leverage and borrowing base restrictions, with a stated maturity date of June 16, 2023.

From July 1, 2021 through July 30, 2021, the Company has invested approximately $5.4 million primarily in 4 senior secured loans with a combined effective yield of approximately 8.4%.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. At June 30, 2021, 100% of debt investments in our portfolio bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate. The interest rates on such investments generally reset by reference to the current market index after one to six months. At June 30, 2021, the percentage of floating rate debt investments in our portfolio that were subject to an interest rate floor was 94.2%. Floating rate investments subject to a floor generally reset by reference to the current market index after one to six months only if the index exceeds the floor.

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. We assess our portfolio companies periodically to determine whether such companies will be able to continue making interest payments in the event that interest rates increase. There can be no assurances that the portfolio companies will be able to meet their contractual obligations at any or all levels of increases in interest rates.

Based on our Statements of Assets and Liabilities as of June 30, 2021, the following table shows the annual impact on net investment income (excluding the related incentive fee impact) of base rate changes in interest rates (considering interest rate floors

for variable rate instruments and the fact that our assets and liabilities may not have the same base rate period as assumed in this table) assuming no changes in our investment and borrowing structure:

Basis Point Change ($ in millions, except per share data)	Net Investment Income			Net Investment Income Per Share
Up 300 basis points	$	1,361,796		$	0.23
Up 200 basis points		740,442			0.12
Up 100 basis points		119,087			0.02
Down 100 basis points		(4,968	)		(0.00	)
Down 200 basis points		(4,968	)		(0.00	)
Down 300 basis points		(4,968	)		(0.00	)

Item 4. Controls and Procedures

As of the period covered by this report, we, including our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on our evaluation, our management, including the chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective in timely alerting management, including the chief executive officer and chief financial officer, of material information about us required to be included in our periodic SEC filings. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, are based upon certain assumptions about the likelihood of future events and can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. There has not been any change in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Part II – Other Information

Item 1.

Legal Proceedings

Although we may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise, as of June 30, 2021, we are currently not a party to any pending material legal proceedings.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in our most recent annual report on Form 10-K, as filed with the Securities and Exchange Commission on March 8, 2021, except as below.

A cyber-attack or a failure to implement effective information and cybersecurity policies, procedures and capabilities could disrupt operations and cause financial losses that may have a material adverse effect on our or a portfolio company's business, results of operations and financial condition.

We are dependent on the effectiveness of the information and cybersecurity policies, procedures and capabilities maintained by our Advisor and other service providers to protect their computer and telecommunications systems and the data that reside on or are transmitted through them. Our portfolio companies similarly are dependent on the effectiveness of the information and cybersecurity policies that they and their service providers maintain. An externally caused information security incident, such as a hacker attack, ransomware attack, virus, phishing scam or worm, or an internally caused issue, such as failure to control access to sensitive systems, could materially interrupt business operations or cause disclosure or modification of sensitive or confidential or competitive information. Moreover, the increased use of mobile and cloud technologies could heighten these and other operational risks as certain aspects of the security of such technologies may be complex and unpredictable. Reliance on mobile or cloud technology or any failure by mobile technology and cloud service providers to adequately safeguard their systems and prevent cyber-attacks could disrupt our operations, the operations of a portfolio company or the operations of our or their service providers and result in misappropriation, corruption or loss of personal, confidential or proprietary information or the inability to conduct ordinary business operations. In addition, there is a risk that encryption and other protective measures may be circumvented, particularly to the extent that new computing technologies increase the speed and computing power available.

There have been a number of recent highly publicized cases of companies reporting the unauthorized disclosure of client or customer information, as well as cyber-attacks involving the dissemination, theft and destruction of corporate information or other assets, as a result of failure to follow procedures by employees or contractors or as a result of actions by third parties, including actions by terrorist organizations and hostile foreign governments.

Our Advisor has been the target of attempted cyber-attacks, as well as the co-opting of its brand to create fraudulent websites, and must continuously monitor and develop its systems to protect its technology infrastructure and data from misappropriation or corruption, as the failure to do so could disrupt our Advisor’s operations and cause financial losses. Although our Advisor takes protective measures and endeavors to strengthen its computer systems, software, technology assets and networks to prevent and address potential cyber-attacks, there can be no assurance that any of these measures prove effective. Moreover, due to the complexity and interconnectedness of our Advisor’s systems, the process of upgrading or patching our Advisor’s protective measures could itself create a risk of security issues or system disruptions for the Company, as well as for external stakeholders who rely upon, or have exposure to, our Advisor’s systems.

In addition, due to our Advisor’s and other service providers’ interconnectivity with third-party vendors, central agents, exchanges, clearing houses and other financial institutions, our Advisor and other service providers may be adversely affected if any of them are subject to a successful cyber-attack or other information security event, including those arising due to the use of mobile and cloud technologies.

Our Advisor and other service providers also routinely transmit and receive personal, confidential or proprietary information by email and other electronic means. Our Advisor and other service providers collaborate with clients, vendors and other third parties to develop secure transmission capabilities and protect against cyber-attacks. However, our Advisor or our other service providers cannot ensure that they or such third parties have all appropriate controls in place to protect the confidentiality of such information.

Our portfolio companies also have been the target of cyber-attacks, including ransomware attacks, that have affected their ability to conduct ordinary business operations or may subject them to liability to third-party suppliers, vendors or customers. Such cyber-attacks may materially and adversely affect their business results and the value of our investment in them.

Any information security incident or cyber-attack against our Advisor, our other service providers or third parties with whom they are connected or our portfolio companies, including any theft, interception, mishandling or misuse of personal, confidential or proprietary corporate information or other assets, could result in material financial loss, loss of competitive position, regulatory fines and/or sanctions, breach of client contracts, reputational harm or legal liability, which, in turn, may have a material adverse effect on our business, results of operations and financial condition.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

None.

Item 5.

Other Information

None

Item 6.

Exhibits

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:

Number		Description
3.1		Certificate of Incorporation⁽¹⁾
3.2		By-Laws⁽¹⁾
4.1		Form of Subscription Agreement⁽²⁾
4.2		Description of Securities⁽³⁾
10.1		Revolving Credit Agreement, dated as of June 18, 2021, by and between BlackRock Direct Capital Corp., as the borrower, and Sumitomo Mitsui Banking Corporation, as the administrative agent, lead arranger and a lender⁽⁴⁾
14.1		Code of Ethics of Registrant and the Manager ⁽¹⁾
31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934*
31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934*
32.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U. S. C. 1350)*

*	Filed herewith.

(1)	Incorporated by reference to the Company’s Registration Statement on Form 10 (File No. 000-56231) filed on December 10, 2020.

(2)	Incorporated by reference to Amendment No. 1 to the Company’s Registration Statement on Form 10 (File No. 000-56231) filed on January 25, 2021.

(3)	Incorporated by reference to Exhibit 4.2 to the Company’s Form 10-K filed on March 8, 2021.

(4)	Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on June 23, 2021.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

BlackRock Direct Lending Corp.


Date: August 4, 2021	By:	/s/ Nik Singhal
	Name:	Nik Singhal
	Title:	Chief Executive Officer

Date: August 4, 2021	By:	/s/ Erik L. Cuellar
	Name:	Erik L. Cuellar
	Title:	Chief Financial Officer

BlackRock Direct Lending Corp. - FORM 10-Q - August 4, 2021

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