Key Highlights

  • Investment income totaled $8.7 million, a step down compared with $10.6 million twelve months earlier.
  • Net Investment income held close to $2.4 million, almost identical to the year-earlier figure.
  • Operations reduced net Assets by $4.2 million, which is $0.30 a share, far less than the $22.0 million cut recorded a year earlier.
  • NAV per share closed Sep 30 at $7.40, against $8.07 on Dec 31, 2025.
  • The board authorized a fourth-quarter payment of $0.25 a share, scheduled for Dec 31, 2026.

Shrinking Loan Book Pulls Investment Income Lower as Coupons Climb

Great Elm Capital (NASDAQ:GECC) put out third-quarter numbers covering the stretch ending Sep 30, 2026, with the filing bearing the Nov 2, 2026 date. Investment income came to $8.7 million, or $0.63 a share, against $10.6 million, equal to $0.86 a share, a year earlier. Net investment income came in near $2.4 million, almost matching the prior-year quarter.

Operating as a business development company, the firm lends to middle-market borrowers through senior secured Debt and also holds specialty finance Equity and CLO securities. Interest income shrank to $5.5 million, compared with $7.6 million, as principal in the debt portfolio dropped from $224.1 million to around $175.4 million. Yet the mean coupon moved higher, reaching 11.2% versus 10.8%.

Dividend income grew to $2.6 million, up from $2.1 million, with $2.2 million of that coming from the CLO joint venture, which had paid $1.5 million before.

Lower Borrowing Costs Trim Expenses by 18% While Markdowns Weigh on Net Assets

Net expenses came to $6.5 million, an 18% (calculated) reduction from $8.0 million a year ago. Borrowing charges fell to $3.7 million versus $5.5 million, and advisory fees declined to $1.0 million against $1.3 million. Incentive fees of $0.6 million were booked this year, compared with none in the prior-year period.

Realized losses netted to $2.2 million, reflecting a $4.1 million hit on selling one equity holding. Net unrealized markdowns totaled $4.4 million, including roughly $3.3 million at the CLO venture and $1.3 million at the specialty finance unit.

Operations pulled net assets down by $4.2 million, or $0.30 per share, a markedly smaller decline than the $22.0 million, or $1.79 per share, seen a year earlier. For the nine-month span, net assets increased $1.5 million, or $0.10 per share, after the external manager waived incentive fees built up to June 30, 2026.

NAV Slides to $7.40 as Note Repurchases and a Smaller Balance Sheet Take Hold

NAV per share at Sep 30, 2026 was $7.40, below the $8.07 recorded on Dec 31, 2025. Net assets were $102.7 million, down from $112.9 million. Investments in total shrank to $251.0 million, a decline from $331.1 million, and assets overall slipped to $256.7 million from $340.8 million.

Liabilities totaled $154.0 million at quarter end, versus $227.8 million earlier. Through nine months, $45.5 million went toward buying back and redeeming notes, among them the 5.875% series maturing in 2026 and a portion of the 8.50% series due 2029. Asset coverage stood near 166.3%.

Share Buybacks used $0.5 million, while payouts to holders consumed $11.1 million.

Fourth-Quarter Payout of $0.25 Exceeds Third-Quarter Net Investment Income Per Share

Directors approved a $0.25 per-share fourth-quarter distribution, paid in cash on Dec 31, 2026 to shareholders of record on Dec 15, 2026 and sourced from distributable earnings. Third-quarter net investment income approximated $0.17 per share (calculated), a figure under the payout level. The company stated it holds enough Liquidity for a minimum of 12 months ahead, and December's payment is the next dated event.