Ares Capital Q3 Earnings: 3 Key Takeaways for Long-Term Investors
On its third-quarter 2026 earnings call, held on Oct. 27, 2026, Ares Capital (ARCC -0.70%) announced an agreement to acquire MidCap Financial Investment Corporation. Scale drives direct lending, and adding 200 portfolio companies deepens the lender’s origination advantage. Three things management said stand out.
1. Acquiring MidCap Financial Expands Platform Scale and Borrower Reach
Management agreed to acquire MidCap Financial Investment Corporation, adding over 200 portfolio companies to its roster. Adding these relationships expands the company’s middle-market footprint and boosts future deal flow for its business development company (BDC) portfolio.
The transaction is expected to be modestly accretive to core earnings per share, providing attractive financial benefits from the outset while also creating strategic value that we believe extends well beyond the initial economics.
— Kort Schnabel, Chief Executive Officer
2. Deal Screening Volume Accelerates Despite Slower Quarterly Closings
Extended transaction timelines delayed deal completions during the third quarter, but underwriting activity continues to build. Expanding deal reviews give management greater visibility into investment opportunities as the fourth quarter approaches.
In the third quarter, we reviewed more transactions than we did 1 year ago. And year-to-date, we have reviewed approximately 25% more transactions than in the prior year.
— Kort Schnabel, Chief Executive Officer
3. Low-Cost Debt Issuance Strengthens Capital Advantage
Management locked in lower borrowing rates by tapping the unsecured bond market and resetting its securitization facility. Lower interest costs widen the competitive moat between the lender and its direct lending peers.
In September, we issued $750 million of 7-year unsecured notes due in 2033 at a spread of 185 basis points over Treasuries, representing the lowest new issue spread and longest duration in the BDC sector during the quarter.
— Scott Lem, Chief Financial Officer
Looking Ahead
Direct lending favors scaled balance sheets, and management isn’t hiding its appetite for capital deployment. Broad origination channels support investment activity while management maintains underwriting discipline across volatile markets.
As we progress through the fourth quarter, we have substantial liquidity, extensive access to financing, a large and diversified incumbent portfolio, and the connectivity of the broader Ares platform, leaving us well-positioned to pursue opportunities as they emerge.
— Kort Schnabel, Chief Executive Officer
The dividend is an important part of investing in Ares Capital for income seekers. It also appears to be safe.
With respect to our quarterly dividend, we continue to believe ARCC’s current regular dividend appropriately reflects the underlying earnings power of the business.
— Kort Schnabel, Chief Executive Officer
The Motley Fool has positions in and recommends Ares Capital. The Motley Fool has a disclosure policy.
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