Lord Abbett Private Credit Fund Annual Report - How They Did This Year

Hey there! Think of this as a friendly chat about how the Lord Abbett Private Credit Fund has been doing. We'll break down their annual report. You'll get a clear picture of their performance. This will show what it means for you. No fancy finance talk, just plain English.

This guide is based on their annual report for the fiscal period ending December 31, 2025.

1. What does this company do and how did they perform this year?

The Lord Abbett Private Credit Fund is a Business Development Company (BDC). BDCs lend money to smaller, growing companies. Big banks often don't lend to these companies. BDCs are regulated investment companies (RICs). They help private businesses get money. They do this by offering loans and ownership stakes. They usually pay out most of their earnings to shareholders. This avoids corporate taxes.

This fund makes senior secured loans. They lend directly to U.S. middle market companies. "Directly originated" means they find and set up these loans. They don't buy them from others. This lets them negotiate terms directly. They also check things carefully and build strong ties with borrowers. Their loans are "senior secured." This means they get paid first if a company fails. Specific assets back these loans. This position usually means less risk. It's safer than other types of loans or ownership stakes. They mainly lend to private U.S. companies. They also lend to smaller public companies. These public companies have a market value under $250 million. U.S. middle market companies usually have $10 million to $1 billion in yearly sales.

The fund started in November 2023. It became a BDC in October 2024. So, 2025 was its first full year as a BDC.

It's a "perpetual-life BDC." This means it runs indefinitely. It doesn't have a fixed end date like other funds. This gives them flexibility to invest patiently. They can use different market conditions to their advantage. It may also reduce forced asset sales during tough times. This avoids meeting redemption requests or fund maturity dates. This structure fits private credit investments well. These investments are not easy to sell quickly. It allows for a long-term investment view.

How they performed this year: BDCs usually make money from interest on their loans. They also earn fees for setting up loans. Sometimes they gain from selling ownership stakes. Their main goal is to give shareholders steady income. They do this through regular payments.

2. Financial performance - revenue, profit, growth metrics

BDCs like this fund make money from loan interest. Many of their loans have variable rates. These rates change with benchmarks like SOFR. They also earn fees for setting up loans. Other income comes from changing loan terms or early payoffs. Profit, or Net Investment Income (NII), is calculated this way: Subtract operating costs from total investment income. Operating costs include management fees, admin fees, and interest on borrowed money. Key growth measures for BDCs include: growing their investment portfolio. Increasing their Net Asset Value (NAV) per share. Consistently covering and growing their shareholder payments.

Lord Abbett & Co. LLC manages this fund. This larger company handles $247.4 billion across various accounts as of December 31, 2025. This highlights the manager's size and experience.

3. Major wins this year

• Becoming a BDC: They became a regulated Business Development Company in October 2024. This was a big step for their operations. This BDC status gives them a regulated structure. It lets them raise money from more investors. They can also operate as a RIC for tax purposes. This means most income passes to shareholders. The company avoids corporate taxes.
• Perpetual-Life Structure: They adopted a "perpetual-life" model. They believe this allows patient, opportunistic investing. It may reduce forced asset sales during downturns. This avoids meeting fund maturity dates or redemption requests. This structure helps with private credit assets. These assets are not easy to sell quickly. It matches the fund's life with these long-term loans.
• Attracting Investors: They keep offering shares to "accredited investors." (These are individuals with over $1 million net worth, or high income). This shows they are raising money. They want to grow their investment portfolio. Raising capital like this is vital for a growing BDC.

4. Financial health - cash, debt, liquidity

The fund mentions using borrowed money for investments. This could impact future results. BDCs often use borrowed money, or leverage. This aims to boost shareholder returns. They usually get credit lines or issue bonds. Leverage can increase returns, but it also raises risk. They must pay interest on borrowed money. This is true even if investments perform poorly. BDCs have rules about how much they can borrow. Their assets must be 1.5 to 2 times their total debt. This is called an asset coverage ratio.

Getting Your Money Out: This fund's shares are not publicly traded. You can't buy or sell them on a stock exchange. So, you can't easily trade shares like a regular stock. They might offer to buy back shares quarterly. They pay the Net Asset Value (NAV) for these. But they are not required to do this. NAV is the fund's total assets minus its total debts. Then divide that by the number of shares out there. These quarterly buybacks are usually limited. They might buy back 5% or 10% of shares each quarter. The fund's board decides if and when to do this. So, getting your money out might not be easy or fast. You might need your money. There's no guarantee of a fast or full sale at NAV. No public market for shares means a big risk. It's hard to get your money out quickly.

5. Key risks that could hurt the value of your investment

This fund's shares don't trade publicly. So, we'll discuss risks to your investment's value. We won't talk about a "stock price." Here are the main things they say could go wrong:

• General Economic Conditions: Changes in interest rates, economic slowdowns, or political instability can hurt companies. This makes it harder for them to repay loans. For instance, a recession means less consumer spending. This hurts the sales and cash flow of their borrowers. It could lead to more loan defaults or changes.
• Performance of Borrowing Companies: The fund's success relies on the businesses it lends to. If these companies struggle, it hurts the fund. Operational issues, competition, or bad markets can cause this. It impacts the fund's interest income. This could lead to unpaid loans, value reductions, or investment losses.
• Borrowing Money (Leverage Risk): The fund may use borrowed money for investments. This can boost returns by using more money. But it also increases risk. If investment returns don't cover borrowing costs, or if the portfolio value drops, losses grow. This hurts the fund's Net Asset Value. It also affects its ability to pay shareholders.
• Manager's Performance: The fund depends on its manager (the Adviser). They must find good investments and manage them well. They also need to keep skilled staff. If the Adviser misses good investments, mismanages the portfolio, or loses key staff, it hurts the fund. This affects its performance and investment value.
• Regulatory Changes: New financial laws or rules could impact the fund. Changes to BDC rules, capital needs, or RIC taxes are examples. These could affect operations, compliance costs, and profits.
• Conflicts of Interest: The fund is part of a larger company. This creates potential conflicts of interest. For example, the Adviser might choose where to put investments. They manage many funds. Or, fees might push them toward certain investments.
• Hard to Sell Shares: As noted, your shares don't trade publicly. The fund doesn't have to buy them back. So, selling your investment quickly might be hard. You might need your money. There's no guarantee of a fast or full sale at NAV.

6. Competitive positioning

The private credit market is very competitive. The fund competes for good lending deals. It rivals other BDCs, private debt funds, and banks. They all target middle market companies.

The fund's strategy implies its advantages:

• Direct Lending: This allows custom loan structures. They do thorough checks and build direct borrower ties. This can mean better terms and less risk than syndicated loans.
• Senior Secured Focus: They prioritize senior secured debt. This puts them higher in the capital structure. It offers more protection if companies struggle.
• Middle Market Focus: This market often has less competition. This can lead to better returns and terms.
• Manager Expertise: Lord Abbett & Co. LLC has vast resources. They have deep credit knowledge and strong relationships. They manage $247.4 billion. This gives them a big edge in finding and approving deals. This size also gives them access to more borrowers and co-lenders.

7. Leadership or strategy changes

• Structural Changes: The fund changed its structure and regulatory status. These were big changes over the past year. It started in late 2023. It became a Delaware trust in August 2024. Then it officially became a BDC in October 2024. These strategic changes built a strong, flexible platform. This supports its private credit investment plan.
• Management Team: Lord Abbett Private Credit Advisor LLC manages the fund. This is a part of Lord, Abbett & Co. LLC. A Private Credit Investment Committee guides its investment choices. This committee reviews and approves all investments. It oversees portfolio building and manages credit risk. This structure ensures a disciplined, experienced approach to choosing investments.

8. Future outlook

The fund plans to keep its strategy. It aims for income and value growth. It will use directly originated, senior secured loans. These go to U.S. middle market companies. They plan to stay a Regulated Investment Company (RIC) for tax reasons. This means most taxable income goes to shareholders. The company avoids taxes. This allows for potentially higher payments.

They also said they don't plan a "Liquidity Event" soon. (This means no public listing, asset sale, or merger). They might consider it later. This tells investors it's a long-term investment. A public listing or other exit isn't coming soon. So, investors shouldn't expect a public market for shares soon.

9. Market trends or regulatory changes affecting them

• Interest Rates: The fund knows interest rate changes impact its business greatly. Many of their loans have variable rates. Rising rates can increase interest income on their assets. But rising rates also make borrowing more expensive. This can stress their borrowers' ability to pay debts. It could lead to more loan defaults. Falling rates, however, could reduce interest income.
• Broader Economic Trends: Economic, political, and industry trends always matter. This fund is no different. Inflation, supply chain issues, and labor markets are factors. Geopolitical events and consumer confidence also play a role. These directly affect the financial health of their borrowers. They impact their ability to repay loans.
• Financial Regulations: New U.S. and global financial rules could affect operations. This might mean changes to BDC capital needs. Rules on borrowing or lending limits could also change. All these could impact the fund's strategy and profits.
• Tax Law Changes: Tax law changes could also impact the fund. This includes corporate tax rates or dividend taxes. Rules for Regulated Investment Companies (RICs) might also change. These could affect financial results and investor returns after taxes.