Vertical Capital Income Fund (VCIF) Announces Hurricane Ian Impact Update and Estimated Sources of October 2022 Distribution – QNT Press Release


DALLAS, Oct. 31, 2022 /PRNewswire/ — As previously announced, it is important for shareholders in Vertical Capital Income Fund (NYSE:VCIFthe &#34, Fund&#34, )) to consider that Hurricane Ian may have caused physical damage to houses that secure mortgage notes held by the Fund. The cost of home repair may be significant and may not be fully covered by a homeowner’s insurance. Additionally, demand for properties in the hurricane impacted area may be lower and home prices may decline as a result. This is a potential impact on all properties in the area of ​​the hurricane (and ancillary) devasation regardless of whether they were actually physically physically damaged.

The Fund’s investment adviser, as the Board of Trustees’ valuation designee, follows a policy for valuation purposes in the event of a natural disaster when specific information about collateral in disaster areas is not yet available. Currently, the policy provides that loans owned by the Fund with collateral in counties that have been deemed by the Federal Emergency Management Agency (FEMA) as disaster areas, will be reduced in value without additional receipt information initially by 35% to take into account the possibility of damage to the underlying collateral pending the of additional information regarding such collateral. As inspections or other information about the collateral in those areas becomes available after the disaster, the Fund’s investment adviser will modify the valuation of each loan based upon more accurate information. Many assets backing the Fund’s loans may not have damage or other significant displacement or other local housing market value impacts, but it is d ifficult to ascertain that information immediately after a disaster.

With Hurricane Ian, twenty-six (26) counties (all in Florida) were deemed by FEMA to be disaster areas. As of October 31, 2022 the Fund owned 34 loans backed by collateral in those 26 counties. The Fund has received property inspections back from 25 out of the 34 loans, all showing no significant damage to the properties. The remaining 9 loans are still pending inspections. Notwithstanding other market factors evaluated and applied by our third party valuation firm to the net asset valuation to be determined today for the Fund, carrying over the initial September 30, 202235% reduction to the valuation of the remaining nine (9) Hurricane Ian-impacted loans pending inspection, the Fund’s net asset valuation will remain reduced by approximately 1%. This temporary natural disaster reduction will be revised based upon more accurate information on the impacted loans by the Fund’s next determination of net asset value to be released at the end of November.

Also, as previously announced, the Fund paid a monthly distribution of $0.0700 per share to all shareholders of record as of October 19, 2022pursuant to the Fund’s managed distribution plan (the “Plan”).

As a general matter, the amount of the Fund’s distributable income depends on the aggregate gains and losses realized by the Fund during the entire year. Distributions may consist of net investment income, capital gains and return of capital but the character of these distributions cannot be determined until after the end of the Fund’s fiscal year. However, under the Investment Company Act of 1940, as amended, and the terms of the Plan, the Fund may be required to indicate the source of each distribution to its shareholders. The following table sets forth the estimated sources of the current distribution, and the cumulative distributions paid during the 2022 fiscal year to date from the sources indicated in the table. All amounts are expressed on a per share basis …

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