News Classic

Summary of Selected IFRS Financial Results

(CAD$000s, except percentages)

Three

Months

Ended

September 30, 2024

Three

Months

Ended

September 30, 2023

$

Change

Nine Months Ended

September 30, 2023

$  Change

% Change

Revenues

$30,414

$28,294

$2,120

7.5 %

$90,657

$85,102

$5,555

6.5 %

Net operating income (NOI)⁽¹⁾

$19,651

$18,460

$1,191

6.5 %

$56,093

$52,918

$3,175

6.0 %

Net change in fair value of investment properties

($3,596)

($10,919)

$7,323

–

($10,472)

($1,752)

–

Profit and total comprehensive income

$5,119

$3,355

$1,764

–

$17,012

$24,091

($7,079)

–

(1)

Summary of Selected Non-IFRS Financial Results

(CAD$000s, except percentages, units repurchased and per unit amounts)

Three

Months

Ended

September 30, 2024

Three

Months

Ended

September 30, 2023

$ Change

% Change

Nine Months

 Ended

September 30, 2024

Nine Months Ended

September 30, 2023

$ Change

% Change

FFO⁽¹⁾

$11,405

$11,392

$13

0.1 %

$31,948

$31,458

$490

1.6 %

FFO per unit⁽¹⁾

$0.102

$0.102

–

–

$0.286

$0.289

($0.003)

(1.0 %)

FFO payout ratio⁽¹⁾

68.4 %

68.5 %

n/a

(0.1 %)

73.3 %

73.2 %

n/a

0.1 %

AFFO⁽¹⁾

$9,640

$9,424

$216

2.3 %

$25,873

$25,360

$513

2.0 %

AFFO per unit⁽¹⁾

$0.086

$0.085

$0.001

1.2 %

$0.232

$0.233

($0.001)

(0.4 %)

AFFO payout ratio⁽¹⁾

81.0 %

82.8 %

n/a

(2.2 %)

90.5 %

90.8 %

n/a

(0.3 %)

Same-asset NOI⁽¹⁾

$18,618

$18,266

$352

1.9 %

$53,984

$52,491

$1,493

2.8 %

Normal course issuer bid – units repurchased

–

8,054

n/a

n/a

4,920

19,627

n/a

n/a

Committed occupancy – including non-consolidated investments⁽²⁾

97.5 %

97.2 %

n/a

0.3 %

Same-asset committed occupancy⁽³⁾

96.9 %

96.9 %

n/a

–

⁽¹⁾ This is a non-GAAP financial measure.  Refer to the Non-GAAP Financial Measures defined here and in Part I and VII of the MD&A ending September 30, 2024 for more information on each non-GAAP financial measure.

⁽²⁾ Excludes properties under development. 

⁽³⁾ Same-asset committed occupancy excludes properties under development and non-consolidated investments.

(000s – except per unit amounts and percentage data, unaudited)

3 Months
Ended
September
30, 2024

3 Months
Ended
September
30, 2023

Change
over
Prior
Period

9 Months
Ended

September
30, 2024

9 Months
Ended

September
30, 2023

Change
over
Prior
Period

Profit and total comprehensive income for the period attributable to unitholders

$   5,073

$   3,375

$  16,862

$   24,009

Incremental leasing costs included in administrative expenses⁽⁷⁾

383

319

1,248

1,056

Amortization of debenture issuance costs⁽⁸⁾

(18)

(18)

(54)

(123)

Distributions on Class B exchangeable LP units included in finance costs – operations

81

81

243

245

Deferred income taxes

(99)

(143)

97

(119)

Right-of-use land lease principal repayments

(205)

(202)

(611)

(601)

Fair value adjustment to restricted and deferred units

280

(227)

134

(383)

Fair value adjustment to investment properties

3,596

10,919

12,224

10,472

Fair value adjustment to investments⁽⁹⁾

(1,460)

(451)

(1,400)

121

Fair value adjustment to Class B exchangeable LP units

544

(416)

243

(1,017)

Fair value adjustment to convertible debentures

426

(450)

279

(658)

Fair value adjustment to interest rate swaps

2,366

(1,486)

1,737

(2,014)

Fair value adjustment to right-of-use land lease assets

205

202

611

601

Equity accounting adjustment⁽¹⁰⁾

264

(33)

370

(58)

Non-controlling interest adjustment⁽⁶⁾

(31)

(78)

(35)

(73)

FFO⁽¹⁾

$  11,405

$  11,392

$    13

$  31,948

$  31,458

$    490

FFO change over prior period – %

0.1 %

1.6 %

FFO⁽¹⁾

$  11,405

$  11,392

$  31,948

$   31,458

Non-cash revenue – straight-line rent⁽⁵⁾

(169)

(16)

(387)

(27)

Leasing costs – existing properties^{(2) (5) (11)}

(1,022)

(1,732)

(3,952)

(5,173)

Maintenance capital expenditures – existing properties⁽¹²⁾

(603)

(223)

(1,778)

(901)

Non-controlling interest adjustment⁽⁶⁾

29

3

42

3

AFFO⁽¹⁾

$    9,640

$   9,424

$  216

$   25,873

$   25,360

$   513

AFFO change over prior period – %

2.3 %

2.0 %

Weighted average units outstanding – basic⁽¹⁾⁽³⁾

111,537

111,530

111,528

108,797

FFO per unit – basic⁽¹⁾

$   0.102

$   0.102

–

$    0.286

$    0.289

(1.0 %)

AFFO per unit – basic⁽¹⁾

$   0.086

$   0.085

1.2 %

$    0.232

$    0.233

(0.4 %)

Gross distribution to unitholders⁽¹⁾⁽⁴⁾

$   7,806

$   7,806

$  23,417

$  23,020

FFO payout ratio – basic⁽¹⁾

68.4 %

68.5 %

73.3 %

73.2 %

AFFO payout ratio – basic⁽¹⁾

81.0 %

82.8 %

90.5 %

90.8 %

FFO⁽¹⁾

$  11,405

$  11,392

$  31,948

$  31,458

Interest on dilutive convertible debentures

180

179

537

533

FFO – diluted⁽¹⁾

$  11,585

$  11,571

$    14

$  32,485

$  31,991

$    494

Diluted weighted average units outstanding⁽¹⁾⁽³⁾

114,067

114,060

114,058

111,327

AFFO⁽¹⁾

$    9,640

$    9,424

$  25,873

$   25,360

Interest on dilutive convertible debentures

180

179

537

533

AFFO – diluted⁽¹⁾

$    9,820

$    9,603

$  217

$  26,410

$   25,893

$  517

Diluted weighted average units outstanding⁽¹⁾⁽³⁾

114,067

114,060

114,058

111,327

FFO per unit – diluted⁽¹⁾

$    0.102

$   0.101

1.0 %

$    0.285

$    0.287

(0.7 %)

AFFO per unit – diluted⁽¹⁾

$    0.086

$   0.084

2.4 %

$    0.231

$    0.233

(0.9 %)

⁽¹⁾

This is a non-GAAP financial measure.  Refer to the Non-GAAP Financial Measures defined here and in Part I and VII of the REIT’s MD&A ending September 30, 2024 for more information on each non-GAAP financial measure.

⁽²⁾

Based on actuals.

⁽³⁾

Includes Class B exchangeable LP units.

⁽⁴⁾

Includes distributions on Class B exchangeable LP units.

⁽⁵⁾

Includes proportionate share of revenue and expenditures at equity-accounted investments.

⁽⁶⁾

The non-controlling interest (“NCI”) adjustment, includes adjustments required to translate the profit and total comprehensive income attributable to NCI of $46 thousand and $150 thousand for the three and nine months ending September 30, 2024, respectively (September 30, 2023 – loss of $20 thousand and profit of $82 thousand, respectively) to FFO and AFFO for the NCI.

⁽⁷⁾

Incremental leasing costs included in administrative expenses include leasing costs of salaried leasing staff directly attributed to signed leases that would otherwise be capitalized if incurred from external sources.  These costs are excluded from FFO in accordance with RealPAC’s definition of FFO.

⁽⁸⁾

Amortization of debenture issuance costs is deducted on a straight-line basis over the remaining term of the related convertible debentures, in accordance with RealPAC.

⁽⁹⁾

Fair value adjustment to investments relate to the unrealized change in fair value of equity accounted entities which are excluded from FFO in accordance with RealPAC’s definition of FFO.

⁽¹⁰⁾

Equity accounting adjustment for interest rate swaps includes the change in non-cash fair value adjustments relating to interest rate swaps held by equity accounted entities, which are excluded from FFO in accordance with RealPAC’s definition of FFO.

⁽¹¹⁾

Leasing costs – existing properties include internal and external leasing costs except to the extent that leasing costs relate to development projects, in accordance with RealPAC’s definition of AFFO.  See the Gross Capital Additions Including Leasing Fees note on page 27 of the MD&A.

⁽¹²⁾

Maintenance capital expenditures – existing properties include expenditures related to sustaining and maintaining existing space, in accordance with RealPAC’s definition of AFFO.  See the Gross Capital Additions Including Leasing Fees note on page 27 of the MD&A.

(000s)

3 Months

Ended

September 30,

 2024

(unaudited)

3 Months

Ended

September 30,

 2023

(unaudited)

9 Months

Ended

September 30,

 2024

(unaudited)

9 Months

Ended

September 30,

2023
(unaudited)

Same-asset NOI⁽¹⁾

$    18,618

$    18,266

$    53,984

$    52,491

Developments and redevelopments transferred to income producing in 2023 & 2024 ($7.5 million annual stabilized NOI)

1,490

906

3,767

1,684

NOI from properties currently under development and redevelopment  ($650 thousand annual stabilized NOI)

–

(179)

–

(51)

Straight-line rent

169

22

387

42

Administrative expenses charged to NOI

(887)

(898)

(2,963)

(2,829)

Lease termination revenue

168

–

201

–

Properties disposed

80

324

697

1,500

Other

13

19

20

81

Total NOI⁽¹⁾

$    19,651

$    18,460

$    56,093

$    52,918

Percentage increase over prior period

6.5 %

6.0 %

(1)    This is a non-GAAP financial measure.  Refer to the Non-GAAP Financial Measures defined here and in Part I and VII of the REIT’s MD&A for more information on each non-GAAP financial measure.

Three Months Ended

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Amount

Per Share

Amount

Per Share

Amount

Per Share

Amount

Per Share

Net investment income

$10.26

$0.39

$10.82

$0.47

$32.29

$1.29

$30.30

$1.42

Core net investment income⁽¹⁾

10.62

0.40

11.16

0.49

33.59

1.34

30.81

1.45

Net realized (loss) gain on investments

(3.30)

(0.13)

0.60

0.03

(21.69)

(0.87)

0.32

0.01

Net realized loss on foreign currency translation

(0.02)

—

(0.02)

—

(0.08)

—

(0.07)

—

Total realized income⁽²⁾

$6.94

$0.26

$11.40

$0.50

$10.52

$0.42

$30.55

$1.43

Distributions

(10.63)

(0.40)

(9.27)

(0.41)

(30.32)

(1.21)

(25.88)

(1.22)

Net unrealized change in appreciation (depreciation) on investments

8.51

0.33

(13.80)

(0.61)

26.44

1.05

(24.34)

(1.14)

Net unrealized change in appreciation (depreciation) on foreign currency translation

0.01

—

—

—

—

—

(0.02)

—

Benefit (provision) for taxes on unrealized depreciation (appreciation) on investments

in taxable subsidiaries

—

—

—

—

0.19

0.01

(0.14)

(0.01)

Net increase (decrease) in net assets resulting from operations

$15.46

$0.59

($2.40)

($0.11)

$37.15

$1.48

$6.05

$0.28

Weighted average shares outstanding

26,326,426

22,824,221

25,066,626

21,289,880

(1)

Core net investment income, as presented, excludes the impact of capital gains incentive fees (reversal) and income taxes, the majority of which are excise taxes. The Company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S. generally accepted accounting principles (“U.S. GAAP”) measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. GAAP. A reconciliation of net investment income in accordance with U.S. GAAP to core net investment income is presented in the table below the financial statements. 

(2)

Total realized income is the sum of net investment income, net realized gains (losses) on investments, net realized gains (losses) on foreign currency, and loss on debt extinguishment; all U.S. GAAP measures.

As of

As of

September 30, 2024

December 31, 2023

Investments at fair value

$908.7

$874.5

Total assets

$957.1

$908.1

Net assets

$366.3

$319.9

Shares outstanding

27,039,364

24,125,642

Net asset value per share

$13.55

$13.26

Three Months Ended

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

New investments

$17.8

$51.9

$112.6

$139.7

Repayments of investments

(15.5)

(34.8)

(87.3)

(79.1)

Net activity

$2.3

$17.1

$25.3

$60.6

As of

As of

September 30, 2024

December 31, 2023

Number of portfolio company investments

99

93

Number of debt investments

86

81

Weighted average yield of debt and other income

producing investments ⁽³⁾

Cash

10.2 %

11.0 %

Payment-in-kind (“PIK”)

0.4 %

0.5 %

Fee amortization

0.4 %

0.4 %

Total

11.0 %

11.9 %

Weighted average yield on total investments ⁽⁴⁾

Cash

9.5 %

10.3 %

PIK

0.4 %

0.5 %

Fee amortization

0.4 %

0.3 %

Total

10.3 %

11.1 %

(3)

The dollar-weighted average annualized effective yield is computed using the effective interest rate for our debt investments and other income producing investments, including cash and PIK interest, as well as the accretion of deferred fees. The individual investment yields are then weighted by the respective cost of the investments (as of the date presented) in calculating the weighted average effective yield of the portfolio. The dollar-weighted average annualized yield on the Company’s investments for a given period will generally be higher than what investors in the Company’s common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company’s expenses or any sales load that may be paid by investors.

(4)

The dollar-weighted average yield on total investments takes the same yields as calculated in the footnote above but weights them to determine the weighted average effective yield as a percentage of the Company’s total investments, including non-income producing loans and equity.

Activity Type

Date

Company Name

Company Description

Investment Amount

 Instrument Type

Add-On Investment               

July 31, 2024

PCS Software, Inc.*

Provider of integrated transportation management software

for the inland trucking industry

$

9,995

Equity

Add-On Investment               

August 12,
2024

Trade Education Acquisition, L.L.C.*

Online education platform for retail investors

$

80,000

Revolver Commitment

New Investment

August 16,
2024

Bart & Associates, LLC

Provides IT modernization services for federal customers

$

8,942,723

Senior Secured – First Lien

$

1,733,387

Delayed Draw Term Loan Commitment

$

1,046,677

Revolver Commitment

$

418,671

Equity

Add-On Investment

August 26,
2024

Impact Home Services LLC*

Residential garage door, electrical, and plumbing services provider

$

1,571,984

Delayed Draw Term Loan Commitment

Add-On Investment

September 11,
2024

Service Minds Company, LLC*

Provider of residential electrical services

$

20,000

Revolver Commitment

Add-On Investment

September 30,
2024

The Hardenbergh Group, Inc. *

Provider of temporary professional staffing of medical services

professionals, external peer review, consulting and physician

leadership solutions

$

804,031

Senior Secured – First Lien

Add-On Investment

September 30,
2024

Monitorus Holding, LLC*

Provider of media monitoring and evaluation services

$

11,629

Unsecured Convertible Bond

Add-On Investment

September 30,
2024

ADS Group Opco, LLC*

Full-service manufacturer for OEMs, prime contractors, and Tier I

suppliers across the defense, space, and aerospace industries

$

69,453

Revolver Commitment

*Existing portfolio company

Activity Type

Date

Company Name

Company Description

Proceeds Received

Realized Gain

 Instrument Type

Full Realization

August 1, 2024

ICD Holdings, LLC*

Financial company that connects corporate treasury departments

with money market and short duration bond funds

$

2,599,378

$

2,192,411

Equity

Full Repayment

September 27, 2024

EHI Buyer, Inc.*

Provider of design, engineering, installation, and maintenance

services for building management systems

$

6,050,229

$

—

Senior Secured – First Lien

$

2,322,310

$

—

Delayed Draw Term Loan

*Existing portfolio company

Activity Type

Date

Company Name

Company Description

Investment Amount

 Instrument Type

Add-On Investment

October 18, 2024

Compost 360 Investments, LLC*

Organic waste recycler and producer of compost,

mulch, and engineered soils

$

49,280

Equity

New Investment

October 31, 2024

Norplex Micarta Acquisition, Inc.

Manufacturer of thermoset composite laminates

$

13,000,000

Senior Secured – First Lien

$

500,000

Revolver Commitment

$

739,804

Equity

Add-On Investment

November 7, 2024

Green Intermediateco II, Inc.*

Cyber-security focused value-added reseller and

associated service provider

$

1,300,000

Senior Secured – First Lien

*Existing portfolio company

Activity Type

Date

Company Name

Company Description

Proceeds Received

Realized Gain

 Instrument Type

Full Repayment

November 4, 2024

Baker Manufacturing Company, LLC*

Manufacturer of water well equipment, specialized

filtration pumps, and custom castings

$

12,738,093

$

—

Senior Secured – First Lien

Full Realization

November 5, 2024

Health Monitor Holdings, LLC*

Provider of point-of-care patient engagement and

marketing solutions for pharmaceutical companies

$

1,704,298

$

651,379

Equity

Ex-Dividend

Record

Payment

Amount per

Declared

Date

Date

Date

Share

10/10/2024

10/31/2024

10/31/2024

11/15/2024

$

0.1333

10/10/2024

11/29/2024

11/29/2024

12/13/2024

$

0.1333

10/10/2024

12/31/2024

12/31/2024

1/15/2024

$

0.1333

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

September 30, 2024

(unaudited)

December 31, 2023

ASSETS

Controlled investments at fair value (amortized cost of $17,934,808 and $17,285,138,

respectively)

$

7,749,169

$

6,175,994

Non-controlled, non-affiliated investments, at fair value (amortized cost of $891,385,080

and $884,858,412, respectively)

900,969,724

868,284,689

Cash and cash equivalents

38,580,261

26,125,741

Receivable for sales and repayments of investments

1,358,421

371,877

Interest receivable

6,272,194

4,882,338

Income tax receivable

1,817,371

1,588,708

Other receivables

67,995

42,995

Deferred offering costs

—

7,312

Prepaid expenses

256,724

606,674

Total Assets

$

957,071,859

$

908,086,328

LIABILITIES

Notes Payable

$

99,331,757

$

98,996,412

Credit Facility payable

154,578,467

156,564,776

SBA-guaranteed debentures

321,058,121

320,273,358

Dividends payable

3,604,347

—

Management fees payable

3,959,554

2,918,536

Income incentive fees payable

3,154,576

2,885,180

Interest payable

1,253,031

5,241,164

Related party payable

1,898,854

—

Unearned revenue

550,348

397,725

Administrative services payable

401,033

402,151

Deferred tax liability

—

188,893

Other accrued expenses and liabilities

996,484

278,345

Total Liabilities

$

590,786,572

$

588,146,540

Commitments and contingencies (Note 7)

Net Assets

$

366,285,287

$

319,939,788

NET ASSETS

Common stock, par value $0.001 per share (100,000,000 shares authorized; 27,039,364

and 24,125,642 issued and outstanding, respectively)

$

27,039

$

24,125

Paid-in capital

375,430,445

335,918,984

Total distributable loss

(9,172,197)

(16,003,321)

Net Assets

$

366,285,287

$

319,939,788

Total Liabilities and Net Assets

$

957,071,859

$

908,086,328

Net Asset Value Per Share

$

13.55

$

13.26

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

For the three months ended

For the nine months ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

INVESTMENT INCOME

From controlled investments:

Interest income

$

—

$

—

$

81,636

$

—

From non-controlled, non-affiliated investments

Interest income

25,338,361

26,223,986

75,460,156

75,295,485

Other income

1,159,898

941,040

3,579,415

2,529,905

Total Investment Income

$

26,498,259

$

27,165,026

$

79,121,207

$

77,825,390

OPERATING EXPENSES

Management fees

$

3,959,554

$

3,933,121

$

11,664,020

$

11,533,811

Valuation fees

151,535

139,267

343,753

332,762

Administrative services expenses

469,274

470,846

1,441,436

1,399,188

Income incentive fees

2,564,922

2,705,200

7,616,562

7,433,039

Capital gains incentive fee reversal

—

—

—

(569,528)

Professional fees

312,034

276,592

847,866

877,276

Directors’ fees

93,250

93,250

315,750

303,750

Insurance expense

126,362

123,725

376,840

366,156

Interest expense and other fees

7,956,403

8,049,063

23,840,473

24,037,462

Income tax expense

360,192

335,508

1,304,948

1,082,057

Other general and administrative expenses

245,043

217,655

908,185

727,754

Total Operating Expenses

$

16,238,569

$

16,344,227

$

48,659,833

$

47,523,727

Income incentive fee waiver

—

—

(1,826,893)

—

Total Operating Expenses, net of fee waivers

$

16,238,569

$

16,344,227

$

46,832,940

$

47,523,727

Net Investment Income

$

10,259,690

$

10,820,799

$

32,288,267

$

30,301,663

Net realized (loss) gain on non-controlled, non-affiliated investments

$

(3,297,615)

$

600,403

$

(21,689,864)

$

324,782

Net realized loss on foreign currency translations

(22,095)

(22,166)

(76,990)

(72,782)

Net change in unrealized appreciation on controlled investments

248,746

—

923,505

—

Net change in unrealized appreciation (depreciation) on non-controlled,

non-affiliated investments

8,255,272

(13,793,320)

25,512,422

(24,338,195)

Net change in unrealized appreciation (depreciation) on foreign currency

translations

14,588

(2,794)

5,099

(21,243)

(Provision) benefit for taxes on net unrealized (appreciation) depreciation

on investments

—

(312)

188,893

(144,425)

Benefit for taxes on net realized loss on investments

2,221

—

2,221

—

Net Increase (Decrease) in Net Assets Resulting from Operations

$

15,460,807

$

(2,397,390)

$

37,153,553

$

6,049,800

Net Investment Income Per Share—basic and diluted

$

0.39

$

0.47

$

1.29

$

1.42

Net Increase (Decrease) in Net Assets Resulting from Operations Per

Share – basic and diluted

$

0.59

$

(0.11)

$

1.48

$

0.28

Weighted Average Shares of Common Stock Outstanding—basic and

diluted

26,326,426

22,824,221

25,066,626

21,289,880

Distributions Per Share—basic and diluted

$

0.40

$

0.41

$

1.21

$

1.22

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

Common Stock

Total

Number 

Par 

Paid-in 

distributable

of shares

value

capital

earnings (loss)

Net Assets

Balances at December 31, 2022

19,666,769

$

19,667

$

275,114,720

$

642,226

$

275,776,613

Net investment income

—

—

—

9,067,620

9,067,620

Net realized gain on investments

—

—

—

34,967

34,967

Net realized loss on foreign currency translations

—

—

—

(39,912)

(39,912)

Net change in unrealized depreciation on investments

—

—

—

(4,249,642)

(4,249,642)

Net change in unrealized appreciation on foreign currency translations

—

—

—

1,874

1,874

Provision for taxes on unrealized appreciation on investments

—

—

—

(78,760)

(78,760)

Distributions from net investment income

—

—

—

(7,951,284)

(7,951,284)

Issuance of common stock, net of offering costs⁽¹⁾

581,614

581

8,289,988

—

8,290,569

Balances at March 31, 2023

20,248,383

$

20,248

$

283,404,708

$

(2,572,911)

$

280,852,045

Net investment income

—

—

—

10,413,244

10,413,244

Net realized loss on non-controlled, non-affiliated investments

—

—

—

(310,588)

(310,588)

Net realized loss on foreign currency translation

—

—

—

(10,704)

(10,704)

Net change in unrealized depreciation on non-controlled, non-affiliated investments

—

—

—

(6,295,233)

(6,295,233)

Net change in unrealized depreciation on foreign currency translations

—

—

—

(20,323)

(20,323)

Provision for taxes on unrealized appreciation on investments

—