and cash equivalents and fair value of derivatives associated with our financing, and an incentive fee consisting of two parts.
The first part of the incentive fee, which is calculated and payable quarterly in arrears, equals 20.0% of the
pre-incentive
fee net investment income (as defined in the Advisory Agreement) for the immediately preceding quarter, subject to a hurdle rate of 2.0% per quarter (8.0% annualized), and is
subject to a
catch-up
feature. The incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of the Companys
pre-incentive
fee net investment income will be payable except to the extent 20.0% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding quarters exceeds
the cumulative incentive fees accrued and/or paid for the 11 preceding quarters. The net
pre-incentive
fee investment income used to calculate this part of the incentive fee is also included in the amount of
our gross assets used to calculate the 1.75% base management fee.
The second part of the incentive fee is calculated and payable in
arrears as of the end of each calendar year and equals 20.0% of the aggregate cumulative realized capital gains from inception through the end of each calendar year, computed net of aggregate cumulative realized capital losses and aggregate
cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid capital gain incentive fees.
The Adviser agreed to permanently waive all or portions of the incentive fee for the calendar year ended December 31, 2016 to the extent
required to support an annualized dividend yield of 9.375% per annum. The Adviser has not contractually agreed to voluntarily waive any fees under the Advisory Agreement for the calendar year ended December 31, 2017 or thereafter.
For the three months ended March 31, 2019 and March 31, 2018, $1,369,713 and $1,236,620, respectively in base management fees were
earned by the Adviser, of which $1,369,713 and $1,236,620 was payable at March 31, 2019 and March 31, 2018, respectively.
For
the three and nine months ended March 31, 2019, we incurred $723,484 and $1,597,526, respectively, of incentive fees related to pre-incentive fee net investment income, of which $362,478 and $384,478, respectively, was waived. As of
March 31, 2019, $1,054,776 of such incentive fees are currently payable to the Adviser and $541,560 of pre-incentive fees incurred by us were generated from deferred interest (i.e. PIK and certain discount accretion) and are not payable until
such amounts are received in cash. For the three and nine months ended March 31, 2018, we incurred $933,356 and $1,840,114, respectively, of incentive fees related to pre-incentive fee net investment income. As of March 31, 2018,
$1,348,295 of incentive fees were currently payable to the Adviser and $729,305 of pre-incentive fees incurred by us were generated from deferred interest (i.e., PIK and certain discount accretion) and are not payable until such amounts are received
in cash.
The capital gains incentive fee consists of fees related to realized gains, realized capital losses and unrealized capital
depreciation. As of March 31, 2019, there were no capital gains incentive fee accrued, earned or payable to the Adviser under the Advisory Agreement. As of March 31, 2018, there were no capital gains incentive fee accrued, earned or
payable to the Adviser under the Advisory Agreement.
With respect to the incentive fee expense accrual relating to the unrealized capital
gains incentive fee, U.S. GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized appreciation were
realized, even though such unrealized appreciation is not permitted to be considered in calculating the fee actually payable under the Advisory Agreement.
The Advisory Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason
of the reckless disregard of its duties and obligations under the Advisory Agreement, the Adviser and its officers, managers, partners, agents, employees, controlling persons and
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