Good morning, ladies and gentlemen. Welcome to FS KKR Capital Corporation's first quarter 2020 earnings conference call. Your lines will be in a listen-only mode during remarks by FSK's management. At the conclusion of the company's remarks, we will begin the question-and-answer session, at which time I will give you instructions on entering the queue. Please note that this conference is being recorded. At this time, Robert Paun, Head of Investor Relations, will proceed with the introduction. Mr. Paun, you may begin.
Thank you. Good morning and welcome to FS KKR Capital Corp's first quarter 2020 earnings conference call. Please note that FS KKR Capital Corp may be referred to as FSK, the fund, or the company throughout the call. Today's conference call is being recorded, and an audio replay of the call will be available for 30 days. Replay information is included in a press release that FSK issued on May 6, 2020. In addition, FSK has posted on its website a presentation containing supplemental financial information with respect to its portfolio and financial performance for the quarter ended March 31, 2020. A link to today's webcast and the presentation is available on the investor relations section of the company's website under events and presentations. Please note that this call is the property of FSK. Any unauthorized rebroadcast of this call in any form is strictly prohibited.
Today's conference call includes forward-looking statements, and we ask that you refer to FSK's most recent filings with the SEC for important factors that could cause actual results or outcomes to differ materially from these statements. FSK does not undertake to update its forward-looking statements unless required to do so by law. In addition, this call will include certain non-GAAP financial measures. For such measures, reconciliations to the most directly comparable GAAP measures can be found in FSK's first quarter earnings release that was filed with the SEC on May 6, 2020. Non-GAAP information should be considered supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly named measures reported by other companies.
To obtain copies of the company's latest SEC filings, please visit FSK's website. Speaking on today's call will be Michael Forman, Chairman and Chief Executive Officer, Dan Pietrzak, Chief Investment Officer and Co-President, Brian Gerson, Co-President, and Steven Lilly, Chief Financial Officer. Also joining us on the phone are Co-Chief Operating Officers Drew O'Toole and Ryan Wilson. I will now turn the call over to Michael.
Thank you, Robert, and welcome everyone to FS KKR Capital Corp's first quarter 2020 earnings conference call. We have a lot of information to cover on today's call, so I'll jump right in. This continues to be a tumultuous time, a time of shared emotion, shared sacrifice, and in certain circumstances, shared concern. We appreciate that all of you, like us, continue to be concerned for loved ones, friends, and associates. Companies' investments are important, but the events of the last two months have helped remind much of the world what's truly important in a very tangible way. Like many of you on this call this morning, the FS KKR team has been working remotely since early March. Thankfully, we were well prepared to operate in a remote environment, given our prior investments in both technology and personnel.
Since the beginning of the FS KKR joint venture in April of 2018, we've employed a defensive strategy with respect to investing new capital. While we are pleased with the results of our new investments, we continue to face volatility in the performance of certain investments made prior to the establishment of the FS KKR Advisor. Many of these investments faced headwinds coming into this year, which have been exacerbated by COVID-19. In addition, the impact has been felt by all markets and underlying operating companies within them to varying degrees. As a result, our investment portfolio declined in value during the first quarter by 10.9%. As we will discuss in detail later in the call, we estimate that 70%-75% of our portfolio depreciation during the quarter related to the COVID-19 pandemic and related market volatility.
With this portfolio decline, our net asset value declined to $6.09 per share at March 31, 2020, compared to $7.64 at year-end 2019. From a general operating perspective, our net investment income was $0.19 per share during the quarter, which was equal to our first quarter dividend of $0.19 per share. Steven will provide details regarding our operating activities during his portion of the call. From a forward-looking perspective, we recognize that in an environment as volatile as the one in which we are all operating, it is impossible to predict the future. As a result, we believe the most transparent communication with shareholders and investors regarding our dividend for the next several quarters is to estimate our current level of quarterly net investment income and announce a dividend of 100% of that amount on a quarterly basis.
For the second quarter, we expect our net investment income per share to be at least $0.15, and therefore, our board has declared a $0.15 distribution for the second quarter. When we report our second quarter earnings, we will announce our third quarter dividend, which we expect will equate to our estimated third quarter net investment income. Over the long term, we continue to expect our annual dividends will equate to an NAV yield of approximately 9%, though we acknowledge there will be certain quarters where our annualized yield may be greater or less than this range. From a capital structure standpoint, yesterday we announced the issuance of a $250 million unsecured bond with a private financing partner.
While our ability to place this bond is a direct example of the strength of the FS KKR franchise, it also helps us anchor our capital structure by providing incremental liquidity for future investment opportunities and to support our existing portfolio companies. While the interest rate on the bond is higher than our previously issued bonds, we believe the strategic merits of accessing capital to preserve our strong liquidity position outweighed the incremental cost. I also would note that the bond is callable after two years. Yesterday, we also announced an amendment of our bank revolver, whereby we amended certain financial covenants and other metrics. In a manner similar to our bond offering, our credit facility amendment provides us greater operational flexibility and cushion during this time of increased volatility.
With regard to the equity component of our balance sheet, during April we completed the remaining portion of our previously committed $200 million stock buyback program, and finally, we announced yesterday certain affiliates of FS and KKR have committed $100 million towards a $350 million investment vehicle. This investment vehicle has been established to invest from time to time in shares of our common stock through open market purchases or other means, such as the potential establishment of a 10b5-1 purchase plan. We are pleased to announce the establishment of this vehicle and is further evidence of our core belief in the long-term strategic value of the FS KKR franchise, and with that, I'll turn the call over to Dan and the team.
Thank you, Michael, and good morning, all. My comments today will focus on three topics. First, some color regarding the quarter from an investment standpoint. Second, our current outlook for our investment portfolio. And third, a few forward-looking comments with respect to our approach to the market in the near term. From an investment standpoint, the first quarter clearly was a tale of two markets. While it's difficult to remember, the quarter opened in January with one of the strongest credit markets in many years. And while activity, spreads, and pricing abated a bit during February, most industry observers were still calling for 2020 to be a robust year for credit overall. We did begin the year with a cautious outlook due to what we saw as froth in the market.
In fact, of the new investments we closed for FSK during the first quarter, over 90% were commitments made and carryover transactions from the fourth quarter of 2019. Then came March and COVID-19, with plunging oil prices as well as equity and credit market volatility not seen since 2008, or in certain instances since the 1930s. Even our language has changed as expressions like social distancing, quarantining, and working remotely have become routine. Perhaps without surprise, the high-yield bonds and senior secured loans each endured their worst month since 2008, ending March down 11.8% and 12.4% respectively, and new deal activity began to wane significantly. As a result of our regular way origination activities, as well as some unfunded commitments, unfunded commitment draws we saw in the quarter as borrowers solidified their liquidity positions.
During the first quarter, we originated $1.3 billion in new investments, and we experienced $914 million in repayments, equating to net investment portfolio growth of $382 million. First quarter sales and paydowns included $102 million of sales to our joint venture. Excluding these sales, net deployment was $484 million, compared to $594 million in the fourth quarter of 2019. We continue to make progress rotating our investment portfolio away from older vintage assets towards FS KKR directly originated assets. Today, over 50% of our investment portfolio is now comprised of assets originated by the FS KKR Advisor, and roughly 81% of total assets in the portfolio have been originated by the KKR Credit Platform. This rotation will continue to remain a large focus for us in coming quarters.
As the shock of March has given way to the acceptance of a new normal during April and early May, the world is grappling with how far-reaching the implications of COVID-19 will be. The Federal Reserve and the Federal Government are providing support and stimulus to the markets on levels even greater than during the Great Recession. Given the trillions of dollars being injected into the economy, there most certainly will be winners and losers. More difficult to determine, however, are the future unintended consequences that will be created by the governmental actions as of today. The Congressional Budget Office projects the U.S. government debt held by the public will reach 108% of GDP, exceeding the prior U.S. peak of 106% set during World War II.
In addition, people 55 years of age and older now account for over 40% of consumer spending, the very segment of the population which is at most at risk from COVID-19 and most impacted by social distancing measures. How these factors and others play out over the coming quarters will have a direct impact on operating companies of all sizes. In terms of portfolio specifics, we, like others, have received requests from certain portfolio companies to convert cash interest payments to fixed interest for a period of time. We have also received requests from certain portfolio companies to defer amortization payments. Furthermore, we do expect certain portfolio companies will require additional capital to support originations throughout the balance of the year.
We are handling these portfolio requests in an individual manner based on specific facts and circumstances, including the ability of their financial sponsors to provide incremental capital, as opposed to a one-size-fits-all approach. We feel that we are well-staffed to deal with these requests, both in terms of the overall team size and the fact that we have dedicated teams focused on general portfolio management and workout situations. We have invested meaningfully in our platform over the last several years, and we believe this will benefit us in the quarters ahead. As we work with borrowers on amendments and deferral requests, there will be a natural opportunity for our investment teams to review overall transaction structures, terms, and pricing to ensure our investments more accurately reflect the risk of the current market environment.
This is important as it will give us the opportunity to potentially de-risk and reset our current loan book. As Brian will discuss in more detail, we have analyzed our portfolio on a name-by-name basis to formulate a view of our exposure to the impact of COVID-19 on our investments. This has been an expansive exercise and the largest focus for our investment teams today, and has been done both top-down by sector or industry and bottoms-up by talking directly with our sponsors and management teams of our borrowers. In terms of our forward view of the market, as you can imagine, our primary objective is to protect and maximize the value of our investments in existing portfolio companies. That said, we expect to leverage the strength of our origination footprint to add selectively to our existing portfolio.
In our view, the coming quarters will present a great opportunity to deploy capital on attractive terms. We will be cautious and highly selective here, but we do believe this will provide us a real opportunity to continue to invest our portfolio in highly accretive investments, and now I'll turn the call over to Brian to discuss some investment portfolio specifics.
Thank you, Dan. As mentioned, from a portfolio perspective, we have been doing a bottoms-up analysis of each of our borrowers, analyzing both business and liquidity risk associated with COVID-19. Our analysis incorporates monthly and quarterly operating data, trend and demand analyses, board reports, management and sponsor projections, and macro-level industry assessments. One of the biggest uncertainties today is the duration of the COVID-19 crisis on company-specific business plans, and while these uncertainties have been reflected in our first quarter valuations, we expect that a meaningful percentage of the unrealized depreciation we experienced during the first quarter ultimately will reverse itself in the future as healthy companies begin to emerge from the COVID-19 downdraft. Turning to slide eight of the earnings presentation, at March 31, our investment portfolio had a fair value of $6.9 billion, consisting of 184 portfolio companies.
At the end of the first quarter, our top 10 largest portfolio companies represented 22% of our portfolio, which is in line with our results for the last several quarters. We continue to focus on portfolio diversification, which we view as a key risk mitigation tool. We also remain focused on senior secured investments as our portfolio was comprised of 70% senior secured loans as of March 31. The weighted average yield on accruing debt investments was 9% at March 31, 2020, as compared to 9.7% at December 31, 2019. The decline in our weighted average portfolio yield was attributable to the decline in LIBOR, the repayment of certain higher-yielding investments during the quarter, and the weighted average yield on our first quarter originations of 7.9%. As expected, COVID-19 has impacted certain of our portfolio companies' financial position and ability to fund future interest payments.
At the end of the first quarter, approximately 3.9% of our portfolio was on non-accrual on a fair value basis and 8.3% on a cost basis, as compared to 2.8% at fair value and 5.4% on a cost basis at December 31, 2019. The increase in non-accruals was primarily due to either volatility in the commodity markets impacting historical energy investments or the direct impact of COVID-19 on certain consumer-facing investments, particularly in retail-related companies. On a combined basis, our new non-accrual investments account for a little less than 2 cents per share of net investment income on a quarterly basis. During the first quarter, our investment portfolio declined by 10.9% or $801 million, which includes $130 million of realized depreciation and $671 million of unrealized depreciation. Realized depreciation included a $54 million realized loss in Art Van Furniture, which coincided with the company's bankruptcy and plan of liquidation.
Other significant realized losses were related to Safariland, which was exited in an opportunistic sale, the restructuring of our investment in Micronics, as well as assets sold to our joint venture. The largest drivers of our $671 million unrealized depreciation are mark-to-market moves in our joint venture totaling $118 million, a $59 million write-down in our investment in Belk, a $45 million write-down in our investment in JW Aluminum, and a $41 million write-down in Amtek. I will now turn the call over to Steven to discuss our financial results in more detail.
Thanks, Brian. I'll provide some color with respect to our operating results for the first quarter. You can find this information starting on slide four of the earnings presentation and continuing on slides 15, 16, and 17. Our total investment income during the first quarter was $179 million, as compared to $186 million during the fourth quarter of last year. Interest income decreased by $2 million quarter over quarter to $131 million, as the impact of our origination activity was offset by the decline in the weighted average yield of our investment portfolio that Brian mentioned earlier, lower LIBOR rates, the repayment of higher interest rate assets, and the effect of our new non-accruals during the quarter. Fee and dividend income totaled $32 million during the first quarter, which was equal to our reported level during the fourth quarter.
Dividend income grew by approximately $4 million quarter over quarter, primarily driven by an increase of approximately $6 million from our joint venture and partially offset by lower dividend income from some of our asset-based finance investments. Offsetting the growth in dividend income was a decline in fee income of approximately $4 million versus the fourth quarter of 2019, as our fee income was elevated during the fourth quarter of last year due to two larger structuring fees and one prepayment fee. During the three months ended March 31, 2020, our net investment income was $98 million, or $0.19 per share, which compares to $0.20 per share in the fourth quarter of 2019. The decline in net investment income quarter over quarter primarily was due to the decline in total investment income during the first quarter, about which I just spoke.
In terms of the details with regard to our incentive fee look-back provision, the contractual agreement resulted in approximately $20 million of incentive fee reductions during the first quarter of 2020. Given recent portfolio depreciation, we continue to anticipate that the look-back provision will reduce incentive fees over the next several quarters, providing additional net investment income of around three cents per share per quarter. Our net asset value was $6.09 per share as of March 31, 2020, as compared to $7.64 per share at December 31, 2019. The primary drivers of the change in net asset value can be seen on slide six of the earnings presentation. These drivers include realized and unrealized portfolio depreciation, the benefit of our share repurchase activity, and net investment income equal to our quarterly distribution.
As Michael mentioned earlier, our board of directors has declared a second quarter dividend of $0.15 per share, which will be paid on July 2, 2020, to stockholders of record as of the close of business on June 17, 2020. The $0.15 per share dividend equates to our estimate of what our net investment income will be during the second quarter. From a high-level perspective, the bridge of our $0.19 of net investment income per share during the first quarter to our estimated second quarter net investment income is as follows. First, we expect new originations will be materially lower in the second quarter as we focus on existing portfolio companies. This reduction in new investment activity is expected to reduce our second quarter fee income by $0.01-$0.02 per share.
The lower overall yield of our investment portfolio, coupled with the assets we placed on non-accrual, are expected to reduce net investment income by $0.01-$0.02 per share during the second quarter. And the net additional interest expense associated with the bond transaction Michael mentioned will reduce second quarter net investment income by approximately $0.005 per share. The input of all of these activities equates to an expected second quarter net investment income level of at least $0.15 per share, hence our dividend declaration of the same amount. Turning to our balance sheet, as of March 31, 2020, total investments at fair value were $6.9 billion, total cash on hand was $193 million, and total assets were $7.4 billion. This compares to total investments at fair value of $7.4 billion, total cash of $106 million, and total assets of $8.2 billion as of December 31, 2019.
At March 31, our total outstanding debt was $4.3 billion, with total committed debt of $4.8 billion. Unsecured debt represented approximately 37% of our drawn debt as of March 31 and approximately 40% of our drawn debt pro forma for the $250 million unsecured debt that we announced yesterday. Our net debt to equity at the end of the first quarter was 128% as compared to 89% at the end of the fourth quarter of 2019. Our net debt to equity is calculated net of cash on our balance sheet, as well as the $194 million in net receivables representing sales to our joint venture and other paydowns. Our effective weighted average interest rate on debt was approximately 3.7% at March 31, 2020, as compared to 4.0% at the end of the fourth quarter of 2019.
Pro forma for our recent bond transaction, our weighted average cost of debt would have been approximately 4.0%. From a liquidity perspective, our total available liquidity as of March 31, 2020, including the pro forma effects of our bond transaction, was approximately $1.2 billion. The components of our liquidity include cash on hand of approximately $190 million, receivables for assets sold of approximately $200 million, approximately $575 million of availability under our revolver, and $250 million of proceeds from our bond transaction. From an unfunded commitments perspective, the majority of our commitments are not traditional revolver-based commitments, which can be called at any time, but rather acquisition or performance-based commitments, which have a natural order of operations attached to them, and as a result, are materially less likely to be called.
As of March 31, 2020, our unfunded revolver commitments totaled $34 million, and our unfunded term debt or delayed draw term loans totaled approximately $338 million. Our unfunded equity or asset-based finance commitments totaled $214 million. Together, these unfunded commitments totaled approximately $587 million. As we disclosed in our 10-Q, for a variety of reasons, we do not envision a scenario where we would be required to fund 100% of these unfunded commitments. With that, I'll turn the call back to Michael for a few closing comments.
Thank you, Steven. While the COVID-19 pandemic has dominated recent headlines, and we all expect its effects to continue to shape our global economy for many months to come, we continue to work toward our own strategic goal of rotating our investment portfolio to KKR Originate Investments. We also will continue to support our existing portfolio companies. The incremental capital we have raised, coupled with our bank amendment, will help position us to carry out our goals. We thank you for your continued support, and we look forward to speaking with you next quarter. With that, Operator, we will open the call for questions.
Ladies and gentlemen, to ask a question at this time, please press star, then one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Casey Alexander with Compass Point. Your line is now open.
Hi. In relation to the FSK franchise co-investment vehicle, I mean, can you give us an idea of where the additional $250 million is likely to come from and just some sort of color on the manner and timing in which you hope to enter the market or how you intend to run this vehicle?
Sure, Casey. It's Dan. I can take that, and good morning. I think a couple of things. I mean, as you know, we have been focused on accessing more institutional investors for the last several quarters, if not a longer duration than that. And I think you can see from the numbers that the affiliates, the advisor, are $100 million of the $350 million. The other $250 million is folks who are institutional investors who are sort of well-known to the KKR platform. In terms of how we enter the market, as per Michael's kind of statements, this is intended to be open market purchases. It can use sort of 10b5-1 programs, but I think that's the color we can share on the call today.
So it is intended to run sort of programmatically then and would operate then through blackout periods as well?
Yeah. I mean, I think that's the intention. I mean, I think it can have some flexibility to do other things, but I would think about it programmatic in nature.
Okay. Great. Secondly, Brian, you went through a number of names pretty quickly that were credit-related marks in the quarter. Could I ask you to review that again just slightly slower? My ADD kicked in, and I didn't quite get it all.
Yeah. No worries, Casey. So just taking a step back, when you look at our loss for the quarter, 10 issuers accounted for about half of this loss. The JV was the largest mover in terms of about a $120 million movement in price. That really related to movements in underlying investments within that portfolio. The other top 10 were really concentrated in certain industries we see being impacted disproportionately by COVID. These included retail and consumer, energy, and aircraft. Within retail and consumer, a couple of names pop out: Belk, NBG Home, and Art Van Furniture. Belk, I think as we've talked about before, is a southeastern department store retailer. That business has been pretty much shuttered because of the lockdown, because of COVID. NBG Home also was marked down. It sells into retailers. It sells home furnishing products. So that's been impacted.
And Art Van Furniture also has gone through a liquidation process and was marked down accordingly. On the energy side, a couple of names, FourPoint and Chisholm, have been impacted by the decline in energy prices and commodity prices. So those have come down during the quarter. And on the aircraft side, Global Jet was also marked down again this quarter, just based on comps. Equity positions, which are about 6% of the portfolio, were also hit due to moves in market multiples. And those included names like JW Aluminum and Amtech.
All right. Thank you very much. I won't try to hijack the call. I'll step out and let other people ask questions, and if I have more, I'll circle back at the end.
All right. Thank you, Casey.
Thank you. And our next question comes from Rick Shane with J.P. Morgan. Your line is now open.
And thank you for taking my questions. I hope everybody's doing well. When we spoke, I guess, now in the fall, you were looking at the incremental leverage opportunities as opportunistic waiting for some sort of dislocation event or some sort of pullback in the market. And I guess we now fall into the category of be careful what you wish for. It's obviously a lot of that capacity was used up by the marks, but there is opportunity at this point for you guys to start deploying capital. I'm curious, as you look forward, how you think the markets for new investments open up. Obviously, everything's closed right now. What would the timeframe be? And what does that look like going forward?
Sure. Rick, it's Dan. Happy to take that. There's a couple of points in there, so maybe I'll touch on them. If I miss anything, circle back. But I think you're right from a leverage perspective. I mean, we started off the quarter roughly sort of 0.9 net. I think we're happy. We were prudent with the leverage because obviously there was a lot of volatility here this quarter, and I think where we sit, I think I'd point out sort of two things that do make us, we'll call it excited about what the market opportunity could bear. I mean, we've talked about the liquidity number. I think we're happy with that $1.2 billion. I think when the market will present more interesting lending opportunities over the near term than it has in the past several quarters, how it opens is probably a little bit TBD.
I mean, you started to see activity in the high-yield market. I think that's been off of a ton of activity in the investment-grade market. We do have transactions percolating through our screening and investment committees, albeit the volume of that is dramatically lower as you would expect. Our number one priority is focusing on the portfolio, maximizing our recoveries and getting back par on loans there. But there will be lending opportunities that will be interesting. I think they will be interesting from a pricing perspective, from a structure perspective, but also just from an overall kind of risk-reward perspective.
Okay. Great. Thank you. And we really do appreciate the transparency in terms of the dividend policy and sort of the build-up to how you get there on a quarterly basis. So thanks for that.
Good. Appreciate that feedback.
Thank you, and our next question, Finian O'Shea with Wells Fargo Securities, your line is now open.
Hi, good morning, everyone. Hope everything's going well. First question for Steve on the credit facility amendment. First, for housekeeping, what should we model for the fee and the amendment fee that is? And next, beyond the shareholders' equity covenant, and I know you issued unsecured as well, so those both give you headroom. But as to the enhanced operating flexibility, can you describe that? What can you do now that you couldn't do before?
Sam, thanks for the question. Sorry, Dan, go ahead.
No, you take it, Steven. I'll follow.
Okay. If I missed something, please jump in. In terms of the fee, for us, it was measured in, I would say, sort of nominal basis points as these types of routine amendments are. For modeling purposes, I think somewhere in the 10-15 basis point range would be appropriate in terms of how you might think about it in terms of the overall facility. Basically, what we did is we reset the covenants on that to what they had been before. That obviously any publicly traded company wants to have a meaningful amount of cushion under operating covenants for credit facilities. We're no different than anyone else there. It was an appropriate time to go to the banks in the sense of we were in the process with the bond deal that Michael mentioned in his prepared remarks.
And so it made a lot of sense to have that conversation with the banks at that point. So those were the primary points of it. Did I miss anything there?
No, the only other thing I would add, then, just so you have it, is there was no change to the spread of the facility, and when you think about we are of the opinion that in a market like this, liquidity is very important. I think we've used the word liquidity as king a bunch of times, so us getting the unsecured deal done and on a very proactive basis, making these amendments to the bank deal felt like a very appropriate thing to do.
Got it. Thank you. And I guess, Dan, as a follow-up on the investment vehicle, can you give us color on any attendant economics the third party might receive and also how the shares will vote? I assume the shareholders are able to vote, but trying to understand these are less common circumstances where one of your affiliates will be managing an investment company that will hold your stock. So will it mirror vote, abstain, or so forth?
Yes, Dan. I mean, good questions. In terms of the third-party institutional investors, there are no fees sort of attached, right? This is just an entity whereby they're buying or on their pro-rata share sort of buying the stock. So there's no sort of, I think, fee component to that. But in case I'm missing something, you can kind of follow up with that sort of question. In terms of your voting points, we can circle back. I want to make sure that I sort of get that sort of correct. But I think the holders of those shares on a look-through basis would be able to vote them in the same manner that you would expect as if they own them. But I'll circle back with you to confirm that.
Okay. Thank you. And a final question for Mr. Forman. First, we appreciate the credit look-back mechanism that you've put in. Many BDCs still, unfortunately, don't have them. But looking at the incentive fee trajectory, Steve mentioned it'll be several quarters. Can you talk about how the lack of incentive fee impacts the strength or viability of your credit platform?
Yes. We implemented the look-back some time ago, and obviously, it's a bit binary. It can be fairly negative in these down markets. But we have a strong team. KKR has a strong team. We have significant scale. It has not changed the way we look at the portfolio and the platform, and we continue to devote the resources necessary to operate and manage the vehicles.
Yeah. And just to add to that, because I mean, I know I made the point in my sort of comments. I mean, we've continued to build out the team sort of meaningfully on the KKR side. I mean, we've had new joiners start in the midst of the shutdown. And we'll continue to add people where needed. So I think you should make a simple assumption that whether or not kind of the incentive fee is paid, and we do think the look-back was doing its job here, that will not impact in any manner how we staff and look after this portfolio.
Got it. Appreciate the color, and thank you, everybody.
Thank you, Finian.
Thank you. Our next question comes from John Hecht with Jefferies. Your line is now open.
Good morning, and good to hear everybody's voice, and thank you for taking my question. First one is related to the dividend. Again, like Rick said, appreciate the kind of bridge from Q1 to Q2 dividend. I'm wondering, how do we think about the dividend policy going forward and the variability around that?
Yeah, John, I can start, and then Steven can add to it. I think we felt this was the most appropriate sort of policy and stance to take considering the environment we're in. And I think if you go back to Steven's sort of comments, you can sort of see the bridge from the 15 to 19, with the obvious downward LIBOR piece is a part of that. Obviously, we're expecting less fee income as we're expecting sort of less new deal volume. I think you should have the expectation for the next several quarters that we will be doing the same. We'll be providing on this call what we're expecting our sort of current/forward quarter to be in terms of earnings, and we'll look out to pay 100% of that. But Steven, add to that, please.
No, I think good summary. And John, as Michael mentioned in his comments, I think if you look at not just FSK, but lots of BDCs over the years, dividends paid have tended to equate to, call it plus or minus, a 9% yield on net asset value over some sustained period of time. And so I think from our standpoint, we would continue to believe that in terms of how we might think about the dividend on a forward basis and what the portfolio could produce from an earnings standpoint. So that's probably a decent metric to work with. Again, plus or minus, every quarter won't hit it exactly, but over the long term.
Okay. Appreciate that. And then this is a kind of a higher-level question. Obviously, it seems like you guys are now more focused. You have good liquidity. You've shored that up even since the end of the quarter. It seems like you're focused inwardly about opportunities to help your portfolio companies. But at the same time, I imagine in the outside world, there's a lot of opportunity for whether it's restructuring or getting better spreads in the market. I guess what I'm just wondering is from, and you're attached to a very big asset management platform that probably has a fairly broad scope of eyes looking at different opportunities. How do you kind of balance that, and how do we think about that in terms of your ability to deploy capital in the next couple of quarters?
Yeah. Listen, I think it's a very good question.
And there's maybe a couple of different pieces to it. We are very focused on the existing portfolio. That's not because we're trying to be solely sort of inward-focused, but I think that's the prudent thing to do, right? We are looking to ensure that we maximize value on those loans. And there'll be work to do. There'll be amendments. There will be situations that sort of need capital. I think you're right, though. I mean, there will be plenty of new opportunities there. As I mentioned, we have seen sort of new deal flow going through our screening and investment committee process. I think we will be highly selective with risks that we do put on. But we feel quite good about our origination footprint, not just with inside the team, but the access to the broader origination footprint of the firm. And we will see deal opportunities.
But like I said, we'll be highly selective and make sure we're putting on the right risk-adjusted returns.
Great. Appreciate that, guys. Thanks very much.
Thank you. Our next question comes from Ryan Lynch with KBW. Your line is now open.
Hey, good morning, guys, and thanks for taking my question. Hope you guys all are well. My first one has to do with your unfunded commitments. You have about $34 million, which are revolvers, which are largely at the borrower's discretion. Another $339 million of delayed-draw term loans, which are typically with acquisitions or certain performance-based tests. My question is with the $215 million of unfunded asset-based finance commitments, are those typically at the borrower's discretion, or are there any certain milestones or performance tests that they have to meet before those can be drawn down or funded?
Yeah, Ryan, good morning. It's Dan. Happy to take that. I mean, your numbers are spot on, right? Our revolver amount is $34 million. We've always probably taken less down on revolvers, so in this environment, we're probably happy that number is small, and it is a fair assumption that the revolvers can be drawn at any point. The delayed-draw term loans would be very much skewed towards M&A and would have leverage in currency tests, so inside the current environment, it's probably a fair expectation that a fair amount of that number will not be drawn. And those are traditionally for much shorter durations than the loan itself, probably ranging anywhere from six months to two years from a closing date. On the $214 million, I would probably think about it in three buckets. Bucket number one, it would be available to be drawn as assets were available.
So put that in the discretion of the borrower on the other side. The second bucket being certain performance tests would have to be met. And the last bucket, which is probably closer to half of that number, we actually have to approve the underlying risk decision, right? So it's dependent on deal and dependent upon asset mix. But our belief is very much across the board that we won't see anywhere near the total of that $587 million sort of drawn, which is why that $1.2 billion liquidity number, not as just two times the $587 million, but should be much more than that by what would actually be drawn.
Okay. Okay. That's helpful. Can you? Obviously, we're in a very fluid situation, so I know things are subject to change, monthly, weekly. But just can you give any sort of update and outlook on your investment in Toorak? I would just be interested to see kind of how that buy-and-flip model is operating given this unprecedented downturn, fully knowing that it's early on and things are subject to change, and it's hard to outlook it, hard to forecast what's going to happen in the future.
Yeah. No, happy to do that. I think you're right. It is a fluid situation. I think we may have moved on from it being fluid on a daily basis to your words, kind of weekly and monthly. What we've seen is on Toorak sort of a couple of things, right? One, they did access the securitization market. I want to say the deal priced on March 10th. I think it shows the strength of that platform. They were able to do that. It was the biggest deal they've ever done. It was in excess of $400 million. We are expecting to see a slowdown in transactions, obviously, as with social distancing and the other measures. I think just housing sales will be down. We haven't actually started to see that flow through much yet, as a lot of this was just sort of in the pipeline.
But I think that will slow. On the bigger macro point, though, I think we remain constructive U.S. housing. Obviously, this is going to put a dent in things. But if you think back to the last financial crisis, that was almost housing-led. You had oversupply everywhere. You had tons of speculation. This isn't that, right? And I think you're going to see probably a bit of a nesting feature. You're probably not going to see a ton of stuff available for sale. Housing starts will be down. So I think from the overall macro picture, we feel quite good about the risk. And remember, these are the underlying loans are 75 LTV. So you have a lot of downside protection on real estate value.
Okay. And then just the last one. You guys right now are above your leverage range that you guys had kind of previously set. I'm not sure if I had missed this earlier in the call. But just kind of how are you guys thinking about leverage? Obviously, these are uncertain times. The asset values of BDCs have been marked down significantly. So certainly, I understand the willingness and need to operate above historical targets. But can you just talk about you guys even thinking about a leverage range right now, or are you guys just more focused on managing liquidity of your balance sheet with flexible capital in addition to providing for your unfunded commitments?
Yeah. I mean, I think it's the former, as you said it, right? I mean, we're very focused on liquidity position, hence all the work that was done over the quarter. I think that's the most important. I mean, there's no change. I would tell you to where we want our target leverage numbers to be. You're right. I mean, we're slightly above that today. We will look to normalize that over time, but we're much more focused on I think we're in a good spot. Liquidity and leverage can be focused on helping our borrowers get to the other side of this.
Okay. Fair enough. Appreciate the time today. That's all I had.
All right. Thank you, Ryan. Good to talk to you.
Thank you. Our next question comes from Robert Dodd with Raymond James. Your line is now open.
Morning, guys. Yeah. In your prepared remarks, you made some comments about obviously receiving PIK toggle requests, amortization deferrals, etc. I mean, no big surprises there. But can you give us any color on kind of components to that? What's the scale relative to the size of the portfolio that you're seeing those requests come in at? And maybe also any color you can give us on kind of the cadence. I mean, are those requests still accelerating? Have they moderated? I mean, what's kind of the flow of requests from portfolio companies at this point, maybe where it was a month ago?
Yeah. No, happy to take that. I'm not entirely sure it's probably that different today than it was a month ago because I think a month ago, people were also just trying to figure out how long this was going to last and how long it was going to play out, right? But in terms of numbers, we've gotten requests on 7.8%. This is through effectively yesterday. We've gotten requests on 7.8% of the portfolio in terms of requests, and we've approved 1.2%, right? So roughly just under a quarter of that, albeit a handful are still in discussion. I will say they've taken a couple of different forms just to give you the color. I mean, we've gotten requests for interest deferrals for companies who, quite frankly, have a very strong liquidity position. We're saying no to those. It doesn't make sense.
We don't need to sort of do that now. Most of our deals have cash flow sweeps, so above and beyond the regularly scheduled amortization. We've seen some requests to waive that. I think we're willing to consider that, but we want to make sure it's kind of fair on both sides, and then there are certain businesses that have obviously been harder hit here where revenue has essentially evaporated, and we'll need to be more accommodating there, I think, as it relates to interest, but on the other side, we will be looking for or expecting the equity to come into those businesses to assist as well, so I think we want to be a good partner. We want to be a good lender. We want to be supportive.
I think we'll just also be using this as an opportunity to make sure we're thoughtful, and we'll be looking for support from sponsors on the other side.
Got it. Got it. Very helpful kind of thing. Just to pull up on that, on the businesses where you've had essentially revenue evaporate or down two-thirds or more, obviously, that ties in with on the other side, you've just added significant liquidity to your own positions. I mean, how do you feel, excuse me, about your liquidity position relative to where you think the portfolio company needs are, particularly for the ones that are highly stressed in terms of how long, obviously, FSK, and then there's a broader platform, all of this can be supported?
Yeah. I mean, great question. I think we feel quite good, right? But I think part of the reason why we were forward-leaning and getting the unsecured bond deal done and proactively working through the revolver is exactly that. And just go back to the numbers, right? Roughly $1.2 billion of liquidity, as Steven laid out on the call, that $587 million unfunded amount, a lot less than that will actually be drawn. So I think you're well covered there for these new money needs. So I think the simple answer is we feel in a good spot to address those. And like I said, we're expecting to be a supportive lender and work with people to get to the other side of this.
Okay. I appreciate that. And if I can, one kind of follow-up on Ryan's question about leverage. Obviously, you're seeing some initial origination opportunities, obviously, volume way down. Given you are slightly above the target range, ignoring whatever happens to rebounds and marks if that happens in the second quarter, that's a little too early to tell, I think. I would presume anything that you would be funding would be on new originations would be contingent on getting repayments in the door. So what do you expect from our asset sales? What do you expect for pace of that? I expect that to be really low in Q2, but how do you think that repayment kind of sale activity is going to pick up through the rest of the year?
Yeah. I mean, to be honest, I think it's probably a little bit too early to tell that, right? I mean, we have had some repayments come through the books for deals that were already in process well before the beginning of March. All of our deals generally have some form of amortization, whether it's 1%, 2.5% per year. Some deals have as much as 10%. These cash flow sweeps do work. So you are seeing sort of paydowns from the book. I think it's probably a little bit too early to figure out what exactly repayments might look like. But I think the overarching point is I think the opportunities will be interesting, but we're going to do it prudently inside of what we think the liquidity we have that's available and the right leverage number. So it'll be a balance of all that.
Got it. Got it. Thank you.
Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Dan Pietrzak for any closing remarks.
All right. Well, thank you. We just want to thank you all for your time today. We hope that you all remain safe and healthy, and the team is available for any follow-up questions as needed. But thanks again for your time.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.