LAGO Evergreen Credit Review 2026: NAV $25.37, 14% Payout

What LAGO Evergreen Credit is

LAGO Evergreen Credit is a Delaware statutory trust formed on October 30, 2024 that elected to be regulated as a BDC and taxed as a regulated investment company. It is a private BDC: its shares “are being offered solely to investors that are ‘accredited investors’” under Regulation D, there is no public market, and it is not a retail product like the non-traded BDCs in our non-traded BDC list. It began on March 3, 2025, when a smaller private fund (the Legacy Fund) merged into it; that fund held $31.7 million in seven companies at December 31, 2024.

The adviser’s own filing says the management fee design matters: “the Investment Adviser benefits when the Company incurs debt or uses leverage,” because the fee is charged on gross assets, not on net assets. Audax Private Credit Fund, another private BDC we cover, charges its base fee on net assets, so compare the basis and not only the percentage.

NAV and the distribution, quarter by quarter

NAV has been steady. The fund’s share price moved from $25.00 in March 2025 to $25.60 at March 31, 2026 and back to $25.37 at June 30, 2026. The October 1, 2026 share sale was priced at $25.42, which implies the September 30, 2026 NAV (the third-quarter 10-Q has not been filed).

The distribution is what a reader notices: it has risen almost every quarter. The table sets each declaration against the NAV at the record date and against net investment income, which is the income left after expenses and fees.

Sums and percentages are our arithmetic from the Forms 10-Q, the 10-K and the Forms 8-K; fourth-quarter 2025 income is the 10-K period total minus the nine-month total. First-quarter 2026 income includes a $720,000 fee that the cash flow statement shows as non-cash. For the period March 3 to December 31, 2025 the 10-K shows $2.16 per share of distributions, all from net investment income and none from return of capital; the character of 2026 distributions is set at year-end.

Income, warrants and fees: what the $0.89 is made of

The question behind a 14% payout is where the income comes from. The fund’s loans carry a floating rate of SOFR plus a spread, and it also receives warrants (rights to buy a borrower’s stock). The 10-Q splits the six months to June 30, 2026 as follows.

Warrant accretion is listed in the cash flow statement as accretion of a discount; in our reading it spreads the value assigned to warrants over the life of the loan. It is income on paper until a warrant is sold or exercised. The cash flow statement lists three non-cash adjustments: net accretion of discounts of $3,893,314, non-cash fee income of $720,000 and payment-in-kind interest of $220,217.

Worked example (our arithmetic). Non-cash items total $4,833,531, which is 25.9% of the $18,681,635 of investment income. Net investment income was $11,978,825 and distributions declared were $9,707,755, so reported coverage was 123%. Subtract the non-cash items and $7,145,294 is left, 74% of the distribution. Because the adviser takes 15% of income above the hurdle, taking that income out would also reduce the incentive fee, which lifts the figure to about $7,870,000, or 81%. The honest range is therefore 74% to 81% in cash-like terms. That does not mean the distribution is unsupported: loans that repay turn accrued discount into cash, and $18.4 million of loans repaid in the half. It does mean the payout leans on gains that arrive when a borrower exits.

Fees are the other side. In the six months the adviser earned $1.51 million of base fee and $2.05 million of income incentive fee, less a $0.37 million reversal of the capital gains fee: $3.19 million, 17.1% of investment income (our arithmetic). The 10-Q reports total expenses of 9.81% of average net assets, annualized, or 7.14% without incentive fees, and a six-month total return of 6.89%, not annualized.

The portfolio: 49 loans, 42 borrowers

Our table below comes from the 10-Q schedule of investments, which lists each loan with its rate, maturity, principal and fair value. The 49 debt positions total $230.05 million of principal and $221.16 million of fair value, which is 155% of net assets because of borrowing. At fair value, the fund holds 92.0% first lien loans, 1.9% second lien loans, 1.3% equity and 4.8% warrants. It has 45 portfolio companies.

Together these ten are $107.5 million, 48.6% of debt at fair value and 75% of net assets (our arithmetic). Facts from the schedule that other write-ups do not show:

• Rates. 46 of the 49 positions pay a spread over one-month SOFR, which was 3.63% on June 30, 2026. The principal-weighted spread is 7.64% (range 6.0% to 10.5%), so the average coupon is about 11.3% before fees (our arithmetic). Seven loans also pay payment-in-kind interest. The 10-Q puts the effective cash yield at 15.6% for the six months, before the fund’s own costs.
• Maturities. $47.2 million of principal (20.5%) matures by the end of 2027 and $114.6 million (49.8%) by the end of 2028 (our arithmetic). The principal-weighted time to maturity is 2.5 years.
• Ratings. At December 31, 2025 the adviser rated every loan 4, the standard level. At June 30, 2026 $43.7 million (19.8%) was rated 5, the best grade, $2.6 million (1.2%) was rated 3 and $5.2 million (2.3%) was rated 2. The 2 and 3 amounts equal the fair value of the Hearth Display loans and the Predictive Fitness loan in the schedule (our arithmetic).
• Valuation. The 10-Q values loans with discounted cash flow at a weighted average discount rate of 15.6% (range 11.8% to 27.3%) and warrants with a weighted average volatility of 86.8%. The total of its Level 3 table equals total investments, $235,487,656: every position is valued with unobservable inputs.
• Non-accrual. No loan was on non-accrual at June 30, 2026 or December 31, 2025. Fair value was $709,120 below cost on the whole portfolio (our arithmetic), after $2.57 million of unrealized losses in the half.
• A repaid loan, a kept warrant. The first lien loan to AI Software dba Capacity was fully repaid in February 2026; the fund still holds its warrants at $2.55 million, 1.78% of net assets, and the repayment reversed a $1.2 million unrealized gain.

Leverage and the bank line

The fund borrows from a KeyBank revolving facility. Gross borrowings were $92,903,869 at June 30, 2026, 0.65 times net assets (our arithmetic), at a 6.89% weighted average rate in the second quarter. Asset coverage was 254%; a BDC with the reduced requirement needs at least 150%, so it can borrow up to about $2 for each $1 of equity.

The tension is in the unfunded commitments. At June 30, 2026 the fund had committed $93.6 million of delayed draw loans and revolvers, of which $76.9 million was unfunded. The largest unfunded amounts were $14.0 million each for Stress Free Auto Care and Hearth Display, $12.0 million for Atlas Exploration and $7.0 million for Spotter Labs. The 10-Q says these loans are generally at the fund’s discretion or depend on the borrower meeting conditions, that $12.6 million was available for eight borrowers to draw at their discretion, and that the credit agreements allow relief after a materially adverse event. It also says the fund funds commitments from cash and its bank line. The September amendment adds $50 million of capacity; the October share sale adds $15.3 million of equity.

Getting out: no repurchase program yet

Here the 98% figure that appears in some summaries needs a correction. Under the planned program, shares held for under one year would be repurchased at 98% of NAV, a 2% deduction kept by the fund. The program itself has not started. The 10-Q says the company intends to begin it “two years after the date on which the Company commenced the Private Offering,” at the board’s discretion, to repurchase up to 10% of shares a year by tender offer at quarter-end NAV, and that the board may suspend it. The company did not make any share repurchases in the six months to June 30, 2026. The filings do not give the offering start date; the first sale to new investors was April 1, 2025, so we read the earliest start as spring 2027.

New money has arrived every quarter. After the October sale there are about 6.90 million shares, worth about $175.4 million at $25.42 (our arithmetic; the third-quarter 10-Q will give the exact figure). If the program began and used the full 10% annual limit, it could repurchase about 690,000 shares a year, about $17.5 million (our arithmetic), which is close to one quarter’s sales. For how tender offers work in practice see our tender-offer guide; for a market-priced comparison see the listed venture lenders Hercules Capital and Trinity Capital.

What a reader can do with this

• If you own shares: read three things in the third-quarter 10-Q (due by about November 16, 2026): whether NAV holds near $25.42, whether net investment income still covers the $0.89 once non-cash items are set aside, and whether any loan moves to non-accrual or to a rating of 1 or 2.
• If you are considering buying: you would pay NAV on a quarterly closing date and could not sell until a program exists. Compare the full cost (about 9.8% of net assets a year in the 10-Q ratio) and the 6% hurdle, not only the payout. The private BDC explainer and the accredited investor comparison cover the basics.
• If the distribution matters for taxes: a BDC reports distributions on Form 1099-DIV after year-end; see 1099-DIV timing for non-traded BDCs. Ask a tax professional how it fits your accounts.
• If you are watching concentration: ten borrowers are 75% of net assets and all 49 loans are valued with unobservable inputs, with no market quote.

FAQ

All figures are from SEC EDGAR filings of LAGO Evergreen Credit (CIK 2043759) read on October 28, 2026: the Forms 10-Q for June 30, 2025, September 30, 2025, March 31, 2026 and June 30, 2026, the 10-K for 2025, the registration statement on Form 10-12G of March 3, 2025 and the Forms 8-K of July 2025 to October 16, 2026 (share sales, distributions and the third and fourth amendments of the KeyBank loan agreement). Sums, percentages, weighted averages and the cash-based coverage range are our arithmetic from the June 30, 2026 schedule of investments and statements. This is analysis of public documents, not investment, legal or tax advice.