UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-55351

Griffin Capital BDC Corp.

(Exact name of Registrant as specified in its charter)



Maryland	47-0995168
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

Griffin Capital Plaza, 1520 E. Grand Avenue, El Segundo, California 90245

(Address of principal executive offices)

(310) 469-6100

(Registrant’s telephone number)

Griffin-Benefit Street Partners BDC Corp.

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer” “smaller reporting company,” and "E-G-C" or an emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	ý (Do not check if a smaller reporting company)	Smaller reporting company	¨
Emerging Growth Company	ý

Table of Contents

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

As of August 8, 2017, the Registrant had 4,563,196 shares of common stock, $0.001 par value, outstanding.

Table of Contents

GRIFFIN CAPITAL BDC CORP.

TABLE OF CONTENTS



	Page No.
PART I. FINANCIAL INFORMATION
Cautionary Note Regarding Forward-Looking Statements	1
Item 1. Financial Statements	2
Statements of Assets and Liabilities as of June 30, 2017 (Unaudited) and December 31, 2016	2
Statements of Operations for the Three and Six Months Ended June 30, 2017 and 2016 (Unaudited)	3
Statements of Changes in Net Assets for the Six Months Ended June 30, 2017 and 2016 (Unaudited)	4
Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016 (Unaudited)	5
Schedules of Investments as of June 30, 2017 (Unaudited) and December 31, 2016	6
Notes to Financial Statements (Unaudited)	12
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3. Quantitative and Qualitative Disclosures About Market Risk	51
Item 4. Controls and Procedures	51
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	52
Item 1A. Risk Factors	52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3. Defaults Upon Senior Securities	52
Item 4. Mine Safety Disclosures	52
Item 5. Other Information	53
Item 6. Exhibits	54
Signatures	55

Table of Contents

PART I. FINANCIAL INFORMATION

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-Q of Griffin Capital BDC Corp., other than historical facts, may be considered forward-looking statements. Such forward-looking statements include, in particular, statements about our plans, strategies, and prospects and are subject to risks, uncertainties, and other factors. Such statements are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations and provide distributions to stockholders, and our ability to find suitable investments, may be significantly hindered. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the Securities and Exchange Commission ("SEC"). We cannot guarantee the accuracy of any such forward-looking statements contained in this Form 10-Q, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable securities laws and regulations.

See the risk factors identified in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2016 as filed with the SEC on March 31, 2017 for a discussion of some, although not all, of the risks and uncertainties that could cause actual results to differ materially from those presented in our forward-looking statements.

Table of Contents

Item 1. Financial Statements

GRIFFIN CAPITAL BDC CORP.

STATEMENTS OF ASSETS AND LIABILITIES



	June 30, 2017			December 31, 2016
ASSETS	(Unaudited)
Investments at fair value (amortized cost of $31,569,423 and $36,194,877, respectively)	$	31,673,055		$	36,642,373
Cash and cash equivalents	8,375,811			7,451,353
Interest receivable from investments	350,479			393,183
Prepaid expenses	67,517			155,533
Due from affiliates	477,151			127,354
Accounts receivable	20,276			64,219
Total assets	$	40,964,289		$	44,834,015
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities	$	148,144		$	213,210
Management and incentive fees payable to affiliate	252,724			267,690
Due to affiliates	1,188,248			1,187,149
Distributions payable	281,326			289,852
Directors fees payable	32,001			153,000
Unsettled trades payable	—			3,440,000
Discount for unfunded commitments	6,123			14,160
Total liabilities	1,908,566			5,565,061
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock $0.001 par value; 50,000,000 shares authorized; no shares issued or outstanding as of June 30, 2017 and December 31, 2016, respectively	$	—		$	—
Common stock $0.001 par value; 450,000,000 shares authorized; 4,563,196 and 4,563,196 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively	4,563			4,563
Capital in excess of par value	41,548,641			41,548,641
Distributions	(5,552,644		)	(3,855,311		)
Accumulated net investment income	2,386,433			888,806
Accumulated net realized gain from investments	549,738			226,597
Accumulated net unrealized appreciation on investments	103,632			447,496
Accumulated net unrealized appreciation on unfunded investments	15,360			8,162
Total stockholders' equity	39,055,723			39,268,954
Total liabilities and stockholders' equity	$	40,964,289		$	44,834,015
Net asset value per share	$	8.56		$	8.61

The accompanying notes are an integral part of these statements.

Table of Contents

GRIFFIN CAPITAL BDC CORP.

STATEMENTS OF OPERATIONS

(Unaudited)



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
Investment income:
Interest from investments	$	753,345		$	610,837		$	1,668,041		$	1,114,240
Total investment income	753,345			610,837			1,668,041			1,114,240
Operating expenses:
Base management fees	167,369			124,658			345,152			227,766
Incentive fees	(20,787		)	—			(4,145		)	—
Organizational costs	—			—			—			7,322
General & administrative	106,123			132,687			179,562			211,139
Amortization of offering costs	—			—			—			1,288,646
Professional fees	134,089			71,021			188,026			180,490
Insurance expense	43,268			49,637			86,589			98,728
Directors fees	35,500			36,549			81,000			80,019
Total expenses before reimbursement	465,562			414,552			876,184			2,094,110
Expense reimbursement (Note 5)	(465,562		)	(189,581		)	(705,770		)	(1,532,888		)
Total expenses, net of reimbursement	—			224,971			170,414			561,222
Net investment income	753,345			385,866			1,497,627			553,018
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from investments	152,755			(26,006		)	323,141			3,315
Net change in unrealized appreciation (depreciation) on investments	(256,690		)	228,458			(343,864		)	245,438
Net change in unrealized appreciation (depreciation) on unfunded investments	(6,641		)	(2,849		)	7,198			(2,849		)
Net gain (loss) on investments	(110,576		)	199,603			(13,525		)	245,904
Net increase in net assets resulting from operations	$	642,769		$	585,469		$	1,484,102		$	798,922
Per share information - basic and diluted
Net increase in net assets per share resulting from operations - basic and diluted	$	0.14		$	0.13		$	0.33		$	0.19
Weighted average common stock outstanding - basic and diluted	4,563,196			4,563,196			4,563,196			4,245,233

The accompanying notes are an integral part of these statements.

Table of Contents

GRIFFIN CAPITAL BDC CORP.

STATEMENTS OF CHANGES IN NET ASSETS

(Unaudited)



	For the Six Months Ended June 30,
	2017			2016
Operations:
Net investment income	$	1,497,627		$	553,018
Net realized gain from investments	323,141			3,315
Net unrealized appreciation (depreciation) on investments	(343,864		)	245,438
Net change in unrealized appreciation (depreciation) on unfunded investments	7,198			(2,849		)
Net increase in net assets resulting from operations	1,484,102			798,922
Stockholder distributions:
Distributions reinvested	—			(228,346		)
Distributions from investment income and realized gains	(1,697,333		)	(1,355,040		)
Net decrease in net assets resulting from stockholder distributions	(1,697,333		)	(1,583,386		)
Capital share transactions:
Issuance of common stock, net of discounts and offering costs	—			13,178,673
Distribution support contribution	—			465,829
Reinvestment of stockholder distributions	—			228,346
Net increase in net assets from capital share transactions	—			13,872,848
Total increase (decrease) in net assets	(213,231		)	13,088,384
Net assets at beginning of period	39,268,954			26,201,365
Net assets at end of period	$	39,055,723		$	39,289,749
Net asset value per common share	$	8.56		$	8.61
Common stock outstanding at end of period	4,563,196			4,563,196
Distributions in excess of net investment income at end of period	$	(3,166,211	)	$	(1,860,867	)

The accompanying notes are an integral part of these statements.

Table of Contents

GRIFFIN CAPITAL BDC CORP.

STATEMENTS OF CASH FLOWS

(Unaudited)



	For the Six Months Ended June 30,
	2017			2016
Operating Activities:
Net increase in net assets resulting from operations	$	1,484,102		$	798,922
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Paid-in-kind interest income	(101,246		)	(105,902		)
Net accretion of discount on investments	(84,495		)	(76,880		)
Principal repayments of investments	8,838,609			6,004,070
Purchase of investments	(3,704,273		)	(14,102,932		)
Net realized gain from investments	(323,141		)	(3,315		)
Net change in unrealized appreciation (depreciation) on investments	343,864			(245,438		)
Amortization of offering costs	—			1,288,646
(Increase) decrease in operating assets:
Interest receivable from investments	42,704			(97,611		)
Prepaid expenses	88,016			99,417
Due from affiliates	(349,797		)	(368,185		)
Accounts receivable	43,943			—
Receivable for unsettled trades	—			(649,699		)
Increase (decrease) in operating liabilities:
Accounts payable and accrued liabilities	(65,066		)	(168,159		)
Management and incentive fees payable to affiliate	(14,966		)	30,334
Due to affiliates	1,099			(574,837		)
Directors fees payable	(120,999		)	39,135
Unsettled trades payable	(3,440,000		)	3,887,584
Discount for unfunded commitments	(8,037		)	9,007
Net cash provided by (used in) operating activities	2,630,317			(4,235,843		)
Financing activities:
Issuance of common stock, net of discounts and offering costs	—			13,109,821
Distribution support contribution	—			465,829
Distributions paid to stockholders	(1,705,859		)	(1,156,529		)
Offering costs paid	—			(285,637		)
Net cash provided by (used in) financing activities	(1,705,859		)	12,133,484
Net increase in cash and cash equivalents	924,458			7,897,641
Cash and cash equivalents, beginning of period	7,451,353			9,577,910
Cash and cash equivalents, end of period	$	8,375,811		$	17,475,551
Supplemental disclosure of non-cash operating transactions:
Paid-in-kind interest income	$	101,246		$	105,902
Supplemental disclosure of non-cash financing transactions:
Distributions declared and payable	$	281,326		$	280,502
Distribution paid through DRP share issuances	$	—		$	228,346

The accompanying notes are an integral part of these statements.

Table of Contents

GRIFFIN CAPITAL BDC CORP. SCHEDULE OF INVESTMENTS As of June 30, 2017 (Unaudited)


Portfolio Company	Footnotes	Industry	Rate (b)	Index Rate (b)	LIBOR Floor		Maturity	Principal	Amortized Cost	Fair Value	% of Net Assets (e)

Senior Secured Loans - First Lien
Alvogen Pharma US, Inc.	(d)	Pharmaceuticals	L+500	3 Month LIBOR	1.00	%	4/1/2022	1,789,257	1,753,497	1,774,048	4.6	%
Ardent Legacy	(d)	Health Facilities	L+550	3 Month LIBOR	1.00	%	8/4/2021	244,375	242,600	245,646	0.6	%
Asset International - TL	(d)	Business Services	L+850	3 Month LIBOR	1.00	%	5/15/2021	2,463,825	2,423,262	2,425,882	6.2	%
Asset International - DDTL	(d) (g)	Business Services	L+850	3 Month LIBOR	1.00	%	5/15/2021	338,000	202,800	200,914	0.5	%
Asset International - Revolver	(d) (g)	Business Services	L+850	3 Month LIBOR	1.00	%	5/15/2021	135,000	67,500	66,913	0.2	%
Bahakel Communications, Ltd.	(d) (g)	Media - Broadcast	L+750	1 Month LIBOR	1.00	%	7/29/2020	270,381	235,094	235,080	0.6	%
Bahakel Communications, Ltd. - Revolver	(d) (g)	Media - Broadcast	L+750	1 Month LIBOR	1.00	%	7/29/2020	14,000	3,500	3,488	—	%
Beaver Visitec International, Inc.	(d)	Healthcare - Products	L+500	3 Month LIBOR	1.00	%	8/21/2023	1,985,000	1,967,329	1,990,955	5.1	%
Centric Group		Business Services	L+425	1 Month LIBOR	1.00	%	1/31/2023	2,992,500	2,978,321	2,984,091	7.7	%
Deep Gulf Energy II, LLC	(d)	Energy - Exploration & Production	L+1300	1,2,3,6 Month LIBOR	1.50	%	9/30/2018	100,000	99,001	92,020	0.2	%
Inventure Foods, Inc.	(d)	Food - Wholesale	L+800	3 Month LIBOR	1.00	%	11/17/2020	855,608	839,519	855,265	2.2	%
Lightsquared	(c)	Telecom	L+875	1 Month LIBOR, Prime	1.00	%	6/15/2020	115,728	113,619	112,174	0.3	%
MyEyeDr	(d)	Health Facilities	L+625	3 Month LIBOR	1.00	%	8/14/2021	794,000	783,956	789,633	2.0	%
MyEyeDr - Term Loan	(d)	Health Facilities	L+625	3 Month LIBOR	1.00	%	8/14/2021	252,619	248,364	251,179	0.7	%
MyEyeDr - Delayed Draw	(d) (g)	Health Facilities	L+625	Unfunded	1.00	%	8/14/2021	1,200,000	—	—	—	%
MyEyeDr - Revolver	(d) (g)	Health Facilities	L+625	Unfunded	1.00	%	8/14/2021	43,000	—	—	—	%
Plano Molding Company, LLC	(d)	Consumer Products	L+750	3 Month LIBOR	1.00	%	5/12/2021	79,964	79,226	69,481	0.2	%
Premiere Global Services Inc.		Telecom	L+650	1 Month LIBOR	1.00	%	12/8/2021	2,836,126	2,632,958	2,820,187	7.2	%
Rue21, Inc.	(h)	Retail	L+463	3 Month LIBOR	1.00	%	10/9/2020	637,220	587,671	55,757	0.1	%
Rue21, Inc. - Rollup		Retail	L+463	1 Month LIBOR	1.00	%	11/12/2017	151,321	151,321	146,403	0.4	%
Rue21, Inc. - DIP DDTL	(g)	Retail	L+1200	1 Month LIBOR	1.00	%	11/15/2017	75,676	59,361	58,573	0.1	%
Santek Waste Services, Inc. - Term Loan	(c) (d)	Environmental	L+1000	3 Month LIBOR	1.00	%	12/4/2020	709,842	693,335	705,370	1.8	%
Santek Waste Services, Inc. - DDTL	(c) (d) (g)	Environmental	L+1000	3 Month LIBOR	1.00	%	12/4/2020	253,458	193,068	198,022	0.5	%
Santek Waste Services, Inc. - Revolver	(d) (g)	Environmental	L+1000	Unfunded	1.00	%	12/4/2020	66,000	—	—	—	%
Solarwinds, Inc.	(a)	Technology	L+350	1 Month LIBOR	1.00	%	2/3/2023	1,080,117	1,028,857	1,081,737	2.8	%

Table of Contents

GRIFFIN CAPITAL BDC CORP. SCHEDULE OF INVESTMENTS (Continued) As of June 30, 2017 (Unaudited)


Portfolio Company	Footnotes	Industry	Rate (b)		Index Rate (b)	LIBOR Floor		Maturity	Principal		Amortized Cost		Fair Value		% of Net Assets (e)

Tribune Publishing Company	(a) (d)	Newspaper	L+475		1 Month LIBOR	1.00	%	8/4/2021	52,352		51,798		52,195		0.1	%
Veritas		Software/Services	L+450		3 Month LIBOR	1.00	%	1/27/2023	400,556		347,310		400,773		1.0	%
Victory Capital Management	(a)	Financial Services	L+750		3 Month LIBOR	1.00	%	10/29/2021	1,654,110		1,606,848		1,674,786		4.3	%
Vizient, Inc.		Healthcare	L+350		1 Month LIBOR	1.00	%	2/13/2023	1,319,779		1,284,276		1,329,678		3.4	%
Walgreens Infusion	(d)	Healthcare	L+500		1 Month LIBOR	1.00	%	4/7/2022	587,535		588,275		586,595		1.5	%
Total Senior Secured Loans - First Lien											$	21,262,666	$	21,206,845	54.3	%
Senior Secured Loans - Second Lien
Asurion Corporation		Business Services	L+750		1 Month LIBOR	1.00	%	3/3/2021	$	2,000,000	$	1,996,034	$	2,007,499	5.1	%
Cast & Crew Payroll, LLC	(d)	Business Services	L+775		3 Month LIBOR	1.00	%	8/12/2023	222,316		220,944		221,738		0.6	%
Cirque Du Soleil	(a) (d) (f)	Entertainment	L+825		3 Month LIBOR	1.00	%	6/23/2023	1,817,918		1,792,099		1,827,008		4.7	%
Lightsquared	(c)	Telecom	L+1250		3 Month LIBOR	1.00	%	12/7/2020	1,203,713		1,127,715		843,357		2.1	%
Total Senior Secured Loans - Second Lien											$	5,136,792	$	4,899,602	12.5	%
Senior Secured Bonds
Covenant Surgical Partners		Health Facilities	8.75	%				8/1/2019	$	400,000	$	401,292	$	392,499	1.0	%
Hexion Inc.		Chemicals	10.00	%				4/15/2020	900,000		841,421		893,250		2.3	%
Radio One Inc.		Media - Broadcast	7.38	%				4/15/2022	500,000		484,936		517,104		1.3	%
Total Senior Secured Bonds											$	1,727,649	$	1,802,853	4.6	%
Senior Unsecured Debt
Cablevision	(a)	Cable	10.88	%				10/15/2025	$	1,000,000	$	1,032,516	$	1,202,035	3.1	%
Frontier Communications, Corp.	(a)	Telecom	11.00	%				9/15/2025	494,000		482,602		457,439		1.2	%
Frontier Communications, Corp.	(a)	Telecom	10.50	%				9/15/2022	116,000		116,000		110,635		0.3	%
Monitronics International, Inc.	(a)	Business Services	9.13	%				4/1/2020	800,000		757,964		758,800		1.9	%
Presidio Holdings, Inc.		Technology	10.25	%				2/15/2023	1,095,000		1,044,737		1,212,713		3.1	%
Total Senior Unsecured Debt											$	3,433,819	$	3,741,622	9.6	%
Equity/Other
Santek Waste Services, Inc.	(d)	Environmental						N/A	NM*		$	8,497	$	22,133	0.1	%
Total Equity/Other											$	8,497	$	22,133	0.1	%
TOTAL INVESTMENTS											$	31,569,423	$	31,673,055	81.1	%

____________________

Table of Contents

(a) Indicates assets that the Company believes do not represent “qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of June 30, 2017, 17.52% of the Company’s total assets were non-qualifying assets.

(b) The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”) which reset daily, monthly, quarterly, or semiannually. For each investment the Company has provided the spread over LIBOR. The 1, 2, 3, and 6 month LIBOR rates were 1.22%, 1.25%, 1.30%, and 1.45% respectively, as of June 30, 2017. Certain investments are subject to a LIBOR interest rate floor.

(d) As there is no readily available market value for these investments, the fair value of these investments is determined in good faith by the Company's board of directors as required by the Investment Company Act of 1940, in conjunction with a nationally recognized valuation firm. (See Note 4, Fair Value of Financial Instruments, in the accompanying notes to the financial statements.)

(e) Percentages are based on the Company's net assets of $39,055,723 as of June 30, 2017.

(f) All of the Company's investments are domiciled in the United States except for Cirque Du Soleil which is domiciled in Canada.

(g) All or a portion of this commitment was unfunded at June 30, 2017. As such, interest is earned only on the funded portion of this commitment. Refer to Note 6, Commitments and Contingencies, of the notes to the financial statements for additional detail.

(h) The investment is on non-accrual status as of June 30, 2017.

The accompanying notes are an integral part of these statements.

Table of Contents

GRIFFIN CAPITAL BDC CORP. SCHEDULE OF INVESTMENTS As of December 31, 2016


Portfolio Company (g)	Footnotes	Industry	Rate (b)	Index Rate (b)	LIBOR Floor		Maturity	Principal		Amortized Cost		Fair Value		% of Net Assets (e)

Senior Secured Loans - First Lien
AccentCare, Inc.		Healthcare	L+575	3 Month LIBOR	1.00	%	9/3/2021	$	195,000	$	191,814	$	189,150	0.5	%
Affinion Group	(f)	Business Services	L+525	3 Month LIBOR	1.50	%	4/30/2018	2,978,342		2,824,193		2,958,983		7.5	%
Alvogen Pharma US, Inc.	(f)	Pharmaceuticals	L+500	3 Month LIBOR	1.00	%	4/1/2022	1,848,317		1,809,270		1,783,626		4.6	%
Ardent Legacy		Health Facilities	L+550	3 Month LIBOR	1.00	%	8/4/2021	246,875		244,822		245,023		0.6	%
Asset International	(d)	Business Services	L+850	3 Month LIBOR	1.00	%	5/15/2021	2,495,413		2,449,904		2,461,550		6.3	%
Asset International - Delayed Draw	(d) (h)	Business Services	L+850	2 Month LIBOR	1.00	%	5/15/2021	338,000		202,800		201,433		0.5	%
Asset International - Revolver	(d) (h)	Business Services	P+775	Prime			5/15/2021	135,000		67,500		66,973		0.2	%
Bahakel Communications, Ltd.	(d) (h)	Media - Broadcast	L+750	1 Month LIBOR	1.00	%	7/29/2020	278,085		242,613		244,459		0.6	%
Bahakel Communications, Ltd. - Revolver	(d) (h)	Media - Broadcast	L+750	Unfunded	1.00	%	7/29/2020	14,000		—		—		—	%
Beaver Visitec International, Inc.		Healthcare - Products	L+500	1 Month LIBOR	1.00	%	8/21/2023	1,995,000		1,975,531		1,990,013		5.1	%
Centric Group	(d)	Business Services	L+675	1 Month LIBOR	1.00	%	10/14/2022	3,000,000		2,941,802		3,071,160		7.8	%
Deep Gulf Energy II, LLC	(d)	Energy - Exploration & Production	L+1300	1,2,5,6 Month LIBOR	1.50	%	9/30/2018	100,000		98,592		95,320		0.2	%
Inventure Foods, Inc.	(d)	Food - Wholesale	L+800	3 Month LIBOR	1.00	%	11/17/2020	990,000		972,998		992,930		2.5	%
Lightsquared	(c)	Telecom	L+875	3 Month LIBOR	1.00	%	6/15/2020	110,200		107,787		102,486		0.3	%
MyEyeDr	(d)	Health Facilities	L+625	1 Month LIBOR	1.00	%	8/14/2021	798,000		786,902		789,038		2.0	%
MyEyeDr	(d)	Health Facilities	L+625	3 Month LIBOR	1.00	%	8/14/2021	253,904		249,184		251,108		0.6	%
MyEyeDr - Delayed Draw	(d) (h)	Health Facilities	L+625	Unfunded	1.00	%	8/14/2021	1,200,000		—		—		—	%
MyEyeDr - Revolver	(d) (h)	Health Facilities	L+625	Unfunded	1.00	%	8/14/2021	43,000		—		—		—	%
Plano Molding Company, LLC	(d)	Consumer Products	L+700	3 Month LIBOR	1.00	%	5/12/2021	80,367		79,685		78,076		0.2	%
Premiere Global Services Inc.	(a) (f)	Telecom	L+650	3 Month LIBOR	1.00	%	12/8/2021	2,911,959		2,714,248		2,833,714		7.2	%
Rue21, Inc.		Retail	L+463	3 Month LIBOR	1.00	%	10/9/2020	788,541		723,021		302,871		0.8	%
Santek Waste Services, Inc.	(c) (d)	Environmental	L+1000	3 Month LIBOR	1.00	%	12/4/2020	707,663		688,976		694,996		1.8	%
Santek Waste Services, Inc. - Delayed Draw	(c) (d) (h)	Environmental	L+1000	1 and 3 Month LIBOR	1.00	%	12/4/2020	251,102		130,735		132,849		0.3	%
Santek Waste Services, Inc. - Revolver	(d) (h)	Environmental	L+1000	Unfunded	1.00	%	12/4/2020	66,000		—		—		—	%
Solarwinds, Inc.	(a)	Technology	L+450	3 Month LIBOR	1.00	%	2/3/2023	1,085,545		1,036,668		1,097,953		2.8	%

Table of Contents

GRIFFIN CAPITAL BDC CORP. SCHEDULE OF INVESTMENTS (Continued) As of December 31, 2016


Portfolio Company (g)	Footnotes	Industry	Rate (b)		Index Rate (b)	LIBOR Floor		Maturity	Principal		Amortized Cost		Fair Value		% of Net Assets (e)

TaxAct, Inc.	(a)	Software/Services	L+600		1 Month LIBOR	1.00	%	1/3/2023	610,161		569,292		611,687		1.6	%
Tribune Publishing Company		Newspaper	L+475		1 Month LIBOR	1.00	%	8/4/2021	61,869		61,131		61,637		0.2	%
Veritas		Software/Services	L+562.5		3 Month LIBOR	1.00	%	1/27/2023	484,235		415,482		446,707		1.1	%
Victory Capital Management	(a)	Financial Services	L+750		3 Month LIBOR	1.00	%	10/29/2021	1,702,055		1,653,705		1,722,275		4.4	%
Vizient, Inc.		Healthcare	L+400		1 Month LIBOR	1.00	%	2/13/2023	1,319,779		1,281,421		1,337,517		3.4	%
Walgreens Infusion		Healthcare	L+500		3 Month LIBOR	1.00	%	4/7/2022	590,525		591,334		565,428		1.4	%
Total Senior Secured Loans - First Lien											$	25,111,410	$	25,328,962	64.5	%
Senior Secured Loans - Second Lien
AccentCare, Inc.		Healthcare	L+950		3 Month LIBOR	1.00	%	9/3/2022	$	200,000	$	196,966	$	194,000	0.5	%
Asurion Corporation		Business Services	L+750		1 Month LIBOR	1.00	%	3/3/2021	2,000,000		1,995,413		2,031,260		5.2	%
Cast & Crew Payroll, LLC		Business Services	L+775		3 Month LIBOR	1.00	%	8/12/2023	300,000		297,923		283,500		0.7	%
Cirque Du Soleil	(a) (g)	Entertainment	L+825		3 Month LIBOR	1.00	%	6/23/2023	1,369,918		1,344,565		1,332,246		3.4	%
Lightsquared	(c)	Telecom	L+1250		3 Month LIBOR	1.00	%	12/7/2020	1,276,092		1,178,587		881,307		2.2	%
Total Senior Secured Loans - Second Lien											$	5,013,454	$	4,722,313	12.0	%
Senior Secured Bonds
Covenant Surgical Partners		Health Facilities	8.75	%				8/1/2019	$	400,000	$	401,569	$	387,000	1.0	%
Hexion, Inc.		Chemicals	10.00	%				4/15/2020	900,000		833,561		886,500		2.2	%
Radio One, Inc.		Media - Broadcast	7.38	%				4/15/2022	500,000		483,689		493,750		1.3	%
Total Senior Secured Bonds											$	1,718,819	$	1,767,250	4.5	%
Senior Unsecured Debt
Cablevision	(a)	Cable	10.88	%				10/15/2025	$	1,000,000	$	1,033,729	$	1,186,250	3.0	%
Frontier Communications, Corp.	(a)	Telecom	8.88	%				9/15/2020	77,000		77,000		82,005		0.2	%
Frontier Communications, Corp.	(a)	Telecom	10.50	%				9/15/2022	116,000		116,000		121,480		0.3	%
Frontier Communications, Corp.	(a)	Telecom	11.00	%				9/15/2025	494,000		482,198		508,820		1.3	%
Monitronics International, Inc.	(a)	Business Services	9.13	%				4/1/2020	800,000		751,708		755,410		1.9	%
Presidio Holdings, Inc.		Technology	10.25	%				2/15/2023	1,950,000		1,882,062		2,149,875		5.5	%
Total Senior Unsecured Debt											$	4,342,697	$	4,803,840	12.2	%
Equity/Other
Santek Waste Services, Inc.	(d)	Environmental	0.00%					N/A	NM*		$	8,497	$	20,008	0.1	%

Table of Contents

GRIFFIN CAPITAL BDC CORP. SCHEDULE OF INVESTMENTS (Continued) As of December 31, 2016


Portfolio Company (g)	Footnotes	Industry	Rate (b)	Index Rate (b)	LIBOR Floor	Maturity	Principal	Amortized Cost		Fair Value		% of Net Assets (e)

Total Equity/Other								$	8,497	$	20,008	0.1	%
TOTAL INVESTMENTS	(e)							$	36,194,877	$	36,642,373	93.3	%

____________________

(a) Indicates assets that the Company believes do not represent “qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of December 31, 2016, 22.95% of the Company’s total assets were non-qualifying assets.

(b) The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”), or Prime Rate ("Prime" or "P") which reset daily, monthly, quarterly, or semiannually. For each investment the Company has provided the spread over LIBOR and Prime. The 1, 2, 3, 5, 6 month LIBOR rates and Prime rate were 0.77%, 0.82%, 1.00%, 0.37%, 1.32% and 3.75%, respectively, as of December 31, 2016. Certain investments are subject to a LIBOR or Prime interest rate floor.

(e) Percentages are based on the Company's net assets of $39,268,954 as of December 31, 2016.

(f) Position or portion thereof was unsettled as of December 31, 2016.

(g) All of the Company's investments are domiciled in the United States except for Cirque Du Soleil which is domiciled in Canada.

(h) All or a portion of this commitment was unfunded at December 31, 2016. As such, interest is earned only on the funded portion of this commitment. Refer to Note 6, Commitments and Contingencies, of the notes to the financial statements for additional detail.

*Not meaningful

The accompanying notes are an integral part of these statements.

Table of Contents

GRIFFIN CAPITAL BDC CORP.

NOTES TO FINANCIAL STATEMENTS

As of June 30, 2017

(Unaudited)

Note 1. Organization

Griffin Capital BDC Corp., previously known as Griffin-Benefit Street Partners BDC Corp., a Maryland corporation (the "Company"), was formed on May 27, 2014 under the Maryland General Corporation Law. The Company was organized as an externally managed, non-diversified closed-end management investment company and has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or the 1940 Act. The Company has elected to be treated for federal income tax purposes as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986. The Company's year-end is December 31.

The Company invested substantially all of the proceeds raised from the offering of its shares, net of offering costs, in private U.S. middle-market companies in accordance with the Company's investment objectives.

The Company is externally managed by Griffin Capital BDC Advisor, LLC ("GBA" or "Adviser"), a Delaware limited liability company. GBA is indirectly owned by Griffin Capital Company, LLC ("Griffin Capital") and Randy Anderson, the Company's Executive Vice President who directly holds a 5% interest in GBA. Kevin A. Shields, Chairman of the Board of Directors and President of the Company, controls the sole stockholder of Griffin Capital. GBA is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). GBA oversees the management of the Company's activities and is responsible for making investment decisions with respect to, and providing day-to-day management and administration of, the Company's investment portfolio under the terms of an advisory agreement between the Company and GBA. Prior to July 31, 2017, the Company and GBA engaged Benefit Street Partners L.L.C. ("Benefit Street" or "Previous Sub-Adviser"), a Delaware limited liability company and an affiliate of Providence Equity Partners L.L.C. ("Providence"), to act as the Company's Sub-Adviser. Beginning August 1, 2017, the Company engaged BCSF Advisors, LP (the "Interim Sub-Advisor" or "BCSF"), an affiliate of Bain Capital Credit, LP, as an Interim Sub-Advisor pursuant to Rule 15a-4 of the 1940 Act. See Note 11, Subsequent Events. BCSF is a registered investment adviser under the Advisers Act and assists GBA with the management of the activities and operations of the Company pursuant to an interim sub-advisory agreement by and among the Company, GBA, and BCSF.

The Company entered into a dealer manager agreement with Griffin Capital Securities, LLC, formerly Griffin Capital Securities, Inc. ("GCS" or the "Dealer Manager"), and an administration agreement with Griffin Capital BDC Administrator, LLC ("Griffin Capital BDC Administrator"), both of which are indirect subsidiaries of Griffin Capital.

On July 25, 2014 and July 28, 2014, pursuant to a private placement, each of GBA and Benefit Street, respectively, contributed $100,000 to purchase 11,111 shares of the Company's common stock at $9.00 per share, which represents the initial public offering price of $10.00 per share, net of selling commissions and dealer manager fees. On January 20, 2015, the Company began offering on a continuous basis up to $1.5 billion in shares of common stock at an initial offering price of $10.00 per share (the "Offering"). On May 1, 2015, the Company raised the minimum offering requirement of $2.5 million as a result of separate investments of $1.25 million from an affiliate of Griffin Capital and from Benefit Street. As a result of achieving the minimum offering requirement, the Company commenced operations. GBA will not tender its shares for repurchase as long as it remains the Adviser. On December 23, 2015, the Company decreased its public offering price from $10.00 per share to $9.80 per share, in accordance with its pricing policy.

On March 15, 2016, the Company's board of directors determined that it is in the Company's and the stockholders’ best interest to suspend the Offering. The board of directors’ determination was based on the Adviser's belief that then current market conditions and the Company's current structure were not conducive to continuing the Offering, and that the board of directors consider an alternative fund structure to reduce the Company's exposure to potential federal and state regulatory challenges and unfavorable market conditions that non-traded BDCs faced in the fourth quarter of 2015 and first quarter of 2016.

On March 29, 2017 and May 4, 2017, the Company's board of directors approved the entry into the Agreement and Plan of Reorganization (the “Agreement”) with Griffin Institutional Access Credit Fund, a Delaware statutory trust (“GIA Credit Fund”), pursuant to which, subject to shareholder approval and the satisfaction or waiver of certain conditions, the Company will transfer all of its assets to GIA Credit Fund and the assumption by GIA Credit Fund of all of the Company's liabilities (the “Reorganization”) in exchange for shares of GIA Credit Fund (“Reorganization Shares”).

On May 5, 2017, the Company and GIA Credit Fund entered into the Agreement, pursuant to which the Company will transfer all of its assets to GIA Credit Fund in exchange for Reorganization Shares, GIA Credit Fund's assumption of all of the

Table of Contents

Company's liabilities, and the distribution of Reorganization Shares to the Company's stockholders in proportion to their holdings.

Pursuant to the terms and conditions of the Agreement, the Reorganization Shares will have an aggregate net asset value equal to the aggregate value of the assets that GIA Credit Fund receives from the Company, less the liabilities it assumes from the Company. The GIA Credit Fund’s adviser will also bear all costs related to the Reorganization, whether the Reorganization is consummated or not.

The Agreement, the Reorganization, and the other transactions contemplated in the Agreement were unanimously approved by the Company's board of directors on March 29, 2017 and May 4, 2017.

The parties' obligations in connection with the Reorganization are subject to certain mutual conditions, including, without limitation, (i) the affirmative vote of a majority of the outstanding shares of common stock entitled to vote on the Agreement at a special meeting of the Company's stockholders, (ii) the declaration and payment of one or more dividends that, together with all previous dividends, will distribute all of the Company's investment company taxable income (computed without regard to the deduction for dividends paid), net tax-exempt income, if any, and net realized capital gains, if any, to the Company's stockholders for the taxable period ended prior to the closing date of the Reorganization, and for prior tax years to the extent such dividends are eligible to be treated as paid in respect of such prior tax years, (iii) the approval, consent, or exemption from the U.S. Securities and Exchange Commission (“SEC”) or any other regulatory body necessary to carry out the Reorganization, (iv) the effectiveness of the registration statement on Form N-14 that has been filed with the SEC, and (v) the receipt of opinions that the Company's stockholders will not recognize gain or loss for U.S. federal income tax purposes upon the exchange of shares in the Company for the Reorganization Shares and that the Company will not recognize gain or loss as a direct result of the Reorganization. In addition, each party's obligation to consummate the Reorganization is subject to certain other conditions, including, without limitation, (a) the accuracy of the other party's representations and warranties, and (b) the receipt of opinions that the Reorganization will qualify as a tax-free reorganization described in Section 368(a) of the Internal Revenue Code of 1986, as amended.

The Company and GIA Credit Fund each made certain customary representations, warranties, and covenants in the Agreement, including, among others, covenants by each party to conduct its business in all material respects in the ordinary course of business, subject to certain exceptions, during the period between the execution of the Agreement and the consummation of the Reorganization.

The Agreement and the transactions contemplated by it may be terminated and abandoned with respect to the Reorganization by mutual agreement of the Company and GIA Credit Fund at any time prior to the closing date thereof, or by either the Company or GIA Credit Fund in the event of a material breach of the Agreement by the other party or a failure of any condition precedent to the terminating party's obligations under the Agreement, among other events. In the event of a termination, GIA Credit Fund's adviser will bear all costs associated with the Reorganization.

The foregoing descriptions of the Agreement and the transactions contemplated thereby are not complete and are subject to and qualified in their entirety by reference to the Agreement, a copy of which is filed as Exhibit 10.14 to the Company's Quarterly Report filed on May 10, 2017 and is incorporated herein by reference. If the shareholders approve the Reorganization, the Company plans to consummate the transaction in the third quarter of 2017.

As of March 15, 2016, the date the offering was suspended, the Company had issued 4,563,196 shares of common stock for gross proceeds of approximately $44.8 million, including shares purchased in the private placement and shares issued pursuant to the Company's DRP, which amounts remained unchanged as of June 30, 2017.

Table of Contents

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial reporting. The accompanying interim financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X of the Securities Act of 1933. The Company has determined it meets the definition of an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 — Financial Services — Investment Companies ("ASC Topic 946").

Reclassifications

Certain prior period amounts have been reclassified to conform to the current presentation, with no effect on the Company's financial condition, results of operations or cash flows.

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could materially differ from those estimates.

Cash and Cash Equivalents

The Company considers all short-term, highly liquid investments that are readily convertible to cash with a maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value. There are no restrictions on the use of the Company's cash balance, as of June 30, 2017.

The Company maintains its cash accounts with major financial institutions. The cash balances consist of business checking accounts. These accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 at each institution. The Company has not experienced any losses with respect to cash balances in excess of government provided insurance. Management believes there was no significant concentration of credit risk with respect to the cash balances as of June 30, 2017.

Valuation of Portfolio Investments

Portfolio investments are reported on the statements of assets and liabilities at fair value. The Company performs an analysis of each investment to determine fair value in accordance with ASC Topic 820 - Fair Value Measurements and Disclosures ("ASC Topic 820").

ASC Topic 820 clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include in summarized form:


•	Level 1: Quoted prices in active markets for identical assets or liabilities, accessible by the Company at the measurement date.


•	Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.


•	Level 3: Unobservable inputs for the asset or liability.

There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each asset while employing a valuation process that is consistently followed.

Table of Contents

In making fair value determinations, the following guidelines are used:

Valuation Methods

The Company has established a valuation and pricing committee (the "Valuation and Pricing Committee"), which is responsible for determining the value of the assets on a quarterly basis, based upon inputs established by the Adviser. The Valuation and Pricing Committee is also responsible for engaging a third-party valuation specialist to provide value determinations for Level 3 assets. Values determined by a third-party valuation specialist must be reviewed and approved by the Valuation and Pricing Committee. If any of the Company's Level 3 designated assets are deemed to require additional monitoring, the independent third-party valuation specialist will assist in reviewing these assets.

The Company values all Level 2 assets by using inputs from an independent third-party pricing service that provide prevailing bid and ask prices that are screened for validity by the service from dealers on the date of the relevant period end. For investments for which the third-party pricing service is unable to obtain quoted prices, the Company intends to obtain bid and ask prices directly from dealers that make a market in such investments. To the extent that the Company holds investments for which no active secondary market exists, i.e. Level 3 assets, and, therefore, no bid and ask prices can be readily obtained, the independent third-party valuation service will be utilized to value such investments. The Company periodically benchmarks the bid and ask prices received from the third-party pricing service and valuations received from the third-party valuation service, as applicable, against the actual prices at which the Company purchases and sells investments. The Company believes that these prices are reliable indicators of fair value.

Investments where a market price is readily available:

Generally, the value of the Company's equity interests in public companies for which market quotations are readily available will be based upon the most recent closing public market price. If no sales of such interests occurred on the determination date, such interests shall be valued at the bid quote for long investments, and the last ask quote for investments sold but not yet purchased, obtained from third-party pricing services, including, where appropriate, multiple broker dealers, as determined by the Adviser.

Notwithstanding the foregoing, if in the reasonable judgment of the Adviser and Interim Sub-Adviser, the price for any securities held by the Company and determined in the manner described above does not accurately reflect the fair value of such security, the Adviser and Interim Sub-Adviser will value such security at the applicable bid or ask quotes obtained by broker dealers that make a market in the security, and report such change in the valuation to the board of directors or its designee as soon as practicable.

Investments where a market price is not readily available:

Any securities or other assets that are not publicly traded or for which a market price is not otherwise readily available are valued at a price that reflects each such security's fair value. With respect to such investments, the investments will be reviewed and valued using one or more of the following types of analyses:


(i)	Market comparable statistics and public trading multiples discounted for illiquidity, minority ownership and other factors for companies with similar characteristics.


(ii)	Valuations implied by third-party investments in the applicable portfolio companies.


(iii)	Discounted cash flow analysis, including a terminal value or exit multiple.

Below is a description of factors that the Valuation and Pricing Committee, with the assistance of an independent third-party valuation specialist in certain circumstances, may consider when valuing the Company's equity and debt investments where a market price is not readily available:


•	the size and scope of a portfolio company and its specific strengths and weaknesses;


•	prevailing interest rates for like securities;


•	expected volatility in future interest rates;


•	leverage;


•	call features, put features and other relevant terms of the debt;


•	the borrower's ability to adequately service its debt;

Table of Contents


•	the fair market value of the portfolio company in relation to the face amount of its outstanding debt;


•	the quality of collateral securing the Company's debt investments;


•	multiples of earnings before interest, tax, depreciation and amortization ("EBITDA"), cash flows, net income, revenues or, in some cases, book value or liquidation value;


•	the liquidity of the investment as determined by a pricing service; and


•	other factors deemed applicable.

All of these factors may be subject to adjustments based upon the particular circumstances of a portfolio company or the Company's actual investment position.

Credit default swaps and interest rate swaps will be valued at estimated fair value based on a pricing model that utilizes quoted inputs, including among other things, yield curves.

Unrealized appreciation and depreciation on total return swaps represents the change in fair value plus net accrued interest of the underlying reference assets.

Valuation Process

With respect to investments for which market quotations are not readily available, the Company will undertake a multi-step valuation process each quarter, as described below:


•	the quarterly valuation process will begin with each portfolio company or investment being identified by the investment professionals of the Adviser and Interim Sub-Adviser and members of the Company's senior management team as investments that require the assistance of the independent third-party valuation specialist;


•	preliminary valuation calculations and conclusions will then be documented by the independent third-party valuation specialist and discussed with the investment professionals of the Adviser and Interim Sub-Adviser and the relevant investment professionals of GBA, BCSF and the Company's senior management team;


•	designated members of the Valuation and Pricing Committee, or as delegated to the Adviser and Interim Sub-Adviser, will review and comment on the preliminary valuation provided by the independent third-party valuation firm;


•	the Valuation and Pricing Committee will meet with members of the Adviser's and Interim Sub-Adviser's management teams and the independent third-party valuation specialist to discuss the results provided by the independent valuation firm; and


•	the board of directors will discuss the valuation and will determine the fair value of each investment in the Company's portfolio in good faith based on various statistical and other factors, including the input and recommendation of the Adviser and Interim Sub-Adviser, the Valuation and Pricing Committee, and the third-party valuation specialist.

The board of directors is responsible for the valuation of the Company's portfolio investments at fair value as determined in good faith pursuant to consistently applied valuation procedures and valuation process.

Revenue Recognition

The Company records interest income on an accrual basis to the extent that the Company expects to collect such amounts. For loans and debt investments with contractual payment-in-kind, or PIK, interest that represents contractual interest accrued and added to the loan balance that generally becomes due at maturity, the Company does not accrue PIK interest if the portfolio company valuation indicates that such PIK interest is not collectible. The Company does not accrue a receivable for interest on loans and debt investments if it is determined that interest for such loans and debt investments is not collectible. Loans will be placed on non-accrual status when principal or interest payments are past due 30 days or more and/or when there is reasonable doubt that principal or interest will be collected. Upfront loan origination fees, original issue discount and market discount or premium are capitalized, and amortized as interest income using the effective yield method. Prepayment premiums on loans and debt investments are recorded as interest income.

Table of Contents

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

The Company will measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, but considering unamortized upfront loan origination fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Organizational Costs

Organizational costs include, among other things, the cost of organizing as a Maryland corporation, including the cost of legal services and other fees pertaining to the organization of the Company. Until the Company achieved the minimum offering requirement in the Offering, all organizational costs were funded by Griffin Capital and its affiliates. On May 1, 2015, the Company raised the minimum offering requirement and became liable for the advanced organizational costs, subject to the terms of the expense support and conditional reimbursement agreement, as discussed in Note 5. Related Party Transactions. Organizational costs were expensed when the Company became liable, and are included on the statements of assets and liabilities as a component of due to affiliates. For the six months ended June 30, 2016 Griffin Capital and its affiliates incurred $7,322 of organizational costs, none of which was incurred in the three months ended June 30, 2016. No organizational costs were incurred for the three and six months ended June 30, 2017.

Offering Costs

Offering costs include, among other things, legal fees and other costs pertaining to the preparation of the Company's registration statement in connection with the Offering. Until the Company achieved the minimum offering requirement, all offering costs were funded by Griffin Capital and its affiliates. On May 1, 2015, the Company raised the minimum offering requirement and became liable for the advanced offering costs, subject to the terms of the expense support and conditional reimbursement agreement, as discussed in Note 5. Related Party Transactions. Offering costs are capitalized and amortized over a twelve month period as an expense. The offering costs are subject to reimbursement by the Company and are included within due to affiliates on the statements of assets and liabilities. As a result of the suspension of the Offering, the Company wrote off approximately $0.7 million of unamortized deferred offering costs, as of March 15, 2016.

Income Taxes

The Company has elected to be treated, for tax purposes, as a RIC, which requires it, among other obligations, in each fiscal year, to distribute at least 90% of the sum of (i) investment company taxable income, which is generally the Company's ordinary income plus the excess of realized net short-term capital gains over realized net long-term capital losses, determined without regard to the deduction for dividends and distributions paid and (ii) net tax exempt interest income, which is the excess of the Company's gross tax exempt interest income over certain disallowed deductions, (the "Annual Distribution Requirement"). If the Company qualifies as a RIC and meets the Annual Distribution Requirement, the Company generally will not be subject to U.S. federal income tax on investment company taxable income and net capital gains that are distributed to the Company's stockholders as dividends. To the extent that the Company retains net capital gains or any investment company taxable income, the Company will be subject to U.S. federal income tax. The Company may choose to retain net capital gains or any investment company taxable income, and pay the associated federal corporate income tax, including the federal excise tax described below.

Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4.0% U.S. federal excise tax payable by the Company. To avoid this tax, the Company must distribute (or be deemed to have distributed) during each calendar year an amount equal to the sum of: (1) at least 98.0% of the Company's ordinary income (not taking into account any capital gains or losses) for the calendar year; (2) at least 98.2% of the amount by which the Company's capital gains exceed capital losses (adjusted for certain ordinary losses) for a one-year period generally ending on October 31 of the calendar year (unless an election is made to use the Company's taxable year); and (3) income realized, but not distributed, in preceding years (the "Excise Tax Avoidance Requirement").

While the Company intends to distribute any income and capital gains in the manner necessary to minimize imposition of the 4.0% federal excise tax, sufficient amounts of taxable income and capital gains may not be distributed to avoid entirely the imposition of the tax. In that event, the Company will be liable for the tax only on the amount by which the Company did not meet the foregoing distribution requirement.

Table of Contents

Because federal income tax regulations differ from U.S. GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

Beginning with the taxable year ended December 31, 2015, the Company has elected to be taxed as a RIC. The determination of any permanent or temporary differences, as well as the tax basis of distributable earnings/(deficit), tax character of distributions paid, and tax basis of investments cost and unrealized appreciation/depreciation will not be known until the completion of the tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statements of operations. There were no interest or penalties due to material uncertain income tax positions at June 30, 2017 or December 31, 2016.

Recently Issued Accounting Pronouncements

In October 2016, the SEC adopted new rules and amended existing rules (together, “final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosures about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. The Company is currently evaluating the impact that the adoption of the amendments to Regulation S-X will have on the Company’s financial statements and related disclosures.

In August 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows (“ASU No. 2016-15”), intended to reduce diversity in practice in certain classifications on the statement of cash flows. This guidance addresses eight types of cash flows, including clarifying how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows, as well as requiring an accounting policy election for classification of distributions received from equity method investees using either the cumulative earnings or nature of distributions approach, among others. Transition will generally be on a retrospective basis. ASU No. 2016-15 is effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted, provided that all amendments within the guidance are adopted in the same period. The Company is currently evaluating the impact of adopting this new guidance on its financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 retains many current requirements for the classification and measurement of financial instruments; however, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted for public business entities. The Company is currently evaluating the impact these changes will have on the Company’s financial statements and disclosures.

In August, 2014, the FASB released ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40) (“ASU 2014-15”). ASU 2014-15 requires the Company to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within the one year period subsequent to the date that the financial statements are issued or within the one year period subsequent the date that the financial statements are available to be issued. ASU 2014-15 becomes effective for fiscal periods ending after December 15, 2016; however, early adoption is permitted. The Company adopted ASU 2014-15 as of December 31, 2016. The adoption did not have an impact on the Company’s financial position or result of operations.

Table of Contents

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU No. 2014-09"). ASU No. 2014-09 replaces substantially all industry-specific revenue recognition requirements and converges areas under this topic with International Financial Reporting Standards. ASU No. 2014-09 implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. ASU No. 2014-09 also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. Other major provisions in ASU No. 2014-09 include capitalizing and amortizing certain contract costs, ensuring the time value of money is considered in the applicable transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. ASU No. 2014-09 was originally effective for reporting periods beginning after December 31, 2016. On April 1, 2015, the FASB voted to defer the effective date of ASU No. 2014-09 by one year, to annual reporting periods beginning after December 15, 2017. On July 9, 2015, the FASB affirmed its proposal to defer the effective date to annual reporting periods beginning after December 15, 2017, although entities may elect to adopt the standard as of the original effective date. The Company is currently evaluating the impact these changes will have on the Company’s financial statements and disclosures.

Note 3. Investments

The following table shows the composition of the investment portfolio, at amortized cost and fair value as of June 30, 2017 (with corresponding percentage of total portfolio investments):



	As of June 30, 2017
	Investments at Amortized Cost		Percentage of Amortized Cost		Investments at Fair Value		Percentage of Fair Value
Senior Secured Loans - First Lien	$	21,262,666	67.3	%	$	21,206,845	66.9	%
Senior Secured Loans - Second Lien	5,136,792		16.3		4,899,602		15.5
Senior Secured Bonds	1,727,649		5.5		1,802,853		5.7
Senior Unsecured Debt	3,433,819		10.9		3,741,622		11.8
Equity/Other	8,497		NM ⁽¹⁾		22,133		0.1
Total	$	31,569,423	100.0	%	$	31,673,055	100.0	%

__________________

⁽¹⁾ Not meaningful.

The following table shows the composition of the investment portfolio, at amortized cost and fair value as of December 31, 2016 (with corresponding percentage of total portfolio investments):



	As of December 31, 2016
	Investments at Amortized Cost		Percentage of Amortized Cost		Investments at Fair Value		Percentage of Fair Value
Senior Secured Loans - First Lien	$	25,111,410	69.4	%	$	25,328,962	69.1	%
Senior Secured Loans - Second Lien	5,013,454		13.9		4,722,313		12.9
Senior Secured Bonds	1,718,819		4.7		1,767,250		4.8
Senior Unsecured Debt	4,342,697		12.0		4,803,840		13.1
Equity/Other	8,497		NM ⁽¹⁾		20,008		0.1
Total	$	36,194,877	100.0	%	$	36,642,373	100.0	%

__________________

⁽¹⁾ Not meaningful.

Table of Contents

The following table shows the composition by industry grouping based on fair value as of June 30, 2017:



	As of June 30, 2017
	Investments at Fair Value		Percentage of Total Portfolio
Business Services	$	8,665,837	27.4	%
Telecom	4,343,792		13.7
Technology	2,294,450		7.2
Healthcare - Products	1,990,955		6.3
Healthcare	1,916,273		6.0
Entertainment	1,827,008		5.8
Pharmaceuticals	1,774,048		5.6
Health Facilities	1,678,957		5.3
Financial Services	1,674,786		5.3
Cable	1,202,035		3.8
Environmental	925,525		2.9
Chemicals	893,250		2.8
Food - Wholesale	855,265		2.7
Media - Broadcast	755,672		2.4
Software/Services	400,773		1.3
Retail	260,733		0.8
Energy - Exploration & Production	92,020		0.3
Consumer Products	69,481		0.2
Newspaper	52,195		0.2
Total	$	31,673,055	100.0	%

Table of Contents

The following table shows the composition by industry grouping based on fair value as of December 31, 2016:



	As of December 31, 2016
	Investments at Fair Value		Percentage of Total Portfolio
Business Services	$	11,830,269	32.3	%
Telecom	4,529,812		12.4
Technology	3,247,828		8.9
Healthcare	2,286,095		6.2
Healthcare - Products	1,990,013		5.4
Pharmaceuticals	1,783,626		4.9
Financial Services	1,722,275		4.7
Health Facilities	1,672,169		4.6
Entertainment	1,332,246		3.6
Cable	1,186,250		3.2
Software/Services	1,058,394		2.9
Food - Wholesale	992,930		2.7
Chemicals	886,500		2.4
Environmental	847,853		2.3
Media - Broadcast	738,209		2.0
Retail	302,871		0.8
Energy - Exploration & Production	95,320		0.3
Consumer Products	78,076		0.2
Newspaper	61,637		0.2
Total	$	36,642,373	100.0	%

The Company does not "control" and is not an "affiliate" of any of its portfolio companies, each as defined in the 1940 Act. In general, under the 1940 Act, the Company would be presumed to "control" a portfolio company or issuer if the Company owned more than 25% of its voting securities and would be an "affiliate" of a portfolio company or issuer if the Company owned between 5% and 25% of its voting securities.

As of June 30, 2017, there was one investment on non-accrual status with a fair value of $0.1 million. As of December 31, 2016, there were no delinquent investments or investments on non-accrual status.

Note 4. Fair Value of Financial Instruments

Accounting guidance establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, if any, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value:



•	Level 1—Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.



•	Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Table of Contents



•	Level 3—Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The Company evaluates the source of inputs, including any markets in which the Company's investments are trading, in determining fair value. Due to the inherent uncertainty in the valuation process, the estimate of fair value of the Company’s investment portfolio as of June 30, 2017 may differ significantly from values that would have been used had a readily available market for the securities existed.

The following table presents fair value measurements of investments, by major class, as of June 30, 2017, according to the fair value hierarchy:



	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Senior Secured Loans - First Lien	$	—	$	10,664,159	$	10,542,686	$	21,206,845
Senior Secured Loans - Second Lien	—		2,850,856		2,048,746		4,899,602
Senior Secured Bonds	—		1,802,853		—		1,802,853
Senior Unsecured Debt	—		3,741,622		—		3,741,622
Equity/Other	—		—		22,133		22,133
Total	$	—	$	19,059,490	$	12,613,565	$	31,673,055

The following table presents fair value measurements of investments, by major class, as of December 31, 2016, according to the fair value hierarchy:



	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Senior Secured Loans - First Lien	$	—	$	16,249,070	$	9,079,892	$	25,328,962
Senior Secured Loans - Second Lien	—		4,722,313		—		4,722,313
Senior Secured Bonds	—		1,767,250		—		1,767,250
Senior Unsecured Debt	—		4,803,840		—		4,803,840
Equity/Other	—		—		20,008		20,008
Total	$	—	$	27,542,473	$	9,099,900	$	36,642,373

Table of Contents

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the six months ended June 30, 2017:



	Senior Secured Loans - First Lien			Senior Secured Loans - Second Lien			Equity/Other		Total
Balance as of December 31, 2016	$	9,079,892		$	—		$	20,008	$	9,099,900
Net change in unrealized appreciation on investments	68,078			62,446			2,125		132,649
Purchases and other adjustments to cost⁽¹⁾	88,696			447,721			—		536,417
Sales and repayments ⁽¹⁾	(3,343,159		)	(77,684		)	—		(3,420,843		)
Net realized gain from investments	3,452			517			—		3,969
Net transfers in	4,645,727			1,615,746			—		6,261,473
Balance as of June 30, 2017	$	10,542,686		$	2,048,746		$	22,133	$	12,613,565

_______________________

⁽¹⁾ Purchases represent the acquisition of new investments at cost. Sales and repayments represent principal payments received during the year.

Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period of which they occur. During the six months ended June 30, 2017, the Company recorded no transfers from Level 3 to Level 2. During the six months ended June 30, 2017, the Company recorded $6.3 million in transfers from Level 2 to Level 3 due to a decrease in observable inputs in market data.

The net change in unrealized appreciation for the six months ended June 30, 2017 attributable to Level 3 investments still held at June 30, 2017 is $0.1 million and is included in net change in unrealized appreciation (depreciation) on investments on the statements of operations.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended December 31, 2016:



	Senior Secured Loans - First Lien			Senior Secured Loans - Second Lien			Senior Secured Bonds			Equity/Other		Total
Balance as of December 31, 2015	$	3,536,724		$	1,139,783		$	397,916		$	8,497	$	5,082,920
Net change in unrealized appreciation on investments	176,407			—			—			11,511		187,918
Purchases and other adjustments to cost ⁽¹⁾	6,618,961			—			—			—		6,618,961
Sales and repayments ⁽¹⁾	(96,620		)	—			—			—		(96,620		)
Net realized gain from investments	1,309			—			—			—		1,309
Net transfers out	(1,156,889		)	(1,139,783		)	(397,916		)	—		(2,694,588		)
Balance as of December 31, 2016	$	9,079,892		$	—		$	—		$	20,008	$	9,099,900

_______________________

⁽¹⁾ Purchases represent the acquisition of new investments at cost. Sales and repayments represent principal payments received during the year.

Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period of which they occur. For the year ended December 31, 2016, the Company recorded $2.7 million in transfers from Level 3 to Level 2 due to an increase in observable inputs in market data. During the year ended December 31, 2016 the Company recorded no transfers from Level 2 to Level 3.

The net change in unrealized appreciation for the year ended December 31, 2016 attributable to Level 3 investments still held at December 31, 2016 is $0.9 million and is included in net change in unrealized appreciation (depreciation) on investments on the statements of operations.

Table of Contents

Significant Unobservable Inputs

The following table summarizes the significant unobservable inputs used by the Company's independent third-party valuation specialist to value the Level 3 investments as of June 30, 2017, which consisted of eighteen senior secured first lien loans, two senior secured second lien loans and one equity investment. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.



					Range
Asset Category	Fair Value		Primary Valuation Technique	Unobservable Inputs	Minimum		Maximum		Weighted Average
Senior Secured Loans - First Lien	$	10,542,686	Discounted Cash Flow Approach	Discount Rate	6.94	%	26.92	%	9.44	%
Senior Secured Loans - Second Lien	$	2,048,746	Discounted Cash Flow Approach	Discount Rate	10.33	%	10.64	%	10.61	%
Equity/Other	$	22,133	Discounted Cash Flow Approach	Discount Rate	11.22	%	11.22	%	11.22	%

Significant increases or decreases in any of the above unobservable inputs in isolation would result in a significantly lower or higher fair value measurement for such assets.

The following table summarizes the significant unobservable inputs used by the Company's independent third-party valuation specialist to value the Level 3 investments as of December 31, 2016, which consisted of sixteen senior secured first lien loans and one equity investment. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.



					Range
Asset Category	Fair Value		Primary Valuation Technique	Unobservable Inputs	Minimum		Maximum		Weighted Average
Senior Secured Loans - First Lien	$	9,079,892	Discounted Cash Flow Approach	Discount Rate	8.57	%	21.01	%	10.14	%
Equity/Other	$	20,008	Discounted Cash Flow Approach	Discount Rate	12.49	%	12.49	%	12.49	%

Significant increases or decreases in any of the above unobservable inputs in isolation would result in a significantly lower or higher fair value measurement for such assets.

Note 5. Related Party Transactions

The following table summarizes the offering, organizational, and operating costs incurred by, and fees earned by, the Adviser as of June 30, 2017 and December 31, 2016. These amounts are included in due to affiliates on the statements of assets and liabilities, net of certain due to affiliate amounts that were otherwise used as an offset against expense support amounts computed pursuant to the expense support and conditional reimbursement agreement, as discussed below.



	As of June 30, 2017			As of December 31, 2016
Organizational costs	$	451,428		$	451,428
Offering costs	2,144,372			2,144,372
General & administrative	163,967			163,792
Directors fees	117,192			117,192
Professional fees	222,909			221,985
Insurance and technology expenses	355,322			355,322
Base management fees earned	589,008			233,034
Total due to affiliates, before expense reimbursement	4,044,198			3,687,125
Expense reimbursement	(2,855,950		)	(2,499,976		)
Total due to affiliates, net of reimbursement	$	1,188,248		$	1,187,149

Table of Contents

The Company entered into an investment advisory agreement, dated January 16, 2015, with GBA (the "Investment Advisory Agreement"). Pursuant to the Investment Advisory Agreement, GBA will be paid a base management fee and certain incentive fees, if applicable. Additionally, GBA and the Company entered into an Interim Investment Sub-Advisory Agreement, dated August 1, 2017, with BCSF (the "Interim Investment Sub-Advisory Agreement"). See Note 11, Subsequent Events.

On May 4, 2017, the board of directors, including a majority of directors who are considered independent under the rules promulgated by the NYSE and who are not “interested" as that term is defined by the 1940 Act, present at an in-person meeting, approved an additional one year extension of the Investment Advisory Agreement between the Company and Adviser.

The Company also entered into an administration agreement, dated January 16, 2015, with Griffin Capital BDC Administrator (the "Administration Agreement") pursuant to which Griffin Capital BDC Administrator will be reimbursed for expenses necessary for the performance of services related to the Company's administration and operation, provided that such reimbursement will be the lower of Griffin Capital BDC Administrator's actual costs or the amount that the Company would be required to pay third-party service providers for comparable administrative services in the same geographic location, and provided further that such costs will be reasonably allocated to the Company on the basis of assets, revenues, time records or other reasonable methods. See Administrative Services section below.

The Company will settle the amounts due from affiliates, net of offsetting amounts due to affiliates, including management fees on a quarterly basis, in cash. See Expense Support and Conditional Reimbursement Agreement section below.

Base Management Fee

The base management fee will be calculated at an annual rate of 2.0% of the Company's gross assets, excluding cash and cash equivalents and other non-investment assets, and payable quarterly in arrears. The base management fee may or may not be taken in whole or in part at the discretion of GBA. All or any part of the base management fee not taken as to any quarter will be deferred without interest and may be taken in any such other quarter prior to the occurrence of a liquidity event as GBA may determine. Further, GBA may apply the management fee against any amount due from affiliates. For the three and six months ended June 30, 2017, the Company incurred $0.2 million and $0.3 million, respectively, in base management fees. For the three and six months ended June 30, 2016, the Company incurred approximately $0.1 million and approximately $0.2 million, respectively, in base management fees.

Incentive Fees on Income

The incentive fee on income is calculated and payable quarterly in arrears based upon the Company's "pre-incentive fee net investment income" for the immediately preceding quarter, and subject to a hurdle rate, measured quarterly and expressed as a rate of return on adjusted capital at the beginning of the most recently completed calendar quarter, of 1.75% (7.0% annualized), subject to a "catch up" feature, as defined. No incentive fee on income will be payable in any calendar quarter in which pre-incentive fee net investment income does not exceed the hurdle rate of 1.75% on adjusted capital. For any calendar quarter in which pre-incentive fee net investment income is greater than the quarterly hurdle rate, but less than or equal to 2.1875%, the incentive fee on income will equal the amount of pre-incentive fee net investment income in excess of the quarterly hurdle rate. This portion of the incentive fee is referred to as the catch-up and provides an increasing fee, equal to 100% of the pre-incentive fee net investment income, between a 1.75% to a 2.1875% quarterly return on adjusted capital. For any calendar quarter in which the pre-incentive fee net investment income exceeds 2.1875% of adjusted capital, the incentive fee on income will equal 20.0% of pre-incentive fee net investment income. For purposes of this fee, adjusted capital will mean cumulative gross proceeds generated from issuances of the Company's common stock, including its DRP, reduced for distributions to investors that represent a return of capital and amounts paid for share repurchases pursuant to the Company's share repurchase program, if any. No incentive fees on income were incurred for the three and six months ended June 30, 2017 and June 30, 2016.

Incentive Fee on Capital Gains

An incentive fee on capital gains is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement) and will equal 20.0% of the Company's realized capital gains on a cumulative basis from inception, calculated as of the application period, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fees on capital gains. For the three and six months ended June 30, 2017, the Company had a reduction in incentive fees, based on net realized and unrealized losses, of approximately $21,000 and $4,000, respectively. No incentive fees on capital gains were incurred for the three and six months ended June 30, 2016.

In accordance with U.S. GAAP, the Company is required to include the aggregate unrealized appreciation on investments in the calculation and accrue a capital gains incentive fee as if such unrealized appreciation were realized, even

Table of Contents

though such unrealized appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Advisory Agreement. As of both June 30, 2017 and December 31, 2016, a payable for incentive fees of $0.1 million was included as a liability under the management and incentive fees payable to affiliate, on the statements of assets and liabilities. No accrual was recorded for the three and six months ended June 30, 2016.

Organizational and Offering Costs

The Company incurred organizational and offering costs (including reimbursement of costs incurred by Griffin Capital and its affiliates) of approximately 1.5% of the gross proceeds from the Offering. Until the Company achieved the minimum offering requirement in the Offering, all offering costs were funded by Griffin Capital and its affiliates. On May 1, 2015, the Company raised the minimum offering requirement and became liable, subject to the expense support and conditional reimbursement agreement, to reimburse Griffin Capital and its affiliates for these costs, if and when Griffin Capital and its affiliates submit such costs for reimbursement. From inception through June 30, 2017, Griffin Capital and its affiliates incurred offering and organizational costs of approximately $2.1 million and $0.5 million, respectively.

The decision to fund the organizational and offering costs and the decision to seek reimbursement for such costs is solely at the discretion of Griffin Capital. These costs are included as a component of due to affiliates on the statements of assets and liabilities and have been applied against amounts due from Griffin Capital and affiliates pursuant to the expense support and conditional reimbursement agreement. As a result, the Company may or may not be requested to reimburse any remaining costs funded by Griffin Capital.

Expense Support and Conditional Reimbursement Agreement

On March 25, 2015, the Company and GBA entered into an expense support and conditional reimbursement agreement (as amended, the "ESA"). On March 23, 2016, the Company and the Adviser executed the Amendment to the Expense Support and Conditional Reimbursement Agreement (the “Amended ESA”), which is effective for all reimbursement payments from the Company to the Adviser made on or after December 31, 2015. Pursuant to the Amended ESA, GBA has agreed to reimburse, or offset such reimbursement against amounts due to GBA, the Company for expenses in an amount that is sufficient to: (i) ensure that no portion of the Company’s distributions to stockholders will be paid from the Company’s Offering proceeds or borrowings, and/or (ii) reduce the Company’s operating expenses until the Company has achieved economies of scale sufficient to ensure that the Company bears a reasonable level of expense in relation to the Company’s investment income. Pursuant to the Amended ESA, the Company may have a conditional obligation to reimburse GBA for any amounts funded by GBA under such agreement, including certain organizational and offering costs that have been included in operating expense, if certain conditions are met. First, GBA will be entitled to receive reimbursement payments if, during any fiscal quarter occurring within three years of the date on which GBA funded such amount, the sum of the Company's net investment income for tax purposes, net capital gains and the amount of any dividends and other distributions paid to the Company on account of investments in portfolio companies (to the extent not included in net investment income or net capital gains for tax purposes) exceeds the distributions paid by the Company to stockholders. Second, the Company and GBA have agreed that the Company will make reimbursement payments only if: (i) the Company's current "operating expense ratio" is equal to or less than its operating expense ratio at the time the corresponding expense payment obligation was incurred by GBA, and (ii) the annualized rate of the Company's regular cash distributions to the Company's stockholders is equal to or greater than the annualized rate of the Company's regular cash distributions to the Company's stockholders at the time the corresponding expense payment was incurred by GBA. For this purpose, the “operating expense ratio” is defined as all expenses borne by the Company, except for organizational and offering expenses, base management and incentive fees owed to GBA, and interest expense, as a percentage of net assets. Finally, for organizational and offering costs that have been included in operating expenses, the Company will limit reimbursement of such expenses to the sum of: (i) all expense payments paid by GBA to the Company in cash and not previously reimbursed; (ii) non-organizational and offering costs included in operating expenses incurred by GBA and its affiliates and accrued as payables by the Company; and (iii) organizational and offering costs incurred by GBA and its affiliates and accrued as payables by the Company, up to a limit of 1.5% of gross proceeds raised. The Company will not record expense support payments as liabilities on the statements of assets and liabilities until the above conditions are met.

On March 29, 2017, the Company and the Adviser executed a Second Amendment to the Expense Support and Conditional Reimbursement Agreement (the "Second Amended ESA”, collectively with the agreements above, the "Amended ESA"), which is effective for all reimbursement payments from the Company to the Adviser on or after March 23, 2017.

Table of Contents

The Company or GBA may terminate the Amended ESA at any time. If the Company terminates the Investment Advisory Agreement with GBA, the Company will be required to repay GBA all reimbursements funded by GBA within three years of the date of termination, subject to the limitation that organizational and offering costs will only be 1.5% of gross proceeds. The specific amount of expenses reimbursed by GBA, if any, will be determined at the end of each quarter. The following table provides information regarding costs incurred by the Adviser pursuant to the Amended ESA as well as other information relating to the Company's ability to reimburse the Adviser for such costs:



Quarter Ended	Amount of Expense Payment Support	Amount Repaid to GBA	Operating Expense Ratio ⁽¹⁾		Annualized Distribution Rate ⁽²⁾		Eligible to be Repaid Through ⁽³⁾
June 30, 2015	815,023	—	6.87	%	7.50	%	June 30, 2018
September 30, 2015	726,058	—	4.23	%	7.50	%	September 30, 2018
December 31, 2015	530,618	—	3.61	%	7.50	%	December 31, 2018
March 31, 2016 ⁽⁴⁾	1,543,113	—	0.71	%	7.65	%	March 31, 2019
June 30, 2016 ⁽⁴⁾	455,606	—	0.74	%	7.65	%	June 30, 2019
September 30, 2016 ⁽⁴⁾	35,603	—	0.62	%	7.65	%	September 30, 2019
December 31, 2016 ⁽⁴⁾	127,354	—	1.21	%	7.65	%	December 31, 2019
March 31, 2017 ⁽⁵⁾	240,208	—	0.55	%	7.65	%	March 31, 2020
June 30, 2017 ⁽⁵⁾	465,562	—	0.82	%	7.65	%	June 30, 2020

________________________


⁽¹⁾	"Operating Expense Ratio” is as of the date the expense support payment obligation was incurred by GBA and includes all expenses borne by the Company, except for organizational and offering expenses, base management and incentive fees owed to the Adviser, and interest expense, as a percentage of net assets.


⁽²⁾	"Annualized Distribution Rate" equals the annualized rate of distributions paid to the Company's stockholders based on the amount of the regular cash distribution paid immediately prior to the date the expense support payment obligation was incurred by GBA. “Annualized Distribution Rate” does not include special cash or stock distributions paid to stockholders.


⁽³⁾	If an expense support payment has not been reimbursed to the Adviser within three years of the end of the calendar quarter following the date such expense support payment was incurred, the Company’s obligation to pay such Expense Support Payment shall automatically terminate and be of no further effect.

⁽⁴⁾

Effective March 15, 2016, the Company's board of directors determined that it was in the Company's and stockholders' best interests to suspend the Offering and DRP. However, in the months of March through December, the board of directors maintained the amount of daily cash distributions payable to stockholders at $0.002049 per share (representing an annualized distribution rate of 7.5% based on share price of $10.00, or an annualized distribution rate of 7.65% based on a share price of $9.80).


⁽⁵⁾	In the months of January through June, the board of directors maintained the amount of daily cash distributions payable to stockholders at $0.002055 per share (representing an annualized distribution rate of 7.5% based on share price of $10.00, or an annualized distribution rate of 7.65% based on a share price of $9.80).

There can be no assurance that the Amended ESA will remain in effect or that GBA will reimburse any portion of the Company’s expenses in future quarters. Since inception, GBA has supported approximately $4.3 million of the Company's operating expenses, including organizational and offering expenses, and approximately $0.7 million of distribution support pursuant to the Amended ESA, as well as other additional support. For the three and six months ended June 30, 2017, total support of $0.5 million and $0.7 million, respectively, is included on the statements of operations as an expense reimbursement. Approximately $0.5 million is reflected as a capital contribution on the statements of changes in net assets as distribution support for the six months ended June 30, 2016. No distribution support was contributed for the six months ended June 30, 2017. As of June 30, 2017, the Company does not believe it is probable that it will generate sufficient excess cash to reimburse GBA for these advances over the next three years, pursuant to the terms of the Amended ESA.

Table of Contents

Administrative Services

Griffin Capital BDC Administrator will provide the Company with general ledger accounting, fund accounting and investor relations and other administrative services pursuant to the Administration Agreement, under which the Griffin Capital BDC Administrator will also furnish the Company with administrative services necessary to conduct its day-to-day operations. The Griffin Capital BDC Administrator will be reimbursed for administrative expenses it incurs on the Company's behalf in performing its obligations. Such costs will be reasonably allocated to the Company on the basis of assets, revenues, time records or other reasonable methods. The Company will not reimburse the Griffin Capital BDC Administrator for any services for which it receives a separate fee or for rent, depreciation, utilities, capital equipment or other administrative items allocated to a person with a controlling interest in the Griffin Capital BDC Administrator. Pursuant to the Administration Agreement, the Griffin Capital BDC Administrator at its sole discretion, may contract with third-party service providers. The cost of the third-party service providers will be an obligation of the Griffin Capital BDC Administrator. The Company will not incur the costs from the Griffin Capital BDC Administrator and the third-party provider for similar services. As of June 30, 2017 and December 31, 2016, the Griffin Capital BDC Administrator waived reimbursement for the cost of any administrative services provided.

As of June 30, 2017 and December 31, 2016, GBA incurred certain expenses on behalf of the Company, including directors fees, insurance and technology expenses, professional fees and other general and administrative expenses, of approximately $0.9 million and $0.9 million, respectively. Benefit Street was responsible for half of the expenses incurred by GBA up to March 6, 2017. GBA and Benefit Street are entitled to reimbursement of these expenses, subject to the limitations imposed under the Amended ESA described above.

Dealer Manager Agreement

The Company executed a dealer manager agreement with the Dealer Manager on December 11, 2014, which entitled the Dealer Manager to receive a sales commission based upon gross proceeds from shares sold in the Offering, which was a 7.0% commission of gross proceeds. In addition, the Dealer Manager received a dealer manager fee up to 3.0% of gross proceeds from shares sold in the Offering. The Dealer Manager entered into participating dealer agreements with certain other broker-dealers authorizing them to sell shares of the Company in the Offering. Upon sale of shares of the Company by such broker-dealers, the Dealer Manager re-allowed all of the sales commissions paid in connection with sales made by these broker-dealers. The Dealer Manager may also re-allow to these broker-dealers a portion of the 3.0% dealer manager fee as marketing fees, reimbursement of certain costs and expenses of attending training and education meetings sponsored by the Dealer Manager, payment of attendance fees required for employees of the Dealer Manager or other affiliates to attend retail seminars and public seminars sponsored by these broker-dealers, or to defray other distribution-related expenses. From January 1, 2016 to March 15, 2016 (the date of the suspension of the Offering), the Company paid dealer manager fees of $0.4 million and sales commissions of $1.0 million. No other dealer manager fees have been paid subsequent to the suspension of the Offering.

License Agreements

The Company has entered into a license agreement with Griffin Capital under which Griffin Capital has granted the Company a non-exclusive, royalty-free license to use the name "Griffin." The Company has a right to use the "Griffin" name for so long as GBA or one of its affiliates remains the Company's investment adviser. The Company's right to use the "Benefit Street Partners" name ended upon termination of the previous sub-advisor agreement. The Company's new name is Griffin Capital BDC Corp. See Note 11, Subsequent Events. Other than with respect to the limited license, the Company has no legal right to the "Griffin" name.

Conflicts of Interest

The Company's executive officers and certain of the Company's directors and other finance professionals of Griffin Capital and their affiliates also serve as executives of GBA. Mr. Shields controls the trust that is the sole member of Griffin Capital. In addition, the Company's executive officers and directors and the members of GBA and members of the investment committee of GBA serve or may serve as officers, directors or principals of entities that operate in the same, or related, line of business as the Company or of investment funds, accounts or other investment vehicles managed by the Company's affiliates. These investment funds, accounts or other investment vehicles may have investment objectives similar to the Company's investment objective. The Company may compete with entities managed by GBA and its affiliates for capital and investment opportunities. As a result, the Company may not be given the opportunity to participate in certain investments made by investment funds, accounts or other investment vehicles managed by GBA or its affiliates or by members of the investment committee. However, in order to fulfill its fiduciary duties to each of its clients, GBA intends to allocate investment opportunities in a manner that is fair and equitable over time and is consistent with GBA's allocation policy, investment objective and strategies so that the Company is not disadvantaged in relation to any other client.

Table of Contents

The Interim Sub-Adviser and its affiliates may manage or advise multiple investment vehicles or accounts that have investment objectives that are similar to the Company and that may seek to make investments or sell investments in the same securities or other instruments, sectors or strategies as the Company. The Interim Sub-Adviser is the sub-adviser to the Griffin Institutional Access Credit Fund. This may create potential conflicts, particularly in circumstances where the availability of such investment opportunities is limited (e.g., in local and emerging markets, high yield securities, fixed income securities, regulated industries, small capitalization and initial public offerings/new issues) or where the liquidity of such investment opportunities is limited. From time to time, the Interim Sub-Adviser may determine to refer certain conflicts of interest to Bain Capital’s Allocation Committee (the “Allocation Committee”), comprised of senior Bain Capital personnel, for review and resolution, particularly in situations where the Interim Sub-Adviser and other affiliated investment advisers are unable to resolve such conflicts. Similarly, the Allocation Committee may in its sole discretion determine to review and make determinations regarding certain conflicts of interest.

The Interim Sub-Adviser does not receive performance-based compensation in respect of its investment management activities on behalf of the Company, but may simultaneously manage other investment vehicles or accounts for which the Interim Sub-Adviser receives greater fees or other compensation (including performance-based fees or allocations) than they receive in respect of the Company. The simultaneous management of other investment vehicles or accounts that pay greater fees or other compensation than the Company may create a conflict of interest as the Interim Sub-Adviser may have an incentive to favor accounts with the potential to receive greater fees. For instance, the Interim Sub-Adviser may be faced with a conflict of interest when allocating scarce investment opportunities given the possibly greater fees from accounts that pay performance-based fees. To address these types of conflicts, the Interim Sub-Adviser has adopted policies and procedures under which it will allocate investment opportunities in a manner that it believes is consistent with their obligations as investment advisers. However, the amount, timing, structuring or terms of an investment by the Company may differ from, and performance may be lower than, the investments and performance of other investment vehicles or accounts.

Some of the material conflicts that GBA, BCSF or the Dealer Manager or its affiliates may face are (1) competing demand for time of GBA and BCSF executive officers and other key personnel and affiliated entities; and (2) influence of the fee structure under GBA's agreement that could result in actions not necessarily in the long-term best interest of the stockholders.

In an order dated June 23, 2015, the SEC granted exemptive relief permitting the Company, subject to the satisfaction of certain conditions, to co-invest in certain privately negotiated investment transactions with certain affiliates of the Previous Sub-Adviser. Among other things, the relief requires our independent directors to review and approve each initial co-investment.

Table of Contents

Note 6. Commitments and Contingencies

The Company’s investment portfolio may contain debt investments that are in the form of lines of credit and unfunded delayed draw commitments, which require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements. The par amounts of the unfunded commitments are not recognized by the Company until the commitment is funded. As of June 30, 2017 and December 31, 2016, the Company had approximately $1.6 million and $1.7 million, respectively, of unfunded commitments under loan and financing agreements as follows:



	June 30, 2017		December 31, 2016
MyEyeDr - Delayed Draw	$	1,200,000	$	1,200,000
MyEyeDr - Revolver	43,000		43,000
Santek Waste Services - Delayed Draw	57,105		117,987
Santek Waste Services - Revolver	66,000		66,000
Asset International - Delayed Draw	135,200		135,200
Asset International - Revolver	67,500		67,500
Bahakel Communications, Ltd.	34,500		34,500
Bahakel Communications, Ltd. - Revolver	10,500		14,000
Rue21, Inc. - Delayed Draw	15,135		—
Total Unfunded Commitments	1,628,940		1,678,187

The unrealized gain or loss on the discount associated with the unfunded commitments is recorded on the statements of assets and liabilities as discount for unfunded commitments and on the statements of operations as net change in unrealized appreciation (depreciation) on unfunded investments. As of June 30, 2017, the discount for unfunded commitments was $6,123, which is reflected as a component of liabilities on the statements of assets and liabilities. For the three and six months ended June 30, 2017, the net change in unrealized appreciation (depreciation) on unfunded investments was $(6,641) and $7,198, respectively.

Distribution Reinvestment Plan

The Company had implemented a DRP that allowed stockholders to have distributions otherwise distributable to them invested in additional shares of common stock at up to 95.0% of the price that common stock is sold in the Offering at the weekly closing immediately following the distribution payment date. The plan became effective on April 1, 2015. On November 11, 2015, the Company’s board of directors voted to amend and restate the DRP such that the purchase price for shares of common stock pursuant to the DRP shall be 90% of the price that common stock is sold in the Offering at the weekly closing immediately following the distribution payment date. The amended and restated DRP became effective as of November 26, 2015. No sales commission or dealer manager fee was paid on shares sold through the DRP. For the six months ended June 30, 2016, the Company issued 25,951 shares under the DRP. Effective March 15, 2016, the Company suspended purchases pursuant to the DRP, in conjunction with the suspension of the Offering.

Share Repurchase Program

Although it has not made any determination at this time, the Company maintains the right to initiate a share repurchase program in the future which would offer to repurchase common stock on such terms as may be determined by the board of directors in its complete and absolute discretion unless, in the judgment of the independent directors of the board of directors, such repurchases would not be in the best interests of our stockholders or would violate applicable law. There can be no assurance that the Company will implement a share repurchase program.

Table of Contents

Note 7. Common Stock

As of March 15, 2016, the Company had issued 4,563,196 shares of common stock outstanding which represents gross offering proceeds of approximately $44.8 million, including shares issued in the private placement and 60,369 shares issued pursuant to the DRP, which amount remained unchanged as of June 30, 2017.

On March 15, 2016, the Company’s board of directors determined that it is in the Company’s and its stockholders’ best interest to suspend the Offering. The board of directors’ determination was based on the Adviser's belief that market conditions, at the time, and the Company’s current structure was not conducive to continuing the Offering.

The Company's transfer agent ceased accepting subscriptions received on or after March 15, 2016, and issued refunds for all subscriptions received on or after March 4, 2016. The Company also sent written notification to its stockholders that the DRP was suspended, effective March 15, 2016.

Note 8. Per Share Information

Basic increase (decrease) in net assets resulting from operations per share is computed by dividing earnings available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Other potentially dilutive shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company had no potentially dilutive securities as of June 30, 2017.

The following information sets forth the computation of the weighted average basic and diluted net increase (decrease) in net assets per share resulting from operations for the three and six months ended June 30, 2017 and June 30, 2016.



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2017		2016		2017		2016
Basic and diluted
Net increase in net assets resulting from operations	$	642,769	$	585,469	$	1,484,102	$	798,922
Weighted average common stock outstanding	4,563,196		4,563,196		4,563,196		4,245,233
Net increase in net assets per share resulting from operations	$	0.14	$	0.13	$	0.33	$	0.19

Table of Contents

The table below shows changes in the Company's offering price and distribution rates since January 1, 2016.



Declaration Date		Public Offering Price	Effective Date	Daily Distribution Amount per Share		Annualized Distribution Rate
December 21, 2015	$	9.80	January 1, 2016	$	0.002049	7.65	%
January 22, 2016	$	9.80	February 1, 2016	$	0.002049	7.65	%
February 29, 2016	$	9.80	March 1, 2016	$	0.002049	7.65	%	⁽¹⁾
March 23, 2016	$	N/A	April 1, 2016	$	0.002049	7.65	%	⁽¹⁾
April 28, 2016	$	N/A	May 1, 2016	$	0.002049	7.65	%	⁽¹⁾
May 11, 2016	$	N/A	June 1, 2016	$	0.002049	7.65	%	⁽¹⁾
June 27, 2016	$	N/A	July 1, 2016	$	0.002049	7.65	%	⁽¹⁾
July 29, 2016	$	N/A	August 1, 2016	$	0.002049	7.65	%	⁽¹⁾
August 11, 2016	$	N/A	September 1, 2016	$	0.002049	7.65	%	⁽¹⁾
September 28, 2016	$	N/A	October 1, 2016	$	0.002049	7.65	%	⁽¹⁾
October 28, 2016	$	N/A	November 1, 2016	$	0.002049	7.65	%	⁽¹⁾
November 9, 2016	$	N/A	December 1, 2016	$	0.002049	7.65	%	⁽¹⁾
December 13, 2016	$	N/A	January 1, 2017	$	0.002055	7.65	%	⁽²⁾
January 27, 2017	$	N/A	February 1, 2017	$	0.002055	7.65	%	⁽²⁾
February 27, 2017	$	N/A	March 1, 2017	$	0.002055	7.65	%	⁽²⁾
March 29, 2017	$	N/A	April 1, 2017	$	0.002055	7.65	%	⁽²⁾
April 28, 2017	$	N/A	May 1, 2017	$	0.002055	7.65	%	⁽²⁾
May 4, 2017	$	N/A	June 1, 2017	$	0.002055	7.65	%	⁽²⁾
June 30, 2017	$	N/A	July 1, 2017	$	0.002055	7.65	%	⁽²⁾

__________________

⁽¹⁾Effective March 15, 2016, the Company's board of directors determined that it was in the Company's and stockholders' best interests to suspend the offering and DRP. In the months of March through December, the board of directors maintained the amount of daily cash distributions payable to stockholders at $0.002049 per share (representing an annualized distribution rate of 7.5% based on a share price of $10.00, or an annualized distribution rate of 7.65% based on a share price of $9.80).

⁽²⁾Effective January 1, 2017, the board of directors declared the amount of daily cash distributions payable to stockholders to be $0.002055 per share (representing an annualized distribution rate of 7.5% based on a share price of $10.00, or an annualized distribution rate of 7.65% based on a share price of $9.80). The board of directors maintained such rate through June 30, 2017.

Table of Contents

Note 9. Distributions

For the six months ended June 30, 2017, the Company had declared approximately $1.7 million in stockholder distributions. Approximately $1.7 million of these distributions were declared and paid or payable in cash and none were in shares issued pursuant to the DRP.



Record Date	Payment Date	Distributions Paid in Cash Accrued
January 31, 2017	February 1, 2017	$	290,703
February 28, 2017	March 1, 2017	262,571
March 31, 2017	April 1, 2017	290,704
April 30, 2017	May 1, 2017	281,325
May 31, 2017	June 1, 2017	290,704
June 30, 2017	July 1, 2017	281,326
		$	1,697,333

For the six months ended June 30, 2016, the Company had declared approximately $1.6 million in stockholder distributions. Approximately $1.4 million of these distributions were declared and paid or payable in cash and $0.2 million in shares issued pursuant to the DRP.



Record Date	Payment Date	Distributions Paid in Cash/Accrued		Distributions Paid Through the DRP		Total Distributions Paid/ Accrued
January 31, 2016	February 1, 2016	$	103,281	$	108,650	$	211,931

Griffin Capital BDC Corp. 10-Q