Prospect Capital Invests $22.0 Million in Four Yield-Producing Multifamily Residential Properties Totaling 783 Rental Units and 664,942 Rentable Square Feet


NEW YORK, NY--(Marketwired - Feb 3, 2014) - Prospect Capital Corporation (NASDAQ: PSEC) ("Prospect") announced today that Prospect has recently invested $22.0 million in three new transactions encompassing four rent-producing multifamily residential properties totaling 783 rental units and 664,942 rentable square feet. In combination with prior multifamily residential investments, Prospect has in the aggregate invested $310.3 million in 13 separate transactions encompassing 29 multifamily residential properties with 9,951 rental units and 9.78 million rentable square feet.

Prospect structures its multifamily investments as an investment of debt and equity into certain of Prospect's controlled portfolio companies, each of which owns a private real estate investment trust ("REIT"). Each REIT works with multiple operating managers and co-investors to close and manage multifamily residential property acquisitions. Prospect may set up other REITs in the future to house its real-estate-related investments in a tax efficient manner. The four recently closed transactions include the acquisition of a two-property portfolio ("Gulf Coast II") and two single-property transactions, Indigo Luxury Apartment Homes ("Indigo"), and Island Club at Atlantic Beach ("Island Club").

The Gulf Coast II portfolio consists of two residential rental properties located in Mobile and Pensacola. The properties were constructed between 1982 and 1984 and together consist of 256 units encompassing 250,400 rentable square feet.

Indigo is a residential rental property located in Jacksonville, Florida. The property was constructed in 2007 and consists of 323 units encompassing 226,374 rentable square feet.

Island Club is a residential rental property located in Jacksonville, Florida. The property was constructed in 1988 and consists of 204 units encompassing 188,168 rentable square feet.

"These multifamily investments continue Prospect's strategy of selectively acquiring stabilized properties at a fraction of replacement cost in markets with limited new construction pipelines and positive demographic and economic trends," said Ted Fowler, Managing Director of Prospect Capital Management LLC. "These rent-producing properties generate attractive current yields (with long-term fixed rate financing), long-term capital appreciation potential, inflation-protecting income streams, and diversification across geography, construction vintage, and operating manager. We are actively screening new investment opportunities in real estate and beyond with a focus on businesses that produce recurring and stable cash flow streams that we can distribute to our shareholders."

Prospect closed approximately $2.7 billion of new originations during calendar year 2013. Prospect has closed nearly $200 million of originations during the current March 2014 quarter, with further origination activity expected in the coming months.

ABOUT PROSPECT CAPITAL CORPORATION

Prospect Capital Corporation (www.prospectstreet.com) is a business development company that focuses on lending to and investing in private businesses. Prospect's investment objective is to generate both current income and long-term capital appreciation through debt and equity investments.

Prospect has elected to be treated as a business development company under the Investment Company Act of 1940 ("1940 Act"). Prospect is required to comply with a series of regulatory requirements under the 1940 Act as well as applicable NASDAQ, federal and state rules and regulations. Prospect has elected to be treated as a regulated investment company under the Internal Revenue Code of 1986. Failure to comply with any of the laws and regulations that apply to Prospect could have an adverse effect on Prospect and its shareholders.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, whose safe harbor for forward-looking statements does not apply to business development companies. Any such statements, other than statements of historical fact, are highly likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under Prospect's control, and that Prospect may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from any forward-looking statements. Such statements speak only as of the time when made, and Prospect undertakes no obligation to update any such statement now or in the future.