Operating Results – Year ended December 31, 2012
Investment income totaled $23.4 million for the year ended December 31, 2012, decreasing $4.5 million compared to $27.9 million in 2011. The decrease in 2012 was primarily attributable to the recognition, in the second quarter of 2011, of $4.5 million of previously unrecognized paid-in-kind ("PIK") interest income on Tranche B of a Term Loan issued to Alden, which was sold in July 2011.
Operating expenses in 2012 totaled $11.6 million, decreasing $0.5 million, or 4%, compared to 2011, primarily as a result of lower management fees for the year and lower general and administrative expenses, partially offset by higher interest expenses on increased borrowings to support our larger investment portfolio. Net investment income was $11.8 million, or $0.55 per share, for the year ended December 31, 2012, compared to $15.8 million, or $0.73 per share, for the year ended December 31, 2011.
We recognized net realized capital losses of $17.8 million, or $0.83 per share, during 2012, primarily resulting from the write off of our investments in BioEnergy and Bionol of $21.8 million, partially offset by realized capital gains on the sale of other investments. In 2011, we recognized net realized capital losses totaling $30.6 million, or $1.42 per share, related to the sale of a number of investments that originated prior to the financial crisis in 2008 and the subsequent downturn in U.S. oil and gas drilling activity.
During the year ended December 31, 2012, we recorded $23.4 million, or $1.09 per share, of net unrealized appreciation on portfolio investments, primarily due to the reversal of prior year unrealized depreciation due to realization on our investments in BioEnergy and Bionol of $21.8 million, and net increases in the estimated fair value of other investments. During 2011, we recorded net increases in unrealized depreciation on portfolio investments totaling $5.1 million, primarily as a result of decreases in the estimated fair value of our investments in BioEnergy, Bionol and certain other investments, partially offset by the reversal of prior period unrealized depreciation on other investments that were exited and realized in 2011.