• Loan Portfolio: $362 million across 29 portfolio companies as of September 30th.

• Weighted Average Yield to Maturity: 18.3% as of September 30th, down from 18.7% at June 30th.

• Gross Originations: $32.7 million during the quarter.

• Net Interest Income: Increased to $14.5 million from $13.2 million in the previous quarter.

• Interest Expenses: Decreased by approximately 2% to $1.8 million.

• Total Operating Expenses: Approximately $4.2 million, consistent quarter over quarter.

• Reserve for Expected Credit Losses: $4.1 million as of September 30th, representing 1.1% of outstanding principal.

• Adjusted Distributable Earnings per Share: 56 for Q3 2024, compared with 50 for the second quarter.

• Regular Dividend: 47 per common share, consistent with the prior quarter.

• Book Value per Share: $15.05 as of September 30th, compared with $14.92 as of June 30th.

• Total Leverage: 18% of book equity at quarter end.

• Debt Service Coverage Ratio: Approximately 7.2 to 1 for the quarter.

• Available Liquidity: In excess of $75 million to fund new investments.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Chicago Atlantic Real Estate Finance Inc (NASDAQ:REFI) reported positive Q3 earnings results, reflecting successful execution of their investment strategy.

• The company has a strong pipeline of $560 million, focusing on operators in limited license states and those transitioning from medical to adult use.

• REFI has liquidity in excess of $75 million to fund new investments, ensuring financial flexibility.

• The company successfully managed interest rate risk by increasing the percentage of fixed-rate loans and loans with rate floors, protecting against further rate cuts.

• Net interest income increased to $14.5 million in Q3, up from $13.2 million in the previous quarter, indicating improved financial performance.

Negative Points

• The weighted average yield to maturity of the loan portfolio decreased from 18.7% to 18.3%, partly due to repricing amendments.

• The cannabis market remains volatile, with political and regulatory uncertainties impacting investment opportunities.

• Loan number nine remains on non-accrual status, indicating potential credit quality issues within the portfolio.

• The company's debt service coverage ratio, while strong, indicates a reliance on maintaining high levels of operational efficiency.

• The overall real estate coverage ratio slightly decreased from 1.3 times to 1.2 times, suggesting a marginal decline in collateral quality.

Q & A Highlights

Q: Can you provide an update on the cannabis industry, specifically any weaknesses or improvements in certain states? A: Peter Sack, Co-Chief Executive Officer, explained that they categorize their portfolio into nascent, emerging, and mature markets. They focus on active portfolio management, allowing them to pivot quickly between these segments. Currently, they are concentrating on operators in Missouri, Ohio, and Maryland, as well as brands expanding into new regions. They focus on competitive dynamics in each state rather than the overall U.S. cannabis market, which consists of 40 distinct markets.