Group 1 - Chicago Atlantic Real Estate Finance, Inc. reported quarterly earnings of $0.46 per share, missing the Zacks Consensus Estimate of $0.48 per share, and down from $0.53 per share a year ago, representing an earnings surprise of -4.17% [1] - The company posted revenues of $14.07 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.13%, but down from $14.84 million year-over-year [2] - The stock has added about 3% since the beginning of the year, while the S&P 500 has declined by -5.3% [3] Group 2 - The earnings outlook for Chicago Atlantic Real Estate Finance is mixed, with the current consensus EPS estimate for the coming quarter at $0.54 on revenues of $14.26 million, and $2.11 on revenues of $57.57 million for the current fiscal year [7] - The Zacks Industry Rank for Financial - Miscellaneous Services is currently in the top 16% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] Group 3 - The company has surpassed consensus EPS estimates just once over the last four quarters, while it has topped consensus revenue estimates two times in the same period [2] - The current status of estimate revisions translates into a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6]

Financial Performance - Net income for the fourth quarter of 2024 was approximately $7.9 million, or $0.39 per weighted average diluted common share, a sequential decrease of 30.1%[10] - Net income for Q4 2024 was $7,919,692, a decrease of 15.7% from $9,397,523 in Q4 2023[20] - Total revenues for the year ended December 31, 2024, were $62,104,092, slightly down from $62,900,004 in 2023[20] - Net interest income for Q4 2024 was $14,068,376, compared to $14,839,485 in Q4 2023, reflecting a decrease of 5.2%[20] - Distributable earnings for the fourth quarter of 2024 were approximately $9.2 million, or $0.47 and $0.46 per basic and diluted weighted average common share, respectively[10] - Distributable Earnings for Q4 2024 were $9,214,434, compared to $9,863,450 in Q4 2023, a decline of 6.6%[24] - Basic Distributable Earnings per Weighted Average Share for Q4 2024 was $0.47, down from $0.54 in Q4 2023[24] - Diluted Distributable Earnings per Weighted Average Share for Q4 2024 was $0.46, compared to $0.53 in Q4 2023[24] Expenses and Costs - Total expenses for the fourth quarter of 2024 were approximately $5.7 million, representing a sequential increase of approximately 34.1%[10] - Total expenses for the year ended December 31, 2024, were $17,737,306, down from $18,617,241 in 2023, indicating a reduction of 4.7%[20] - Management and incentive fees for Q4 2024 were $2,863,158, a decrease from $3,243,775 in Q4 2023[20] - Stock-based compensation for the year ended December 31, 2024, was $3,058,674, significantly higher than $1,479,736 in 2023[20] Portfolio and Loans - As of December 31, 2024, total loan principal outstanding was $410.2 million across 30 portfolio companies, with $20.9 million of unfunded commitments[6] - The portfolio weighted average yield to maturity was approximately 17.2% as of December 31, 2024, down from 18.3% as of September 30, 2024[6] - The total reserve for current expected credit losses increased to $4.3 million, approximately 1.1% of the aggregate portfolio principal balance of loans held for investment[10] Shareholder Returns - The company declared a total of $2.06 in dividends per common share during 2024, compared to $2.17 during 2023[10] Leverage and Book Value - As of December 31, 2024, the company had a consolidated leverage ratio of approximately 34%[6] - The book value per common share decreased from $14.94 as of December 31, 2023, to $14.83 as of December 31, 2024[10] Future Projections - The company expects net interest income of approximately $14.1 million for full year 2025, compared to $14.5 million as of September 30, 2024[10] Share Count - The weighted average number of common shares outstanding increased to 19,830,596 in Q4 2024 from 18,182,403 in Q4 2023[24]

Financial Performance - Base Management Fees for 2024 totaled $4,138,401, an increase from $4,046,398 in 2023, reflecting a growth of approximately 2.3%[34] - Incentive Fees decreased to $3,923,495 in 2024 from $4,736,436 in 2023, representing a decline of about 17.2%[34] - The total expenses for 2024 amounted to $12,883,269, down from $13,582,044 in 2023, indicating a reduction of approximately 5.2%[34] Loan Portfolio and Performance - As of December 31, 2024, the company's loan portfolio totals approximately $410.2 million, with $404.7 million held for investment and $5.5 million reported at fair value[48] - The loan portfolio has a weighted-average yield-to-maturity internal rate of return (YTM IRR) of 17.2%, indicating a strong anticipated annualized return if loans are held to maturity[48] - The loan portfolio consists of 62.1% floating-rate loans and 37.9% fixed-rate loans as of December 31, 2024[50] - The total principal amount of fixed-rate loans is approximately $149.2 million, accounting for 37.0% of loans held for investment[50] - The total principal amount of floating-rate loans is approximately $253.3 million, accounting for 63.0% of loans held for investment[50] - The average interest rate across the loan portfolio is approximately 17.2%[54] - The loan portfolio includes various interest rate structures, with some loans having a prime rate floor of 3.25% to 6.25%[55] - The company has approximately $20.9 million in unfunded commitments to existing borrowers, with $14.9 million related to loans held for investment[48] Risk Management - The Manager's Investment Committee is responsible for managing credit risk through a comprehensive investment review process for each loan[46] - Credit risk is a significant concern, with the company focusing on originating higher quality loans and proactively monitoring them to mitigate potential losses[522] - The company is subject to varying degrees of credit risk, particularly with loans to relatively new and small companies in the cannabis industry[522] - The company actively manages risk exposure through monitoring and employing various risk management tools, including software and proprietary analytical methods[515] Regulatory Compliance and REIT Status - The company has qualified as a REIT and will continue to operate under this status, which allows it to avoid double taxation on distributed taxable income[92] - The company is subject to a 100% tax on net income from prohibited transactions, which includes sales of property held primarily for sale to customers[104] - At least 75% of the company's gross income must be derived from real property investments to satisfy the gross income tests[100] - The company must maintain at least 75% of its total assets in real estate assets to meet the asset tests[108] - The company must distribute at least 85% of its REIT ordinary income and 95% of its REIT capital gain income annually to avoid excise taxes[94] - The company is required to comply with regulatory requirements regarding stockholder ownership to maintain its REIT status[97] Market Conditions and Strategy - The company believes favorable market conditions in the cannabis industry provide attractive opportunities for non-bank lenders, although competition for capital is increasing[518] - The company's growth strategy includes diversifying financing sources to lower overall funding costs and increase loan sizes[43] - The company intends to continue providing financing to state-licensed cannabis operators and ancillary businesses in the U.S. and Canada, focusing on strong collateral[42] Loan Characteristics and Terms - The company targets loans with a principal balance greater than $5 million and requires real estate collateral coverage of at least one times the principal balance[43] - The loan with the highest principal amount is $27,110,506, maturing on 12/31/2025, with an interest rate of P+3% Cash[54] - The loan portfolio includes loans with varying payment structures, including interest-only (I/O) and principal and interest (P&I) payments[54] - The collateral for loans does not include cannabis inventory due to regulatory restrictions, which may impact profitability[56] Debt and Financing - The Revolving Loan commitment was increased from $92.5 million to $100 million as of June 30, 2023[63] - The contractual maturity date of the Revolving Loan was extended to June 30, 2026, with an expanded accordion feature allowing up to $150 million in aggregate loan commitments[64] - The company entered into a Loan Agreement for an aggregate commitment of $50.0 million in senior unsecured notes, maturing on October 18, 2028, with a fixed interest rate of 9.00% per annum[70] - The proceeds from the Unsecured Notes were used to temporarily repay outstanding obligations on the Revolving Loan and for other working capital purposes[71] Economic and Competitive Landscape - The company faces competition from various institutional investors, which may impact its ability to secure attractive lending opportunities[125] - Commercial real estate loans are subject to volatility influenced by various economic and local conditions, which could adversely affect the company's operations[523] - The company's operating results are significantly influenced by the difference between income earned on assets and borrowing costs, which are affected by prevailing market interest rates[514]

Core Viewpoint - Chicago Atlantic Real Estate Finance, Inc. reported its financial results for the fourth quarter and full year of 2024, highlighting a disciplined underwriting process and a strong portfolio focused on cannabis operators, with a significant growth pipeline for 2025 [1][2]. Portfolio Performance - As of December 31, 2024, the total loan principal outstanding was $410.2 million across 30 portfolio companies, with a weighted average yield to maturity of approximately 17.2%, down from 18.3% in the previous quarter [5][6]. - The aggregate loan portfolio with variable interest rates was 62.1%, while fixed-rate loans increased from 31.9% in 2023 to 37.9% in 2024 [6]. Investment Activity - The company had total gross originations of $90.7 million in the fourth quarter, with $52.6 million funded to new borrowers and $38.1 million to existing borrowers [6]. - A $50 million unsecured term loan was entered into with a fixed interest rate of 9.0%, used to repay outstanding borrowings and for working capital [6]. Financial Results - Net interest income for the fourth quarter was approximately $14.1 million, a slight decrease from $14.5 million in the previous quarter [5][10]. - Net income for the full year was approximately $37.0 million, or $1.88 per diluted share, representing a year-over-year decrease of 10.5% [10][22]. - The company declared total dividends of $2.06 per common share in 2024, down from $2.17 in 2023 [10]. Capital Activity and Dividends - The company paid a regular quarterly cash dividend of $0.47 per share and a special cash dividend of $0.18 per share for the fourth quarter of 2024 [6][10]. - As of March 12, 2025, the company had $71.5 million available on its secured revolving credit facility and total liquidity of approximately $67 million [6]. 2025 Outlook - Chicago Atlantic anticipates continued growth in 2025, supported by a strong liquidity position and a collaborative approach with borrowers [2][8].

Company Overview - Chicago Atlantic Real Estate Finance, Inc. is a commercial mortgage real estate investment trust (REIT) focused on originating senior secured loans primarily to state-licensed cannabis operators in limited-license states in the United States [4] - The company has deployed over $2 billion in credit and equity investments to date and has offices in Chicago, Miami, and New York [4] Earnings Release Information - The company plans to issue its earnings release and supplemental financial information before the market opens on March 12, 2025 [2] - A conference call and live audio webcast will be held on the same day at 9:00 a.m. Eastern Time, which will be open to the general public [2] - The interactive teleconference can be accessed by calling (833) 630-1956 for domestic callers and (412) 317-1837 for international callers [2] Webcast Availability - The live audio webcast of the quarterly conference call will be available in the Investor Relations section of the company's website [3] - An online replay of the call will be available approximately one hour after the end of the call and archived for one year [3]

Core Points - Chicago Atlantic Real Estate Finance, Inc. declared a special cash dividend of $0.18 per common share for the 2024 tax year to comply with U.S. federal income tax rules for REITs [1] - The special dividend is based on estimated performance for the year ending December 31, 2024, and is payable on January 13, 2025, to shareholders of record as of December 31, 2024 [1] - The company also announced a regular quarterly cash dividend of $0.47 per common share for the fourth quarter of 2024, which annualizes to $1.88 per common share [3] - The regular quarterly dividend is also payable on January 13, 2025, to shareholders of record as of December 31, 2024 [3] Company Overview - Chicago Atlantic Real Estate Finance, Inc. is a market-leading commercial mortgage REIT that focuses on originating senior secured loans primarily to state-licensed cannabis operators in limited-license states in the U.S. [2] - The company has closed over $2.3 billion in credit facilities since its inception and operates offices in Chicago, Miami, New York, and London [2]

Financial Data and Key Metrics Changes - The loan portfolio totaled $362 million with a weighted average yield to maturity of 18.3%, down from 18.7% at June 30 due to repricing amendments and a 50 basis point decrease in the prime rate [17][19] - Net interest income increased to $14.5 million from $13.2 million in the previous quarter, with gross interest income rising by 4% [23] - Adjusted distributable earnings per weighted average diluted share was $0.56 for Q3 2024, compared to $0.50 for the second quarter [29] Business Line Data and Key Metrics Changes - Gross originations during the quarter were $32.7 million, with $24 million to new borrowers and $8.7 million to existing borrowers [18] - The company successfully retained and extended $89 million of loans maturing in 2024, with $47 million repaid with full recovery of principal and interest [16] Market Data and Key Metrics Changes - The pipeline across the Chicago Atlantic platform has grown to $560 million, focusing on operators in limited license states transitioning from medical to adult use [13][36] - Florida represents 7% of the portfolio, and the company underwrote investments based on the existing medical market [11] Company Strategy and Development Direction - The company aims to build an investment platform focused on strong operators in attractive markets, emphasizing disciplined expertise and a unique competitive position [10][12] - The company is exploring other sources of accretive capital to accelerate deployment, including a $50 million unsecured term loan [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the election results do not significantly impact the company, as they do not invest based on speculative political events [11] - The company believes federal rescheduling of cannabis is likely in 2025, which could facilitate further investment opportunities [12] Other Important Information - Total leverage was at 18% of book equity at quarter end, with a debt service coverage ratio of approximately 7.2 to 1 [21] - The company received a BBB+ rating from Egan-Jones for both the company and the unsecured term loan [14] Q&A Session Summary Question: Update on the core cannabis industry and market weaknesses - Management focuses on dissecting the portfolio into nascent, emerging, and mature markets, actively managing and pivoting as needed [33][35] Question: Pipeline for new loans and opportunities in specific states - The pipeline is strong at approximately $560 million, with significant focus on operators in Ohio, Missouri, and Maryland [36]

Company Performance - Chicago Atlantic Real Estate Finance, Inc. reported quarterly earnings of $0.56 per share, exceeding the Zacks Consensus Estimate of $0.55 per share, but down from $0.57 per share a year ago, representing an earnings surprise of 1.82% [1] - The company posted revenues of $14.46 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2.57%, compared to $13.73 million in the same quarter last year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] Stock Performance - Chicago Atlantic Real Estate Finance shares have declined approximately 3.7% since the beginning of the year, while the S&P 500 has gained 24.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.53 on revenues of $15.15 million, and for the current fiscal year, it is $2.10 on revenues of $58.39 million [7] Industry Outlook - The Zacks Industry Rank for Financial - Miscellaneous Services is currently in the top 31% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Financial Performance - Net income for the third quarter was approximately $11.2 million, or $0.56 per weighted average diluted common share, representing a sequential increase of 21.7% on a per share basis[15]. - Net income for the three months ended September 30, 2024, was $11,211,636, compared to $9,976,998 for the same period in 2023, representing a 12.4% increase[24]. - Net interest income for the third quarter was approximately $14.5 million, an increase from $13.2 million as of June 30, 2024[14]. - Net interest income for the three months ended September 30, 2024, was $14,459,393, up from $13,734,307 in the same period last year, indicating a growth of 5.3%[24]. - Distributable Earnings for the three months ended September 30, 2024, were $11,159,241, compared to $10,537,182 for the same period in 2023, reflecting a 5.9% increase[27]. - Basic earnings per common share for the three months ended September 30, 2024, were $0.57, compared to $0.55 for the same period in 2023, marking a 3.6% increase[24]. - Total expenses for the three months ended September 30, 2024, were $3,247,757, down from $3,842,876 in the same period last year, a decrease of 15.5%[24]. - Adjusted Distributable Earnings per Weighted Average Share for the three months ended September 30, 2024, were $0.56, compared to $0.57 for the same period in 2023, a decrease of 1.8%[27]. Loan and Portfolio Information - As of September 30, 2024, total loan principal outstanding was $362.3 million across 29 portfolio companies, with a $6.0 million unfunded commitment[3]. - The portfolio weighted average yield to maturity was approximately 18.3%, down from 18.7% as of June 30, 2024, primarily due to repricing amendments and a 50-basis point decrease in the prime rate[4]. - Total gross originations during the third quarter amounted to $32.7 million, with $24.0 million funded to new borrowers and $8.7 million to existing borrowers[7]. - The total reserve for current expected credit losses decreased to $4.1 million, approximately 1.1% of the aggregate portfolio principal balance of $362.3 million[16]. - The company reported a decrease in the provision for current expected credit losses of $(989,597) for the three months ended September 30, 2024, compared to $(41,351) in the same period last year[27]. Shareholder Information - Book value per common share increased to $15.05 as of September 30, 2024, compared to $14.92 as of June 30, 2024[17]. - The weighted average number of common shares outstanding increased to 19,625,190 for the three months ended September 30, 2024, from 18,175,467 in the same period last year, an increase of 8.0%[27]. - Stock-based compensation for the three months ended September 30, 2024, was $845,524, compared to $540,426 for the same period in 2023, representing a 56.5% increase[27]. - The company intends to pay dividends to stockholders in an amount equal to its net taxable income, subject to Board authorization[25]. Liquidity and Financing - As of November 7, 2024, the Company had approximately $94.5 million available on its secured revolving credit facility, with total liquidity of approximately $80 million[12]. - The Company entered into a $50.0 million unsecured term loan with a fixed interest rate of 9.0% on October 18, 2024[11]. Collateral Coverage - Real estate collateral coverage was 1.2x as of September 30, 2024, compared to 1.3x as of June 30, 2024, and improved to approximately 1.3x as of November 7, 2024[5].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-41123 CHICAGO ATLANTIC REAL ESTATE FINANCE, INC. | --- | --- | |----------------------------------------------------------------------------|--------------------------- ...