Chicago Atlantic Real Estate Finance(REFI) - 2024 Q3 - Earnings Call Transcript

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]