AFCG - Earnings call transcript Q4 2021

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Operator

Good day and thank you for standing by. Welcome to the AFC Gamma Incorporated Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be question-and-answer session [Operator Instructions] I would now like to hand the conference over to Gabriel Katz, Chief Legal Officer. Please go ahead.

Gabe Katz

you fourth joining XXXX. quarter thank call Gamma's and the for and morning all AFC for earnings Good full year am our Head by Officer; morning Origination and Tannenbaum, joined our and of Officer. I Executive Brett Relations; Chief Kaufman, our Leonard Head Jonathan Financial Real of Tannenbaum, our Investor Estate; Chief Robyn Kalikow, this

other press and posted growth included developments, these note results presentation. forward-looking statements certain subject predicting projections being includes recorded. is the cause current we Before the and in and and March section that Gamma’s this projections to in our that reflect of begin, is in and and statements. fourth call I company’s along from those These future website among the would financial call and things, XXXX release statements performance views XX, future Relations projected Investor at conditions, forward-looking in to, investor results materially XXXX originations XXXX. respect information earnings conference release uncertainties on with like are is to and quarter differ could to ASC inherent Today’s market Replay factors our with afcgamma.com,

the undue SEC forward-looking differ significant statements. possible refer arise to and statements most certain over place risks events Please New filings to for uncertainties and forward-looking projections. these with that Gamma's and on these company it for is actual to could how AFC factors from materially may reliance results cause recent time, you affect not Therefore, should not they the or those predict these statements.

will investor which comparable found available measure. of will Jon, on follows; our year will Gamma's fourth performance to earnings, and GAAP we provide The net an results Len Gamma's and commentary; call format also introductory income, website. the AFC presentation be earnings, strategic XXXX results. is non-GAAP portfolio; will a origination our financial most call, Gamma's as will Reconciliations Robyn remarks, full AFC and financial and for release can this discuss measure distributable today’s earnings the in summarize Brett discuss is AFC overview refer to During of distributable pipeline

then will Tannenbaum. now the that, to our turn Officer, over call Q&A. for Executive I'll the With Chief We line open Leonard

Leonard Tannenbaum

Thank fourth and you, good and and to to thank call XXXX. today morning like quarter Gamma's the quarter Gabe, fiscal year AFC fiscal fourth investors earnings welcome and results. us discuss for I'd our analysts to our joining for year

goals what our to turning quarter our we like XXXX for I'd what fourth Before accomplished. and briefly were results, discuss to

year, ended as accomplish public REIT. operating capital During an goals, completed Gamma and a initial for in position the equity allowed leadership of We the AFC its offering several its attractive us lenders has public a being step provides with the cost to access relationship peers. to one public consistent to Gamma debt cannabis valuable began as markets, largest which with including reputation and lender. a AFC institutional relative This of year a in

set we beginning Looking year, team am proud our we and extremely at work of dedication. hard of from everything the almost to out our last the and goals do, accomplished I for

by $XXX in and goal originations originations that we million gross of generating First $XXX gross of targeted exceeded XXXX. million

in December book QX December XXXX. share by increase return to increase shareholders. on from XX, offering $XX.XX XXXX completed per is We XX% our the include impact goal of our XX, increased value the does Second, XXXX. This not on book value, driving accreative to positive for $XX.XX

$X.XX XXXX. and approximately in goal quarter our increased of XX% increased by for is We $X.XX initial share declared quarter. to declare Third, QX dividend over XXXX, to dividends per QX that

we our the borrowers solutions. customized with providing continue Over to financing year, in-house capabilities our further augmented

Beach, Palm platform with growing in West Florida. of are We our XX headquartered proud over employees

are have seven and valuable broader pleased to We information AFCG, research to investment providing community. investors analysts the covering our also

rapidly and supporting forward very about excited cannabis growing remain industry we the to us. opportunities XXXX, Looking the ahead of

Although $XX targets gross of start in we pipeline we we confident active and remain for the the in had million our to originations, year, have a ourselves with slow set XXXX.

gross and AFC the two this overcome. that During decision between we close not issues $XXX and repayments QX generate a of origination's with and targeting to during intend approximately target equity originations deals XXXX, debt fund million million commitments We we times XXXX. debt X.X bringing during anticipated to equity between a a which could will at range million. the that these due million combination $XXX $XXX believe of end we currently not Gamma to serviced $XXX us ratio net to to $XXX $XXX and XXXX, made of million, At of because diligence, of us million with of time, are

I on the this remain limited in We place industry. focused among best cost number in and believe industry. the developing components necessary all have to rapidly continue we lenders to the the of serve of alternative scale business capital the growing

pipeline During and record on fundings of net quarter. to $XXX during which quarter, had our continued originations. the commitments We the million to we fourth of closed led execute fourth on $XXX new million

earnings each of $X.XX per in from of generated our in in This weighted our earnings basic a the share. in third portfolio public $XXX excess of $X.XX $X.XX the in Since quarter three increase distributable of over the last quarters, million per Our have dividend. the in result drove going fourth quarter. XX% to dividend in average share we quarterly increase earnings

free $X.X we in million do For XXXX, XX% into on XXXX can a earnings, as basis. approximately which carrying REIT which tax a distributed AFC Gamma forward resulted of over distributable

no we Currently XXXX, XXX% pleased performing. -- states are When to this Moving and we states. XX portfolio, believe current in loans states time We portfolio loans we loans in have focused which borrowers. lending as creating portfolios operating licenses to on additional and states to, pleased diversified all form security. prefer loans. value our limited license have XX we comprised that as that we markets a evaluating lean at no in no borrowers loans March our have to as of of first those our XX, remain -- aren't lend have We're of are time across have operators on -- we that at that this that's

prepayment that in during AFC marketing licenses. operators underwriting, primary any we and with conditions Additionally, lent into for or that experienced believe states have each to state our pressure may evaluate pricing states, to these experience has unlimited and Oklahoma, the many is adverse California, Due pricing we Washington, supply Currently, continuously have Oregon four where in not borrowers demand operations and trending. dynamic potential pound Gamma may states. Due repayments quarter may a which to these in impact -- earnings, be negatively lenders repayments in declining lumpy forecasting in of estimating difficulty of as Earnings to cause and/or deal deal an and order deal Repayments exit in potential the quarter. times of closings. an income as increase well a receipt the due tend to OID penalties. write-up

XXXX, expected I we and the are million repayments currently As $XXX experience $XXX mature. as of in between stated portfolio million to to earlier continues

We on will third dividend expect as in I or this distributable past generate company. share prior to to an this is the of XX. over distributable over the declared earnings level of the On are quarterly now shareholders a dividend public for the board the XX represents to the call quarterly first payable XXXX. April and quarter This our quarter a earnings our of three dividend $X.XX dividend a March we at above record pleased year. annual to and Consistent year dividend quarters, is first XX% quarter pay consecutive has a of between increase that increase the basis, over XX% policy our with of XXX% John. turn in

Jonathan Kalikow

Thank you, Len.

we to aspects to of portfolio several begin highlighting portfolio and Gamma's evolve is has As AFC The management certain goal wanted fold. management of mature, the begun operations. our portfolio

and borrower with relationship over should our be its is modify dialogue company's us Regular and maintain strength loan. to dialogue, First, to ensuring regular expand able with a credit allows with operations to each a a loan along We performing. the to their covenant quickly, need reporting act monitor through financial testing, or borrower time that borrowers. strong

For their Travis Nature's and to example, to were Medicines three existing we finance initiatives. the loans growth able increase recently to new borrowers, Brono,

to want a can borrower. we any anticipate issues sure with potential we make Second,

For diagnose instance, with company of a to with equity, not us our provides performing work look them and may remedy ability find knowledge remedy, business include the their in of delaying the which scenarios and expected, posting ahead investing additional arise provides financial team that to monitoring future. additional company trajectory may collateral. the with may as a covenants or In issues to the where the plans future changing, towards issue the we as or borrowers can be a

which we states state, limited the management at states performing. current in to announce dynamics are over market remain time, this all the remains in in are our a this operate pricing. the and understand our must cornerstone which team decisions dynamics management evolving. the license help what monitoring portfolio and will ever of that do borrowers of I portfolio demand call our Robyn. on Portfolio are inform focused Third, our lending pleased in turn to supply we are will loans in each the origination now in We and as

Robyn Tannenbaum

you, Jon. Thank

are companies cash the are include institutional The reminder, and cannabis those as lender, and to which build make cannabis As we an We operators, on domestic those Gamma estate. three businesses. by to a that ourselves to well The relationship privately a licenses, the Canadian that we flow, lend held pillars, industry. as exchanges. successful real listed lender that is AFC loans operators secured typically multi-state as single are see financing

a XXXX existing X, XXX both origination over borrowers. March deals. on expanding have sourcing transactions, focused our is represents Our over borrowers sourced From we $XX variety which of billion and new of January continually with XXXX, loans through platform

Yet date three over commitments $XX lending active the continues The high both platform larger to of and X with robust a close deals quarter active maintaining an important while of those of during we're to existing ensure may us $X transactions, the deals by especially many strong we of from our to over proven give continue converting as as remains in team those of borrowers sourcing market. incumbency as active to increase The it hard pipeline million. origination evaluating to to quarter, remains the billion. We quarter first expand fluctuate March pipeline pipeline When move difficult timing XXXX, edge, predict closed. has to to pipeline an selectivity. deals work we the transactions degree closing deals. The remains and

over in partners to pledged personally the rooted bit charities become Foundation donate to course Foundation. local Foundation lives of $XXX,XXX operators Gamma's AFC turning have borrowers Before they the their XXXX. Since business would like is in founding over to a I regional highlight AFC AFCs to positively the to identify about a AFC with communities, operate Cannabis in. little call impacting state Brett, AFC where collaborates three the

look underserved president collaboration quarter. the toward PA clinical a trained deserving our CASA announce over to CASA's As work ensuring support AFC Pennsylvania remedies unite as of organic was Foundation volunteer. financials. I for that to and Pennsylvania, that programs CASA next service to it in borrower they this turn I with child company to to they special appointed advocate to and access Foundation's grow, in has donation mission vertically integrated to to that excited now remedies, cannabis and a Foundation advocate the registered of quarter Brett operates court AFC first association as organization licensed under youth. PA and or review neglected highlighting pleased made another support CASA. will are I'm CASA strengthen AFC forward a every local in is Pennsylvania Pennsylvania organic PA

Brett Kaufman

earnings everyone for you joining Gamma's here Thanks us thank for Robyn. Hello and AFC again call.

strong to results of December weighted our of per the fiscal and quarter earnings common XX, GAAP We income million share. basic are Beginning in the $X quarter XXXX. quarterly fourth report XXXX, with results for had average $X.XX or ended net fourth pleased we

XXXX. weighted with XXXX, XX, the at an year borrowers. the $X.XX or million December million per $X.X a we XX million average million GAAP XXXX, of of we of total and income we share. XX, per earnings net of the million ended assets XX, net net $XX average of our earned earnings earnings $XX with interest of $XX.X ended quarter ended fourth common three income generated basic dis spread fourth We across principle In XXXX, the XXXX We to distributable share. For September $XXX weighted and income or distributable for million $XXX weighted average per $XXX generated basic as December common ended or XXXX annual basis outstanding month quarter million of compared On million of interest common $X.XX of basic $X.XX share. $XX of

As $XXX million XXXX, Gamma XX, portfolio consisted commitments of with of December million funded. $XXX AFC of current

of So short million existing far $XX.X additional million in also funded new investment, debt and new term XXXX, commitments, security and we million a we've $XX closed our sold of $XX.X commitments.

of XX%. portfolio approximately yield approximately of as current principle is to loan life the approximately of $XXX As XX% had compared of maturity, of weighted was XXXX, as XX% Currently XX outstanding the weight is commitments portfolio XXXX. portfolio such average of million $XXX maturity we of X, on maturity across weighted average over average XXXX, The March to still our each which XX, loan yields a December with September XX, yield borrows. measured for to million of the

mentioned or for on believe our is or other AFC gains business. non-cash the expense, GAAP, income or credit performance losses, helpful earnings of provision accordance items call, in recorded known the excluding for CECL earnings any income stockholders as such losses current non-cash we equity also last Distributable Gamma's the in items the with period. earnings net computed as expected distributable compensation unrealized net assessing in providing loss As overall to represents

share reserve of from our quarter loans which of January December third represents common XX, AFC of XXXX, the an represents shareholders value. as at XXXX, Gamma a fourth paid approximately As December XX% dividend caring of of for the per quarter. to increase XXXX, XX, record X.X% of On $X.XX XX, CECL our the

XX% its share of represents dividends XXXX common increase earnings of the of per Gamma approximately Gamma's which in be the At During the to dividend XXXX previous fourth record XX% XXXX, of end of distributable of AFC announced our compared total AFC upcoming XXXX, XX, per per of $XX.XX as to from on declared value quarter increase the $XXX million Gamma equity in to million of aggregate, book were XXXX, $XX.X Earlier quarter was accretive today, XX, respectively, book of of the XXXX. our follow-on attributable shareholders in to for XX, was paid XX, December our equity $X.XX first The April each offering primarily our the was March first as represents and an share which to as AFC as second share XXXX, $XX.XX XXXX. compared which and our end December value. XXXX IPO of value and in of stockholder's to of book quarter, quarter.

until not a offering December Jones, us have an rating principal increase XXXX. a November unsecured our $XXX DDD investment closed of in from XXXA million fixed On These we XX, plus and grade mature XXXX, credit the interest we senior moving notes quarter, X.XX% received rate of our a to Egan do debt of During amount rating. notes. cash aggregate

offering significant also shares common approximately particular capital. a a maintain NASDAQ we listed utilize Company, debt and of milestone and able as cost Public equity approximately of in which the of with provided of January issuing since year's X.X public million completed our in AFC capital. Last IPO were We was to IPO Gamma to you million markets our this second year, private deployable stock, improve $XX and both equity work as because

eligibility it operator call I another will strategically approached year to open the over to we Operator? is IPO, will transactions. that, more one efficient, lower may now anniversary markets assist Q&A. now With capital to back the our the of start self-registration that executing questions. in cost the turn As tool, we

Operator

Gaurav question first comes from Thank you. [Operator Our with Hutton. EF Mehta Instructions]

open. is line Your

Gaurav Mehta

question guys. for on gross gross for commitment. of about year $XXX we range Yeah. of gave morning Thanks. with on the you In your Good originations to start prepared your, remarks, loan million $XXX your To to originations talked and of then March, XXXX. slow as a million million $XX

it attribute So, million do the two? that that the that like range year the just seems the on provided Is last timing? you you then call. $XXX to $XXX start guys $XXX million number compares the the that what you million to And gave slow to range

or has quarter? of didn't ring provide commitments the So loan your that anything view it's guys changed last in you just

Brett Kaufman

Okay.

great So questions. just good,

a As there that the close our I to is two expected said we extensive, deals we that call, document do earlier variety reasons. were in we and not two during period, decided which deals for were those to of diligence

us, important especially environment. selective very is being this so to in And

so And reason pipeline we've And And, and this getting have built existing lighter great a cause lot reputation, we time. and one we're same our the a from referrals time, we're that's as of at quarter parties. but over a re-ups lot is why a confidence bit that a of

this So number. get to hit currently $XXX that we confident can we million feel $XXX

done that that has to got You probably conclusion a the can next draw X$X that only the pay XX if pretty we've months. in lot it million to-date,

We that's estimate I are gross last from take to from conclusion of the $XXX million did take So $XXX our to natural but a to right. million do, originations effectively time. think down you $XXX

confident equity. So range. moved how do $XXX million, I, happens could we, equity I'm how markets that to we we give to we, that less raise we, how be the but turbulence the hit because a I partially think issue careful in about we we and down and that want wanted It it

and this And time. book about dividend increase lot shareholders, may may that this us of raise value trying really over allow not value in market to so our environment a increasing to care maintaining year. our for that increasing we increasing and that And, equity

actually the which the on that good selective more for is portfolio. we So we have deals to really be do,

Gaurav Mehta

yield. Great. second on And your question

you'll be kind XX% to March. end that is yield that you of of for XXXX? yield to Do maturity maintain able of as the expect portfolio Your

Brett Kaufman

So in surprised, at really obvious, has I've how the you all, somewhat. to first par really even issued a helped turbulence look the been bonds one is so markets even yield is of traded which between the they're, yielding down leaders, see the increase in market and purely of pretty industry positively you high 'XX, they the and can if were and brokers trade us different and trading that call they they, guys somewhere they're 'XX and

of sort that think I of across the high then widen performance So everything high, leaders, off spreads credits. that one types should that's keys of of industry those

we maintain better be would've so And maintain yields to than I but able think year you at quarter-to-quarter. positively can't XX% tell this before. to going was that's to are see be, I I it surprised to expected I going what

Gaurav Mehta

taking for my Thanks questions right. All today.

Operator

you. Thank

next with Our from Gerald comes Pascarelli question Cowen.

Your is now open. line

Gerald Pascarelli

two, in there's just guess underlying good much I'm is period, the for outlook there? is, up. that rates, that color far I in would maybe -- would some thus to lower talk questions. I'm on bit assume assumption that to your what's a the number Hi, Right? are -- one year on [indiscernible] correct? little still number more looking expectations that number, your been then a provide prepayment any very about through you ago, than your of credits but pick that love driving your seeing the Can now And from I are and interest it's top little maybe looks here prepaid at queue, taking So for one like morning. dollars million a a Thank it for you over can you going the if

Leonard Tannenbaum

I year year, So we're rates know ex didn't market where environment you expect this see we that lower interest I talked so as seeing, that if didn't but would last we last we the versus was. actually year,

the to nice, environment to in and out, range capital, us it's build this capital still demand to So the, of the states maturity. XX% market on the really high for yields yield now in I constraints maintain build these out for is think but allowing this to

$X.XX dividend as business, get pleased a about for is, that, I we said, you earned this the, really as, quarter. we you, $X.XX difficult and it'll least at as don't we're as you be want so as pretty it forecast the So, we that declared as, into guys, earnings can, the to

we our goal paying so over And to great continue the And at, below year. want or that's of course and that's our the earnings. to dividends over

of had -- to to we, that's we good be a and quarter, know see quarter can continue quarter some we quarter already obviously the year. going we quarter that from good So second third a going of that that since this I and in today is repayments. is first the And

$XXX to is comfortable So very for it, us million, able to at pretty too, redeploy to our about really back investors. IRS is my estimate get and which of a which we're be great which, feel that that that money high hundred going generates I

Gerald Pascarelli

it like that's That's, Got equity guess, of in where seems the and, you. the are, are raises debt helpful. I given likely previous here. and it. are are, Thank cards future some markets your commentary

your triple that to first has what Given the have rates be the would rating is the, to your on own similar expectations your relatively the you anything what to, debt your changed first to that raise? in be B relative plus be you. to of today? capital of headline books terms Thank expect, on rates to, Or to do the you cost that

Leonard Tannenbaum

I to Well, senior debt. or layer want in

haven't execute things on still to couple some yet that. executed on to we're in intend to so of side. good that about in And working process the on, we the of us really one calls, on but the senior And bringing lend last in but talked of we've banks is

debt of great. so really is think cost And that I

but room bonds limited, last to would could to somewhat should you today My debt, very either pricing, to of was that and my in zero bond. today's expectation don't environment. I and we a it the be be still go were in do raises. and our it are leaves from would could would too I pricing even lower senior never, up that zero, the read I would in issue the XX% lot senior, that and debt than cost market bond happen volatile wouldn't be, of today's rates today a is on but We in and it high us think If hope similar terms cheaper environment, I more similar debenture

bit I interest think rates a higher. are all

Gerald Pascarelli

Got very Thanks for it. on. pass the Leon, it color I'll much

Operator

you. you. Thank Thank Thank you.

Our Aaron comes Securities. with Hecht from next JMP question

open is line Your

Aaron Hecht

taking all. you your operators changed In any smaller the are in Thanks at the between across versus my has And either Morning. questions. last of for segments seeing investment and expected divergence pipeline mix yields quarter? MSOs those

Leonard Tannenbaum

I have, they trading thought think great state changed pipeline buckets. believe and can see operators MSOs that's get they executed this really between the operators, the could that And down. truly MSOs we that similar. such the will is I mix they're hasn't It is much and you how and, is environment which single What in trading you three in yields and market second-tier sustainable. I is really, divide tell even not up way the that

their have have last trading down, market You a of raise. on care capital purely the market the sucked Columbia of that out the you wind lot of out

to cannabis have institutional really are really us more a good that's exposure of lot don't have cannabis cannabis. have the of really in want full entrants aren't played the to market. for, a lot before. to There new clients of So the, that They

lenders up that. So for because environment hold good the And in really expect yields general. I this a alternative to is of

Aaron Hecht

guess, any, operator increase, especially have And you Understood. any I on side? competition of smaller in the seen terms

Leonard Tannenbaum

No.

new seen players in market that I think in competition. the haven't entrance year the were market just to this we ago, same a and

some million here are surprise I by million size. on in swings the think type if taking if, the competition, banks surprise, of to one $XX any $XX

a get And we're and so go X%. $XX it. take deal they're sometimes like, wait, million It's can we in like, at great,

look. and caveats things with other and a of hooks that Now I comes that lot and, too,

legislative end market. but of right the I year only, that's additional in some and time now will change. entrants. the more the seen that's think the really That's ultimately participate think we've banks if it's really healthy, only really you I a the not change, see And

Aaron Hecht

Leonard. Nice results. Thanks

Leonard Tannenbaum

Thank you.

Operator

Thank you.

comes Heck Jeffries. Our John next question with from

is Your line open

John Heck

question a on taking Thanks finishing guys. to, for busy congratulations my and year. Morning Good

Brett Kaufman

Thank you.

John Heck

of and wondering either high been this how affect I, construct? a overall you then, the way does touched just other, industry I'm on into some but stuff the or operators inflation one has maybe the level just

Brett Kaufman

So offsetting amount interest strategies is I've flows effects do things have this enormous especially And which macroeconomic and often given rates, a lender how of CA one money my as happens. how think of thought, to will with and things of affect. favorite those because

rising capital. you have a component, invested the expect. have of that comes get and that to component's I a, of as expect, inflation would you're inflation that's benefit this even And production to for that comment, production capital an component. the -- of about or you as of or just as for a right? have industry of like like, though cost not there's that, Because more fast baseline that's do whatever. thinking food able And You'd cost production out You with already a product good inflation's should a labor marijuana the is, labor, anything that of

building much throw that those that but points infrastructure we those of of that are some lot here to going will, have based for and numbers, infrastructure. is substantial. really it's operators I'm benefits Because out of guesses the the cost, in but it fixed inflation more at upon I, construction their continuously data hurting if I are that a least not actually is XX%, cost place. so delays It's their up really And operators but have already

XX% cost And grow grow least you greenhouse so indoor build what same at to more. greenhouse is or that's that modified doing

start infrastructure existing is benefiting it's which harder that operators means benefit existing market, that the and pricing. harder stabilizing have and for and what So the definitely to should new entrances

I, We of there's price producers I, October, after but I going seen can't expected haven't are which a and that I marginal the as and new really make business entrance or lot the Ima increase yet, build of of sense. turn expect I prices remaining the the and do on during stay because year. that the investments happens will can't return doesn't out

John Heck

That's, thoughtful, good thoughts. help very or helpful Okay. a that's

a million markets a compares guys of mentioned, types. of, question you other kind more I'm I $XX to give of Just is your a second around class of sense how quarter. how of asset was capital to sold The generic for, execution the me type note small you wondering what, that? think overall

Brett Kaufman

exactly. So

So we bought felt existing that operator note cannabis a as sort comfortable that, management of a tool cash with. we from

around to note executed, better that depth my turned sense and book. really job. Seaport ideas both the In Seaport deploy then bids have so an really trading capital good trades of and to and rates we creating excellent market their of had does at do when due contacts interest And offers. an of we very higher opinion, excellent they a those the, job where and is market And the

John Heck

Okay. and final on line-up, you cause end, by level you geography? are this but did federal any state faster level or certain keeping think you're or the something you to anything, at line, the there's move changes possibly your And at then, the possibly worth under slow a it, touch would that question, noting

Brett Kaufman

still capital are know the XXX hope reasonable that as the of the there, expectation or the and what a safe moving current and after expectation towards that, act in as, pivot expectation my push that is at of components is And that going that's So market Schumer's[ph] state to still for and, political fall. act and little starts combination my don't is We and not but critical all. has cycle act passing. chance the my this year, the

act changing have and states been these New together. amazing to for are, can't take and how saying May example, ago for months six And it's now, As wrecked it's me get their then still should Jersey, which state-by-state rapidly June. is

out still different have another we're together to the we're and operating should or been York, about always a put to is program month learning So it's states New which But their rec that also. rolled lot that trying get in.

core focusing real and how our are states. by of and One dynamic, the supply the on competencies focusing within on legislatively things changing data state is state but the demand also

lot continue on. getting we governors politicians, and talking inputs so into talking time directly to a to And going of spend what's to

John Heck

much Right. Thanks very guys.

Brett Kaufman

you. Thank

Operator

[Operator you. Capital. Street comes Mark question Thank Lake Our Instructions] Smith from with next

open. is line Your

Mark Smith

cetera. et the you in Are, guys. states out in, else cannabis states? called are you Hi of weakness anywhere this other in Washington, any any industry, California, seeing bleed you seeing market? Leon, weakness in we're Oregon, Are seeing, some in the where this

Leonard Tannenbaum

to me. amazing according our what's high-end me, to even when held sort what's what's $XXX mid-tier when problems thousand but pound effect are California mean, What's, we're the dollars. and high-end the to the course amazing for hit of, drops has states production, that's the marginal have I around of depressed. about saw become prices low-end. and beyond under that thesis, those up, pricing the, any down just an not mean, enormous Michigan you a of and, but the, up when, and but a is Arizona mid-tier. Arizona wholesale amount went talking has price least with to continue really the right. is, double held at Oh, far. competitive and retail And, high-end the probably done on sure. But defaults well, is held Cal the has to up and, super the of base What's, I going spillover well. cannabis Retail has gets

vertically So retail retail. just I our vertical I if mitigation better retail, much go sometimes from important in is increased on we're really as can because risk that think our, borrowers. in retail is as guess on the making really are integrated environment. prices have integration as we And sure we that focused down be If, in it margins you're a

much get produce. if to it's better constrained, Sometimes prices

Mark Smith

issues just be little didn't about, didn't of why it states Okay. or can where bit they And a on specific those or, the kind close, within deals so deal look was was this, to might but, we you that and the as close? talk reaching the at more this operated

Leonard Tannenbaum

the to that need the think the tighter a challenging a as sure said, How XX deals? estate and, liquidity. be, to say real and this we're, changing have think and We're and repay lend us they to Robyn I market will start the environment, or focused and start, the has have is plus additional spend prices that licenses, believe we we talk liquidity to to everything's gone a delayed. cash-flows the company challenging underestimating of models unraveling. things or filter CapEx the crazy we're we're do bottlenecks adequate And that's their on And very company to, being don't debt the forecasts we and lenders. really lot. given really we're, up ability those extent that's, specifically environment I and But I And, make caused under percent those and until to delays, I where models given business

I sustainable think making companies sure we've can cash. got to be about very have careful

Mark Smith

expect at, kind look current the one kind bring that partners in at of you you can Okay. the year, expect versus portfolio kind from, how can, new of last in? wait this you as coming growth partners for the And that of you just that we then me,

Leonard Tannenbaum

for all mature our, come existing when in time because over relationships And the it portfolio and the our XX% so new, was the, XX had of XX% were years. of it's a about at a, almost new. portfolio. managed know So obviously, partners new a manage all I X billion loans we beginning from as We portfolio

then, trending business any you, was development tell that if companies in mature we million because them hundred was gets there And not parties million lien amount you call clients. $XX like whatever definitely where from and would but yet, in portfolio million, We're at it originated to fact, we that's, of that's In I good direction look Aries loans. existing to a a And are $XX we're think let's Apollo, to. our, partners our loans. new they'll

Mark Smith

Thank you guys. Excellent.

Operator

no I'd closing over at the showing back for further Mr. hand And Leonard time. Thank questions currently I'm comments. to Tannenbaum like you. to conference this

Leonard Tannenbaum

three for this to look again year. in everyone forward attending excited results thank and call. to reporting we Well We're And you about our months. with pleased really our

Operator

Thank you conference. in for your participation today's

everyone now may wonderful You disconnect day. a have

AFC Gamma (AFCG) 10 Mar 222021 Q4 Earnings call transcript