- Earnings call transcript Q3 2022

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Operator

Good day and thank you for standing by. Welcome to the AFC Gamma Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. to Katz. conference like speaker to now Gabriel today, would hand over the your I ahead. go Please

Gabriel Katz

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

future to, call would in these that press at like section recorded. respect periodic Please to performance XXXX AFC call posted recent Before is projections we filings quarter forward-looking for financial to this among in factors anticipated XX to being Gamma’s afcgamma.com, and information that, October views on with the begin, third Today’s Gamma’s certain our that SEC release includes statements results earnings refer included is other website with statements from inherent reflect significant projections. and and These differ subject I things, cause portfolio current forward-looking and could with for yield of most conditions. AFC and Relations Replay company’s and note release future presentation. are results is projections along the actual our the Investor and beyond. materially market and to developments, the statements predicting uncertainties investor

financial AFC will The Len that, of Gamma’s as our Executive our the today’s GAAP will provide earnings, portfolio; now to earnings Robyn AFC Brett will And for call discuss over presentation distributable net financial refer is open the Q&A. which the Gamma’s we Leonard third and be the Reconciliations call, Chief will call Gamma’s With follows; on to we I to can AFC remarks, investor and for will found distributable introductory line Tannenbaum. will then income, an origination measure quarter a this comparable summarize pipeline, website. available is results. our of will commentary; format discuss performance During release Jon, measure. earnings, most in strategic XXXX overview turn Officer, non-GAAP

Leonard Tannenbaum

our and taxable include our the include AFC REIT earnings are the earnings to the REIT have our to AFC of quarter core and you, to recognized of million in taxable subsidiary welcome for The earnings to business investors our quarter during for the analysts of results. call stock, to not generated on quarter. would third $X.X average earnings common earned earnings $X from the Gamma’s excluded does taxable of morning, our I to-date our in I’m AFC third earnings distributable weighted none the AFC to of REIT Gamma. have pleased Gabe $X.XX our XXXX. view of which Thank thank the execute until although million subsidiary. to continued earnings September year-to-date, today joining distributable per Gamma from which and earnings. good share been distributable like plan subsidiary, distributed Gamma and discuss We up us power

September shareholders Gamma’s that current of the $X.XX believe a the which did XX, Directors core $X.XX of the paid level September share. in dividend distributable as a going based we each per to distributable The dividends generated this in dividend. AFC have the paid Since record in have appropriate, primary of share dividend public, per out quarter, is dividend October of excess the of since earnings quarterly million the $X as IPO, quarter when $X.XX portfolio. Board $X.XX XXXX. not And quarter. metric the on per approximately on earnings As we rollover We currently is Gamma’s in We have AFC declared income we XXXX, or increased earnings our considers dividend XX, reminder, share declaring quarterly of Board was outstanding. of

confident Given distributable our of will the we statement are the earnings dividend or meet XXXX. halfway through exceed in current the are that are level making quarter, that fourth we the quarter we

market, I marginal environment above to broader in of to the the for compression operators. or has cost the macro which cost as we would to pressure undercapitalized cannabis a sector benefiting certain equity. caused to may last wholesalers mid-XXXX the believe perspective, wholesale suspend that market. and Next, close of In production, change, From marginal cultivation raise like rebound as times due turn the to production. pricing We has lead declined to discussed operators under the states, production better longer prices quarter, pricing uncertainty the their exit below remains and of capitalized regulatory

In addition, result difficult Interesting. Alarm. capital markets operators, a sir? any as of the environment, cannabis

environment, lows, for believe exit as reluctant We new wholesalers difficult existing us, fill generating the to returns. stocks earnings which operators on operations providers equity may void deploying and debt and strong risk capital focused company adjusted market capital, In with additional as that to Okay. a open in yields such cannabis are many raise a near enhanced as invest in cannabis With public many trading - versus deals the additional opportunities capital addition, result are of states. and market

an We are operators up generate us we Category our Category with CECL and analysis are under our market portfolio, ranked returns. that mitigate our to of the having X the quarter, the as license and many manage of loans our regular we believe We additions with has the on limited loans during volatility, no new are with in pleased portfolio. no set our risk-adjusted X strong in our of risk borrowers Two portfolio. comfortable focus with dialogue our on enterprise-value states basis. loans and actively coverage quality targeting Given

annum quarter commitment Acreage Subsequent AFC by its all U.S. of drawn. $XX additional X.X%, addition, X.XX% the $XX amended providing X.XX%. Viridescent million prime plus their increase an nonaccrual. payment with facility million rate their has to affiliates In to our fixed Gamma, are access credit to rate of borrowers end, of a which loans The Holdings no per of to with an floating includes and prime and from initial now on floor current equal are obligations been coupon increased interest

We have further enhanced with $XX.X facility a collateral our subsidiary. by of under Canopy escrow cash a the million

in Additionally, subsequent is in believe this to environment, position order quarter important Holdings. of substantial out to it over In deals. to cannabis our the million end, control we have AFC was refinanced our gamma $XX.X volatile Verano agent

outstanding Verano’s new financing, agent deploy our not higher was did capital in among commitments. secured. X, November of of we not yielding XX% potentially the was participate assets. Gamma yielding XXXX, lowest As we investments AFC could real which our and in estate based fully deals on Toronto

returns. deals at on As have we balance Therefore, strong balance the sheet, a close. to cash stated us leveraged risk return into with cause to ratio, the medium-term. we under X.X:X we deals end in may capital in year balance have have cash can stated may decrease the adjusted which debt-to-equity equity an between This past, may the deploy look as months previously of nine take target and of the three lower to

rates has market. substantial benchmark the macro in broader Turning cannabis been to rise environment. in There interest lending a the well market in the as as

end had end the XX% XX% nicely As a floating XXXX. approximately The portfolio of the of the XX% XXXX. of at increasing was second quarter the of yield second from portfolio interest our November at weighted November rate, of from approximately up XX% of average of on the Xst, quarter Xst, the

exploring some company. We the are also are attractive we excited opportunities that, to discuss for

John also opportunities - describe, an the our external exploring our potential the corporate investment As for analyzing company, core core our including are we utilizing Management of using competencies. will Board and expanding internalization are our strategy manager. competencies

of and a consider best we been thinking company the the independent the has company for internalization. a is shareholders, around potential and to members potential Board a As formed the its of company’s in thinking - lead committee disinterested what around lead special

will set over turn available excited positioning, composition, now to Looking about opportunity call the John. ahead, market I’m our our liquidity. our and I portfolio

Jonathan Kalikow

Thank you, Len.

As to just weighted has in has we portfolio, million significant and outstanding with equity of commitments knowledge, AFC of XXXX, portfolio In borrowers XXX.X under November gamma invested three our years. their time a targeted The loans cultivation cannabis experience million XX in operational building with and average maturity XXX.X enterprise. X, funded. in

if have see personnel cannabis coming market, seek underwriting have whether adult challenges because states in advantage and in take have factors to source and Act of newly this ballot that access of to a remained standards possibility again approved environment in significant surprising Even, risk in companies result may These criteria virtually made of to license the deploying for increased measures encountered trap. for this more has money it cannabis operators capital like We strong a a in difficult the passage the in real our on more combined to capital near and steadfast may and construction purchases, new caused expansion the succeed, mergers, favorable believe increases it not We absence prudent. unknowns we slowdown In pricing not of companies to itself not that capital or that or volatile that worsening with in cash loan legalization the into candidates states. this, cash that available future, our is making our will current markets. temporary once Safe profile opportunities have to and pressure ceased don’t loans with will with the capital. we will a deploy has limited balances. wish We capital companies having slowed, Missouri where our Maryland lend coverage industry, while estate cost simply Add around use is possible the meet distressed equity opportunities into be difficult, scenario has regulatory the reform continues.

we preserving activity wave cannabis building the risk growth. to We I the ability received to are M&A repayments invest our have near-term be reserves of wanted while to strong with returns, in cash positioned deals lending. the take and best to another recent highlight adjusted in therefore from factor next of advantage

REIT, we generally a a part As receive as pool from estate we of borrower. the require real collateral

the for potential candidates, We the do our can for requirement are estate to economic loan a the we pool some has discussing solutions that loans necessity our turn pool and I to borrowers. decisions different borrowers, has market collateralized. real ensure now over such, call make fully cycles. best to shrinks our Robyn. increase remain cannabis We of recognize part of it this proven will through investment our to shareholders as continue eliminated and While potential vital

Robyn Tannenbaum

John. you, Thank

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

approximately As the ratio Xst of same for period, time selectivity X.X%. November was our

of million and few We to that previous have active levels both in described. the down pipeline from market higher an John quarters factors $XXX due Len

deals. timing those it being we predict and Additionally, converting difficult capital At to the a both with environment closing of AFC challenged. of our as commitments Gamma, remains selectivity exhibiting been higher and the prudent market degree has are

we of on quarter, third million XX million. the XX.X had During funding and commitments growth new of closed

liquidity to criteria to returns. our to to has transactions strong lending continue stringent meet additional lending complete investment substantial approach Gamma adjusted capacity remain decisions. and risk disciplined prudent underwriting AFC have We make and our in that implement criteria and

as lives and was communities the its enact to as Corners Brett Foundation strives Before through donated invest students I improve of and non-profit Outreach turning AFC lead that students is to Outreach make and needed I’m underserved opportunities. development turn over over that AFC continues President this economic to to Georgia. in in to tools Atlanta’s based it financials. pleased Metro to to color Brett, excited Atlanta, Corners a social organization deserving full of change. to Outreach the our educational their donation, to AFC organization with to equip Foundation another families call highlight Corners now Foundation, will nearby review

Brett Kaufman

Robin. you, Thank

performance another to growth due report the growth driven versus during prior to solid pleased quarter quarter. comparable quarter in income year the of are the loan We by financial strong portfolio in the

income We $X.XX recorded earnings For of of the to average share compared of million an of quarter income $XX.X weighted $X.XX basic or common we increase to basic per had or net of September average XX, million XXXX, XXXX. net income XX% as quarter share. where third common net GAAP weighted per the $X.X of GAAP ended earnings

XXXX, as million, of For million. we compared where to XX% quarter of income the net $XX.X third XXXX, increase the quarter third we of of generated of income had interest $XX.X an interest

$XX.X weighted average quarter generated earnings or the distributable of or basic third For common to the share $X.XX same period, of per compared common earnings and time as per $X.XX increased of million to earnings share, XX% distributable average basic of million XXXX. $X.X we for distributable weighted

to As XX, our total of compared assets on $XXX.X XXXX, XXXX. as million September $XXX.X September million XX, were

Xst, across November XXXX, consisted with XX loans. Gamma’s of current million funded $XXX.X $XXX.X of As million portfolio of AFC commitments

X, to of is over of as As approximately $XXX.X commitments where investments. XX% XXth, on loan of have each the million to of on of which maturity, as and closed new paid from June sold November Xst, XXXX, from we we investments, we $XXX.X year-to-date as such two for XX% $XX average loan measured portfolio million five yield November The XXXX. life was weighted XXXX, million compared

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

September XX% Gamma at at value of June paid dividend October the distributable of dividends XX, As of reserve share loans the we approximately X.XX% represents XX, a of approximately On for XX, earnings. approximately of third compared paid $X.XX shareholders our X.X% Year-to-date, XXXX. AFC as XXXX, quarter XXXX, out of XX, to per September our to of CECL have record XXX. caring common

over our year. XX% As annual basis, an earnings a the pay and reminder, to is on dividend policy of between XXX% distributable

look senior investment Next, and let’s I’m BBB+ our quarter that notes our corporate balance during strong. the sheet, Egan at report which pleased a Jones take remains affirmed grade rating. to

senior XXXX. have a notes, million remain are and X.XX% rate which $XXX Our outstanding fixed in May due

was measured as currently X.XXx and debt by XX, net there equity of to as leverage. leverage XXXX Our to is no September X

partially Verano addition In liquidity, and $XX loan provided cash million to an facility. credit by revolving have we the substantial undrawn the repayment,

share $XX.XX As XXXX, With the per was it back December our now book to our million over value of total was equity and an Q&A. Operator? turn to of as of X%. that, $XXX.X XX, XX, to start operator September as $XX.XX will increase stockholders’ XXXX, compared I the

Operator

come Thank you. [Operator Instructions] EF from from And our first Gaurav Mehta question Hutton. will

Your line open. is

Gaurav Mehta

morning. good Thanks,

I still your on is hoping internalization. billion there question was equity could the more And comments Is are when think change past or about that color in or First you you if going on equals to a order? some internalization I I any you provide then talked considering in on what factors know $X more. that consider? had target

Leonard Tannenbaum

in said. the as still the I are I think discovery formed Board doing early we So and is relatively and was the just that committee

can of to I back proxy, are think in it you course, out. was is go about, we so to going much not see there detailed the very not - talk and

asking are to manager. to they formula considering doing asking yes, it at that the point the there right is $X I understand it. It doing around a this case, are talking internalize billion, the preliminary. about. yes, $X thought a certain to us do consider in are But good from think but and least the starting the And we out They it than where that we that, than what had discussions the differ will is it you billion Board very process will point earlier earlier? earlier is As manager

Gaurav Mehta

Okay.

it you saw repayments sort I’m the was surprise, your XQ? if about sorry a on talked expected But comments guys of repayments that on repayments, you or this. XQ. increase question maybe that substantial in your in was Second in

Leonard Tannenbaum

No. it was expected.

borrower In it, that cetera. I on large lowest loan, repay to drown talked calls I think about be previous fact, a and our that, could happened yielding et

May. So we actually the did was following due it. expect It

by because certainly received have early are repayment. then. additional So some they refinance And to they we income

Gaurav Mehta

you. Thank Okay.

Operator

Cowen next Instructions] from come you. Harrison will our Thank [Operator and Vivas And question Company. from

Harrison Vivas

past, to taking for about your so studied current you looking in we have step do you cycles Len think maybe question. your in soften would cycle. on at where flexibility your of economic you thanks back pipeline Great, executing before are environment. have you wait the and appreciate a to And on talked wanted perspective borrowers rate think loans? the to rate taking broader the just in rates for the new Understanding start my much and sort

Leonard Tannenbaum

really I are that rate it rates to print very high time. And of to XX persistent. switch XX% for So XX%. portfolio our think interest stay of it to from period successful hope we to will will I floating we fix, but most higher XX%. think important week, that some We to find but out move migrate The to were a lot it this are from we CPI the robin, moving percent inflation which a estimates found obviously, up stay going in

we to rates which to is hope The points weaker - The rise. the or that, a across Much margins, more some in or compressed better to the Obviously, supply already could paying we mid feds indicated important going slower for the the coming get sure So quite we board. equation are going one rise. has are terms least stabilization, hope of people at the year certainly at price market. demand but of next out environment players cannabis, by macro in least it way another. because I’m interest, tilt one are apple not cart of is of borrowers rate benefit continue as basis bit, XXX a the in

fast where out. environment, slow slowing the of, the it everyone how for and will a across it it bottoms pace what it board is the question is As think country’s realizes of I macro

Harrison Vivas

sense, Okay you. the XXX million as obviously it has million million, XXX of guidance gross been you originations, at are to expectation offered, to you makes thank around for XXX Xst. previously Shifting in November

to kind of what front gross So, expect repayment land you do at so still uh, the of the to are somewhere midpoint are target originations. about, you within your on gross of curious you thinking obviously hear origination that sort guide,

Leonard Tannenbaum

time very do my will if low is XXX guess the problem to it XXX, best. hit is originations, be the at the The difficult we is end it Yes. but

hit thing to same going hit it be and next range to is year. So that, to challenging that for

I comments regarding think forward looking I leverage. some made

will stated X.X to I difficult times get our be target. lever to previously think it

to the year And I’m not medium-term. Next levered we do environment we of, is means term in see want cannabis leverage more but what bottom We are volatile quite for things going aren’t I’m sure And leverage. terms by medium be anticipating taking way, to us before, of are under the it in the of take in either. aggressive a people not lot sure prudent this in to loans. terms

So a position we having such nice are happy pretty liquidity about

Harrison Vivas

Makes me more sense. you Do you one on become strategy? did acquired how think long giving guess deal. Last loan. that some to part I the deal that a bigger for deployment public obviously and complete color would take company love capital acquiring loans

Leonard Tannenbaum

$XX the is million? That

Leonard Tannenbaum

the is Yes. that Yes, acquired $XX XX. million

don’t it. one agent name pipeline. another in not it it we deal. with the me, not the okay. that actually the space. That on was think you are but that But a an We company it is a on whispering - of but are It to this saying that is a You was one it I is to now Look, working very operators with better deal are smart, is in call. is deal

XX% XX. not deals deal So is a aim deal, of to different I agented, is our an What agent. did agent by percent? company are said, it public

of some did with relationship did business company, think do part with. Not We larger company’s we which only good, build to but loan. much a And we to it it. we the do we are a the hope more

Harrison Vivas

I back the Good, very jump helpful. into queue. will

Operator

from next from Jefferies. Hecht Instructions] [Operator will our And question John Thank come you.

Your line is open.

John Hecht

Hey.

Sorry guys.

taking went but thanks good questions Something my for though. and wrong, morning

trying row talked to commitments You book understanding. you talked think and for about modeling then about quarter. and as payoff I’m best Verano the possible perspective near-term just about this the gross

kind not that then guidance of are think - are You other payoffs aware end about you other maybe next no just And you there meaningful characterize But any is I giving excuse kind me, deals, kind can certainty maybe the have the come we the take you there. couple the of months? about should the but - year? big and pipeline of opportunities he things just closing any of over any fruition - to characterize know of can that longer may by

Leonard Tannenbaum

question. is that great Well, a

But on deals that some could is are we It could to end or the signed We term year. early they happen sheets the working hard tell. very next into of by have slip year we have a do environment complete. have we always to are is Doesn’t think I for are necessarily drag working on. I that going bad do mean they cash it. bit. not think to this a

are our said think We universe have prepared considering are we secured. that real are I on estate And that too. things that remarks of expanding preliminary looking we as is at the

have I to the over intend don’t drag So long-term. cash

it necessarily bad I thing for the the having capital. a need not uncertainty the environment think and given is now in

Company secured. Act loan, very of much are messes estate two your retest money real estate providers challenge need estate course seller retest after that which estate as really debt secured. from we payments have that that was the A one these, real having and that things, And test, certainly isn’t cannabis the the of got we normal security. income restated you - primarily real There out, Verano they retest. these really is capital. including of lot capital when important know, make real and your out on loan The and are to start is really ICA test, up a to And As you make secured. having wasn’t which that running facing Investment notes in

a to or higher reach like we for XX% course, than you estate and be is that, so one much at XXX%. And very two And fully our thing secured, of have considerations, but more different status. maintain aim loans, is that very have real of important a or minimum we and to important, one

are we this component important terms, So John our think in security. said view which security, estate as we finding real very in cannabis terms the finding overall of do in I a appropriate challenging

John Hecht

Yes.

a I call maybe environment. that does liquidity, selective next its think extra in everybody But that to smart concur being dovetail and holding the question.

on in commented guess this assets the bigger Len, we quarter. You this, the What under that go a TRS how I TRS P&L? had think the and about just impact do

Leonard Tannenbaum

good a the as And past I’m really where some what of of drop I like, our numbers is realized question. we That to discrepancy glad estimates you things one assets. are of for and mentioned it and through through I as one had we analyst quarter look look our the okay, because is this the I and

we last right, Brett? said that think I quarter,

Brett Kaufman

we We Yes. dropped this it - put in quarter. no, it

Leonard Tannenbaum

We dropped quarter. it this in

Okay.

capital and a count can raising, So it for you And is against we year, do substantial about dropped assets have But not your asset year it into the you asset secured retest. a is estate a isn’t. real it for this TRS. match REITs the after your and after work way

is is not enough. that no real It estate test preserved. income coverage. to the Yes, is so real coverage, there taxable subsidiary, has little REIT fact, be In - real this the dropped into some it has estate but very

why is therefore, a big all interest pays the that asset, earnings goes that income. which in taxable you jump of that of subsidiary, saw REIT all into So of the the

parent. our dividend at up to is discretion that to it Now

to it is then earnings. wholly-owned have up, we it showing and less more dividend it So we up cash. is out have earnings, are It wanted distributable we and when a we earning there point still is just in that real subsidiary. But I leave distributable if that,

decide not we I’m up, to sure did I to when earn out want dividend it did point money. the so we And but that,

John Hecht

the near-term terms helpful. is in least come assets of we consistent think be should should there the in is go out that, the that at of in either That level the any P&L? for on other or future or that that, of invisible that will impact And Okay.

Leonard Tannenbaum

see six next right means I is going there think - doesn’t in, next to medium-term of. quarter. asset but I in something I mean next now, we I not another are the month drop that don’t anything see which I that don’t the put think But in in the can timeframe It quarter. Yes. see anything in don’t there, may anything

John Hecht

question helpful. commented ballot I is, even are Okay. think five you today that initiatives double are there maybe That is state opportunities. of last one then think I on very Thanks. I mean, And the you on Is comment how increase the or any there may expand it eying how or national as to expand these appetite to of your and about these? you legislation allow geographically well? any update outcome

Leonard Tannenbaum

and on mean, about a I the the today Republican Maryland. I very depending optimistic happens are Duck, I and [Technical difficulty] I at looking states deal that think because Act And are what have been approves are Lane saying passes interesting. Maryland today excited think approving Safe Look, we I’m legal cannabis, of less it on which elections of is we kind in

which dynamic. and to are into, the be There states continue true. slowing a But of we We it. disproportionate is about Arkansas, excited lot Dakota, that not build-out we North have Missouri, that slowing some and are hearing is the And exposure when Missouri we their amounts of approves MSOs optimistic other very Dakota. I’m really that Missouri standpoint. that their exposure some big from given consciously is South in of are And in CapEx a buildings, you took

is going to that there another the also size be so a that most licenses - Florida another it not going reconciled you is top MSOs. excited we haven’t. I have in are pay-off to next Florida, operators. of But seller state to getting bunch as and with six about is or conserving potential the very cleared, going of type think two state, only year. be two-thirds the think four The I to are Georgia at still It think Georgia. notes is of is too. they if But cash bottom got the the mean, being they everybody larger more the I be have amazing, about states

with We are in, those actively at builders Georgia. looking in partnering

John Hecht

very for Great. much update. Thank the you

Operator

question Instruction] Thank from next Hecht come And you. from will [Operator Aaron Securities. our JMP

Your is open. line

Aaron Hecht

major status, my of guys, loan, you Hey maintained taking reach I Len those requirements was largest one for limited about coverage. broad real in investment said the had thanks you think it question. estate This your talked obviously portfolio, loans then the core about that that runway also loan. investment other biggest significant you non-real would in you to give the requirements invest I But secured strategy made your the think estate comment to expanding was would given competencies.

have looking imply change that are walk invest where kind you’d of or to a does through to the the you you those dynamics? level - of just that So me organization structure

Leonard Tannenbaum

So The secured. was The we secured. the it loan real estate we I did Verano refinanced loan not Verano think estate was got loan when backwards. real

In real fact, coverage, of the less a XX% loan but estate real was little of estate if than had bit it secured, that.

eligible. became re And it not so

to an bucket our So But that our even need loans test in B bucket have call meet loan, we what loan. B that A bucket, and to a bucket bucket. order B A, they was maintain an ICA have as our become would

large your weren’t we back wanted eligible. taxable REIT that a problem agent into piece, dropped you is in over estate the your, is to things, have types wasn’t that if even that over would and ultimately, in real to So, estate, control to very in of small and, loan, subsidiary. We we the real have even did agent we we investments. be those really chose And not the a believe because should also we go loan if

So the that is problem.

coverage REIT. is are think to then the real how making we So do estate It thinking that really more real estate have about we we do that sure what loans for is we do need about.

Aaron Hecht

of then define that those, estate real you you does more some and competencies, realm for the loans, when stay and Okay, of cannabis that does mean non in if doing are you core what this, type the versus look say, a get bigger return opportunity then profile with your secured secured the much know, how estate loans? loan? just you like And real non world does

Leonard Tannenbaum

we again, So I off. think are

are We backwards.

for loans real looking estate are loans. not We estate secured secured real

we want estate with stay going loans. are to we to secured So, real

underwriting, industrial property in have expertise We underwriting. built in-house industrial have industrial expertise we in built in-house managing, construction,

is job also to you building, to And good to big to internally that very in but when leading also those a managed Martin I it. dispensaries. become out provider. a the have so all is And helping but will does good understanding teams, going the we a hurdles you cultivation, build out peer their want lease non-cannabis out want peer a build property even when point at

tangential so are still of that at. we good in and expertises what competencies really And we are could really our while a there explore, maintaining lot core

right that And - are have think funds so our to and now about we the we way, real our we is nothing But estate primary find we today. in a to deals do I cannabis XXX% that. talk by have have focus. besides continue And secured we - of need to

Aaron Hecht

to out from Okay. is process internalization, liquidity then potential up? some may on come liquidity for board And anything Thanks extra for figured on what the that do And for right an changed Will your early internalization? until you yourselves that clarification. that now. be perspective consider give to options to have you holding

Leonard Tannenbaum

I have we lots of liquidity. think,

We have net in I today. position credit we undrawn debt a are and line setting equal think an

require. mean, so, in my And would is internalization than internal far more liquidity that any more I than is any much liquidity mind, that -

As for the discussions I Board’s are early, of why it. we just the in mean preliminary considering

it of I think capital. part of cost is

stock to a And how see And internal the but trading companies. and it it IFRS well. managed trades. trade, we manager well than and entity, want invest others, firm we has internally I are look to even to think of we at your structures our around number are we there very bankers as have spoken our there an want external well, book, in we external in manager. trade different don’t to that trade is managed The investors continue as cost

So or least Board at the does.

So our definitely more, because about this to we are it, shareholders up any talk there ultimately, very is soon require think If lot I considerations to we is internalization it. value. me shareholder is have going a as a still of it preliminary. we to it would and is around But

Operator

next our Mark next Smith our question moment One question come you. Street. please. Thank will from for And from Lake

line open. Your is

Mark Smith

Hi guys.

the of states of operating where for Any in states? kind into of seen we one there, license at limited changes those out of First states? you in broadly this any weakness just look the some industry as me, some are you weakness these and expanding

Leonard Tannenbaum

license the expanding that is in license limited states unlimited weakness the mean I states. into

think that Arizona I and license prices standpoint is easily production will you state, you the is cost from the of license dispensary but Arizona for the limited of crashed It on be Arizona. a and that of greenhouse one a great example is good especially. have a cultivation is want to $XXXish. to prices say side. cultivation can below It states unlimited wholesale is down marginal product at

worst do Arizona. And is but I crashed view as licenses. unfortunate. seen that business is We The really - that don’t for there it I an an there, is so price have I mean, Colorado unlimited sure. in

is And Pennsylvania. a spilling, so in you compression look, it price are seeing

it board Massachusetts, as because borders cannabis You across in much as are seeing across much want don’t does. price compression they to magically pretty the spill

And borders so, especially greenhouse spilling gross general, products I and end. high in light it is cross say bright is spilling borders. a cross little outdoor bit with would of The flow a one

and the brands has one they Michigan, prices extremely product held an have tough We So up that state held held product premium but high are do which and well. to really the selling is nice greenhouse in end up up have crash, indoor company and prices.

example difficulty] And of premium. [Technical a so that is good a

Mark Smith

dumping deals? few start once kind months that the are line, Any into compensation kind capital as deals of to stages insight seeing and come the a early you and people over then in finish more? you yet pipeline? the any out - getting these we for look Have looking and are seen is indicator they that leading get big of kind of invest in what the ready like are they to there into

Robyn Tannenbaum

term So want a diligence to how to on or get heading decision - process a active we opportunities are term actionable the and whether down just as make farther it pipeline term sounds sheet. issued sheets towards either that sheet to the view the issue we issued, is it or not

standpoint, come think from I definitely that it So down. is

need talked that John we general operators is we willing deals and Len the are of providers. selective about, capital making more for invest a from the is environment terms terms in. for in that opportunities There to and at, are looking of cannabis in As in still us definitely

the tier on been refinancing what Some of generating discussed, And MSOs part cash expansion along from of and down versus tough bigger aside of up. their that and they tickets year. and lack those real saw that to find. drove flow more Verano mid those existing the larger we really operations is as mid what are a size MSOs expansion the operators estate really the is large we focusing it pipeline driven of The the last focused with is collateral on

Mark Smith

same Okay. need In at and real collateral. looking are vein, as that you the estate

move kind or feel As you floating an look towards the not do switch rate loans issue? on you more floating, as pushback like is there to of that the of is over big

Leonard Tannenbaum

with a environment. renegotiation floating the the I loan we we in that are a good floor floating, are opportunity by go increasing that is way this at interest a mean the in advantage from believe And floating, new because rate modify clearly to all standard. looking have taking to of to just are fixed things we when we

Mark Smith

Thank fair. guys. you, is That

Operator

for And remarks. further would now to back lines. phone conference Thank our turn you. over to closing I’m I like the showing questions from any no Len Tannenbaum

Leonard Tannenbaum

another we look next forward reporting for all and you quarter Thank listening year. to

have talk So the you. rest year. to of if we great you, a don’t Thank

Operator

today’s your conference for call. This you participation. Thank concludes

may a wonderful disconnect. have now You day. Everyone

AFC Gamma (AFCG) 8 Nov 222022 Q3 Earnings call transcript