REFI - Earnings call transcript Q1 2024 | Chicago Atlantic Real Estate Finance, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Chicago Atlantic Real Estate Financing First Quarter 2024 Earnings Call. [Operator Instructions]. Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your first speaker today, Tripp Sullivan with Investor Relations.

begin. may You

Harry Sullivan

morning. Finance Good the Atlantic Chicago Thank Call Welcome to Estate Conference results. review Real you. to the company's

call John be Co-Chief Phil today Chairman; Chief the Silverman, Sack, and Executive Mazarakis, Officer. Financial Peter Officer; On Executive will

made morning this live call Investor which filed the our earnings section with today. our audio supplemental of this our available the released can were press being found A be webcast results of is in Our with SEC. on Relations release, website along

For the are of not you today those this the webcast, this replay will to who listen remarks to call. we remind be and as that updated subsequent herein made of

statements future potential loans During portfolio, laws, the and be make of securities may statements performance our statements pipeline investments, prescribed other this financing and deemed to related of activities. by call, including certain our the we dividends, future within comments and forward-looking the meaning

date Atlantic's in can All conference company's company, cause forward-looking that urged the from filings Chicago to are represent actual uncertainties risk various call the SEC. our other statements of and results judgment review the Investors made differ disclosures of to and to are disclosed expectations. and including by materially this subject risks current information the carefully with as the

GAAP adjusted comparable earnings. of most these Definitions discuss We and with are to, distributable to the also non-GAAP our certain filings the measures, distributable will earnings non-GAAP including, limited included but and SEC. not reconciliations in measures measures

go the John Please ahead. over to turn now call I'll Mazarakis.

John Mazarakis

was, credit and increased benefits states. The across by course, and process. change the last loan to Once investment. likely announcement to We're portfolio step average like much enacted, to started an front significant has fashion, increased this growing cannabis. that attractive Good bring week's of the biggest is diversifying and portfolio the employment maintaining XXXX, of morning, weighted we disciplined to Tripp. including thrilled Thanks, DA We elimination the policy last on capital regulatory and the pledged ended and XXXX XXXE significant access quarter, everyone. in the that news reschedule industry, operators quality in the a strong yield we discussed

level We're as The with orders in as both of November recently PA. the developments in news legalization a Ohio remain the front continues to in staying state and on of front approving Supreme well, Court well to have these in language rollout likely positive soon. Florida as ballot recreational to referendum have states, in

stands those to Chicago actionable pipeline across the from our limited license at and of Our platform transitioning with states Atlantic focus adult use. deals medical and on currently $XXX remaining million operators

called For has demand, into the fashion to credit in quarter. additional improving an it in the of last capital has expansion the ATM out accessing facility, X and quarters, like the of That I'd during loan touch highlight use sentiment accretive translated our the Peter industry. deploy. the to will but cannabis we've our in helped on

of price the through access best we discipline proceeds the The approximately we program to million. importantly, used raising value. $XX.XX, time at of new brought to at premium Most to opportunities underwriting shares average one determine issued and same those a XXX,XXX shares $XX.X ATM weighted approximately a We capital. to we've is book the net sold same manner

it here? from don't why you take Peter,

Peter Sack

maturity yield of remained our Good XX XX, across you, At weighted consistent morning. with million of XX. companies, with average commitments had to a March loan December which XX.X%, Thank total John. portfolio portfolio $XXX

respectively. originations new strong $X.X with year-end. of of We at repayments $XX.X to million during existing was unscheduled quarter gross loan-to-enterprise had compared average quarter. XX.X% weighted We no which million of and borrowers, principal value the funded was another Our million XX.X% $XX.X principal with had borrowers fundings and

portfolio of rate. the remains the prime of based XX% off rate floating with portfolio predominantly Our

pursue floors the with floating We continue rate set to loans at prevailing rate. prime

average the have fixed sheet the yield low on The We with weighted at loans XX.X%. year-end. of leverage balance equity, fixed-rate a with X loans of rate retains in book at portfolio XX% XX% compared

debt basis ratio coverage the service on of Our the quarter approximately X.XX:X. with consolidated requirement X:X, a was for compared

call, the credit our QX maturity XXXX accordion the million. increased up on of noted the to and to June As we facility $XXX extended

operational revolving of in $XX.X approximately facility, $X.X of had million another we the and liquidity, $XX of drawn That a million outstanding As liabilities. million. leaves net March estimated down total subsequently credit we and to XX, on us

I'll now turn it over to Phil.

Phillip Silverman

Thanks, Peter.

income the XXXX $XX.X quarter sequentially to interest from million $XX.X net fourth for from of million XX.X%. or the declined first Our quarter

income $XX with gross amortization interest cash period. the interest, the unscheduled results and repayments recurring income. $X.X the which $X.X interest the payments PIK unused primarily during of which principal from XXXX, increased discounts no of quarter million prepayment by million million However, The prepayment generated of fee decline during fourth from fees of generated of fees, comparable compared sequential quarter, lack for

Prepayments first loans quarter performance. portfolio's on rate our remain of the run was idiosyncratic, representative the and

interest of Additionally, XX.X% increased expense result as by or greater weighted borrowings. $XXX,XXX average a

XX, management provision primarily on before $X.X million million in approximately credit outstanding Total XXXX. fees the $X.X as company decrease $XX QX of million. from The for facility and had resulting XX, with incentive decreased losses credit as March of the million compared the December from expenses operating $XX.X of XXXX,

fees professional Other and administrative consistent. remain

XXXX, of at as both for was basis, XX March credit our of approximately losses XX, represents March size reserve On December $XXX,XXX. outstanding XXXX. principal December increase Our XX, and relative CECL a reserve expected compared million X.X% $X million $X.X approximately with XX, of of as an

during monitor stable XX% the X X a or downgraded Credit we performance. quality risk position March also the X a X rating December while with and better quarter, the XX closely XX. of the remained risk portfolio portfolio rated as of and from for to of XX% We its

meet obligations. service and to continues debt its loan the However, perform

remains million. the of in Loan secured it's collateral. the and included portfolio for outstanding collateral. real of and secured based X is status, on carries XX% fully on reserve estate #X a real with X% Approximately remaining by risk rating principal approximately XX% having estate is credit losses no nonaccrual partially $X.X

weighted portfolio had Our estate. #XX, other is a as ratio by is by coverage than The as average real of driven of XXXX. secured funding real XX, partially estate compared on loan X.Xx which the collateral basis XX, decline with of March estate real coverage X.Xx December of

Adjusted the QX In quarter our dividend with the prior share, was fourth which distributed $X.XX last first distributable average compared for for quarter we per of regular consistent by share $X.XX of was quarter $X.XX the earnings quarter December XXXX, XX. first Board declared year. per weighted the and April, diluted common with ended

value Our sequential book December book March increase and of dividend issuance in of as first earnings XX. regular was the due accretion of book to at excess quarter value value. premium $XX.XX as from stock of the common XX The in $X.XX per basic of $XX.XX to with per compared is quarterly a share share common

our conjunction to take release. issued affirmed ready we're guidance in QX we questions. with now our Lastly, we Operator,

Operator

Mark from Instructions] will [Operator come Street. today question with Smith Our first Lake

Mark Smith

insight we more picture impacts and I primarily cannabis and to including kind of competition in space? about of just of come DA your think business, a kind so the as here long-term of you the into short can big industry, longer-term could kind kind on question some rescheduling, just wanted than ask the more broad increased lending give that

John Mazarakis

report for the to don't expect step. has with anything Mark. Townsend announcement yet. And prepared. just and Kilpatrick Nothing months. to very is accomplished change Thanks, nice the another really a respect been this to XX We XX first had

So we're just see. waiting to

be the impact an XX-month mark. impact So there will if I after when think any is or

Mark Smith

for how to see lenders Or -- have you positives I entire Obviously, changes As traditional what look that into kind really over just this. others and would changes more about a this unknowns it lot we speak the with know regulatory to that lot of industry. anything time think to and come it, come a as maybe for from more can though. -- and of competition of be need could happen But space? we landscape you kind at there's the you on of just would guys

John Mazarakis

I are no there here based be recent just and The competition. multiple truth latter. the speculative. of across the more on is sit platform, Mark, seen signs I can deals think, that we've

So data. that's on the report based

some will On more months, at a speculative compression. basis, capital efficient point, is and XX likely after start seeing obviously, probably we

speak that So I point. further can to

Mark Smith

to negative? changes call any today? you term the just quarter in positive maybe at kind then guys of maybe look And Or changes are fair. out as -- there any with happening that we picking the up? even states near or the operators here That's what's any industry out over Any that saw Okay. and

John Mazarakis

positive. with think operators very I interaction our been has

think a multiple from creditworthiness we on can the basis. markets improving purely is the I as see just public

we But focused operations. last kind only very meaningful with any been businesses deployed in months. set And with in numbers. forth XX that have the that we more importantly, EBITDA EBITDA mature in been to has meet haven't credits of very the There's The be strong. operators deal capital strong. very, we really criteria plenty early-stage of

Operator

program. have. [Operator conclude to you participation any you Instructions] much Thank We follow today's free so with time. showing this up call. may your at no Feel are questions does for in further our questions This

now may You disconnect.

Chicago Atlantic Real Estate Finance (REFI) 7 May 242024 Q1 Earnings call transcript