REFI - Earnings call transcript Q2 2024 | Chicago Atlantic Real Estate Finance, Inc.

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Operator

Good day, and thank you for standing by. Welcome to Chicago Atlantic Real Estate Finance, Inc.

Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to introduce your host for today's conference, Mr. Relations. Investor with Sullivan Tripp Please go ahead.

Harry Sullivan

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

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

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 or 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

the date future disclosed the current potential loans expectations. we portfolio, uncertainties judgment to During may carefully our filings and and as company, and the from forward-looking of be securities this performance our forward-looking statements pipeline investments, deemed Atlantic's other by financing within represent laws, of to including by related of activities. All to certain actual call, statements materially including made the are company's and information differ the subject of urged disclosures our can call cause review the other that statements to Investors dividends risks in future the make statements and prescribed comments meaning results and the this conference various with risk are SEC. Chicago

filings but Please now distributable measures over not will GAAP to Mazarakis. non-GAAP go to in most and reconciliations including, SEC. I'll also turn to distributable non-GAAP included of limited the measures, are the call earnings. these and ahead. We John our measures discuss certain the adjusted earnings Definitions with comparable

John Mazarakis

surrounding be the adult for in The operators the especially Ohio not pipeline ballot morning, the public and grow. our future from possible that on Despite shocked optimism volatility very those adult-use growing this the November help recent we us federal should the everyone. the those Good and a have Tripp. we'll have tailwinds, of rollout portfolio, you ready addition them the of given many rescheduling, in Florida to to maintained our use to be Thanks, markets. growth, planning in hear approach conservative

attractive focused our appropriate capital and risk-adjusted collateral. an never underwrite new spread if exceptionally on federal passed, continue rescheduling that over strong happens. are with cost we to returns provide Until of legalization as is loans We will coverage

that upside opportunity. We the are never I'd we on for any surprised like think already in the potential accounted downside, to have

$XXX XX% to the for we're We're Our Missouri, in operators Maryland, if deployed pipeline Ohio once our that medical across at million. backing the the means we're operators those again to ATM of state use investments with adult we accounting still and Minnesota positioned limited in assets use. well stands license continue portfolio prioritizing states to quarter Florida-based to Chicago end, capital. in believe currently positioned source ultimately and accretive active from Atlantic platform very adult at That is in best transition We program approved.

average price it weighted $XX.XX issuance why of from book During don't Each $X.X the approximately of a value. Peter, million. to take at a here? XXX,XXX transacted shares net approximately quarter, raising issued premium at you we proceeds was

Peter Sack

Good morning.

accept as to in due million collateral down June idiosyncratic the primarily that to estate XX.X%. relative profile of performance create across refinanced on companies weighted pricing loan to return strong due and is In borrower. and real process. instance, its down two March maturity As performance totaled to That's related one to derisking. execution we a In the XX, grid lower position priced in of shifted second a a stronger loan portfolio a of a of average to $XXX actions our XX.X% yield XX with XX instance, portfolio from

to XX% million which unscheduled $X We've weighted leverage our was growth. principal together XX% of with $XX.X million an the book $XX.X Loan to March March respectively. compared quarter that We for prime new repayment compared of of floating and originations the based loan-to-enterprise of Gross of at existing portfolio Our quarter, XX. had $X.X #X, during portfolio $X.X at borrowers borrowers, percentage as compared approximately which funded off XX% value the equity XX% at low principal at contributed million with million of The year-end. fundings, were with kept end approximate in with million is remained rate XX. rate was XX.X% originations new average and

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

We our $XXX the million enhance in again size credit continue to by increasing once revolving total. to facility

$XX.X with As along subsequently means the outstanding we funding of liquidity disciplined we've execution million on new million. had us XX, facility the facility, in on of of June another primary down $X.X liabilities. is the estimated a That our $XX.X The originations ATM of drawn operational million approximately and program. continued leaves net total

substantial of with Given us originations, to that we continue that capital the new spread we capital position to Phil. to accelerate deployment turn to are over year. I'll with in put explore work the it later earning we now other sources

Phillip Silverman

Peter. Thanks,

the million first million $XX.X comparable to in period. and quarter decreasing Gross resulting compared million resulting $X.X primarily Interest grants second relatively quarter incremental for cash $XXX,XXX million. at repayments lower second quarter QX QX and unused stock unpredictable, with $XXX,XXX of operating the of QX. interest, Total decreased second Our average expenses remains remain amortization portfolio's remained prepayment rate compared also quarter net recognized run during interest $XX.X PIK stock-based the consistent approximately of the during million provision from borrowings believe $XX.X XXXX, during by fees income interest, approximately by from performance. losses income the largely net representative for during current the weighted second administrative the $X.X quarter. before and we decreased interest fees million restricted was of interest discounts fees expenses the recurring with made award from the compensation with for Other quarter. We loan increased of Unscheduled $XXX,XXX income due $X.X from professional consistent, first QX. credit

we Our $X.X CECL portfolio million June on the a million for repayment of together size of on as our better XXXX, or $X.X is for million. as X.X% quarter expected And payable. XX. remains loan as XX% June approximately of as rated with This with applicable risk relative has in with interest June Credit principal. of losses losses reserve a Loan portfolio compared of of the #X rating a stable and and remained X of included status In received X $X.X all nonaccrual full Loan basis, in risk #XX, of rating carries is reserve subsequent XX. to reserve was XX. end, risk outstanding credit March XX, approximately and included credit of X fees represents July, quality

Our the XX $X.XX our year. dividend quarter. was portfolio second average and with by which first weighted XX. quarter In regular declared the basis estate for last was we real quarter of March distributed common consistent second average had coverage per earnings weighted share, diluted and of of prior XXXX Adjusted collateral July, share per both on a distributable $X.XX Board the of June compared quarter with $X.XX QX X.Xx as for

basis, as XX a XX.X compared March June with outstanding XX.X million were diluted outstanding $XX.XX with shares of March as of as compared share June per of as value was XX, common XX. On shares XX. fully book $XX.XX approximately there common Our million of common

now XX. Operator, guidance to affirmed we're issued ready our we've March questions. previously on Lastly, take

Operator

Love [Operator Piper our to with question Crispin come Sandler. going of Instructions] And the first line is from

Crispin Love

First, take opportunities. pickup half the advantage in your of those about when in talked year, you to potential for you of the can just capacity discuss a the originations second

think on the you available have $XX mentioned I facility. credit you million

tap debt So need you good continue are perspective Or actions fund the here? either a or originations? feel the those on there do think ATM you take to other from capacity side to to you

Operator

Pardon me, speakers.

on You the line. be might remain Please mute. on

begin will Sullivan, Difficulty] Mr. momentarily. ahead. go [Technical conference please Your

Peter Sack

Chris, optimism some opportunities question. year, have But liquidity of have you to the conference the of There million equity we for difficulties growth that evaluate the additional heard additional technical we're the debt we $XX.X answer are take M&A. my going we not continue opportunities, market And the us. of sure to in half and change Apologies, industry, in additional those to of with investment, is additional excited in the if second line. profound and into I'm capital pretty for operational opportunities front advantage in the opportunities.

Crispin Love

And just and think pros you discuss just that. specifically. and election months the might business away, then elections to near term? And with mentioned from from of post I and perspective? and elections, cons right. I other with come what the some the presidential for you up Can state Florida appreciate -- leading along a impact what looking you a be All that election are them cannabis over the intermediate could the few

Peter Sack

think we'll the the of I before prior election and that. I rule-making think how to as as all the process have a And But rescheduling much election there's to the on election. in unfolds the process see. eyes and impact accomplished lot can And how and be as to may new there's the presidency that hopeful before possible a will what are we're occur that -- of election. uncertainty

and XX the level. halting And of who greater an ballot at if tends one it both on to that, about of dialogue of topic if the that of progress a I I of lead about times. last greater history years positives to think the and level and liberalization the even federal dialogue think at is it's even election low policies, cannabis shown regardless state at this has is is

Crispin Love

then quick And for me. just one one Great. last

where the Can milestones we for you're to today? update scheduling. looking key near then Just you on any us over And on just intermediate just stand term.

process other there talked any you making, the kind rule think scheduling? but on about I of detail

Peter Sack

the we're think of period. the the review of outcome comment for looking I

at the process. have evaluate probably secret this a we to And And I on DOJ horizon. lot think there's proceed that's in next I of crystal uncertainty. don't benchmark Atlantic, will the then ball the a how Chicago think

And book our loan so appropriately. we're underwriting

looks you'll challenges look until rescheduling -- from a to is more that potential formal there to what rule rule see approach you'll I think on and like us continue see what like. and a conservative certainty

Operator

line And our Lake Street. with Mark from comes the next question Smith of

Mark Smith

me. for question First

new kind about ask of to wanted states. Just

You newly strength you're called others. geographic Ohio, of from or some anywhere as Minnesota, legal Kind what you're weakness. well of states it as kind seeing where seeing

Peter Sack

market initiative first to that see the been medical center prospects news the state. flash encouraging the Florida jurisdiction of cautiously program I in referendum. And of debate on the we're about has in November, program think wholesale the see in that week exciting, optimistic deploy think to state focus build up Ohio seen others. to to the will we've us for medical Pennsylvania use on opportunities think the ballot expect out of received existing out are I our additional example Depending is deploy will state. And an in looks from borrowers a dispensary Kentucky's seek going and extremely adult the conservative I footprint day with I are outcome catch lead. the new of licenses see adult the outlook of that And interesting is owners to we to as to in we're present from results this Ohio the where that opportunities on and smaller demand. that about to of who in very of industry's of opportunities and sales their going continue use additional numbers as

Mark Smith

kind something kind is a Perfect. of you rescheduling? know start green until but if you moves? ball, of shoots build just mode a everybody you out more then really around don't have in ahead any early kind make you're wait-and-see kind that there's or seeing said of -- seeing concrete. changes crystal I Or any And people just Are thoughts potential to of of

Peter Sack

X But to Operators months optimism led ago making additional risk some I to or making wasn't are moves, think ago. a has definitely aggressive are year that willingness I think more more that -- moves. there take operators conservative some are

Operator

and Showing further and gentlemen, you. this conclude will may you questions. call. Thank disconnect. Ladies you day. for Everyone, now conference Thank great have no participating, today's a

Chicago Atlantic Real Estate Finance (REFI) 7 Aug 242024 Q2 Earnings call transcript