Chicago Atlantic Real Estate Finance, Inc. · NASDAQ:REFI
Chicago Atlantic Real Estate Finance — Q3 2022 Earnings Presentation
21 slides from Chicago Atlantic Real Estate Finance's earnings presentation, Nov 9, 2022
Slide 1: Third Quarter 2022 Earnings Supplemental
Third Quarter 2022 Earnings Supplemental November 9, 2022
Slide 2: Forward-looking statements
This presentation contains forward - looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 , regarding future events and the future results of the Company that are based on current expectations, estimates, forecasts, projections about the industry in which th
Slide 3: Company Overview
▪ Successful IPO in December 2021 (NASDAQ: REFI) ▪ Track record of identifying market inefficiencies, particularly where risk is fundamentally mispriced ▪ Ability to redeploy capital quickly ▪ Access to Sponsor’s leading cannabis lending platform as lead or co - lead ▪ Proprietary sourcing network a
Slide 4: Investment Highlights
Investment Highlights Pioneer in cannabis lending with first - mover advantage Proprietary and extensive deal sourcing capabilities Differentiated investment approach Compelling opportunity in rapidly growing cannabis market Lender of choice to leading cannabis operators Chicago Atlantic Real Estate
Slide 5: Industry-Leading Management and Investment Team
Industry - Leading Management and Investment Team Deep Cannabis, Credit and Real Estate Expertise With Entrepreneurial Approach Peter Sack (1) Co - President ▪ Former Principal at BC Partners Credit, leading their cannabis practice ▪ Underwritten $138mm in cannabis credit transactions ▪ Former priva
Slide 6: Veteran Independent Directors
Veteran Independent Directors Significant Public Board, REIT, Financial and Corporate Governance Expertise Michael Steiner ▪ Current investor in Chicago Atlantic ▪ Founder and President of Service Energy and Petroleum Equipment, which are engaged in distribution of petroleum products ▪ Expert in hig
Slide 7: Investment Portfolio Activity
Investment Portfolio Activity $200.4 $281.5 $331.9 $330.4 $34.7 $39.6 $25.2 $18.5 Q4 2021 Q1 2022 Q2 2022 Unfunded Q3 2022 Funded C O M M I T M E N T S (in millions) $235.1 $321.1 $357.1 $348.9 Weighted average yield to maturity of ~18.3% as of September 30, 2022 Chicago Atlantic Real Estate Finance
Slide 8: Portfolio Diversity
Portfolio Diversity Our portfolio is diversified across operators, geographies, and asset types P R I N C I P A L O U T S T A N D I N G ( 1 ) By Loan 2% 82.7% 0.1% 17.2% Retail/Industrial Retail Industrial By Real Estate Collateral Type $335M Note: (1) As of September 30, 2022 9% 11% 6% 4% 4% 0% 1%
Slide 9: Loan Collateral Coverage
Loan Collateral Coverage 1.9x real estate collateral coverage A D D I T I O N A L C O L L A T E R A L 1 - 1.5x 1.5 - 2x Portfolio Weighted Average (1.9x) Our loans to owner operators in the state - licensed cannabis industry are secured by additional collateral, including personal guarantee where ap
Slide 10: Portfolio Overview
Total Commitment: $348.9M Chicago Atlantic Real Estate Finance, Inc. | 10 Portfolio Overview (as of September 30, 2022) Loan Initial Funding Date (1) Maturity Date (2) Total Commitment (3) Principal Balance as of 9/30/2022 Percentage of Our Loan Portfolio Future Fundings Interest Rate (4) Periodic P
Slide 11: Portfolio Overview (continued)
Portfolio Overview (continued) Notes: Chicago Atlantic Real Estate Finance, Inc. | 11 (1) All loans originated prior to April 1, 2021 were purchased from affiliated entities at fair value plus accrued interest on or subsequent to April 1, 2021 (2) Certain loans are subject to contractual extension o
Slide 12: Loan Origination Pipeline
Loan Origination Pipeline Driven by proprietary deal sourcing Total current pipeline of $800+mm 1 ▪ Recent legalization at the state level creates a new influx of opportunities ▪ Increase in M&A activity requires additional debt financing ▪ Robust set of profitable operators and refinancing opportun
Slide 13: Compelling Market Opportunity
$7.4 $11.2 $13.4 $18.2 $21.8 $25.0 $27.4 $5.9 $9.1 $11.5 $13.0 $14.0 $14.8 $15.5 2019 2020 2023E 2024E 2025E 2021E 2022E Adult - Use Sales Medical Sales $13.2 $20.3 $24.9 $31.2 $35.7 $39.7 $42.9 Note: (1) Per New Frontier Data U . S . C A N N A B I S S A L E S (1) M A R K E T D R I V E R S Compellin
Slide 14: Compelling Market Opportunity: Legislative Tailwinds
Note: (1) Per DISA Global Solutions, as of October 2022 Compelling Market Opportunity L E G I S L A T I V E T A I L W I N D S C U R R E N T L E G A L I Z A T I O N (1) : 3 8 S T A T E S ▪ Continued state - level legalization, including transition from medical to adult - use cannabis ▪ SAFE Banking A
Slide 15: Competitive Landscape
Shorter loan durations Better diversification Lower LTVs Deal leads Ability to upsize Close relationships with management teams We negotiate the deal REIT shares 50% of the origination fee Underwrite enterprise value in the borrowers Our borrower’s only source of debt Competitive Landscape C O M P E
Slide 16: Q3 2022 Financial Overview Appendix
Q3 2022 Financial Overview Appendix Chicago Atlantic Real Estate Finance, Inc. | 16
Slide 17: Collateral Overview
Collateral Overview (as of September 30, 2022) Chicago Atlantic Real Estate Finance, Inc. | 17 Loan Investment (1 ) Location Property Type Principal Balance as of 9/30/2022 Implied Real Estate Collateral for REIT (2) Our Real Estate Collateral Coverage as of 6/30/2022 1 Senior Real Estate Corporate
Slide 18: Balance Sheet (unaudited)
Balance Sheet (unaudited) Chicago Atlantic Real Estate Finance, Inc. | 18 September 30, 2022 (unaudited) December 31, 2021 Assets Loans held for investment $ 331,075,547 $ 196,984,566 Current expected credit loss reserve (1,497,933) (134,542) Loans held for investment, net 329,577,614 196,850,024 Ca
Slide 19: Statement of Operations (unaudited)
Statement of Operations (unaudited) Chicago Atlantic Real Estate Finance, Inc. | 19 Three months ended September 30, 2022 Three months ended June 30, 2022 Revenues Interest income $ 13,795,097 $ 11,850,028 Interest expense (861,348) (449,556) Net interest income 12,933,749 11,400,472 Expenses Manage
Slide 20: Reconciliation of Distributable Earnings to GAAP Net Income
Reconciliation of Distributable Earnings and Adjusted Distributable Earnings to GAAP Net Income Chicago Atlantic Real Estate Finance, Inc. | 20 Three Months ended September 30, 2022 Three Months ended June 30, 2022 Net Income $ 9,768,969 $ 7,463,839 Adjustments to net income Non - cash equity compen
Slide 21: External Manager and Management Agreement Overview
Annual Base Management Fee (on Equity) 1.5% Origination Fees (Rebated to REIT) 50.0% Incentive Compensation Terms: Incentive Fees (of Core Earnings) 20.0% Hurdle Amount (on Avg. Equity); No Catch - up Provision 8.0% Chicago Atlantic Real Estate Finance, Inc. | 21 External Manager ▪ Externally - mana
Chicago Atlantic Real Estate Finance — Q3 2022 Earnings Presentation on 6ix