Chicago Atlantic Real Estate Finance, Inc. · NASDAQ:REFI
Chicago Atlantic Real Estate Finance — Q3 2024 Earnings Presentation
24 slides from Chicago Atlantic Real Estate Finance's earnings presentation, Nov 7, 2024
Slide 1: Earnings Supplemental
Earnings Supplemental For the third quarter ended September 30, 2024
Slide 2: Important Disclosure Information
Important Disclosure Information This presentation contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), regarding future events and the future resul
Slide 3: Company Overview
Chicago Atlantic Real Estate Finance Company Overview $2.3B+ 80+ Commercial mortgage REIT and institutional lender to in loans closed since cannabis loans closed state-licensed operators in the cannabis industry. platform inception(1) across platform(1) Manages a diversified portfolio of borrowe
Slide 4: Industry-Leading Management and Investment Team
Industry-Leading Management and Investment Team Deep Cannabis, Credit and Real Estate Expertise With Entrepreneurial Approach John Mazarakis(1) Tony Cappell(1) Andreas Bodmeier(1) Peter Sack(1) Phil Silverman Executive Chairman Co-CEO President and CIO Co-CEO CFO Originated over $500mm in Debt i
Slide 5: Veteran Independent Directors
Veteran Independent Directors Significant Public Board, REIT, Financial and Corporate Governance Expertise Jason Papastavrou Donald Gulbrandsen Fredrick C. Herbst Brandon Konigsberg Michael Steiner Lead Independent Director Current investor in Chicago Audit Committee Chair Former CFO at J.P.
Slide 6: Target Loan Profile
Target Loan Profile USES OF CAPITAL Real estate financing, capital expenditure and growth/acquisition capital SIZE $10-$40 million TERM 2-3 years STRUCTURE Term loans and delayed draw term loans COLLATERAL Mortgage/deed of trust, stock pledge, all asset UCC-1 lien, guarantees AMORTIZATION 50-150 bps
Slide 7: Active Portfolio Management in a Declining Rate Environment
Active Portfolio Management in a Declining Rate Environment Principal Outstanding with Fixed Rate or Floors at or Below Prime Rate is Increasing June 30, 20241 September 30, 2024 October 31, 20242 PRINCIPAL OUTSTANDING BY RATE TYPE AND FLOOR 31.9% 43.0% 51.8% 8.3% 5.8% 14.9% 23.6% 37.2% 36.9% $383.3
Slide 8: Portfolio Diversification
Portfolio Diversification Our portfolio is diversified across operators, geographies, and asset types P R I N C I P AL O U T S T A N D I N G (1) By Loan By Rate Type Floating Loans by Prime Rate Floor1 25.0% 5.8% 20.0% 33.7% 37.6% 37.2% Average 15.0% Loan Size = 3.5% $362.3M 10.0% 57.0% 28.7% 5.0% 0
Slide 9: Portfolio Diversification
Portfolio Diversification Our portfolio is diversified across operators, geographies, and asset types PRINCIPAL OUTSTANDING1 By Real Estate Percentage of Real Estate Collateral by By Location Collateral Type State and Operator Type2 2% 0% 1%2% 4% 3.7% 20.0% 9% 18.0% 7% 12% 16.0% 30.1% 14.0% 7% 15% $
Slide 10: Loan Collateral Coverage
Loan Collateral Coverage 47% loan to enterprise value and 1.2x real estate collateral coverage P R I N C I P AL B Y L T E V R A T I O (1) R E AL E S T A T E C O L L AT E R A L C O V E R AG E (2) $180,000,000 45% $160,000,000 40% $140,000,000 35% $120,000,000 29% 30% 29% 21% $100,000,000 29% 25% $80,
Slide 11: Portfolio Overview (as of September 30, 2024)
Portfolio Overview1 (as of September 30, 2024) Unfunded Location(s) Origination Date Maturity Date Principal Balance Floating/Fixed Rate Cash Rate PIK Rate YTM IRR3 Loan Number Commitment 1 Various 10/27/2022 10/30/2026 $ 25,354,286 - Floating 14.50% 0.00% 17.2% 2 Michigan 1/13/2022 12/31/2024 27,03
Slide 12: Distributable Earnings and Dividends
Distributable Earnings and Dividends1 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $- Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 FD Distributable Earnings per Share Regular Dividend Special Dividend 1Distributable earnings per share based on basic we
Slide 13: The Cannabis Landscape in the U.S.
The Cannabis Landscape in the U.S. Where Chicago Atlantic Sees Timely Opportunities LACK OF TRADITIONAL FINANCING Banks generally don’t lend to firms in this industry, allowing higher interest rates, attractive collateral, and lender-friendly covenants. HIGH BARRIERS TO ENTRY THE CANNABIS INDUSTRY E
Slide 14: The Cannabis Landscape in the U.S. (cont'd)
The Cannabis Landscape in the U.S. (cont’d) How the landscape changed over past 5 years 2019 2024 Legalized recreational and medical use Legalized medical use only No regulated use Legal in 35 states and the District of Columbia1 Legal in 40 states and the District of Columbia1 Medical use onl
Slide 15: The Cannabis Industry: Size of Opportunity and Growth Projections
The Cannabis Industry: Size of Opportunity and Growth Projections The U.S. cannabis industry is estimated to be $32B in top-line Assuming the cannabis market enterprise value at 1x retail revenue in 2024 and is projected to grow to $58B by revenue, and a 35% debt to 65% equity capital structure2, 20
Slide 16: Competitive Investment Landscape
Competitive Investment Landscape COMPETITORS: GROUPS COMPETITIVE ADVANTAGES Shorter loan durations Greater diversification Sale/ Mortgage BDCs Leaseback REITs REITs Lower LTVs Deal leads Close relationships with Ability to upsize Cannabis- Community management teams Focused Banks Lenders REIT shares
Slide 17: Comprehensive Investment Process
Comprehensive Investment Process 1 2 OVERVIEW GEOGRAPHY / INDUSTRY FINANCIALS / OPERATIONS Direct Origination Focus primarily on U.S. borrowers Historical financial statements / tax returns Brand Recognition (Local) industry dynamics Projects of the business and financials Ability to A
Slide 18: Comprehensive Investment Process (cont'd)
Comprehensive Investment Process (cont’d) 4 CAPITAL PREDICTABLE EXIT RETURN CONSERVATIVE STRONG CURRENT PRESERVATION STRATEGY ENHANCEMENT STRUCTURE INCOME Typically, a first lien on the Fixed amortization and Additional yield generation Conservative leverage Contractual coupon and fees bor
Slide 19: Loan Origination Pipeline
Loan Origination Pipeline Driven by proprietary deal sourcing Continued cannabis legalization at the state Over 1,000 Qualified Deals level creates a new influx of opportunities Sourced and Reviewed Increase in M&A activity in cannabis verticals requires additional debt financing Total current a
Slide 20: Appendix Financial Overview
Appendix Financial Overview For the third quarter ended September 30, 2024 Chicago Atlantic Real Estate Finance, Inc. | 20
Slide 21: Consolidated Balance Sheets
Consolidated Balance Sheets September 30, 2024 December 31, 2023 (unaudited) Assets Loans held for investment $ 338,270,022 $ 337,238,122 Loans held for investment - related party (Note 8) 16,402,488 16,402,488 Loans held for investment, at carrying value 354,672,510 353,640,610 Current expected cre
Slide 22: Consolidated Statements of Operation
Consolidated Statements of Operation Three months Three months For the nine For the nine ended ended months ended months ended September 30, September 30, September 30, September 30, 2024 2023 2024 2023 Revenues Interest income $ 16,258,744 $ 15,183,450 $ 46,624,842 $ 46,369,976 Interest expense (1,
Slide 23: Reconciliation of Distributable Earnings to GAAP Net Income
Reconciliation of Distributable Earnings and Adjusted Distributable Earnings to GAAP Net Income Three months Three months Nine months Nine months ended ended ended ended September 30, September 30, September 30, September 30, 2024 2023 2024 2023 Net Income $ 11,211,636 $ 9,976,998 $ 29,125,711 $ 29,
Slide 24: About Chicago Atlantic
About CHICAGOATLANTIC The Sponsor is a credit-focused investment firm founded in 2019 INCEPTION REFI completed its IPO in December 2021 Sponsor assets under management: $1.6B(1)(2) SIZE One of the largest institutional lenders in the cannabis space TEAM 80+ professionals, including over 30 inves
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