Chicago Atlantic Real Estate Finance, Inc. · NASDAQ:REFI
Chicago Atlantic Real Estate Finance — Q3 2023 Earnings Presentation
26 slides from Chicago Atlantic Real Estate Finance's earnings presentation, Nov 8, 2023
Slide 1: Third Quarter 2023 Earnings Supplemental
Third Quarter 2023 Earnings Supplemental November 8, 2023
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 Chicago Atlantic Real Estate Finance, Inc. | 4 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
Slide 5: Industry-Leading Management and Investment Team
Industry - Leading Management and Investment Team Deep Cannabis, Credit and Real Estate Expertise With Entrepreneurial Approach Note: (1) Denotes member of Investment Committee Peter Sack (1) Co - President ▪ Former Principal at BC Partners Credit, leading their cannabis practice ▪ Underwritten $138
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 Chicago Atlantic Real Estate Finance, Inc. | 7 $330.4 $336.3 $313.7 $315.6 $344.7 $18.5 $15.0 $14.2 $13.6 $11.2 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Drawn Future Funding COMMITMENTS (in millions) $ 348.9 $ 351.3 $ 327.9 $ 329.2 Weighted average yield to maturity of ~
Slide 8: Portfolio Diversity
Portfolio Diversity Chicago Atlantic Real Estate Finance, Inc. | 8 Our portfolio is diversified across operators, geographies, and asset types PRINCIPAL OUTSTANDING (1) By Loan By Location 76.9% 2.9% 14.0% Retail/Industrial None Industrial By Real Estate Collateral Type $342M Note: (1) As of Septemb
Slide 9: Portfolio Diversity (Continued)
Portfolio Diversity (Continued) Chicago Atlantic Real Estate Finance, Inc. | 9 Our portfolio is diversified across operators, geographies, and asset types PRINCIPAL OUTSTANDING 1 By Operator Integration 1.8% 98.2% Construction No Construction By Construction Component 2 $342M Note: (1) As of Septemb
Slide 10: Loan Collateral Coverage
Loan Collateral Coverage Chicago Atlantic Real Estate Finance, Inc. | 10 42.5% loan to enterprise value and 1.5x real estate collateral coverage REAL ESTATE COLLATERAL COVERAGE (2) Portfolio Weighted Average (1.5x) PRINCIPAL BY LTEV RATIO (1) 29% 29% 8% (1) Our loans to owner operators in the state
Slide 11: Portfolio Overview
Total Commitment: $355.9M Portfolio Overview (as of September 30, 2023) Chicago Atlantic Real Estate Finance, Inc. | 11 YTM IRR (5) All - In Rate PIK Rate (4) Cash Rate (4) Fixed/Floating Future Fundings Percent of Portfolio Carrying Value Principal Balance Remaining Commitment (3) Maturity Date (2)
Slide 12: Portfolio Overview (continued)
Portfolio Overview ( continued ) Chicago Atlantic Real Estate Finance, Inc. | 12 Notes: (1) All loans originated prior to April 1, 2021 were purchased from affiliated entities at fair value plus accrued interest on or su bsequent to April 1, 2021 (2) Certain loans are subject to contractual extensio
Slide 13: Driven by proprietary deal sourcing
Driven by proprietary deal sourcing Total current pipeline of $640mm 1 ▪ Continued 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 opportunities Note: (1) As of No
Slide 14: Compelling Market Opportunity
$19.3 $22.5 $26.9 $32.0 $36.8 $40.0 $42.8 $10.7 $11.1 $11.6 $12.3 $12.9 $13.5 $14.1 2022 2023 2024 2025 2026 2027 2028 Adult-Use Sales Medical Sales $30.0 $33.6 $38.4 $44.3 $49.7 $53.5 $56.9 Note: (1) Source: MJBiz Factbook 2023; ($ in billions) U.S. CANNABIS SALES (1) MARKET DRIVERS Compelling Mark
Slide 15: Compelling Market Opportunity: Legislative Tailwinds
Note: (1) Per MJBiz Daily, as of May 2023 Compelling Market Opportunity LEGISLATIVE TAILWINDS CURRENT LEGALIZATION (1) : 40 STATES ▪ Continued state - level legalization, including transition from medical to adult - use cannabis. ▪ Adult - use sales began during the first quarter of 2023 in Missouri
Slide 16: 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 Competitive Landscape COMPETITORS: GROUPS Mortgage REITs BDCs Sale
Slide 17: Market Performance | Total Net Returns vs. Selected Indexes
Market Performance | Total Net Returns vs. Selected Indexes Chicago Atlantic Real Estate Finance, Inc. | 17 Sources: Bloomberg, S&P Global Data Repository
Slide 18: Market Performance | Total Net Returns vs. Selected Peers
Market Performance | Total Net Returns vs. Selected Peers Chicago Atlantic Real Estate Finance, Inc. | 18 Sources: Bloomberg, S&P Global Data Repository
Slide 19: Market Performance | Price to Book Value per Share vs. Selected Peers
Market Performance | Price to Book Value per Share vs. Selected Peers Chicago Atlantic Real Estate Finance, Inc. | 19 Sources: Bloomberg, Capital IQ, Company Filings Note: Book value per share amounts are based on latest reported metrics at the time of stock trading; Book values represent c omm on e
Slide 20: Q3 2023 Financial Overview Appendix
Q3 2023 Financial Overview Appendix Chicago Atlantic Real Estate Finance, Inc. | 20
Slide 21: Collateral Overview
Collateral Overview (as of September 30, 2023) Our Real Estate Collateral Coverage as of 9/30/2023 (4) Implied Real Estate Collateral for REIT (2) Principal Balance as of 9/30/2023 Property Type Location Investment (1 ) Loan 0.2x 5,264,571 $ 30,000,000 $ Retail/Industrial Multi - State Senior Real E
Slide 22: Collateral Overview (continued)
Collateral Overview (continued) Chicago Atlantic Real Estate Finance, Inc. | 22 Notes: (1) Senior Real Estate Corporate Loans are structured as loans to owner operators secured by real estate. Senior Loans are loans to a property owner and leased to third party tenant. (2) Real estate is based on ap
Slide 23: Balance Sheet
Balance Sheet Chicago Atlantic Real Estate Finance, Inc. | 23 December 31, 2022 September 30, 2023 (unaudited) Assets 339,273,538 $ 322,513,760 $ Loans held for investment - 16,278,729 Loan held for investment – related party (Note 7) 339,273,538 338,792,489 Loans held for investment at carrying val
Slide 24: Statement of Operations
Statement of Operations Chicago Atlantic Real Estate Finance, Inc. | 24 Nine months ended September 30, 2022 (unaudited) Nine months ended September 30, 2023 (unaudited) Three months ended June 30, 2023 (unaudited) Three months ended September 30, 2023 (unaudited) Revenues 35,478,178 46,369,976 14,6
Slide 25: 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. | 25 Three Months ended June 30, 2023 (unaudited) Three Months ended September 30, 2023 (unaudited) 8,643,378 $ 9,976,998 $ Net Income Adjustments to net income
Slide 26: Management Agreement Overview
1.5% Annual Base Management Fee (on Equity) 50.0% Origination Fees (Rebated to REIT) Incentive Compensation Terms: 20.0% Incentive Fees (of Core Earnings) 8.0% Hurdle Amount (on Avg. Equity); No Catch - up Provision External Manager ▪ Externally - managed by Chicago Atlantic REIT Manager, LLC, a sub
Chicago Atlantic Real Estate Finance — Q3 2023 Earnings Presentation on 6ix