Chicago Atlantic Real Estate Finance, Inc. · NASDAQ:REFI
Chicago Atlantic Real Estate Finance — Q4 2023 Earnings Presentation
23 slides from Chicago Atlantic Real Estate Finance's earnings presentation, Mar 12, 2024
Slide 1: Fourth Quarter 2023 Earnings Supplemental
Fourth Quarter 2023 Earnings Supplemental March 12, 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, regarding future events and the future results of the Company that are based on current expectations, estimates, forecasts, projections
Slide 3: Company Overview
Company Overview Successful IPO in December 2021 (NASDAQ: REFI) $2.0B+ 70+ in loans closed since cannabis loans closed Track record of identifying market inefficiencies, platform inception(1) across platform(1) particularly where risk is fundamentally mispriced Ability to redeploy capital quic
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 F
Slide 5: 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 6: 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 7: Investment Portfolio Activity
Investment Portfolio Activity COMMITMENTS (in millions) $7.5 $15.0 $11.2 $14.2 $13.6 Weighted average yield $371.3 $378.8 to maturity of $ 355.9 ~19.4% $336.3 $ 351.3 $ 327.9 $315.6 $ 329.2 $344.7 $313.7 as of December 31, 2023 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Drawn Future Funding Chicago Atl
Slide 8: Portfolio Diversification
Portfolio Diversification 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 By Location By Real Estate Collateral Type 2% 2% 0% 3% 3% 18.9% 16% 4% 33.4% 6% 2.7% 40.8% WA Loan 6% 15% 7.3% $356M Size = 5.8% $356M 7% 71.0% 7%
Slide 9: Portfolio Diversity (Continued)
Portfolio Diversity (Continued) Our portfolio is diversified across operators, geographies, and asset types PRINCIPAL OUTSTANDING1 By Operator Integration By Construction Component2 Percentage of Real Estate Collateral by State and Operator Type3 1.0% 30.0% 23.8% 25.0% 20.0% $356M $356M 15.0% 10.0%
Slide 10: Loan Collateral Coverage
Loan Collateral Coverage 44.1% loan to enterprise value and 1.5x real estate collateral coverage P R I N C I P A L B Y L T E V R A T I O (1) R E A L E S T A T E C O L L A T E R A L C O V E R A G E (2) $120,000,000 40% 35% $100,000,000 35% 30% $80,000,000 29% 29%24% 25% 21% 29% $60,000,000 20% 16% 14
Slide 11: Portfolio Overview (as of December 31, 2023)
Portfolio Overview1 (as of December 31, 2023) Initial Funding Maturity Total Principal Carrying Percent of Future YTM Loan Location(s) Date (1) Date (2) Commitment (3) Balance Value Portfolio Fundings Fixed/Floating Cash Rate (4) PIK Rate (4) All-In Rate IRR (5) 1 Various 10/27/22 10/30/26 $ 30,000,
Slide 12: Loan Origination Pipeline
Loan Origination Pipeline Driven by proprietary deal sourcing Over 700 Qualified Deals Total current pipeline of Sourced and Reviewed ~$600mm1 Continued legalization at the state level creates a new influx of $47mm1 in Potential Fundings opportunities Increase in M&A activity requires additional
Slide 13: Compelling Market Opportunity
Compelling Market Opportunity U . S . C A N N A B I S S A L E S (1) MARKET DRIVERS ($ in billions) Sales of the U.S. cannabis industry expected to rival beer $56.9 ($100bn), spirits ($97bn) and wine ($62bn) by 2030 $53.5 $49.7 $14.1 Continued legalization at state level expected to drive $13.5 $
Slide 14: Compelling Market Opportunity
Compelling Market Opportunity LEGISLATIVE TAILWINDS C U R R E N T L E G A L I Z A T I O N (1): 4 0 S T A T E S Continued state-level legalization, including transition from medical to adult-use cannabis. Adult-use sales began during the first quarter of 2023 in Missouri and Connecticut. Adult-
Slide 15: Competitive Landscape
Competitive Landscape COMPETITORS: GROUPS COMPETITIVE ADVANTAGES Shorter loan durations Better 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 50% of the
Slide 16: Market Performance | Total Net Returns vs. Selected Indexes
Market Performance | Total Net Returns vs. Selected Indexes 27.3% 12.6% 9.4% 5.7% 4.0% (7.4%) (20.4%) (33.8%) Sources: Bloomberg, S&P Global Data Repository (Indexed from December 2021) Assumes dividend re-investment Chicago Atlantic Real Estate Finance, Inc. | 16
Slide 17: Market Performance | Price to Book Value per Share vs. Selected Peers
Market Performance | Price to Book Value per Share vs. Selected Peers Sources: Bloomberg, S&P Global Data Repository Chicago Atlantic Real Estate Finance, Inc. | 17
Slide 18: Appendix
Appendix Q4 2023 Financial Overview Chicago Atlantic Real Estate Finance, Inc. | 18
Slide 19: Collateral Overview (as of December 31, 2023)
Collateral Overview1 (as of December 31, 2023) Principal Implied Real Our Real Estate Property Balance Estate Collateral Coverage Loan Investment Location Type as of 12/31/2023 Collateral for REIT as of 12/31/2023 1 Senior Real Estate Corporate Loan Multi-State Retail/Industrial $ 29,910,000 $ 5,514
Slide 20: Balance Sheet
Balance Sheet December 31, 2023 December 31, 2022 Assets Loans held for investment $ 337,238,122 $ 339,273,538 Loan held for investment – related party (Note 7) 16,402,488 - Loans held for investment at carrying value 353,640,610 339,273,538 Current expected credit loss reserve (4,972,647) (3,940,93
Slide 21: Statement of Operations
Statement of Operations Three months ended Three months ended Year ended Year ended December 31, 2023 September 30, 2023 December 31, 2023 December 31, 2022 (unaudited) (unaudited) Revenues Interest income $ 16,530,028 $ 15,183,450 62,900,004 51,471,766 Interest expense (1,690,543) (1,449,143) (5,75
Slide 22: Reconciliation of Distributable Earnings and Adjusted Distributable Earnings to GAAP Net Income
Reconciliation of Distributable Earnings and Adjusted Distributable Earnings to GAAP Net Income Three Months ended Three Months ended December 31, 2023 September 30, 2023 (unaudited) (unaudited) Net Income $ 9,397,523 $ 9,976,998 Adjustments to net income Non-cash equity compensation expense 537,131
Slide 23: Management Agreement Overview
Management Agreement Overview External Manager Management Agreement and Equity Incentive Plan Externally-managed by Chicago Atlantic REIT Manager, LLC, a Initial term of three years subsidiary of Chicago Atlantic Group, LLC Following the initial term, the agreement automatically renews every
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