Chicago Atlantic Real Estate Finance, Inc. · NASDAQ:REFI
Chicago Atlantic Real Estate Finance — Q2 2024 Earnings Presentation
24 slides from Chicago Atlantic Real Estate Finance's earnings presentation, Aug 7, 2024
Slide 1: Earnings Supplemental
Earnings Supplemental For the second quarter ended June 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 $2.2B+ 75+ 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: 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 Location By Rate Type 1% 2% 3% 2% 2% 15% 3% 6% 23.6% 36.3% 38.2% Weighted 7% 14% average loan $383.3M size = 5.2% $383.3M 7% 12% 10% 76.4% 25.6%
Slide 8: Portfolio Diversity (Continued)
Portfolio Diversity (Continued) Our portfolio is diversified across operators, geographies, and asset types PRINCIPAL OUTSTANDING1 By Operator Integration By Real Estate Percentage of Real Estate Collateral by Collateral Type State and Operator Type3 25.0% 18.2% 28.6% 20.0% 4.1% $383.3M 8.0% $383.3M
Slide 9: Loan Collateral Coverage
Loan Collateral Coverage 42.0% loan to enterprise value and 1.3x 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) $140,000,000 50% $120,000,000 45% 40% $100,000,000 35% 29% 29% $80,000,000 30% 21% 29% 25% $60,000,000
Slide 10: Portfolio Overview (as of June 30, 2024)
Portfolio Overview1 (as of June 30, 2024) Loan Location(s) Origination Date Maturity Date Principal Balance Future Fundings Fixed/Floating Cash Rate PIK Rate YTM IRR 1 Various 10/27/2022 10/30/2026 $ 25,444,286 - Floating 15.00% 0.00% 17.4% 2 Michigan 1/13/2022 12/31/2024 39,589,766 - Floating 12.50
Slide 11: Distributable Earnings and Dividends
Distributable Earnings and Dividends1 $0.65 $0.62 $0.61 $0.60 $0.57 $0.57 $0.55 $0.55 $0.55 $0.53 $0.52 $0.50 $0.50 $0.50 $0.47 $0.47 $0.47 $0.47 $0.47 $0.47 $0.47 $0.47 $0.47 $0.45 $0.45 $0.40 $0.40 $0.35 $0.30 $0.29 $0.29 $0.26 $0.25 $0.20 $0.15 $0.10 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 202
Slide 12: Chicago Atlantic Real Estate Finance (Nasdaq: REFI) Historical performance vs market
Chicago Atlantic Real Estate Finance, Inc (Nasdaq: REFI) Historical performance vs market Illustrative Quarterly Growth of $100,000 Invested, from Dec 31, 2021 to June 30, 2024 $140,000 $130,000 REFI $120,000 S&P 500 Financials $110,000 S&P 500 $100,000 NASDAQ $90,000 Russell 2000 FTSE NAREIT Mortga
Slide 13: The Cannabis Landscape in the U.S.
The Cannabis Landscape in the U.S. Where We See 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 Each state has unique i
Slide 14: The Evolving U.S Cannabis Landscape
The Evolving U.S Cannabis Landscape State-level changes since our 2019 formation 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 only: 25 s
Slide 15: The Cannabis Landscape in the U.S. (cont'd)
The Cannabis Landscape in the U.S. (cont’d) Size of Opportunity and Growth Projections The U.S. cannabis industry was estimated to be $33.6B in Assuming the cannabis market enterprise value at 1x top line retail revenue in 2023 and is projected to grow to revenue, and a 35% debt to 65% equity capita
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: Underwriting
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): Structuring
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 Over 1,000 Qualified Deals Total current pipeline of Sourced and Reviewed ~$508mm1 Continued legalization at the state level creates a new influx of ~$38mm1 in Potential Fundings opportunities Increase in M&A activity requires additio
Slide 20: Appendix: Financial Overview
Appendix Financial Overview For the second quarter ended June 30, 2024 Chicago Atlantic Real Estate Finance, Inc. | 20
Slide 21: Consolidated Balance Sheets
Consolidated Balance Sheets 21
Slide 22: Consolidated Statements of Operation
Consolidated Statements of Operation 22
Slide 23: Reconciliation of Distributable Earnings and Adjusted Distributable Earnings to GAAP Net Income
Reconciliation of Distributable Earnings and Adjusted Distributable Earnings to GAAP Net Income 23
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: $1.7B1 SIZE One of the largest institutional lenders in the cannabis space TEAM 85 professionals, including over 30 investment
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