Chicago Atlantic Real Estate Finance, Inc. · NASDAQ:REFI
Chicago Atlantic Real Estate Finance — Q4 2021 Earnings Presentation
24 slides from Chicago Atlantic Real Estate Finance's earnings presentation, Mar 22, 2022
Slide 1: Fourth Quarter 2021 Earnings Supplemental
Fourth Quarter 2021 Earnings Supplemental March 22, 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 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 $58.3 $129.5 $200.4 $284.1 $13.7 $43.0 $34.7 $40.1 Q2 2021 Q3 2021 Q4 2021 As of March 17, 2022 Funded Unfunded COMMITMENTS (in millions) $72.0 $140.0 $235.1 $324.2 Weighted average yield to maturity of ~17.3% as of March 1
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 0% 11% 2% 10% 7% 4% 1% 5% 2% 7% 3% 5% 0% 1% 7% 4% 4% 2% 1% 3% 4% 11% 6% By Location 89.9% 9.7% Retail & Industrial Industri
Slide 9: Loan Collateral Coverage
Loan Collateral Coverage Chicago Atlantic Real Estate Finance, Inc. | 9 1.8x real estate collateral coverage ADDITIONAL COLLATERAL Portfolio Weighted Average (1.8x) Our loans to owner operators in the state - licensed cannabis industry are secured by additional collateral, including personal guarant
Slide 10: Portfolio Overview (as of March 2022)
Total Commitment: $324.2M Portfolio Overview (as of March 17, 2022) Loan Initial Funding Date (1) Maturity Date (2) Total Commitment (3) Principal Balance as of 3/17/2022 (12) Percentage of Our Loan Portfolio Future Fundings Interest Rate (4) Periodic Payment (5) YTM IRR (6) 1 (8) 12/31/19 12/31/22
Slide 11: Portfolio Overview (continued)
Portfolio Overview (continued) Chicago Atlantic Real Estate Finance, Inc. | 11 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 have extension options from original
Slide 12: Driven by proprietary deal sourcing
Driven by proprietary deal sourcing Total current pipeline of approximately $979mm ▪ 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 opportunities Note: (1)
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 2021E 2022E 2023E 2024E 2025E 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. CANNABIS SALES (1) MARKET DRIVERS Compelling Market Opportunity ▪ Sale
Slide 14: Compelling Market Opportunity: Legislative Tailwinds
Note: (1) Per DISA Global Solutions, as of March 2022 Compelling Market Opportunity Legalized Medical and/or Decriminalized CBD Only or Fully Prohibited LEGISLATIVE TAILWINDS CURRENT LEGALIZATION (1) : 37 STATES ▪ Continued state - level legalization, including transition from medical to adult - use
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 Competitive Landscape COMPETITORS: GROUPS Mortgage REITs BDCs Sale
Slide 16: 2021 Financial Overview Appendix
2021 Financial Overview Appendix Chicago Atlantic Real Estate Finance, Inc. | 16
Slide 17: Collateral notes
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 appraised value as is, or on a comparable cost basis, as completed. The real estat
Slide 18: Portfolio Overview (as of December 31, 2021)
Total Commitment: $235.1M Portfolio Overview (as of December 31, 2021) Loan Initial Funding Date (1) Maturity Date (2) Total Commitment (3) Principal Balance as of 12/31/2021 Percentage of Our Loan Portfolio Future Fundings Interest Rate (4) Periodic Payment (5) YTM IRR (6) 1 12/31/19 12/31/22 $ 800
Slide 19: Portfolio Overview (continued)
Portfolio Overview (continued) Chicago Atlantic Real Estate Finance, Inc. | 19 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 have extension options from original
Slide 20: Collateral Overview (as of December 31, 2021)
Collateral Overview (as of December 31, 2021) Loan Investment (1 ) Location Property Type Principal Balance as of 12/31/2021 Implied Real Estate Collateral for REIT (2) Our Real Estate Collateral Coverage as of 12/31/2021 1 Senior Real Estate Corporate Loan Michigan Retail $ 567,500 $ 1,710,000 3.0x
Slide 21: Balance Sheet (unaudited)
Balance Sheet (unaudited) Chicago Atlantic Real Estate Finance, Inc. | 21 Chicago Atlantic Real Estate Finance, Inc. Consolidated Balance Sheet (unaudited) December 31, 2021 March 31, 2021 Assets Loans held for investment $ 196,984,566 $ - Current expected credit loss reserve (134,542) - Loans held
Slide 22: Statement of Operations (unaudited)
Statement of Operations (unaudited) Chicago Atlantic Real Estate Finance, Inc. | 22 Chicago Atlantic Real Estate Finance, Inc. Consolidated Statement of Operations (Unaudited) Three Months Ended December 31, 2021 For the period from April 1, 2021 to December 31, 2021 Revenues Interest income $ 5,779
Slide 23: Reconciliation of Adjusted Distributable Earnings to GAAP Net Income
Reconciliation of Adjusted Distributable Earnings to GAAP Net Income Chicago Atlantic Real Estate Finance, Inc. | 23 Three Months Ended December 31, 2021 For the period April 1, 2021 to December 31, 2021 Net Income $ 4,360,364 $ 9,496,436 Adjustments to net income Non - cash equity compensation expe
Slide 24: Management Agreement and Equity Incentive Plan
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) 8.0% External Manager ▪ Externally - managed by Chicago Atlantic REIT Manager, LLC, a subsidiary of Chicago Atlant
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