Chicago Atlantic Real Estate Finance, Inc. · NASDAQ:REFI
Chicago Atlantic Real Estate Finance — Q4 2022 Earnings Presentation
22 slides from Chicago Atlantic Real Estate Finance's earnings presentation, Mar 9, 2023
Slide 1: Fourth Quarter 2022 Earnings Supplemental
Fourth Quarter 2022 Earnings Supplemental March 9, 2023
Slide 2: Forward-looking statements disclaimer
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 $281.5 $331.9 $330.4 $336.3 $39.6 $25.2 $18.5 $15.0 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Drawn Future Funding COMMITMENTS (in millions) $321.1 $357.1 $348.9 $351.3 Weighted average yield to maturity of ~19.7% as of December 31,
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 82.8% 17.2% Retail/Industrial Industrial By Real Estate Collateral Type $343M Note: (1) As of December 31, 2022
Slide 9: Loan Collateral Coverage
Loan Collateral Coverage Chicago Atlantic Real Estate Finance, Inc. | 9 1.7x real estate collateral coverage ADDITIONAL COLLATERAL Portfolio Weighted Average (1.7x) Our loans to owner operators in the state - licensed cannabis industry are secured by additional collateral, including personal guarant
Slide 10: Portfolio Overview
Total Commitment: $351.4M Portfolio Overview (as of December 31, 2022) Loan Initial Funding Date(1) Maturity Date(2) Total Commitment(3) Principal Balance as of 12/31/2022 Percentage of Our Loan Portfolio Future Fundings Interest Rate(4) Periodic Payment(5) YTM IRR(6) 1 10/27/22 10/30/26 $ 30,000,00
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 are subject to contractual extension
Slide 12: Driven by proprietary deal sourcing
Driven by proprietary deal sourcing Total current pipeline of $800+mm 1 ▪ 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) As of Febr
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 February 2023 Compelling Market Opportunity LEGISLATIVE TAILWINDS CURRENT LEGALIZATION (1) : 38 STATES ▪ Continued state - level legalization, including transition from medical to adult - use cannabis ▪ SAFE Banking Act would protect banks providing service
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: Q4 2022 Financial Overview Appendix
Q4 2022 Financial Overview Appendix Chicago Atlantic Real Estate Finance, Inc. | 16
Slide 17: Collateral Overview
Collateral Overview (as of December 31, 2022) Loan Investment (1 ) Location Property Type Principal Balance as of 12/31/2022 Implied Real Estate Collateral for REIT (2) Our Real Estate Collateral Coverage as of 12/31/2022 (4) 1 Senior Real Estate Corporate Loan (3) Multi - State Retail/Industrial $
Slide 18: Collateral Overview (continued)
Collateral Overview (continued) Chicago Atlantic Real Estate Finance, Inc. | 18 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 19: Balance Sheet
Balance Sheet Chicago Atlantic Real Estate Finance, Inc. | 19 December 31, 2022 December 31, 2021 Assets Loans held for investment $ 339,273,538 $ 196,984,566 Current expected credit loss reserve (3,940,939) (134,542) Loans held for investment at carrying value, net 335,332,599 196,850,024 Cash 5,71
Slide 20: Statement of Operations
Statement of Operations Chicago Atlantic Real Estate Finance, Inc. | 20 Three months ended December 31, 2022 (unaudited) Three months ended September 30, 2022 (unaudited) Revenues Interest income $ 15,993,588 $ 13,795,097 Interest expense (1,230,966) (861,348) Net interest income 14,762,622 12,933,7
Slide 21: 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. | 21 Three Months ended December 31, 2022 Three Months ended September 30, 2022 Net Income $ 7,255,717 $ 9,768,969 Adjustments to net income Non - cash equity co
Slide 22: Management Agreement Overview
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); No Catch - up Provision 8.0% External Manager ▪ Externally - managed by Chicago Atlantic REIT Manager, LLC, a sub
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