Chicago Atlantic Real Estate Finance, Inc. · NASDAQ:REFI
Chicago Atlantic Real Estate Finance — Q1 2023 Earnings Presentation
23 slides from Chicago Atlantic Real Estate Finance's earnings presentation, May 9, 2023
Slide 1: First Quarter 2023 Earnings Supplemental
First Quarter 2023 Earnings Supplemental May 9, 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 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
Slide 5: Industry-Leading Management and Investment Team
Industry - Leading Management and Investment Team Deep Cannabis, Credit and Real Estate Expertise With Entrepreneurial Approach Peter Sack (1) Co - President ▪ Former Principal at BC Partners Credit, leading their cannabis practice ▪ Underwritten $138mm in cannabis credit transactions ▪ Former priva
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 $281.5 $331.9 $330.4 $336.3 $313.7 $39.6 $25.2 $18.5 $15.0 $14.2 Q1 2022 Q2 2022 Q1 2023 Q3 2022 Q4 2022 Drawn Future Funding C O M M I T M E N T S (in millions) $321.1 $357.1 $348.9 $ 3 5 1 .3 Weighted average yield to maturity of ~19.4% as of March 31, 2023 $328.1 Chi
Slide 8: Portfolio Diversity
Portfolio Diversity 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 82.8% 17.2% Retail/Industrial I n d ust r i al By Real Estate Collateral Type $320M Note: (1) As of March 31, 2023 6% 15% 8% 20% 18% 5% 6%
Slide 9: Portfolio Diversity (Continued)
Portfolio Diversity (Continued) 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 Operator Integration By Construction Component 55.6% 44 . 4 % Construction No Construction $320M Note: (1) As of March 31, 2023 (2) SSO = singl
Slide 10: Loan Collateral Coverage
Loan Collateral Coverage 41% loan to enterprise value and 1.6x real estate collateral coverage 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 ) 1 - 1.5x 1.5 - 2x Portfolio Weighted Average (1.6x) P R I N C I P A L B Y L T E V R A T I O ( 1 ) < . 5 x .5 - 1x >2 x 13% 29% (1) Our loans to
Slide 11: Portfolio Overview (as of March 31, 2023)
Portfolio Overview (as of March 31, 2023) Loan Initial Funding Date(1) M at uri t y Date(2) Total C ommi t m e n t(3 ) Princip a l Balance as of 3/31/20232 Percentage of Our Loan Portfolio Future Fundings Interest Rate(4) Periodic P a y m e n t(5 ) YTM IR R(6 ) 1 10/27/22 10/30/26 $ 30,000,000 $ 30,
Slide 12: Portfolio Overview (continued)
Portfolio Overview (continued) Notes: Chicago Atlantic Real Estate Finance, Inc. | 12 (1) All loans originated prior to April 1, 2021 were purchased from affiliated entities at fair value plus accrued interest on or subsequent to April 1, 2021 (2) Certain loans are subject to contractual extension o
Slide 13: Loan Origination Pipeline
Loan Origination Pipeline Driven by proprietary deal sourcing Total current pipeline of $600+mm 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 oppor
Slide 14: 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 2 0 19 2 0 20 2 0 2 3 E 2 0 2 4 E 2025E 2021E 2022E 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 . C A N N A B I S S A L E S (1) M A R K E T D R I
Slide 15: Compelling Market Opportunity: Legislative Tailwinds
Note: (1) Per MJBiz Daily, as of May 2023 Compelling Market Opportunity L E G I S L A T I V E T A I L W I N D S 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 have begu
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 Our borrower’s only source of debt Competitive Landscape C O M P E
Slide 17: Q1 2023 Financial Overview Appendix
Q1 2023 Financial Overview Appendix Chicago Atlantic Real Estate Finance, Inc. | 17
Slide 18: Collateral Overview (as of March 31, 2023)
Collateral Overview (as of March 31, 2023) Chicago Atlantic Real Estate Finance, Inc. | 18 Loan Investment (1 ) Location Prope rt y Type Princip a l Balance as of 3/31/2023 Impli e d Rea l Estate Collateral for REIT (2) Our Real Estate Collateral Coverage as of 3/31/2023 (4) 1 Senior Real Estate Cor
Slide 19: Collateral Overview (continued)
Collateral Overview (continued) Notes: Chicago Atlantic Real Estate Finance, Inc. | 19 (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 20: Balance Sheet
Balance Sheet Chicago Atlantic Real Estate Finance, Inc. | 20 March 31, 2023 (unaudited) December 31, 2022 Assets Loans held for investment $ 316,226,144 $ 339,273,538 Current expected credit loss reserve (4,051,934) (3,940,939) Loans held for investment at carrying value, net 312,174,210 335,332,59
Slide 21: Statement of Operations
Statement of Operations Three months ended March 31, 2023 (unaudited) Three months ended December 31, 2022 (unaudited) Revenues Interest income $ 16,527,304 $ 15,993,588 Interest expense (1,618,296) (1,230,966) Net interest income 14,909,088 14,762,622 Expenses Management and incentive fees, net 2,1
Slide 22: 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. | 22 Three Months ended March 31, 2023 (unaudited) Three Months ended December 31, 2022 (unaudited) Net Income $ 10,692,349 $ 7,255,717 Adjustments to net income
Slide 23: 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% Chicago Atlantic Real Estate Finance, Inc. | 23 External Manager ▪ Externally - mana
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