Advanced Flower Capital Inc. · NASDAQ:AFCG
Advanced Flower Capital — Q3 2024 Earnings Presentation
28 slides from Advanced Flower Capital's earnings presentation, Nov 13, 2024
Slide 1: Advancing The Industry
ADVANCED FLOWER CAPITAL | INVESTOR PRESENTATION Advancing The Industry A Thoughtful Lending Partner Flexible Capital Solutions Deep Industry Experience Investor Presentation NASDAQ: AFCG Q3 2024
Slide 2: Forward-Looking Statements
NASDAQ: AFCG | INVESTOR PRESENTATION DISCLAIMER Forward-Looking Statements Some of the statements contained in this presentation constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, and we intend such statements to be covered by the safe
Slide 3: Legal Disclaimers
NASDAQ: AFCG | INVESTOR PRESENTATION DISCLAIMER Legal Disclaimers Important Notices This presentation is by Advanced Flower Capital, Inc. (“Advanced Flower Capital”, “AFC” or the “Company”), a publicly traded company that has elected to be taxed as a REIT for federal income tax purposes. This presen
Slide 4: Table of Contents
Company Overview 5 Investment Highlights 6 Team 7 Table of Diverse Platform 8 Contents 2024 Strategic Goals Growth Opportunity 9 1 0 -1 6 Investment Process 17 Actionable Pipeline 18 Portfolio 1 9 -2 0 Key Financials 2 1 -2 2 Appendix: Quarterly Results 24 -2 6 Appendix: Select Investments 27 4
Slide 5: A Leading Lender to the Cannabis Industry
NASDAQ: AFCG | INVESTOR PRESENTATION COMPANY OVERVIEW A Leading Lender to the Cannabis Industry Company Highlights(1) Advanced Flower Capital is the first NASDAQ-listed commercial mortgage REIT that provides institutional loans to state law compliant cannabis operators in the United States We ai
Slide 6: It's Good to be a Lender
NASDAQ: AFCG | INVESTOR PRESENTATION INVESTMENT HIGHLIGHTS It’s Good to be a Lender Cycle-Tested Leadership Significant lending, investment management and operational experience, which helps Team to navigate rapidly evolving markets and underwrite complex credits Strong Risk-Adjusted Constrained cap
Slide 7: Experienced, Cycle-Tested Leadership Team
NASDAQ: AFCG | INVESTOR PRESENTATION MANAGEMENT TEAM Experienced, Cycle-Tested Leadership Team Leonard Daniel Robyn Brandon Gabriel James Tannenbaum Neville Tannenbaum Hetzel Katz Velgot Executive Chief Executive Chief Investment Chief Financial Chief Legal Chief Marketing Chairman Officer, Director
Slide 8: Early Mover Advantage Creates Diverse National Platform
NASDAQ: AFCG | INVESTOR PRESENTATION DIVERSE PLATFORM Early Mover Advantage Creates Diverse National Platform AFC’s loan portfolio includes 14 cannabis loans to borrowers with significant operations and/or collateral across 15 states. Our portfolio is diversified across operators, geographies and as
Slide 9: 2024 Strategic Goals
NASDAQ: AFCG | INVESTOR PRESENTATION 2024 STRATEGIC GOALS 2024 Strategic Goals Our team aims to optimize the portfolio, advance our underwriting process and source $100 million+ in new investments Active Portfolio Advanced New Deal Management Underwriting Origination Maintain portfolio health and Un
Slide 10: Rapid Adoption of State Legalization
NASDAQ: AFCG | INVESTOR PRESENTATION GROWTH OPPORTUNITY Rapid Adoption of State Legalization 41 states and DC have legalized medical cannabis; of those, 24 states and DC have legalized adult-use cannabis, and two states have legalized high-CBD, low-THC with official medical programs(1) Current Legal
Slide 11: Cannabis Lending is a Multi-Decade Growth Opportunity
NASDAQ: AFCG | INVESTOR PRESENTATION GROWTH OPPORTUNITY Cannabis Lending is a Multi-Decade Growth Opportunity The U.S. legal cannabis market is expected to grow at 10% CAGR, to over $43 billion by 2027(1) Projected Market Growth by Comparable U.S. Cannabis Market Size(1) Product Type(2) ~10% $42.7 ~
Slide 12: March Toward Legalization Drives Capital Demand
NASDAQ: AFCG | INVESTOR PRESENTATION GROWTH OPPORTUNITY March Toward Legalization Drives Capital Demand(1) Pennsylvania Minnesota Ohio Transitions Adult-Use $2.8B 13MM $100MM $1.6B 6MM $475MM $1.7B 12MM $450MM Exp. AU Sales Population Capital Need Exp. AU Sales Population Capital Need Exp. AU Sales
Slide 13: Few Institutional Capital Providers
NASDAQ: AFCG | INVESTOR PRESENTATION GROWTH OPPORTUNITY Few Institutional Capital Providers Cannabis is a capital-intensive industry with a lack of specialized lenders and high barriers to entry Capital Environment Competitive Environment Cannabis sector has seen a difficult capital raising Few
Slide 14: Client Ambition Expands Opportunity Set
NASDAQ: AFCG | INVESTOR PRESENTATION GROWTH OPPORTUNITY Client Ambition Expands Opportunity Set Borrowers’ growth pipeline is expanding, buoyed by legalization and regulatory tailwinds Growth Consolidation Emergence Return to Sustainable Growth MSO 3.0 Players Additional medical and adult-use transi
Slide 15: Cannabis Lending Offers Superior Returns
NASDAQ: AFCG | INVESTOR PRESENTATION GROWTH OPPORTUNITY Cannabis Lending Offers Superior Returns(1)(2) Cannabis lending offers a significant premium to traditional leveraged finance AFC Average YTM vs. Benchmarks ~18% 8% 7% U.S. Leveraged U.S. High AFC Loan Loan Yield Index Yield Index Average YTM(3
Slide 16: Current Valuation Presents Attractive Entry Point
NASDAQ: AFCG | INVESTOR PRESENTATION GROWTH OPPORTUNITY Current Valuation Presents Attractive Entry Point(1)(2)(3) AFC Price-to-Book vs. Peers 1.4 x 1.0 x 1.0 x 0.8 x 13% 14% 12% 8% Sale Leaseback REFI AFC Commercial Providers Mortgage REITs Dividend Yield High return income-generating company at an
Slide 17: Disciplined and Selective Investment Process
NASDAQ: AFCG | INVESTOR PRESENTATION INVESTMENT PROCESS Disciplined and Selective Investment Process AFC is involved in each phase of the lending process, with an aim to source loans with high return potential and downside protection Sourcing & Loan Selection Investment Committee Portfolio Managemen
Slide 18: AFC Maintains a Strong Origination Pipeline
NASDAQ: AFCG | INVESTOR PRESENTATION ACTIONABLE PIPELINE AFC Maintains a Strong Origination Pipeline Through its direct origination platform, AFC sources deals via various leads in select jurisdictions, maintaining a robust pipeline of active opportunities Multiple Origination Channels High-quality
Slide 19: Investment Portfolio Activity
NASDAQ: AFCG | INVESTOR PRESENTATION PORTFOLIO Investment Portfolio Activity Current Commitments(1) In $MM $431 $444 $433 $409 $7 $10 $10 $383 $12 $335 $350 $13 $11 $20 $423 $421 $437 $397 $370 $324 $330 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Nov. 1, 2024 Funded Unfunded Weighted average yi
Slide 20: AFC Cannabis Portfolio Summary
NASDAQ: AFCG | INVESTOR PRESENTATION PORTFOLIO AFC Cannabis Portfolio Summary AFC’s manager has reviewed 848 deals, representing approximately $20 billion in aggregate value* 817 Deals Rejected* 13 Current Deals in Review 14 Current Deals Funded Principal Original Funding Loan AFCG Loan, net of TOTA
Slide 21: Q3 2024 Book Value
NASDAQ: AFCG | INVESTOR PRESENTATION KEY FINANCIALS Q3 2024 Book Value Book Value(1) In $/share $1.40 $0.03 $15.64 ($1.44) ($0.66) $9.42 ($5.55) Book Value YTD 2024 YTD 2024 YTD 2024 YTD 2024 CECL, YTD 2024 Book Value December 31, Distributable Equity Raises Dividend FV Adjustments Spin-Off Septembe
Slide 22: Shareholder Distributions
NASDAQ: AFCG | INVESTOR PRESENTATION KEY FINANCIALS Shareholder Distributions Distributable Earnings & Regular Quarterly Dividends(1) In $/share Spin-off of $115MM commercial real estate portfolio $0.56 $0.49 $0.48 $0.49 $0.48 $0.49 $0.48 $0.49 $0.48 $0.48 $0.35 $0.33 (2) Q2 2023 Q3 2023 Q4 2023 Q1
Slide 23: Appendix
Appendix 23
Slide 24: Balance Sheet
NASDAQ: AFCG | INVESTOR PRESENTATION QUARTERLY RESULTS Balance Sheet September 30, 2024 December 31, 2023 (unaudited) Assets Loans held for investment at fair value (cost of $50,950,868 and $71,644,003 at September 30, 2024 and December 31, 2023, respectively, net) $ 31,372,174 $ 61,720,705 Loans he
Slide 25: Income Statement
NASDAQ: AFCG | INVESTOR PRESENTATION QUARTERLY RESULTS Income Statement Three months ended Nine months ended September 30, September 30, (unaudited) 2024 2023 2024 2023 Revenue Interest income $ 10,455,021 $ 16,798,426 $ 42,767,720 $ 52,974,100 Interest expense (1,572,705) (1,532,928) (4,749,143) (4
Slide 26: Reconciliation of GAAP Net Income to Distributable Earnings
NASDAQ: AFCG | INVESTOR PRESENTATION QUARTERLY RESULTS Reconciliation of GAAP Net Income to Distributable Earnings Three months ended Nine months ended September 30, September 30, 2024 2023 2024 2023 Net income $ 1,383,734 $ 7,979,875 $ 17,775,739 $ 30,140,482 Adjustments to net income: Stock-based
Slide 27: Select Investments
NASDAQ: AFCG | INVESTOR PRESENTATION SELECT INVESTMENTS Select Investments 27
Slide 28: Contact Us
Contact Us ir@advancedflowercapital.com www.advancedflowercapital.com
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