More Demand For Capital From Big Weed Operators Ahead, Top Exec Shares Thoughts On Cannabis Mortgage REIT Q3 Results

Cannabis-focused commercial real estate finance company Chicago Atlantic Real Estate Finance, Inc. REFI announced its third-quarter earnings results on Wednesday for the three months ended September 30, 2023.

Q3 2023 Financial Highlights

• Net interest income totaled $13.7 million, up from $12.9 million in the prior year’s period.
• Total expenses amounted to $3.8 million, up from $3.16 million in the third quarter of 2023.
• Net income was $9.97 million, slightly up from $9.77 million in the corresponding quarter of last year.
• As of Sept. 30, 2023, the company had $352.3 million in total assets, up from $343.3 million as of Dec. 31, 2022.
• Total liabilities were $76.5 million as of Sept. 30, 2023, down from $79.2 million as of Dec. 31, 2022.

See also: Chicago Atlantic Q2 FY23 Net Income Grows 15.8% YoY, Here Are The Details

Portfolio Performance And Investment Activity In Q3

• As of Sept. 30, 2023, total loan commitments of approximately $355.9 million across 27 portfolio investments.
• Weighted average yield to maturity was approximately 19.3% as of Sept. 30, 2023, compared with approximately 19.2% as of June 30, 2023.
• The company had $63 million and $74 million outstanding on its $100 million revolving credit facility as of Sept. 30, 2023 and Nov. 7, 2023, respectively.
• Total gross originations of $35.4 million, $32.8 million of which was funded to new borrowers.

“The sequential gross originations growth of $35 million and the ability to improve our weighted average yield to maturity to 19.3% this quarter demonstrate our success in continuing to capture a greater share of new loan demand in the cannabis industry,” CEO Tony Cappell said. “Credit quality remains paramount with real estate collateral coverage of 1.5x. While we remain under-levered at 23% and with $25 million of liquidity, we are re-initiating discussions to expand our credit facility to provide even more capacity to fund new opportunities from our active investment pipeline.”

John Mazarakis, the company’s executive chairman shed light on what’s next for the company.

“With the substantial improvement in the equities of the cannabis operators of late and a more positive indication of future regulatory relief, the creditworthiness of our borrowers has improved in the past quarter,” Mazarakis said. “This credit improvement and more positive outlook align well with our expectation of greater demand for capital from some of the larger operators over the next 12 to 18 months.”

REFI Price Action

Chicago Atlantic’s shares traded 1.06% higher at $15.24 per share during the pre-market session on Wednesday morning.

Now read: Chicago Atlantic Q1 FY23 Net Income Grows 46.3% Sequentially, Here Are The Details

•  47.10% with $GTBIF
•  40.23% with $TCNNF
•  21.50% with $VFF

Photo: Courtesy of micheile henderson on Unsplash