Chicago Atlantic BDC, Inc. Q3 FY2025 earnings call

• Chicago Atlantic BDC is uniquely positioned as a BDC focused on cannabis and the lower middle market, offering uncorrelated credit opportunities.
• In Q3, $66.7 million was funded to 13 new investments (7 new borrowers), a new originations record. Weighted average yield on debt investments was 15.8% vs. average BDC's 11.4%; 99.5% senior secured vs. average 19.5% subordinated; 31% fixed and 69% floating rate in portfolio.
• Portfolio is under-levered with $11 million debt vs. BDC average 1.2x debt to equity; no non-accruals vs. average 3.5%. Q3 dividend 34¢, fifth consecutive quarter, covered by net investment income.
• Q3: Funded $66.3 million to 11 portfolio companies (7 new borrowers), 100% senior secured, 84% fixed-floating at floors; loan repayments/amortization $62.7 million; unfunded commitments $27 million; Q4 funded $5 million; pipeline ~$610 million (cannabis ~$415M, non-cannabis ~$195M); $98 million dry powder with high underwriting bar.

During the third quarter, net investment income per share was 42¢ for 2025, demonstrating a 12.5% yield to book value. Gross investment income totaled $15.1 million in Q3 compared to $13.1 million in Q2. Net investment income was $9.5 million or 42¢ per share, up from $7.7 million or 34¢ per share in Q2. Net assets totaled $302.9 million at quarter end with a net asset value per share of $13.27, up from $13.23 in Q2. The portfolio consisted of 37 portfolio company investments, with 24% invested in non-cannabis companies. 69% of the portfolio had floating interest rates, and the gross weighted average yield of the credit investment portfolio was approximately 15.8%. As of September 30, 2025, the company had $11 million of debt outstanding and $97.8 million of liquidity as of November 12, 2025.

• Expect additional deployment between now and year-end at a more measured pace than prior quarters.
• Pipeline includes ~$610 million potential debt transactions.
• Maintain high bar for underwriting and structuring investments to achieve above-market risk-adjusted returns.

• General private credit market risks like borrower default, interest rate sensitivity, dividend coverage, and fraud.
• Uncertainty around tax liabilities and their impact on borrowers' balance sheets and repayment ability.

Q: About loan repayments in Q3 and cannabis industry outlook A: Pipeline is long-term and not reactive to short-term liquidity; cannabis industry varies by jurisdiction, with focus on building relationships with strong borrowers.

Q: Thoughts on hemp derivatives and cannabis industry A: Closing hemp loophole is positive for state regulated markets, but hemp-derived beverage market loss is a negative for the THC ecosystem.

Q: Uncertain tax provisions for borrowers A: View uncertain tax liabilities as borrower obligations, aim to limit such liabilities in loan docs; companies want to reduce balance sheet liabilities.

Q: Lending to smaller companies and associated risk A: More leverage and bargaining power for downside protection in loan structuring, balancing risk with strong portfolio monitoring.