Chicago Atlantic Real Estate Finance, Inc. Q4 FY2024 earnings call

• Industry developments: US cannabis industry had muted notes with Florida ballot failure, lack of federal reform, and pricing pressure. - Q4 accomplishments: Deployed $90.7 million in gross originations, increased senior secured credit facility to $110 million and closed a $50 million unsecured term loan. - Dividends: Delivered $2.06 per share in 2024. - Foreclosure milestone: Administrative agent completed key milestones in foreclosure on loan number nine, aiming to restore it to accrual status via restructuring.

In Q4, Chicago Atlantic executed $90.7 million in gross originations across nine investments. The loan portfolio principal totaled $410 million as of Dec 31 with a weighted average yield to maturity of 17.2%. Net interest income for Q4 was $14.1 million, down from $14.5 million in Q3. For the year, $2.06 per share was delivered in dividends. The portfolio has 30 portfolio companies, with diversification strong, and a cannabis pipeline of approximately $490 million with $67 million in current liquidity.

Expect to maintain a dividend payout ratio of 90% to 100% based on basic distributable earnings per share for 2025. A special distribution in Q4 2025 may occur if additional taxable income distributions are needed beyond regular quarterly dividends.

• Uncertainties in the cannabis industry including lack of federal reform, pricing pressure, and impact on equity values. - Credit quality risks, with loan number nine being the only non-accrual loan, though overall credit quality has not changed significantly quarter over quarter.

Q: Can you talk about demand for loans and leverage expectations?

A: On market demand, profile changed but industry matured. No near-term plan to increase leverage beyond approved facility.

Q: Update on credit quality and loan number nine?

A: Overall credit quality stable. For loan number nine, administrative agent has operational control and is working to remedy deficiencies to restore to accrual status.

Q: Thoughts on dividend, base vs special?

A: Board wants regular dividend to have cushion; evaluate quarterly, aiming for regular dividend with margin of safety.

Q: Pipeline and maturities?

A: Pipeline near $500 million, originations driven by idiosyncratic growth projects. Aim to be lender of choice for maturities, expecting market to work through loan maturities normally.