LIEN — Chicago Atlantic BDC, Inc.

Summary of Chicago Atlantic BDC, Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Investment Income (NII): $8.3 million, or $0.36 per share for Q4 2025, down from $9.5 million, or $0.42 per share in Q3 2025.
• Full Year NII: $1.45 per share, reflecting a yield to book value of 11%.
• Gross Investment Income: $14.2 million for Q4, compared to $15.1 million in Q3.
• Net Assets: Totaled $303.4 million, with a net asset value (NAV) per share of $13.30, slightly up from $13.27 in Q3.
• Debt Levels: $25 million in debt outstanding, with a low debt-to-equity ratio of 0.08x, significantly below the BDC average of 1.2x.
• Dividend: Maintained at $0.34 per share for the sixth consecutive quarter, totaling $1.36 for the year.

2. Strategic Updates and Business Highlights

• Chicago Atlantic BDC focuses on direct loans to privately held companies, particularly in the cannabis sector and lower middle markets.
• Funded $31.7 million across seven new investments in Q4, including four new borrowers, with 100% being senior secured loans.
• The company has a robust pipeline of approximately $732 million, with $616 million in cannabis opportunities.
• Recent M&A activity in the cannabis market is expected to enhance the company's investment pipeline.
• The company emphasizes a disciplined approach to underwriting and structuring investments, targeting above-market returns with strong capital preservation.

3. Forward Guidance and Outlook

• The company is optimistic about the cannabis sector due to potential federal rescheduling of cannabis, which could enhance cash flows for borrowers and lead to increased M&A activity.
• Management believes they are well-positioned to capitalize on the evolving landscape while maintaining a conservative approach to risk.
• They anticipate continued demand for debt capital in the lower middle market and are prepared to deploy available liquidity strategically.

4. Bad News, Challenges, or Points of Concern

• The broader BDC market is experiencing negative sentiment, with many firms trading below net asset value and concerns over potential dividend cuts and loan performance.
• There are fears regarding looser underwriting standards in private credit markets, which could lead to higher defaults.
• The recent drop in the Fed Funds rate raises concerns about future earnings and dividends.
• The company has limited exposure to the software industry and no nonaccruals, but the overall market anxiety could impact investor sentiment.

5. Notable Q&A Insights

• The $732 million pipeline includes opportunities across the entire Chicago Atlantic platform, not just LIEN specifically.
• There has been an increase in the pipeline from approximately $600 million last quarter.
• Discussions with potential borrowers have become more optimistic due to the prospect of rescheduling cannabis, leading to increased transaction activity.
• The company is exploring providing disclosures on state-level exposure and how they utilize third-party valuation services for their portfolio.
• Management acknowledged the significant payoffs in Q4 as reflective of broader transaction activity rather than a concerning trend.

This summary encapsulates the key points from the earnings call, highlighting the company's financial performance, strategic initiatives, outlook, and challenges faced in the current market environment.