REFI — Chicago Atlantic Real Estate Finance, Inc.

Summary of Chicago Atlantic Real Estate Finance, Inc. Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Loan Portfolio: As of September 30, 2025, the loan portfolio principal totaled approximately $400 million across 26 companies, with a weighted average yield to maturity of 16.5%.
• Gross Originations: The company originated $39.5 million in principal during the quarter, including $20 million related to a new credit facility for Verano.
• Net Interest Income: Reported at $13.7 million, a decrease of 5.1% from the previous quarter, primarily due to nonrecurring fees and the impact of a recent rate cut.
• Distributable Earnings: Approximately $0.50 per share (basic) and $0.49 (diluted), down from $0.52 and $0.51 in Q2 2025.
• Dividend: A dividend of $0.47 per share was declared, with a payout ratio expected to remain between 90% to 100% for the 2025 tax year.
• Book Value: $14.71 per common share, with approximately 21.5 million shares outstanding.

2. Strategic Updates and Business Highlights

• Pipeline: The cannabis pipeline stands at approximately $441 million, with a focus on growth investments and restructuring opportunities.
• Loan Structure: 36.7% of loans are fixed rate, while 63.3% are floating rate, with only 14% exposed to further rate declines due to interest rate floors.
• Share Repurchase: Management and Board members purchased shares, reflecting confidence in the company's valuation and strategy.
• New Credit Facility: Secured a $75 million revolving credit facility with Verano, marking a significant milestone in the cannabis financing landscape.

3. Forward Guidance and Outlook

• The management team expressed confidence in achieving net growth in the loan portfolio despite challenges in the private credit market.
• Continued focus on maintaining a dividend payout ratio and potential special dividends if taxable income requires it.
• Anticipation of further opportunities in states like Virginia, particularly with potential changes in the regulatory landscape.

4. Bad News, Challenges, or Points of Concern

• Market Discount: The company's shares are trading at a significant discount to book value, attributed to broader concerns in the private credit market and perceived risks in underwriting standards.
• Interest Rate Sensitivity: Although well-insulated, the company remains cautious about the impact of interest rate fluctuations on its floating rate loans.
• Competition: Increased competition from banks entering the cannabis lending space could pressure margins and market share.
• Pipeline Fluctuations: The pipeline has seen ordinary churn, and there are concerns about the sustainability of certain opportunities, particularly in ESOPs.

5. Notable Q&A Insights

• Pipeline Dynamics: Management confirmed that ESOPs remain a significant part of their pipeline, with no major exits affecting overall opportunities.
• Maturing Loans: Most loans maturing before year-end are expected to be retained through negotiations, supporting the goal of net portfolio growth.
• Regulatory Landscape: Virginia is viewed as a promising market for future investments, contingent on regulatory developments.
• Underwriting Approach: The company emphasizes a disciplined underwriting strategy focused on credit quality and principal protection, which has allowed them to navigate market volatility effectively.
• New York Lending Program: The New York Social Equity Fund has paused additional capital draws, but the company remains ready to support future expansions.

This summary encapsulates the key aspects of the earnings call, highlighting both the positive developments and the challenges facing Chicago Atlantic Real Estate Finance, Inc.