REFI — Chicago Atlantic Real Estate Finance, Inc.

Summary of Chicago Atlantic Real Estate Finance, Inc. (REFI) Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Interest Income: $13.1 million, down 8% from $14.2 million in Q4 2025.
• Loan Portfolio: Principal totaled approximately $414 million across 25 companies, with a weighted average yield to maturity of 15.8%.
• Gross Originations: Approximately $54 million, with $16.2 million to new borrowers and $37.8 million to existing borrowers.
• Repayments: Approximately $52 million, including $3.3 million in scheduled amortization and $48.2 million in prepayments.
• Credit Quality: 10.7% of the portfolio rated 4 or higher, up from 4.8% in Q4 2025. Nonaccrual loans decreased to 4.8% from 11.1%.
• CECL Reserve: Increased to $8.7 million (2.1% of outstanding loans), reflecting a $3.8 million rise due to specific loans.
• Distributable Earnings: Approximately $0.47 per share; dividend declared at $0.47 per share.
• Book Value: $14.39 per share as of March 31, 2026.

2. Strategic Updates and Business Highlights

• Market Position: REFI remains a leading capital provider in the cannabis sector, leveraging its expertise and relationships to navigate the evolving landscape.
• Pipeline: Strong pipeline of cannabis opportunities valued at $482 million, with $133 million backed by real estate collateral.
• Regulatory Changes: Significant federal rescheduling of medical marijuana from Schedule I to Schedule III is expected to improve cash flows for operators and enhance credit profiles.
• Portfolio Management: Successful turnaround of loan #9, which has returned to accrual status after improved performance.

3. Forward Guidance and Outlook

• Optimism: Management expresses confidence in the current environment and potential benefits from regulatory changes.
• Dividend Policy: Aiming to maintain a payout ratio of 90% to 100% of distributable earnings, with potential special dividends if taxable income requires it.
• Market Opportunities: Anticipates continued deployment of capital and resolution of challenges within the portfolio, particularly in light of improving market conditions.

4. Bad News, Challenges, or Points of Concern

• Increased Risk Ratings: Notable increase in loans rated 4 or higher, indicating heightened risk in parts of the portfolio.
• Market Volatility: Ongoing concerns in the private credit market and geopolitical tensions affecting the broader financial landscape.
• Loan Performance: Specific loans (e.g., loan #36) facing challenges in Illinois due to market consolidation and competition.
• CECL Reserves: Increased reserves may indicate underlying credit quality concerns, particularly as they relate to specific loans.

5. Notable Q&A Insights

• Loan #36: Management acknowledges challenges in the Illinois market but remains optimistic about the borrower's potential for improvement.
• Regulatory Impact: Questions regarding the implications of Schedule III on the portfolio reveal that most borrowers operate in both medical and adult-use markets, complicating revenue categorization.
• Hemp Ban: Anecdotal evidence suggests that the upcoming hemp ban may positively impact regulated cannabis sales, although direct data is lacking.
• Liquidity and Pipeline: Management indicated that the pipeline refreshes every 3 to 6 months, making it difficult to predict the timing of new deployments.

Overall, REFI's Q1 2026 results reflect a stable financial position amid a challenging macro environment, with significant potential for growth driven by regulatory changes in the cannabis sector. However, increased risk ratings and market volatility remain areas of concern.