Real Estate Archives - Green Market Report

Debra BorchardtMay 9, 2023


Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI) announced its results for the first quarter ending March 31, 2023. The commercial real estate company reported net interest income increased slightly by1% to approximately $14.9 million. The company attributed the increase to approximately $1 million of interest income from prepayment fees and acceleration of original issue discounts, the increase in the prime rate from 7.50% to 8.00%, and improved yield terms on facilities amended and/or restructured during the quarter. These increases were said too be partially offset by the impact of timing of early principal repayments.

Chicago Atlantic recorded net income of approximately $10.7 million, or $0.60 per weighted average diluted common share. This was a sequential increase of 46.3%. Total expenses were roughly $4.1 million before provision for current expected credit losses, representing a sequential decrease of 18.0%; primarily attributable to a $1.2 million decrease in net management and incentive fees.

“The better-than-anticipated results reflect the benefit of four principal paydowns during the quarter and the timing of our redeployment of the proceeds,” said John Mazarakis, Executive Chairman. “We are entering what we believe will be a period of favorable demand for capital from a proven lending platform such as ours. With our fortress balance sheet, we have purposefully reined in our originations to continue to focus on higher yielding investments and funding vertically integrated operators with the strongest credit profile.”

The company had distributable earnings of approximately $11.1 million, or $0.62 per weighted average diluted common share, representing a sequential increase of 10.6%. The company reaffirmed its outlook that was issued in March. Back then Chicago Atlantic said it  expected to maintain a dividend payout ratio of approximately 90% to 100% on a full year basis. The regular quarterly common dividend is expected to be a minimum of $0.47 per weighted average diluted share.

Tony Cappell, Chief Executive Officer, added, “Our portfolio has continued to perform well with the percentage of floating rate loans increasing to 88%, the weighted average yield to maturity remaining above 19% and our loan to values well below the rest of the lenders in the industry. The balance sheet is under levered, and we have over $50 million of liquidity available to selectively fund the best operators in the cannabis industry.”

During the first quarter, Chicago Atlantic said it had total gross originations of $34.1 million, of which $33.3 million and $0.8 million were funded to new borrowers and an existing borrower, respectively. New originations were offset by principal repayments of $59.2 million, of which $57.8 million was attributable to unscheduled early repayments and sales.

The company reported no defaults upon senior securities. As of March 31, 2023, total loan commitments of approximately $328.1 million ($313.9 million funded, $14.2 million in future fundings) across 24 portfolio companies.

StaffFebruary 1, 2023


This story was republished with permission from Crain’s New York and written by C.J. Hughes.

Because marijuana is still illegal at the federal level, landlords who have mortgages with federally chartered banks would seem potentially at risk by having pot stores as tenants, as doing business with a drug dealer, essentially, runs afoul of the law.

But even though federal officials haven’t said outright that they won’t enforce the law, some landlords seem unfazed, as in Greenwich Village, where the city’s second legal dispensary opened on Jan. 24.

“My only concern is: Is marijuana legal? And is the state of New York behind it? And the answer to both of those questions is yes,” said Herman Gans, an owner of 144 Bleecker St., which is home to the new cannabis shop, Smacked Village.

In 2011 Gans and his co-investors borrowed $6.8 million against the 4-story mixed-use building, which cost $4.2 million in 2001, records show. The lender was New York Community Bank, which is based on Long Island and holds $66 billion in loans for properties across the country.

A message left with the bank asking for an explanation of its position on working with landlords with cannabis-selling tenants was not returned by press time.

Cooper Katz, a broker with ABS Partners Real Estate who handled the Smacked Village deal, said it’s his understanding some financial institutions are advising landlords to tread carefully.

“Some of the banks are saying, ‘We’re OK with it,’ and others are not,” said Katz, who was the fifth agent to market 144 Bleecker, a 5,600-square-foot two-level space that had been empty since a Duane Reade closed in 2019. “But it’s definitely a conversation we’re having.”

If some federal lawmakers have their way, those conversations won’t be necessary for much longer. In 2020 the House of Representatives approved the More Act, which would decriminalize cannabis on a national level. And Senate Majority Leader Chuck Schumer of New York has said he expects his chamber to take up the bill soon.

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