AFC Gamma Archives - Green Market Report

StaffMay 10, 2022
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AFC Gamma, Inc. (NASDAQ: AFCG)  announced its results for the first quarter of 2022 with a net income of $10.2 million or $0.53 per basic weighted average share of common stock. The total net interest income was $16.9 million, an increase of $12.3 million, or 261%, compared to last year. This just beat the Yahoo Finance average analyst estimate for revenues of $16 million. The distributable earnings were $11.9 million in the first quarter or $0.62 per basic weighted average share of common stock, beating the estimates for earnings of $0.57. AFC paid a dividend of $0.55 per common share on April 15, 2022, for the quarter representing a 10% increase from the prior quarter. The distributable earnings significantly exceeded the declared dividend for the fourth consecutive quarter

“We are pleased with our strong performance in the first quarter and continued growth so far into 2022, which is evidenced by AFC Gamma’s results and steady dividend growth. At this time, the Board expects that the quarterly dividend should remain at least $0.55 per common share over the course of 2022,” stated Leonard Tannenbaum, AFC Gamma’s Chief Executive Officer. “Additionally, the entry into our $60 million senior secured revolving credit facility led by two FDIC-insured banks was another significant milestone for AFC Gamma’s debt cost of capital and enables continued expansion of the portfolio. We look forward to continuing to amplify our presence as a leading lender and driving shareholder value.”

Since the start of the first quarter, AFC Gamma has closed on $154.2 million of new commitments and funded $131.5 million of new and existing commitments. The company has total loan commitments of $482.7 million ($419.1 million of which has been funded) across 12 portfolio companies as of May 9, 2022.

Well-Funded

AFC Gamma is well-funded for financing. In January 2022, the company completed its follow-on offering of 3,291,832 shares of common stock (including the partial underwriters’ overallotment option) at $20.50 per share, raising approximately $63.0 million of additional net capital. In April 2022, AFCG entered into a senior secured revolving credit facility with $60 million of current commitments from two FDIC-insured banks and the ability to increase the facility to $100 million (subject to available borrowing base and additional commitments)


StaffApril 21, 2022
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AFC Gamma, Inc. (NASDAQ: AFCG) has provided a senior secured credit facility of up to $82.5 million to Bloom Medicinals Holding Company, a privately held multi-state cannabis operator with licenses in Missouri, New Jersey, and Ohio. Bloom said it plans to use the money from the new credit facility to repay existing debt, fund expansion initiatives, acquire a Level 1 Cultivation license in Ohio and provide additional working capital.

“We are excited to support Bloom’s business as they acquire a Level 1 Cultivation license in Ohio, which coupled with their five existing dispensaries gives them a vertical presence in Ohio, a state that we believe has an attractive medical cannabis program. This acquisition allows their business operations to be vertically integrated in both Ohio and Missouri,” said Leonard M. Tannenbaum, AFC Gamma’s Chief Executive Officer. “Additionally, we are pleased to continue our long-standing relationship with Bloom, by refinancing two outstanding loans to them and providing growth capital in this third loan. This relationship is a prime example of our ability to support our client’s expansion and grow with them over time.”

AFC Gamma said that the facility is secured by first-lien mortgages on Bloom’s owned real estate properties and other commercial security interests. Bloom Medicinals is a family-owned business with three cultivation facilities, two processing facilities and 12 dispensaries. Nicole Stark is the CEO.

“We are pleased to have partnered with AFC Gamma to strengthen our balance sheet as we enter our next phase of growth,” said Nicole Stark, Chief Executive Officer of Bloom. “This is our third transaction with AFC Gamma and we are pleased to continue with them as our lender, given their flexibility and creativity in structuring a loan to meet our ever changing needs. AFC Gamma was there to support the growth of our business in a time when traditional lenders could not understand the nuances in the cannabis industry. We look forward to utilizing this latest financing to expand our business and provide high-quality medical products to our growing patient community.”

 


StaffMarch 28, 2022
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AFC GAMMA

ROBYN TANNENBAUM – PARTNER, HEAD OF ORIGINATION AND INVESTOR RELATIONS, AFC GAMMA (NASDAQ: AFCG)

Mrs. Tannenbaum has over 7 years’ experience focusing on mergers and acquisitions and leveraged loans to healthcare companies. Additionally, she has 5 years of experience as an investor relations professional within the finance industry. Mrs. Tannenbaum formerly served as Head of Investor Relations at Fifth Street Asset Management and as a Vice President in Healthcare mergers and acquisitions at CIT Group Inc. She graduated summa cum laude with a B.S. in Finance, with a concentration in Marketing and a Public Relations minor from Lehigh University.

What is your proudest accomplishment in the cannabis industry?

 

My proudest accomplishment is starting AFC Gamma with my husband, Len, during the middle of a pandemic and convincing our partner Jon Kalikow to join us as well. We have now created the first publicly listed NASDAQ lender, employ almost 30 professionals, and are considered by many as the leading lender in the industry. I’m incredibly proud to be one of the co-founders of this company and am excited to build upon the growth milestones we’ve experienced in our first year.

 

Do you feel that the cannabis industry has more opportunities for female-identifying people than other industries?

 

I believe that the cannabis industry, because it’s newer and everyone’s coming in at the ground floor, definitely has more opportunities for females and has elevated more females to leadership positions. Two notable female leaders we work with on a regular basis are Rosie Mattio at Mattio Communications and Ariella Tolkin, the managing director at Jefferies’ cannabis practice. I believe that females are well respected in the industry and that this space is relatively more accessible to women who want to build their businesses from the ground up.

 

Do you feel you have to work twice as hard as male colleagues or do you think the industry has moved past that?

 

I’ve always worked twice as hard as my male and female colleagues, but I still believe that females have something to prove that men often do not. I remember reading an initiating coverage report on AFC Gamma and saw that I was called “Len’s wife.” No, I’m Robyn. I run originations for AFC Gamma. I’ve never seen a report where Len has been called my husband, so I think that as much progress has been made elevating females in the cannabis industry, there’s still more progress to be made. And I think that if you look at the leadership of large cannabis companies, the only large cannabis operator with a female CEO that comes to mind is Trulieve, and what Kim Rivers has done there is obviously incredible. And Jen Drake is very high up at Ayr, but other than that; the C-suites are still mainly comprised of male executives. 

 

What was your biggest challenge in business and how did you overcome it?

 

The biggest challenge was deciding to start a fund in cannabis. This is an industry that was really only funded by family offices when we first started raising capital in 2019. There were many institutions that would not invest in a small fund unless you were NASDAQ or New York Stock Exchange-listed. So building our company from scratch and raising million by million from over thirty family offices to get the REIT running and off the ground before we decided to take it public was a challenge. And imagine doing that during COVID when all you’ve known is pitching and meeting people in person and now having to do everything remotely. So you’re basically asking people to trust you with their capital in a brand new industry that most people don’t know anything about.

 

In terms of overcoming this initial challenge, Len and I always like to talk about how we failed five times before we actually got AFCG started. There were partnerships or other opportunities that could have been helpful in raising capital, which all fell through, but we just kept going. While we were home during the pandemic, Len’s older boys – Stephen, Max and Adam, were with us, and every day they saw us fail and pick ourselves back up and go again.

 

What have you or your company done to help give more opportunities for women?

 

In general, female representation and diversity is an important topic because it brings a different perspective to a board and workplace. Our team is very focused on this internally, and we just added another female board member in Marnie Sudnow. We have an outstanding female board member in Jodi Bond, and supporting NASDAQ President and CEO Adena Friedman’s vision for diversity on boards and the inclusion of women is really important to us. Having more women on boards will perpetuate the cycle and lead to more women being on boards in the future due to their experience.  Personally, now having a daughter of my own, I want Gemma to see the sky’s the limit when it comes to what a female can achieve, so I hope to continue fostering opportunities for women to shine.

 

What are your personal goals for 2022?

 

Besides getting in shape after having a baby last year, one of the things that I’m most proud of is launching the AFC Foundation at the end of last year. The AFC Foundation seeks to partner with our borrowers in states that we operate in and give back to charities that we vet in each respective community. These operators become a source of jobs and tax revenue for the states, but it’s even more vital for them to give back to the communities that they work in. We believe it is crucial for cannabis leaders to reinvest their resources and create new economic opportunities that benefit local residents. My personal goal is to get the AFC Foundation up and running and make impactful donations in partnership with many of our borrowers. While we’re doing well as a company, we need to also do well for the world.

 

 

 


Debra BorchardtMarch 10, 2022
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AFC Gamma Inc. (NASDAQ:AFCG) announced its results for the fourth quarter and year-ended December 31, 2021. In the fourth quarter, AFC reported net income of $7.0 million or $0.43 per basic weighted average share of common stock. The company reported total expenses of $4.5 million, an increase of $0.6 million, or 16.5%, compared to the prior quarter

The company had distributable earnings of $8.5 million or $0.52 per basic weighted average share of common stock. Also in the fourth quarter AFC closed $127.3 million of new commitments in Q4 2021 and funded $125.6 million of new and existing commitments.

For the full year of 2021, the company had net income of $21.0 million or $1.57 per basic weighted average share of common stock. Distributable earnings of $24.7 million in 2021, or $1.85 per basic weighted average share of common stock. The company closed $341.3 million of new commitments in 2021.

“We are proud of all that was accomplished in 2021, including AFC Gamma’s initial public offering and remarkable growth of AFCG’s portfolio, which has positioned us as the largest institutional lender. Operating as a public REIT has allowed us to accomplish several goals, including valuable access to public debt and equity markets, which provides AFCG with an attractive cost of capital relative to its peers,” stated Leonard Tannenbaum, AFC Gamma’s Chief Executive Officer. “Looking ahead to 2022, we are excited to continue expanding our portfolio and supporting the rapidly growing cannabis industry. As a result of our meaningful growth and strong performance, we are pleased to increase our quarterly dividend by 10% to $0.55, which is the third consecutive quarterly dividend increase. We look forward to continuing to amplify our presence as a leading lender and driving shareholder value.”

Looking at the company’s portfolio, AFC said it had total loan commitments of $419.2 million ($363.7 million of which has been funded) across 16 portfolio companies, as of December 31, 2021. The portfolio’s weighted average yield to maturity was approximately 19% as of December 31, 2021, compared to 21% as of September 30, 2021

Debra BorchardtOctober 4, 2021
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Cannabis real estate lender AFC Gamma, Inc. (NASDAQ: AFCG) said that it has expanded its senior credit facility by $53.4 million, to $75.4 million in total commitments to Chicago-based Justice Cannabis Co., a multi-state operator with licenses in eight states. Justice Cannabis will use the money to make acquisitions and develop its operations in New Jersey, further develop its Pennsylvania cultivation facility, and refinance existing debt.

“We are committed to the long-term success of our borrowers, and today’s announcement demonstrates AFC Gamma’s ability to support existing borrowers’ capital needs as they seek to expand their businesses and achieve new strategic objectives,” said Leonard M. Tannenbaum, AFC Gamma’s Chief Executive Officer. “We believe that Justice Cannabis Co. has one of the best license stacks for a multi-state operator and are proud to further our partnership with them in Pennsylvania and New Jersey, two states with favorable supply and demand dynamics.”

In New Jersey, Justice Cannabis has broken ground on its first cultivation center in Ewing Township, where the company also plans to open a 5000 sq. ft. dispensary nearby the cultivation. The 72,000 sq. ft. indoor cultivation will specialize in cannabis flower and extract products. In Pennsylvania, Justice Cannabis holds licenses for both dispensary operations and cultivation/processing sites. Currently, there are two Justice Cannabis Co. medical dispensaries open in the state operating as Justice Grown, located in Edwardsville and Dickson City, with a third dispensary location in Bethlehem, operating as Bloc Dispensary. Additionally, the company has just broken ground on a massive 76,000 sq. ft. cultivation and processing center located in Hazel Township.

AFC Gamma said it has committed an additional $43.4 million under Justice Cannabis Co.’s expanded credit facility, with $10.0 million syndicated to an affiliate. AFC Gamma said that it now holds a total of $65.4 million of the $75.4 million expanded credit facility. According to the statement, the loan is secured by a first-lien mortgage on Justice Cannabis Co.’s owned real-estate in New Jersey and Pennsylvania and other commercial-security interests. AFC Management, LLC served as Agent for the transaction.

“AFC Gamma continues to be a great asset to Justice Cannabis Co. throughout our partnership, and we are pleased to have the opportunity to utilize their flexibility and lending capabilities to support our next chapter of growth,” said Jon Loevy, Co-Founder of Justice Cannabis Co. “It is refreshing to have a capital partner that understands the dynamic nature of the cannabis industry and can anticipate and meet our capital needs.”

In addition to the update on Justice, AFC Gamma reported that when the quarter ended in September, its gross funding was $89.3 million, and its net funding, taking into account loan repayments and amortization, was $79.3 million. AFC Gamma said closed on total new commitments of $119.2 million during the quarter. AFC Gamma said it plans to be taxed as a real estate investment trust, beginning with its taxable year ending December 31, 2020.

 


Debra BorchardtJune 24, 2021
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Commercial real estate finance company AFC Gamma, Inc.  (Nasdaq: AFCG) priced its underwritten public offering of 2,750,000 shares of its common stock at a public offering price of $20.50 per share. AFC Gamma has granted the underwriters of the Offering a 30-day option to purchase up to an additional 412,500 shares of common stock. AFC provides loans to operators in the cannabis industry.

AFC Gamma anticipates total gross proceeds of approximately $56.4 million, before deducting underwriting discounts and commissions and other offering expenses and excluding any exercise of the underwriters’ option to purchase additional shares. AFC Gamma said it intends to use the net proceeds from the Offering to fund loans related to unfunded commitments to its existing borrowers, to originate and participate in commercial loans to companies operating in the cannabis industry that are consistent with its investment strategy, and for working capital and other general corporate purposes. The Offering is expected to close on or about June 28, 2021.

In May the company delivered its first fiscal quarter 2021 earnings with net income of $1.4 million, or earnings of $0.20 per basic weighted average share of common stock. Distributable earnings in Q1 2021 of $3.2 million, or $0.45 per basic weighted average share of common stock. Ending Q1 2021 net book value per common share of $16.18

AFC Portfolio

As of June 15, 2021, AFC’s portfolio was comprised of loans to 13 different borrowers, totaling approximately $158.6 million in total principal amount, with approximately $29.5 million in additional unfunded loan commitments to such borrowers. As of June 15, 2021, the loan portfolio had a weighted-average estimated YTM of approximately 21% and was secured by real estate, cash flows, and licenses. AFC said it reviewed 319 loan opportunities. As of June 15, 2021, it had funded 17 loans, of which three have been repaid, had entered into non-binding term sheets for three loans, had entered into a syndication commitment letter for one loan, and were evaluating 55 other loans.

The list of company loans as per the company’s filings are as follows:

Public Company A
Single-state cultivator, producer, and full-service brand fulfillment partner that produces a wide range of products in the Nevada market. Public Company A operates a +/- 400,000 square foot greenhouse and 55,000 square foot processing and custom packaging facility, which is capable of producing 140,000 pounds of dry flower per year. The real estate collateral of Public Company A consists of a greenhouse and processing facility in Nevada.
Private Company A
Multi-state operator with operations in six states. Private Company A is a vertically integrated cultivator and retailer of both medical and adult-use cannabis that primarily operates under its own brand. Private Company A’s business segments include cultivation, extraction and processing, retail products, and dispensaries. The real estate collateral of Private Company A consists of three cultivation facilities across Arizona and Michigan and ten dispensaries across Arizona, Maryland, Massachusetts and Michigan.
Private Company B
Single-state operator currently constructing an indoor cultivation facility to wholesale product to the medical and adult use markets in Michigan. Private Company B produces high-end cannabis strains and intends to focus on the high-end, top-tier cannabis niche. The management team has over 20 years’ experience in the cannabis industry, including ten years in Michigan. The real estate collateral for Private Company B consists of a cultivation facility in Michigan.
Private Company C
Single-state vertically integrated cultivator and retailer of medical cannabis. Private Company C operates under a Chapter 20 Clinical Registrant license and has partnered to collaborate on multifaceted studies to substantiate safety and positive therapeutic outcomes. Private Company C currently operates a cultivation facility and three dispensaries with the ability to add three additional dispensary locations. The real estate collateral of Private Company C consists of a cultivation facility and dispensary in Pennsylvania.
Subsidiary of Public Company D
Public Company D participates in the medical and adult-use market across Canada and in several US states where cannabis has been legalized for therapeutic or adult use. Subsidiary of Public Company D, is a premier medical marijuana cultivator, processor, and distributor in Pennsylvania. Public Company D also has operators in California and New Jersey. The real estate collateral for Subsidiary of Public Company D consists of a cultivation facility in Pennsylvania.
Private Company D
Multi-state operator who operates five dispensaries, the maximum amount of dispensaries allowed by law for any operator, in the State of Ohio and one dispensary in Arkansas. Private Company D historical focus has been dispensary operations and has licenses in other states, where it also operates dispensaries. The real estate collateral for Private Company D consists of three dispensaries across Ohio and Arkansas.
Private Company E
Single-state operator who operates one dispensary and is currently constructing an indoor cultivation facility to wholesale product for medical use in Ohio. Private Company E approaches the medical cannabis market from the healthcare and scientific perspectives of its founders and key executives, differentiating it in the industry. The real estate collateral for Private Company E consists of a cultivation and processing facility and a dispensary in Ohio.
Private Company F
Single-state operator currently constructing a cultivation/manufacturing facility and two dispensaries in Missouri and will lease two additional dispensary locations for a total of four dispensaries in the state. Private Company F’s management team has extensive experience operating retail operations in other states. The real estate collateral for Private Company F consists of a cultivation/manufacturing facility and two dispensaries in Missouri.
Public Company E
Multi-state operator with operations in four states. Public Company E is a vertically integrated cultivator and retailer in both Florida and Texas with cultivation in Michigan and retail operations in Pennsylvania. Public Company E’s Florida operations consist of two cultivation and processing locations as well as 23 dispensaries across the state. The real estate collateral for Public Company E consists of a cultivation facility in Michigan.
Subsidiary of Private Company G
Private Company G is a multi-state operator with assets across nine states. Subsidiary of Private Company G operates in New Jersey as an alternative treatment center which allows for one cultivation facility and three dispensary operations, all of which are being constructed using the proceeds of the loan to Subsidiary of Private Company G. The real estate collateral for Subsidiary of Private Company G consists of a cultivation facility and dispensary operation in New Jersey.
Subsidiary of Private Company H
Private Company H is a multi-state operator with assets in Arkansas, Florida, Maryland and Illinois. Subsidiary of Private Company H is a single-state operator that is currently expanding their cultivation facility in Illinois, which is licensed to grow both recreational and medical use cannabis. Subsidiary of Private Company H also operates two additional dispensaries in the state, one licensed to sell medical-use cannabis and the other licensed to sell both recreational and medical use cannabis. The real estate collateral for Subsidiary of Private Company H consists of a cultivation facility in Illinois.
Public Company F
Public Company F is an Illinois-based multi-state operator with approximately 75 retail locations across 14 states and has expanded via an aggressive M&A strategy. The real estate collateral for Public Company F consists of five cultivation facilities across Illinois, Florida, Nevada, Ohio, and Massachusetts and eight dispensaries across Illinois, Michigan, Maryland, Arkansas, Ohio, Nevada, Florida, and Arizona.
Private Company I
Private Company I is a Maryland-based single-state operator with an existing cultivation and processing operation in the state, as well as one operational dispensary.

Company Funding

Leonard M. Tannenbaum, who also serves as the Chief Executive Officer, invested approximately $47.8 million in AFC in August 2020.  The investment resulted in the Sponsor, directly and indirectly, acquiring approximately 3,342,500 shares of common stock, or approximately 20.7% of our common stock upon completion of this offering (or approximately 20.2% if the underwriters exercise their option to purchase additional shares in full). Additionally, Gamma Lending Holdco LLC, which is a fund controlled by Jonathan Kalikow, the Head of Real Estate, one of AFC’s directors and an affiliate of the Manager, and his father, invested approximately $9.6 million in cash in AFC in August 2020. The Sponsor, through AFC Finance, LLC, an entity wholly-owned by the Sponsor and Mr. Kalikow, has also provided us a $50.0 million secured revolving credit facility (as amended, restated, supplemented or otherwise modified from time to time, the “Revolving Credit Facility”).


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