Chicago Atlantic Real Estate Finance Archives

Debra BorchardtAugust 9, 2023

The REIT asserts that the dividend is solid and will be supported.

StaffMay 9, 2023

The Daily Hit is a recap of the top financial news stories for May 9, 2023.

On the Site

New Jersey Governor Signs 280E Cannabis Tax Law

New Jersey Gov. Phil Murphy signed a law on Monday to end the state’s unfair tax treatment of cannabis businesses. The legislation, written by the New Jersey Society of CPAs Cannabis Interest Group, decouples cannabis businesses from federal Internal Revenue Code Section 280E and creates a level playing field for cannabis businesses in the state. Read more here.

Illinois Cannabis Sales Stall in April

Illinois marijuana sales growth flattened last month for the first time since the state legalized recreational cannabis in 2020, hurt by declining prices and out-of-state competition. April sales totaled $132 million, compared with $131.8 million in same period a year earlier. Read more here.

Report: MSOs Bogart Market Share

A recent report from data provider BDSA found that big multistate operators dominate the dispensary shelves in mature markets – despite competition for local brands that have commanded local customer loyalty. Read more here.

Weedmaps Loses $4 Million in Q1 Despite Increase in Clientele

California-based WM Technology Inc., better known as Weedmaps, (Nasdaq: MAPS) shrank its losses to $3.9 million for the first quarter of 2023, from more than $31 million lost in the first quarter a year ago, while also increasing its client base by 12% compared to the same time period. Read more here.

More Earnings:

• Ascend Wellness Revenues, Losses Improve in Q1
• Chicago Atlantic Real Estate Delivers Solid Quarter
• Cronos Group Revenue Slips, Updates 2023 Outlook

In Other News

GrowGeneration Corp.

GrowGeneration Corp. (Nasdaq: GRWG) reported first-quarter revenue fell 30.5% year-over-year to $24.9 million. The chain of specialty hydroponic and organic garden centers with 61 locations across 17 states maintained its revenue guidance for 2023 at between $250 million and $270 million. Read more here.

New York

A New York magistrate judge gave state cannabis regulators more time to respond to discovery demands after they claimed to be nearing a draft agreement with the Michigander who is suing over residency requirements for cannabis licenses, despite plaintiff accusations that settlement talks are “mere delay tactics.” Read more here.

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.