Cannabis REIT Chicago Atlantic's Net Income Grows 20% YoY In 2023

Cannabis-focused commercial real estate finance company Chicago Atlantic Real Estate Finance, Inc. REFI announced its results on Tuesday for the fourth quarter and year ended December 31, 2023.

Distinguished in the cannabis market as one of the few major publicly traded capital providers, Chicago Atlantic can fund a $350 million loan book and a history of closing $2 billion in loans, including syndications, Zuanic & Associates' (Z&A) recent report reads. Z&A recently initiated coverage of Chicago Atlantic with an Overweight rating

The company reported on Tuesday total loan commitments of roughly $378.8 million – including $371.3 million funded and $7.5 million in future fundings – as of Dec. 31, 2023, across 27 portfolio investments.

"The improvement in the regulatory landscape has fed new investment opportunities for us while significantly improving the equity value of many of our borrowers," John Mazarakis, the company's executive chairman said. "In addition, the wall of debt maturities we have anticipated among the larger cannabis operators is beginning to occur, with early indications this opportunity could be as meaningful over the next 12 to 18 months as we have previously predicted."

See also: More Demand For Capital From Big Weed Operators Ahead, Top Exec Shares Thoughts On Cannabis Mortgage REIT Q3 Results

Q4 2023 Financial Results

• Net interest income was around $14.8 million, representing a sequential increase of 8% compared with the third quarter of 2023.
• Total expenses amounted to approximately $5.8 million before provision for current expected credit losses, which is an increase when compared with the third quarter of 2023, primarily attributable to the $1.6 million increase in net management and incentive fees.
• The total reserve for current expected credit losses of $5 million dropped quarter-over-quarter by $0.2 million and amounts to roughly 1.4% of the portfolio principal balance of $355.7 million as of Dec. 31, 2023.
• Net income of approximately $9.4 million, or $0.51 per weighted average diluted share, representing a sequential decrease of 5.8%, primarily due to the aforementioned increase in net management and incentive fees.
• Distributable earnings of approximately $9.8 million, or $0.53 per weighted average diluted common share, representing a sequential decrease of 7.0%.
• Book value per common share decreased sequentially by 1.5% to $14.94 as of Dec. 31, 2023, compared with $15.17 as of Sept. 30, 2023, primarily due to the special dividend of $0.29 per share declared in the fourth quarter.

FY 2023 Financial Results

• Net interest income of approximately $57.1 million, representing a year-over-year increase of 17%.
• Total expenses of roughly $17.7 million before provision for current expected credit losses, representing a year-over-year increase of 39.4%.
• Net Income of approximately $38.7 million, compared to $32.3 million in last year.
• Distributable earnings of approximately $41.5 million, or $2.26 per weighted average diluted common share, representing a year-over-year increase of 7.6%.
• The company declared a total of $2.17 in dividends per common share during 2023, compared to $2.10 during 2022, an increase of approximately 3.3% year-over-year. Total 2023 dividends included regular quarterly dividends totaling $1.88 per diluted share and a special dividend of $0.29 per diluted share.
• Book value per common share increased from $14.86 as of Dec. 31, 2022, to $14.94 as of Dec. 31, 2023.

2024 Outlook

Chicago Atlantic expects to maintain a dividend payout ratio based on distributable earnings per weighted average diluted share of approximately 90% to 100% on a full-year basis.

If the company's taxable income requires additional distribution over the regular quarterly dividend to meet its 2024 taxable income distribution requirements, Chicago Atlantic expects to meet that requirement with a special dividend in the fourth quarter of 2024.

REFI Price Action

Chicago Atlantic's shares traded 2.20% higher at $16.74 per share during the pre-market session on Tuesday morning.

Now read: Chicago Atlantic Q2 FY23 Net Income Grows 15.8% YoY, Here Are The Details

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