Chicago Atlantic Real Estate Finance REFI, a cannabis-focused commercial real estate finance company, announced on Tuesday its financial results for the first quarter ended March 31, 2024.
Q1 2024 Financial Highlights
- Net interest income stands at about $13.2 million, marking a sequential decline of 10.8% from the $14.8 million recorded in the fourth quarter of 2023. This downturn stems from the absence of prepayments and related fees received during the first quarter of 2024, compared to $1.8 million in prepayment fees and accelerated original issue discounts in the three months ended December 31, 2023.
- Total expenses amount to around $4.1 million before the provision for current expected credit losses, reflecting a sequential drop of 28.4%. This decline is mainly attributed to decreases in management and incentive fees.
- Net Income stands at approximately $8.7 million, or $0.47 per weighted average diluted common share, showing a sequential decrease of 7.8% per share.
- The total reserve for current expected credit losses sees a sequential increase of $0.4 million, reaching $5.4 million. This reserve amounts to roughly 1.4% of the portfolio’s principal balance, which is $377.6 million as of March 31, 2024.
- Distributable Earnings amount to about $9.7 million, or $0.52 per weighted average diluted common share, reflecting a sequential decrease of 1.9% per share.
- Book value per common share stands at $14.97 as of March 31, 2024, compared with $14.94 as of December 31, 2023. This increase is attributed to first-quarter basic earnings per share exceeding the regular quarterly dividend of $0.47, along with accretion from the issuance of common stock at a premium to book value.
Portfolio Insights, Investment Dynamics And Outlook Affirmation
Chicago Atlantic maintained a robust portfolio, boasting total loan commitments surpassing $401.3 million across 28 investments. Notable metrics included a weighted average yield to maturity of approximately 19.4%, showcasing stability and strategic selectivity in portfolio expansion.
The quarter witnessed the company’s strategic capital deployment, exemplified by gross originations totaling $22.5 million, funding new and existing borrowers.
Moreover, Chicago Atlantic reaffirmed its 2024 outlook, previously issued on March 12, 2024.
Management Perspective
John Mazarakis, executive chairman of Chicago Atlantic, said in a press release, "We are thrilled with progress toward regulatory reform resulting from the recent news of the DEA's commitment to the rescheduling of cannabis. Once enacted, the policy change is likely to bring significant benefits to the U.S. cannabis industry, including the elimination of punitive federal tax burdens, increased access to capital, and increased employment and investment opportunity to the expected benefit of our shareholders. While there is still uncertainty as to exactly how and when the rescheduling will conclusively take place, this report signals encouraging progress for the industry as a whole."
Echoing Mazarakis’ sentiments, co-CEO Peter Sack emphasized the company’s strategic achievements during the quarter. He highlighted portfolio growth facilitated by funding a new borrower and emphasized the enhancement of book value per share through capital accretion via the ATM program. Notably, the portfolio maintained stability, with a weighted average yield to maturity exceeding 19%. Sack underscored the company’s discerning approach to portfolio expansion, as evidenced by the robust originations pipeline and strategic focus on growth markets such as Maryland, Missouri and Ohio.
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REFI Price Action
REFI's shares were trading 0.13% higher at $15.97 per share at the time of this writing around noon ET Tuesday.
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