Chicago Atlantic Real Estate Net Income Increases 19% YoY, Expands Cannabis Loan Portfolio

Zinger Key Points
  • Chicago Atlantic grows loan portfolio to $362.3 million across 29 companies, with a strong 18.3% yield to maturity.
  • Secures additional liquidity with a $50 million term loan, enhancing flexibility for growth in cannabis-focused investments.

Chicago Atlantic Real Estate Finance, Inc. REFI announced strong third-quarter results for 2024. The company, a commercial mortgage real estate investment trust (REIT) specializing in cannabis-related assets, reported significant net income growth and expanding portfolio performance, underpinned by disciplined loan management.

Key Financial Highlights for Q3 2024

  • Net Interest Income: $14.5 million, up from $13.2 million in Q2 2024 and a 9.1% increase from Q3 2023.
  • Net Income: $11.2 million, or $0.56 per share, a 21.7% sequential increase and a 19% year-over-year increase.
  • Distributable Earnings: $11.2 million, or $0.56 per share, reflecting a 12% quarterly increase and a 15% year-over-year rise.
  • Book Value: $15.05 per share, up slightly from $14.92 in Q2 2024, showing growth in shareholder equity.

Portfolio And Investment Activity

As of September 30, 2024, Chicago Atlantic's portfolio included $362.3 million in loan principal across 29 companies, with a real estate collateral coverage of 1.2x, slightly down from 1.3x in June.

The company originated $32.7 million in gross loans during Q3, including $24 million to new borrowers and $8.7 million to existing ones, with a weighted average yield to maturity of 18.3%.

After the quarter's close, Chicago Atlantic funded an additional $36.5 million, including a $25 million credit facility with an Illinois operator.

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"We have managed our portfolio and its maturities very well throughout 2024 with extensions, modifications, and refinancings, while improving credit quality and loan coverage,” stated co-CEO Peter Sack. “A strong pipeline in both existing and new states with adult-use legislation keeps us well-positioned for the balance of the year and into 2025."

Read Also: EXCLUSIVE: Weed Companies Will Be Treated Like Normal Businesses Once This Tax Provision Goes Away, Experts Say

Capital And Liquidity Management

During Q3, Chicago Atlantic increased its secured revolving credit facility to $110 million, with a drawdown of $54 million as of quarter-end, resulting in a leverage ratio of 18%.

In October, the company secured a $50 million unsecured term loan with a fixed interest rate of 9.0% and received an investment-grade BBB+ rating from Egan-Jones. This loan strengthens Chicago Atlantic's liquidity, leaving $94.5 million available under the facility and approximately $80 million in total liquidity as of early November.

The company also paid a quarterly dividend of $0.47 per share on October 15, reflecting its steady return to shareholders amid robust performance.

REFI Stock Price Action

REFI shares closed Wednesday at $15.58 per share gaining +0.33 during the trading session, which represents a 2.16% increase.

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Posted In: CannabisEarningsNewsMarketsearnings reportsREITREIT Cannabis
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