Exclusive: This Cannabis Real Estate Lender Drove Significant Double-Digit Growth For Its Investors In Q4

Cannabis commercial real estate lender Pelorus Equity Group reported on Thursday its fourth quarter 2022 and full-year financial results.

“Even in a volatile market, we outperformed the benchmark U.S. cannabis ETF by 84.58% and drove significant double-digit growth for our investors while continuing to see an acceleration of institutional interest in our core strategy,” Dan Leimel, the company’s CEO and manager of the Pelorus Fund, a privately held mortgage real estate investment trust lending to cannabis-use and cannabis-related properties.

Q4 Highlights

• The Pelorus Fund recorded two new originations for a total value of $63 million, taking the total portfolio of loan commitments from $301 million to $372 million, for 23.6% growth for the quarter.
• Newly originated note rates were with a floor of 12% for the fully stabilized loan products and 15% for the hybrid/construction loan products.
• Fund equity increased $10 million – 3.7% – to $278 million.
• Assets under management increased $28 million – 8.8% – to $345 million.

FY 2022 Highlights

• The Pelorus Fund ended 2022 with $377 million in loan commitments and $345M in assets under management, marking 41.98% year-over-year growth.
• The fund also announced it generated 61.3% total returns to investors who have
• opted to receive monthly distributions since its inception.
• The fund completed 2022 with a 10.52% net annualized internal rate of return, an 11.9% year-to-date return, a 14.15% life-to-date return, and a 13.12% cash yield to date.

“As per previous guidance, we were successful in further reducing our cash position in Q4 and have addressed the cash drag issue, and are working to offset some remaining balance of lower yield fixed rate stabilized loans, which was another contributing factor to the lower yield of 2022,” Leimel continued. “In this process, the portfolio has transitioned from 100% fixed rate at the beginning of 2022 to 73% fixed rate and 27% floating rate loans.”

What To Expect In 2023?

The Pelorus Fund continues to have a robust pipeline of a bridge, hybrid and fully stabilized transactions for 2023.

The larger transactions are blanket loans consisting of a portfolio of properties.

All of the loans in the pipeline have been quoted with a floating interest rate over the one-month secured overnight financing rate, which means the fund would benefit from the current trend of higher interest rates in 2023.

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