Chicago Atlantic Real Estate Finance Reports Q3 2024 Financial Results

LOS ANGELES- Chicago Atlantic Real Estate Finance Inc. has released its financial results for the third quarter of 2024, highlighting key metrics and strategic developments. As of September 30, 2024, the company’s loan portfolio stood at $362 million, encompassing 29 portfolio companies. The weighted average yield to maturity was reported at 18.3%, a slight decrease from 18.7% at the end of the previous quarter. This decline is attributed to repricing amendments related to improved collateral and borrower performance, as well as a 50-basis point decrease in the prime rate affecting the variable rate portfolio.

Origination and Income & Credit Quality and Earnings

During the quarter, Chicago Atlantic achieved gross originations totaling $32.7 million. Net interest income increased to $14.5 million, up from $13.2 million in the prior quarter. Interest expenses decreased by approximately 2% to $1.8 million, while total operating expenses remained consistent at approximately $4.2 million.

The reserve for expected credit losses was $4.1 million as of September 30, representing 1.1% of the outstanding principal. Adjusted distributable earnings per share rose to $0.56, compared to $0.50 in the second quarter. The company declared a regular dividend of $0.47 per common share, consistent with the prior quarter.

Financial Position & Strategic Outlook

The book value per share increased to $15.05, up from $14.92 at the end of June. Total leverage was reported at 18% of book equity, with a debt service coverage ratio of approximately 7.2 to 1 for the quarter. The company maintains liquidity exceeding $75 million to fund new investments.

Chicago Atlantic continues to focus on operators in limited-license states and those transitioning from medical to adult-use cannabis markets. The company has a robust pipeline of $560 million and has managed interest rate risk by increasing the proportion of fixed-rate loans and loans with rate floors.

The cannabis market remains volatile, with political and regulatory uncertainties affecting investment opportunities. Additionally, one loan remains on non-accrual status, indicating potential credit quality issues within the portfolio. The real estate coverage ratio experienced a slight decline from 1.3 times to 1.2 times, suggesting a marginal decrease in collateral quality.

Overall, Chicago Atlantic Real Estate Finance Inc. reports a solid financial performance for the third quarter of 2024, demonstrating effective portfolio management and strategic positioning within the evolving cannabis industry.