Advanced Flower Capital Inc. (NASDAQ:AFCG) is among the 7 Best Cannabis Stocks to Invest In Now.   Is Advanced Flower Capital Inc. (AFCG) one of the Best Cannabis Stocks to Invest In Now? Advanced Flower Capital Inc. (NASDAQ:AFCG) is among the Best Marijuana Stocks.  TheFly on Jan 05, 2026, stated that, as of January 1, 2026, Advanced Flower Capital Inc. (NASDAQ:AFCG) has successfully converted from a real estate investment trust to a business development company according to the Investment Company Act ...

Group 1 - AFC has committed $29 million to a $60 million senior secured term loan to finance the acquisition of a leading healthcare benefits platform [1][2] - The credit facility is secured by a lien on all assets of the borrower and has a four-year term, with AFC holding approximately 49% of the total facility [2] - The healthcare benefits platform targets a large and underserved segment of the workforce, showcasing AFC's ability to provide flexible capital following its conversion to a BDC [2] Group 2 - AFC is a publicly traded business development company that provides flexible credit solutions to lower middle market companies, focusing on direct senior debt investments typically ranging from $10 million to $100 million [3] - The company aims to maximize risk-adjusted returns for its stockholders with an opportunistic approach across all industries [3] - AFC is headquartered in West Palm Beach, Florida, and more information can be found on its website [3]

Core Viewpoint - AFC is set to release its financial results for Q4 and the full year ended December 31, 2025, on March 4, 2026, before market open, with a management review scheduled for 10:00 am ET [1] Company Overview - AFC (Nasdaq: AFCG) is a publicly traded business development company that provides flexible credit solutions to lower middle market companies [3] - The company primarily originates, structures, invests, and manages direct senior debt investments typically ranging from $10 million to $100 million [3] - AFC aims to maximize risk-adjusted returns for its stockholders with an opportunistic approach across all industries [3] - The company is headquartered in West Palm Beach, Florida [3] Investor Relations - AFC distributes its earnings releases via its website and email lists, and interested parties can sign up for updates [2] - For further inquiries, the investor relations contact is Robyn Tannenbaum, reachable at 561-510-2293 or via email at ir@advancedflowercapital.com [4]

Core Insights - AFC's subsidiary TCGDL LLC has secured a $60 million senior secured credit facility for STAT Buyer, LLC, to facilitate the acquisition of STAT and The Moresby Group, aimed at creating a leading revenue and cost optimization platform [1][2][3] Group 1: Transaction Details - The credit facility will finance the acquisition, refinance existing debt, and provide working capital for the combined entity [1] - The facility consists of a first-lien term loan secured by all assets of the borrower and has a five-year term [3] Group 2: Company Profiles - STAT is a revenue recovery specialist utilizing machine learning to recover unclaimed revenue for suppliers in the Walmart, Target, and Amazon ecosystems [2][6] - The Moresby Group specializes in procurement optimization, helping Fortune 1000 enterprises achieve cost savings through supplier negotiations [2][7] Group 3: Strategic Importance - The combination of STAT's technology and Moresby's procurement expertise aims to deliver comprehensive solutions for large enterprise customers, enhancing revenue recovery and cost optimization [2][3] - AFC emphasizes its capability to provide flexible capital to sponsor-backed companies with strong growth potential in the supply chain technology sector [2]

Core Insights - Advanced Flower Capital Inc. has successfully converted from a real estate investment trust (REIT) to a business development company (BDC) effective January 1, 2026, enhancing its investment flexibility [1][2][3] Group 1: Company Overview - The company specializes in providing loans to U.S. middle-market companies in the cannabis industry, as well as ancillary businesses and select companies outside the cannabis sector [4] - Loans typically range from approximately $10 million to over $100 million, with a focus on senior secured loans [4] Group 2: Strategic Implications - The conversion allows the company to pursue a broader range of investment opportunities beyond real estate-backed loans, aimed at enhancing long-term shareholder value [2] - The company has a compelling pipeline of investment opportunities under evaluation, which is expected to generate attractive risk-adjusted returns for shareholders [2]

Core Insights - The article discusses the investment landscape in the real estate sector, particularly focusing on the performance and outlook of real estate investment trusts (REITs) and related securities [2][3]. Group 1: Company Insights - Hoya Capital Research & Index Innovations is affiliated with Hoya Capital Real Estate, providing investment advisory services and market commentary focused on publicly traded securities in the real estate industry [2]. - The commentary emphasizes that it is for informational and educational purposes only, and does not constitute investment, tax, or legal advice [2]. Group 2: Industry Insights - The real estate industry is highlighted as having unique risks associated with investments in real estate companies and housing industry companies, as well as ETFs [2]. - The article notes that past performance of market data does not guarantee future results, indicating the inherent volatility and unpredictability of the real estate market [3].

Financial Data and Key Metrics Changes - For Q3 2025, the company generated distributable earnings of $0.16 per basic weighted average share of common stock and declared a dividend of $0.15 per common share [8][16] - The company reported a GAAP net loss of $12.5 million, or a loss of $0.57 per basic weighted average share [16] - As of September 30, 2025, total assets were $288.7 million, total shareholder equity was $169.3 million, and book value per share was $7.49 [17] Business Line Data and Key Metrics Changes - The company has made progress in reducing exposure to underperforming credits, with $43 million of principal repayment received since the end of Q2 2025 [9] - The CECL reserve was $51.3 million, approximately 18.7% of loans at carrying value, including a $4 million reserve on a specific loan [17] - The company anticipates a taxable loss of approximately $4 million related to a loan settlement, which will impact Q4 earnings [11][12] Market Data and Key Metrics Changes - The company is expanding its investment mandate to include direct lending opportunities outside the cannabis industry, targeting a pipeline of approximately $350 million [15] - The active cannabis pipeline is currently valued at $60 million, with a broader focus on non-cannabis opportunities [20][30] Company Strategy and Development Direction - The company plans to convert from a mortgage REIT to a business development company (BDC), which will allow it to invest in a wider array of opportunities [4][5] - The conversion is expected to occur in Q1 2026, with the company continuing to operate as a REIT until then [6] - The expanded investment focus aims to diversify exposure across industries and credit risk profiles, enhancing long-term growth potential [7][15] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the cannabis industry, noting limited opportunities due to the lack of federal progress and equity capital [21][44] - The company remains committed to capital preservation and is focused on stable, recession-resistant industries for future investments [23][36] - Management indicated that the selectivity in deal-making will increase with the broader investment mandate [25] Other Important Information - The company has received strong shareholder support for its conversion plans, with over 94% voting in favor of the proposals [5] - The company is actively managing underperforming loans and has initiated liquidation processes for certain assets [10][14] Q&A Session Summary Question: Clarification on the $350 million pipeline - The $350 million pipeline includes approximately $415 million, with $60 million allocated to cannabis and the remainder to non-cannabis opportunities [19][20] Question: Timing for redeploying cash - The conversion to a BDC is expected in Q1 2026, but no specific date has been provided for cash redeployment [30][31] Question: Skill set replication in new industries - The company has a strong underwriting background and is casting a wide net to explore various industries while leveraging past experiences [32][35] Question: Changes in fee structure with the external investment advisor - Details regarding the fee structure changes were referenced to the proxy materials, indicating no significant changes [37][40] Question: Future outlook for the cannabis industry - Management remains cautious about the cannabis sector, emphasizing the need for federal progress and equity capital before increasing investments [44] Question: Dividend guidance for Q1 2026 - No specific guidance was provided for dividends in Q1 2026, but the board has decided on no dividend for Q4 2025 [46]

Company Overview - Advanced Flower Capital (AFCG) is a Nasdaq-listed commercial mortgage REIT providing institutional loans to state law-compliant cannabis operators in the United States[12] - The company aims for attractive risk-adjusted returns with a target average portfolio gross yield of 12%-20%[12][13] - Shareholders approved the plan to convert from a REIT to a BDC, with over 61% of outstanding shares voted and approximately 94% of those votes cast in favor[12] Market Opportunity - The U S legal cannabis market is expected to reach $63 billion by 2030, with a total economic impact surpassing $200 billion[25] - Cannabis market is projected to grow at a CAGR of approximately 12% from 2025 to 2030, outpacing growth projections for wine, spirits, tobacco, and beer[28][31] - 42 states and DC have legalized medical cannabis, with 24 states and DC legalizing adult-use cannabis[32] Portfolio and Deal Flow - AFC's loan portfolio includes 14 loans to borrowers across 16 states[19] - The company has a deal selectivity of 34% since inception[42] - Total closed deals since inception amount to $930 million[42] - The company has sourced $261 billion in total deals since inception[42] - Current commitments stand at $340 million, with a principal balance of $328 million[42] Financial Performance - For the three months ended September 30, 2025, the company reported a net loss of $1249 million[54] - Distributable earnings for the three months ended September 30, 2025, were $354 million, or $016 per basic weighted average share[55] - For the nine months ended September 30, 2025, the company reported a net loss of $2159 million[54] - Distributable earnings for the nine months ended September 30, 2025, were $1147 million, or $052 per basic weighted average share[55]

Financial Performance - Advanced Flower Capital reported a GAAP net loss of $(12.5) million or $(0.57) per basic weighted average common share for Q3 2025[1][2]. - Distributable Earnings for the third quarter were $3.5 million or $0.16 per basic weighted average common share[1][2]. - Distributable Earnings for the nine months ended September 30, 2025, totaled $11.5 million, compared to $28.6 million for the same period in 2024[18]. - The provision for current expected credit losses for Q3 2025 was $7.4 million, compared to $0.2 million in Q3 2024[18][20]. - The company emphasizes that Distributable Earnings is a non-GAAP financial measure, providing insights into its operational performance[12][16]. Business Transition - The company is transitioning from a mortgage REIT to a business development company (BDC), which is expected to broaden its investment opportunities beyond real estate[4][5]. - Shareholders approved the conversion to BDC, with completion expected in Q1 2026[4][5]. - AFC's management believes the conversion to BDC will enhance its ability to generate consistent, risk-adjusted returns for shareholders[5]. Dividend Information - The company paid a regular cash dividend of $0.15 per common share for Q3 2025[6]. Portfolio Management - AFC is actively resolving nonaccrual positions and driving loan repayments across its portfolio, with a focus on the lower-middle market[3].

Core Insights - Advanced Flower Capital Inc. reported a GAAP net loss of $(12.5) million or $(0.57) per basic weighted average common share for Q3 2025, alongside Distributable Earnings of $3.5 million or $0.16 per share [1][2]. Financial Performance - The company experienced a net loss of $(12.5) million for the third quarter of 2025, translating to $(0.57) per basic weighted average common share [2]. - Distributable Earnings for the same period were reported at $3.5 million, equating to $0.16 per basic weighted average common share [2][17]. Strategic Developments - Shareholders approved the conversion of AFC from a mortgage REIT to a business development company (BDC), which is expected to broaden the investment scope beyond real estate-backed loans [4][5]. - The conversion is anticipated to be completed in the first quarter of 2026, pending customary conditions and regulatory requirements [5]. Market Opportunities - The CEO highlighted ongoing efforts to resolve nonaccrual positions and drive loan repayments, noting limited new capital entering the cannabis market [3]. - The company is actively exploring lending opportunities in the lower-middle market, aiming for attractive risk-adjusted returns [3]. Dividend Information - AFC paid a regular cash dividend of $0.15 per common share for Q3 2025 to shareholders of record as of September 30, 2025 [6].