Core Insights - Advanced Flower Capital Inc. reported a GAAP net income of $4.1 million, translating to $0.18 per basic weighted average common share for Q1 2025 [1][2] - The company also reported Distributable Earnings of $4.5 million, or $0.21 per basic weighted average common share for the same period [1][2] Financial Performance - The net income for the first quarter of 2025 was $4,067,685, a significant improvement compared to a net loss of $54,116 in Q1 2024 [15] - Distributable Earnings for Q1 2025 were $4,543,906, down from $9,965,706 in Q1 2024, with Distributable Earnings per basic weighted average share decreasing from $0.49 to $0.21 [15][16] Dividend Information - The company paid a regular cash dividend of $0.23 per common share on April 15, 2025, for shareholders of record as of March 31, 2025 [3] Strategic Focus - The CEO emphasized the company's priority in reducing exposure to underperforming credits while maintaining discipline in providing debt capital to successful operators [3] - The company aims to leverage market dislocations to invest in quality credits with strong risk-adjusted returns [3] Company Overview - Advanced Flower Capital Inc. is a commercial mortgage REIT that provides loans to state law compliant cannabis operators in the U.S., with loans typically ranging from $10 million to over $100 million [8]

Financial Performance - The company declared a cash dividend of $0.23 per share for the three months ended March 31, 2025, totaling $5,197,082 [163]. - Distributable Earnings for the three months ended March 31, 2025, was approximately $4.54 million, compared to $9.97 million for the same period in 2024, reflecting a decrease of 54.4% [177]. - Net income from continuing operations for the three months ended March 31, 2025, was approximately $4.07 million, or $0.18 per basic weighted average common share, compared to a net loss of approximately $(1.6) million, or $(0.08) per share for the same period in 2024 [180]. - The company reported a decrease in net income from discontinued operations of approximately $(1.5) million for the three months ended March 31, 2025 [231]. Loan Portfolio - As of March 31, 2025, the loan portfolio comprised 17 loans with an aggregate originated commitment of approximately $375.0 million and outstanding principal of approximately $366.3 million [188]. - The aggregate outstanding principal for loans held at carrying value was approximately $312.5 million as of March 31, 2025, compared to $301.8 million as of December 31, 2024 [197]. - The portfolio included fifteen loans held at carrying value with an aggregate originated commitment of approximately $327.8 million as of March 31, 2025, compared to $312.8 million as of December 31, 2024 [197]. - The total loan held at fair value as of March 31, 2025, was approximately $28.6 million, reflecting a decrease in unrealized losses of approximately $685,478 [195]. - The loan portfolio as of March 31, 2025, was concentrated with the top three borrowers representing approximately 46.2% of the aggregate outstanding principal balances and approximately 42.0% of total loan commitments [258]. Interest Income and Expense - Interest income decreased by approximately $(5.9) million, or (41.0)%, for the three months ended March 31, 2025, primarily due to lower income from loans on nonaccrual status and reduced loan exits and prepayments [181]. - Interest expense increased by approximately $0.2 million, or 13.2%, for the three months ended March 31, 2025, driven by increased borrowings on the Revolving Credit Facility [182]. Cash Flow and Liquidity - Net cash provided by operating activities for the three months ended March 31, 2025, was approximately $3.9 million, which was less than the declared dividends of $5.2 million during the same period [207]. - Total cash as of March 31, 2025, was approximately $3.3 million, a significant decrease from $103.6 million as of December 31, 2024 [208]. - The net cash used in investing activities during the three months ended March 31, 2025 was approximately $(19.1) million, compared to $(7.5) million for the same period in 2024, reflecting an increase in cash fundings to title agents [228]. - The net cash used in financing activities was approximately $(85.1) million for the three months ended March 31, 2025, a significant decrease of approximately $(93.3) million compared to $8.2 million for the same period in 2024 [229]. Debt and Financing - Advanced Flower Capital Inc. originated a $15.0 million senior secured credit facility with Private Company U, maturing on March 1, 2028, with an interest rate of 14.0% [156]. - A $14.0 million senior secured credit facility was entered into with Subsidiaries of Private Company V, bearing cash interest at 12.5% and 1.5% paid-in-kind [165]. - The company entered into Amendment Number Four to the Revolving Credit Agreement, extending the maturity date to April 29, 2028, and increasing the interest rate floor from 4.00% to 7.00% [215]. - The company has total unfunded commitments of $9.5 million as of March 31, 2025, which are related to total loan commitments available for funding in less than two years [234]. Risk Management - The company actively manages risk exposure related to interest rates, credit, and prepayment risks associated with its portfolio [242]. - Credit risk is managed through a comprehensive review and selection process, with ongoing monitoring of loans for variance from expected performance [254][256]. - The company is exposed to significant risks in the cannabis industry, including federal illegality and potential loss of loans due to borrower issues [260]. - Management plans to monitor the legal landscape to mitigate risks associated with the cannabis industry [262]. Regulatory and Compliance - The company has qualified as a REIT and intends to maintain this status, which depends on satisfying various asset, income, and distribution tests [151]. - The company intends to distribute at least 90% of its REIT taxable income annually to shareholders, with potential tax implications for undistributed portions [239]. - The company does not intend to have leverage exceeding one times equity, maintaining compliance with the 2027 Senior Notes Indenture [238]. Market Conditions - As of March 31, 2025, a 50 basis points decrease or increase in market yield would have resulted in an unrealized gain (loss) of approximately $0.3 million and $(0.3) million, respectively [250]. - A hypothetical 100 basis points increase in the floating benchmark rate would result in an increase in annual interest income of approximately $1.1 million [250].

Core Viewpoint - Advanced Flower Capital Inc. has renewed its senior secured revolving credit facility to support its financing strategy and operations in the cannabis sector [1][3]. Group 1: Credit Facility Details - The renewed credit facility has a maximum expansion capability of $100 million, with a maturity date set for April 29, 2028, and an interest rate of Prime + 0.50%, with a Prime floor of 6.50% [2]. - The facility will be utilized for funding unfunded commitments to existing borrowers, originating and participating in commercial loans to cannabis operators, and for general corporate purposes [1][2]. Group 2: Company Overview - Advanced Flower Capital Inc. is a leading commercial mortgage REIT that provides institutional loans to state law compliant cannabis operators in the U.S., with loan amounts ranging from $10 million to over $100 million [4]. - The company leverages its management team's extensive network and expertise in credit and cannabis to structure and underwrite loans secured by quality real estate assets, license value, and cash flows [4].

Group 1 - The stock of Advanced Flower Capital Inc. (AFCG) is experiencing significant attention due to high implied volatility in the options market, particularly the May 16, 2025 $10 Call option [1] - Implied volatility indicates the market's expectation of future movement, suggesting that investors anticipate a significant price change or an upcoming event that could lead to a major rally or sell-off [2] - Advanced Flower Capital currently holds a Zacks Rank 3 (Hold) in the REIT and Equity Trust industry, which is in the bottom 31% of the Zacks Industry Rank [3] Group 2 - Over the past 60 days, no analysts have increased their earnings estimates for the current quarter, while two analysts have revised their estimates downward, resulting in a decrease of the Zacks Consensus Estimate from 38 cents per share to 30 cents [3] - The high implied volatility may indicate a developing trade, as options traders often seek to sell premium on options with high implied volatility to capture decay, hoping the underlying stock does not move as much as expected at expiration [4]

Company Overview - Advanced Flower Capital Inc. (NASDAQ: AFCG) is a leading commercial mortgage REIT that provides institutional loans to state-law compliant cannabis operators in the U.S. [3] - The company originates, structures, underwrites, and manages loans ranging from $10 million to over $100 million, typically secured by quality real estate assets, license value, and cash flows [3]. - Advanced Flower Capital is based in West Palm Beach, Florida [3]. Financial Results Announcement - The company will release its financial results for the first quarter ended March 31, 2025, on May 14, 2025, before market open [1]. - Management will review the financial results via a webcast at 10:00 am ET on the same day [1]. - A replay of the event will be available one hour after the live presentation [1]. Investor Relations - AFC distributes its earnings releases via its website and email lists, allowing interested parties to sign up for updates [2]. - The Investor Relations contact for the company is Robyn Tannenbaum, reachable at 561-510-2293 or via email [4].

Core Insights - Standard Wellness Holdings, LLC has successfully closed a $14 million senior secured credit facility with Advanced Flower Capital Inc. to refinance existing debt and fund the acquisition of a dispensary license in Saint Louis, Missouri [1][2]. Financial Overview - The credit facility carries an interest rate of 12.5% and is aimed at streamlining Standard Wellness's debt structure, eliminating legacy obligations, and supporting strategic acquisitions [2][3]. - The financing will fully repay the company's debt facility with Focus Growth Capital Partners and the seller note with Columbia Care [1][3]. Strategic Growth - The acquisition of the dispensary license in Saint Louis is a key component of Standard Wellness's long-term growth strategy, pending regulatory approval [1][3]. - The company aims to expand its footprint in key markets, demonstrating a commitment to strategic expansion and financial discipline [2][3]. Company Background - Standard Wellness, founded in 2017, operates in Ohio, Missouri, and Utah, with cultivation, processing, and dispensary licenses in Maryland [5]. - The company has a workforce of approximately 350 employees and is dedicated to providing safe and legal access to cannabis for medical and adult use [6]. Industry Context - Advanced Flower Capital Inc. is a leading commercial mortgage REIT that provides loans to state-law compliant cannabis operators in the U.S., highlighting the growing financial support for the cannabis industry [7].

Supports Standard Wellness’s Continued Growth in Missouri, Utah and OhioWEST PALM BEACH, Fla., April 02, 2025 (GLOBE NEWSWIRE) -- Advanced Flower Capital Inc. (Nasdaq:AFCG) (“AFC”) today announced that it has committed to a $14 million senior secured credit facility to various subsidiaries of Standard Wellness Holdings (“Standard Wellness”), a privately held multi-state operator of cannabis cultivation, processing, and retail facilities. $10.5 million of the senior secured credit facility was funded at clos ...

Advanced Flower Capital (NASDAQ: AFCG ), a cannabis mortgage REIT, disappointed investors with its last earnings report on March 13, sending the stock down over 20% in a single session. What happened? The dividend was cut from a quarterlyI objectively search for undervalued stocks of any size across a wide variety of industries using quantitative methods that I've thoroughly backtested for success. I believe the numbers are more important than the story (most of the time), as they tend to paint a more reali ...

Analyst’s Disclosure: I/we have a beneficial long position in the shares of RIET, HOMZ, IRET, ALL HOLDINGS IN THE IREIT+HOYA PORTFOLIOS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Hoya Capital Research & Index Innovations (“Hoya Capital”) is an affiliate of Hoya Capi ...

Financial Data and Key Metrics Changes - For Q4 2024, the company generated distributable earnings of $0.29 per basic weighted average share, with a GAAP net loss of $1 million or $0.05 per share [14][31] - For the fiscal year 2024, net interest income was $45.7 million, with distributable earnings of $34.9 million or $1.68 per share, and a GAAP net income of $16.8 million or $0.78 per share [31] - As of December 31, 2024, total assets were $402.1 million, with total shareholder equity of $201.4 million and a book value per share of $9.02 [33] Business Line Data and Key Metrics Changes - The company originated $135 million in new commitments for the fiscal year 2024, exceeding the goal of $100 million [9] - The weighted average portfolio yield to maturity was approximately 18% as of December 31, 2024 [33] - The company received $119 million in paydowns from five underperforming credits during 2024 [28] Market Data and Key Metrics Changes - The active deal pipeline as of March 1, 2025, was over $380 million, indicating strong demand for capital in the cannabis sector [10][17] - The company noted a growing supply-demand imbalance for debt capital in the cannabis industry, driven by refinancing activity and market expansions [18] Company Strategy and Development Direction - The company refocused efforts solely on the cannabis sector after spinning off its commercial real estate portfolio [9] - The management aims to diversify the portfolio while enhancing underwriting and reducing exposure to underperforming credits [9] - The company is targeting loan sizes between $10 million and $40 million for future investments [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the opportunities in the cannabis space, citing a demand for capital that exceeds supply [10] - The company is focused on supporting strong operators in attractive limited license states, despite challenges in the market [18] - Management acknowledged the impact of underperforming legacy loans on earnings but emphasized ongoing efforts to manage the portfolio effectively [15][28] Other Important Information - The company declared a first-quarter dividend of $0.23 per share, reflecting a sustainable payout based on current performing assets [15] - The CECL reserve was $30.6 million, approximately 10.4% of loans at carrying value, indicating a cautious approach to credit risk [33] Q&A Session Summary Question: Update on Justice Grown and next steps - Management indicated they would not negotiate in public but emphasized setting dividends at sustainable levels based on performing assets [38][39] Question: Commentary on the pipeline and opportunities - Management noted a robust pipeline of opportunities across refinancing, CapEx, and M&A, with a focus on good operators and strong credits [41][46] Question: Outlook for new fundings in 2025 - Management stated they would likely wait until the next quarter to set a new target for fundings, citing a better opportunity set than the previous year [50][53] Question: Clarification on liquidity and credit lines - Management confirmed approximately $89 million available under revolving credit facilities as of March 1, 2025 [55] Question: Sustainability of the dividend - Management clarified that the recent dividend adjustments were based on new developments and the need to set a sustainable payout level [56][59] Question: Demand for assets in New Jersey and Pennsylvania - Management refrained from commenting on specific market conditions but acknowledged the competitive landscape in those states [66] Question: Perspective on 280E tax implications - Management recognized the complexities of 280E and its impact on companies, expressing a desire for reform but noting it is not a priority for the current administration [72][73]