Company Overview - Chicago Atlantic has closed over $2.7 billion in loans since its platform inception[9, 10] - The company has closed over 95 cannabis loans across its platform[9] - The outstanding loan principal is approximately $407 million[9] - The gross portfolio yield is 16.9%[9] Portfolio Diversification - The top 10 loans account for 61.5% of the principal outstanding[35] - Fixed-rate loans constitute 41.5% of the portfolio, while floating-rate loans make up 58.5%[35] - Loans with Retail/Industrial collateral represent 35.3% of the portfolio[39] Market and Financial Performance - REFI has outperformed the median and average total return of mortgage REITs by approximately 51% and 55%, respectively[33] - The U S cannabis industry is estimated to be $35 billion in top-line retail revenue in 2025 and is projected to grow to $69 billion by 2031[60] - As of March 31, 2025, loans held for investment at carrying value, net is $396,181,421[81] - For the three months ended March 31, 2025, net income was $10,041,312, or $0.48 per basic common share[85]

Financial Performance - Net interest income for the first quarter of 2025 was approximately $13.0 million, a decrease from $14.1 million as of December 31, 2024[6]. - Net income was approximately $10.0 million, or $0.47 per weighted average diluted common share, reflecting a sequential increase of 20.5% on a per share basis[6]. - Net income for Q1 2025 reached $10,041,312, an increase of 26.8% compared to $7,919,692 in Q4 2024[19]. - Distributable earnings were approximately $9.7 million, or $0.47 and $0.46 per basic and diluted weighted average common share, respectively[12]. - Distributable earnings for Q1 2025 were $9,727,657, compared to $9,214,434 in Q4 2024, reflecting a growth of 5.6%[19]. - Basic distributable earnings per weighted average share remained stable at $0.47 for both Q1 2025 and Q4 2024[19]. - Diluted distributable earnings per weighted average share also held steady at $0.46 for Q1 2025, consistent with Q4 2024[19]. Portfolio and Investments - As of March 31, 2025, total loan principal outstanding was $407.0 million across 30 portfolio companies, with $19.8 million of unfunded commitments[6]. - The portfolio weighted average yield to maturity was approximately 16.9% as of March 31, 2025, compared to 17.2% as of December 31, 2024[6]. - The total reserve for current expected credit losses decreased to $3.3 million, approximately 0.8% of the aggregate portfolio principal balance of loans held for investment of $401.5 million[12]. - The provision for current expected credit losses showed a benefit of $(1,073,276) in Q1 2025, compared to a provision of $301,491 in Q4 2024[19]. - The change in unrealized gain on investments was not reported for Q1 2025, while it was $165,000 in Q4 2024[19]. Shareholder Returns - Chicago Atlantic paid a regular quarterly cash dividend of $0.47 per share for the first quarter of 2025[6]. - Book value per common share increased from $14.83 as of December 31, 2024, to $14.87 as of March 31, 2025[12]. Expenses and Leverage - Total expenses were approximately $4.1 million, representing a sequential decrease of approximately 28.3%[6]. - The Company had $88.0 million of total leverage, resulting in a consolidated leverage ratio of approximately 28%[6]. Share Count and Adjustments - The number of basic weighted average shares outstanding increased to 20,858,466 in Q1 2025 from 19,830,596 in Q4 2024, representing a growth of 5.2%[19]. - The diluted weighted average shares outstanding rose to 21,264,891 in Q1 2025, up from 20,256,628 in Q4 2024, indicating an increase of 5.0%[19]. - Adjustments to net income included a stock-based compensation of $649,312 for Q1 2025, down from $845,524 in Q4 2024[19].

```markdown PART I - FINANCIAL INFORMATION This section provides the unaudited financial information for the quarter ended March 31, 2025 [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements of Chicago Atlantic Real Estate Finance, Inc. for the quarter ended March 31, 2025, including balance sheets, income statements, equity statements, cash flow statements, and comprehensive notes detailing accounting policies, loan portfolio specifics, debt, related party transactions, commitments, equity, earnings per share, income taxes, fair value measurements, dividends, and segment reporting [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section presents the Company's financial position, including assets, liabilities, and equity, as of March 31, 2025, and December 31, 2024 | Metric | March 31, 2025 (unaudited) | December 31, 2024 | | :----------------------------------- | :--------------------------- | :------------------ | | **Assets** | | | | Loans held for investment, net | $396,181,421 | $398,130,177 | | Cash and cash equivalents | $9,879,177 | $26,400,448 | | Total Assets | $414,665,332 | $435,148,974 | | **Liabilities** | | | | Revolving loan | $38,000,000 | $55,000,000 | | Notes payable, net | $49,155,713 | $49,096,250 | | Total Liabilities | $103,885,285 | $126,190,877 | | **Stockholders' Equity** | | | | Total stockholders' equity | $310,780,047 | $308,958,097 | | Total liabilities and stockholders' equity | $414,665,332 | $435,148,974 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) This section details the Company's revenues, expenses, and net income for the three months ended March 31, 2025, and 2024 | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Interest income | $15,107,315 | $15,343,667 | | Interest expense | $(2,065,382) | $(2,104,050) | | Net interest income | $13,041,933 | $13,239,617 | | Total expenses | $3,000,621 | $4,506,438 | | Net Income | $10,041,312 | $8,730,003 | | Basic earnings per common share | $0.48 | $0.48 | | Diluted earnings per common share | $0.47 | $0.47 | - Net Income increased by **15%** to **$10,041,312** for the three months ended March 31, 2025, compared to **$8,730,003** for the same period in 2024[14](index=14&type=chunk) - Total expenses decreased by **33%** to **$3,000,621** for the three months ended March 31, 2025, primarily due to a benefit for current expected credit losses of **$(1,073,276)** compared to a provision of **$380,279** in the prior year[14](index=14&type=chunk) [Consolidated Statements of Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Equity) This section outlines changes in the Company's stockholders' equity for the three months ended March 31, 2025, and 2024 | Metric | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Common Stock Shares | 20,893,785 | 20,829,228 | | Common Stock Amount | $208,938 | $208,292 | | Additional Paid-In Capital | $320,486,840 | $318,886,768 | | Accumulated Deficit | $(9,915,731) | $(10,136,963) | | Total Stockholders' Equity | $310,780,047 | $308,958,097 | - Total stockholders' equity increased to **$310,780,047** as of March 31, 2025, from **$308,958,097** at December 31, 2024, driven by net income and issuance of common stock, partially offset by dividends declared[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the Company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025, and 2024 | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $7,625,168 | $6,917,872 | | Net cash provided by/(used in) investing activities | $5,507,310 | $(18,717,355) | | Net cash (used in)/provided by financing activities | $(29,653,749) | $10,805,556 | | Net decrease in cash and cash equivalents | $(16,521,271) | $(993,927) | | Cash and cash equivalents, end of period | $9,879,177 | $6,904,113 | - Net cash provided by operating activities increased by approximately **$0.7 million** year-over-year[21](index=21&type=chunk) - Investing activities shifted from a net cash outflow of **$18.7 million** in Q1 2024 to a net cash inflow of **$5.5 million** in Q1 2025, primarily due to higher principal repayments of loans[21](index=21&type=chunk) - Financing activities resulted in a net cash outflow of **$29.7 million** in Q1 2025, a significant change from a **$10.8 million** inflow in Q1 2024, mainly due to net repayments on the revolving loan[21](index=21&type=chunk) [Notes to Consolidated Financial Statements (unaudited)](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed explanations and disclosures supporting the unaudited consolidated financial statements [1. ORGANIZATION AND DESCRIPTION OF BUSINESS](index=7&type=section&id=1.%20ORGANIZATION%20AND%20DESCRIPTION%20OF%20BUSINESS) This section describes Chicago Atlantic Real Estate Finance, Inc.'s business as a commercial mortgage REIT focused on cannabis operators - Chicago Atlantic Real Estate Finance, Inc. is a commercial mortgage REIT, incorporated in Maryland on March 30, 2021, and elected REIT taxation status from December 31, 2021[23](index=23&type=chunk) - The Company's primary objective is to provide attractive, risk-adjusted returns through consistent current income (dividends) and capital appreciation, achieved by investing in first mortgage loans and structured financings secured by commercial real estate, primarily to state-licensed cannabis operators[24](index=24&type=chunk) - The Company is externally managed by Chicago Atlantic REIT Manager, LLC, which handles operations and asset management, with investment decisions made by the Manager's investment committee under Board oversight[25](index=25&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=7&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the key accounting principles and methods used in preparing the consolidated financial statements [Basis of Presentation](index=7&type=section&id=Basis%20of%20Presentation) This section describes the basis for preparing the unaudited condensed consolidated financial statements in conformity with GAAP - The unaudited condensed consolidated financial statements are prepared on an accrual basis in conformity with GAAP for interim financial information, consolidating Chicago Atlantic Real Estate Finance, Inc. and its wholly-owned subsidiary, Chicago Atlantic Lincoln, LLC[26](index=26&type=chunk) [Cash and Cash Equivalents](index=7&type=section&id=Cash%20and%20Cash%20Equivalents) This section defines cash and cash equivalents and presents their balances as of March 31, 2025, and December 31, 2024 - Cash and cash equivalents include funds on deposit with financial institutions and short-term investments with original maturities of three months or less[28](index=28&type=chunk) | Metric | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Cash and cash equivalents | $9.9 million | $26.4 million | [Use of Estimates in the Preparation of Consolidated Financial Statements](index=9&type=section&id=Use%20of%20Estimates%20in%20the%20Preparation%20of%20Consolidated%20Financial%20Statements) This section highlights the role of management's estimates and assumptions in preparing the financial statements - The preparation of financial statements requires management to make estimates and assumptions, with the provision for current expected credit losses being a significant estimate[29](index=29&type=chunk) [Investment Payable](index=9&type=section&id=Investment%20Payable) This section explains the accounting treatment for unsettled investment transactions included in payables on the consolidated balance sheets - Investment transactions are reported on a trade-date basis, with unsettled trades included in payable for investments purchased on the consolidated balance sheets[30](index=30&type=chunk) [Revenue Recognition](index=9&type=section&id=Revenue%20Recognition) This section details the Company's policies for recognizing interest income, PIK interest, and other fees from its loan portfolio - Interest income from loans is accrued based on outstanding principal and contractual terms, including the accretion of loan origination fees, costs, and other discounts/premiums (OID) as a yield adjustment[31](index=31&type=chunk) - Paid-in-kind (PIK) interest is added to the principal balance and recognized as interest income, with accrual discontinued if collectability is doubtful[32](index=32&type=chunk) - Loans are generally placed on non-accrual status when payments are 90+ days past due or full recovery is doubtful, with accrued and unpaid interest reversed[34](index=34&type=chunk) - Other fees like prepayment and exit/success fees are recognized as interest income when received, while structuring fees are recognized when received if not yield enhancements or paid to all lenders[35](index=35&type=chunk) [Income Taxes](index=9&type=section&id=Income%20Taxes) This section explains the Company's REIT taxation status and the requirements for maintaining its qualification and avoiding federal income taxes - The Company has elected to be taxed as a REIT since December 31, 2021, requiring it to distribute at least **90%** of its REIT taxable income annually to avoid federal income taxes[38](index=38&type=chunk) - To maintain REIT qualification, the Company must satisfy annual gross income tests (**75%** from real property/mortgages, **95%** from qualifying income) and asset tests (**75%** in real estate assets, cash, government securities; limits on single issuer securities and TRS holdings)[39](index=39&type=chunk)[40](index=40&type=chunk) - Failure to meet distribution requirements (at least **90%** of REIT taxable income) can result in corporate taxes on undistributed portions and a **4%** non-deductible excise tax if distributions fall below a required threshold[41](index=41&type=chunk) [Recent Accounting Pronouncements](index=13&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses the impact and evaluation of recently issued accounting standards updates on the Company's financial statements - ASU 2023-09 (Income Taxes) effective for annual periods after December 15, 2024, had no material impact on the Company's financial statements[43](index=43&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures) effective for fiscal years after December 15, 2026, is currently being evaluated for its potential impact[44](index=44&type=chunk) [3. LOANS HELD FOR INVESTMENT, NET](index=13&type=section&id=3.%20LOANS%20HELD%20FOR%20INVESTMENT,%20NET) This section provides details on the Company's loan portfolio, including loan types, carrying values, and credit quality indicators - The Company primarily originates senior secured loans intended to be held until maturity or payoff, classified at amortized cost[45](index=45&type=chunk) | Loan Type | March 31, 2025 Carrying Value | March 31, 2025 % of Total | December 31, 2024 Carrying Value | December 31, 2024 % of Total | | :---------------- | :----------------------------- | :----------------------- | :----------------------------- | :----------------------- | | Fixed-rate loans | $162,715,780 | 40.7% | $149,226,790 | 37.0% | | Floating-rate loans | $236,739,699 | 59.3% | $253,250,256 | 63.0% | | Total | $399,455,479 | 100.0% | $402,477,046 | 100.0% | | Metric | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Total Principal | $401,511,816 | $404,721,554 | | Original Issue Discount | $(2,056,337) | $(2,244,508) | | Carrying Value | $399,455,479 | $402,477,046 | | Current expected credit loss reserve | $(3,274,058) | $(4,346,869) | | Total loans held at carrying value, net | $396,181,421 | $398,130,177 | | Weighted Average Remaining Life (Years) | 2.1 | 2.2 | [Aging Analyses of Past Due Loans](index=19&type=section&id=Aging%20Analyses%20of%20Past%20Due%20Loans) This section presents the aging of the Company's loan portfolio, categorizing loans by their payment status | Category | March 31, 2025 | December 31, 2024 | | :---------------- | :------------- | :---------------- | | Current Loans | $399,455,479 | $386,074,558 | | 90+ Days Past Due | $- | $16,402,488 | | Total Past Due | $- | $16,402,488 | | Total Loans | $399,455,479 | $402,477,046 | | Non-Accrual | $16,468,950 | $16,402,488 | - As of March 31, 2025, all senior term loans were current, with no loans 31-90+ days past due, a significant improvement from December 31, 2024, which had **$16.4 million** in 90+ days past due loans[51](index=51&type=chunk) [Non-Accrual Loans](index=19&type=section&id=Non-Accrual%20Loans) This section details loans placed on non-accrual status and the associated current expected credit loss reserve - One loan (Loan 9) remained on non-accrual status as of March 31, 2025, with a carrying value of approximately **$16.4 million**, consistent with December 31, 2024[52](index=52&type=chunk)[53](index=53&type=chunk) - The CECL reserve for Loan 9 decreased from approximately **$1.2 million** at December 31, 2024, to **$0.1 million** at March 31, 2025, following its restructuring[53](index=53&type=chunk) [Credit Quality Indicators](index=19&type=section&id=Credit%20Quality%20Indicators) This section describes the Company's loan risk rating system and provides a breakdown of the portfolio by credit quality - Loans are rated on a 5-point scale (1=very low risk, 5=impaired/loss likely) based on payment history, collateral, market dynamics, financial performance, and other factors[54](index=54&type=chunk) | Risk Rating | March 31, 2025 Carrying Value | December 31, 2024 Carrying Value | | :---------- | :----------------------------- | :----------------------------- | | 1 (Very low risk) | $23,222,643 | $42,737,017 | | 2 (Low risk) | $217,592,635 | $243,834,247 | | 3 (Moderate/average risk) | $137,054,720 | $77,918,362 | | 4 (High risk/potential for loss) | $21,585,481 | $37,987,420 | | 5 (Impaired/loss likely) | $- | $- | | Total | $399,455,479 | $402,477,046 | - The portion of the portfolio risk-rated '4' decreased from **9.4%** (**$38.0 million**) at December 31, 2024, to **5.4%** (**$21.6 million**) at March 31, 2025, indicating an improvement in credit profile[66](index=66&type=chunk) | Real Estate Collateral Coverage | March 31, 2025 | December 31, 2024 | | :------------------------------ | :------------- | :---------------- | | < 1.0x | $197,253,776 | $200,394,606 | | 1.0x – 1.25x | $64,453,235 | $65,302,672 | | 1.25x – 1.5x | $50,478,361 | $50,299,693 | | 1.50x – 1.75x | $9,567,657 | $9,603,167 | | 1.75x – 2.0x | $25,792,798 | $24,885,063 | | > 2.0x | $51,909,652 | $51,991,845 | | Total | $399,455,479 | $402,477,046 | [CECL Reserve](index=22&type=section&id=CECL%20Reserve) This section explains the methodology and changes in the Company's allowance for current expected credit losses on its loan portfolio - The Company records an allowance for current expected credit losses (CECL Reserve) for loans held for investment, estimated using third-party valuations and a probability-weighted model considering default likelihood and loss given default[60](index=60&type=chunk)[61](index=61&type=chunk) - During Q1 2025, the Company reversed approximately **$1.2 million** of the CECL Reserve related to Loan 9 due to its restructuring and improved collectibility expectations[66](index=66&type=chunk) | Metric | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Funded CECL Reserve | $3,274,058 | $4,346,869 | | Unfunded CECL Reserve | $45,107 | $45,572 | | Total CECL Reserve | $3,319,165 | $4,392,441 | | Benefit/(Provision) for CECL | $(1,073,276) | $380,279 | [4. LOANS, AT FAIR VALUE](index=25&type=section&id=4.%20LOANS,%20AT%20FAIR%20VALUE) This section details the Company's loans measured at fair value, including a related party loan, and the rationale for this accounting treatment - As of March 31, 2025, the Company held one loan at fair value, a related party loan (Loan 39) with a principal balance of **$5.5 million** and a fair value of **$5.335 million**[73](index=73&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) - The fair value option was elected for this loan due to senior indebtedness, uncertainty regarding holding to maturity, and potential for future fair value elections[74](index=74&type=chunk) - The loan was current on all interest and principal payments as of March 31, 2025[78](index=78&type=chunk) [5. INTEREST RECEIVABLE](index=25&type=section&id=5.%20INTEREST%20RECEIVABLE) This section presents the breakdown of interest receivable by aging category as of March 31, 2025, and December 31, 2024 | Category | March 31, 2025 | December 31, 2024 | | :---------------- | :------------- | :---------------- | | Current Loans | $1,202,748 | $1,388,058 | | 31-60 Days Past Due | $235,976 | $65,765 | | 61-90 Days Past Due | $77,174 | $- | | 90+ Days Past Due | $- | $- | | Total Interest Receivable | $1,515,898 | $1,453,823 | | Non-Accrual | $- | $- | - Total interest receivable increased slightly to approximately **$1.5 million** as of March 31, 2025, from **$1.45 million** at December 31, 2024[79](index=79&type=chunk) [6. INTEREST RESERVE](index=27&type=section&id=6.%20INTEREST%20RESERVE) This section details the changes in the Company's prepaid interest reserve for certain loans during the reporting periods - As of March 31, 2025, four loans included a prepaid interest reserve[82](index=82&type=chunk) | Metric | March 31, 2025 | December 31, 2024 | | :---------------- | :------------- | :---------------- | | Beginning reserves | $1,297,878 | $1,074,889 | | New reserves | $20,714 | $4,194,597 | | Reserves disbursed | $(771,066) | $(3,971,608) | | Ending reserve | $547,526 | $1,297,878 | - The ending interest reserve decreased significantly to **$547,526** at March 31, 2025, from **$1,297,878** at December 31, 2024, primarily due to higher disbursements[82](index=82&type=chunk) [7. DEBT](index=27&type=section&id=7.%20DEBT) This section provides information on the Company's debt instruments, including its revolving loan and notes payable [Revolving Loan](index=27&type=section&id=Revolving%20Loan) This section details the terms, availability, and outstanding balance of the Company's revolving loan facility - The Revolving Loan's maturity date was extended to June 30, 2026, and its commitment expanded to **$110.0 million** (with an accordion feature up to **$150.0 million**) through amendments in 2024[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - As of March 31, 2025, the Revolving Loan had an interest rate of **7.50%** and **$72.0 million** of borrowing availability, with **$38.0 million** outstanding[87](index=87&type=chunk)[90](index=90&type=chunk) - The Company made net repayments of **$17.0 million** against the Revolving Loan during the three months ended March 31, 2025[90](index=90&type=chunk) [Notes Payable](index=29&type=section&id=Notes%20Payable) This section describes the Company's senior unsecured notes, including their terms, interest rate, and compliance with covenants - The Company entered into a Loan Agreement for **$50.0 million** in senior unsecured notes (Unsecured Notes) on October 18, 2024, maturing on October 18, 2028, with a fixed interest rate of **9.00%** per annum[91](index=91&type=chunk) - The Unsecured Notes proceeds were used to temporarily repay Revolving Loan obligations and for working capital, with debt issuance costs capitalized and offset against the face value[92](index=92&type=chunk) - The Company was in compliance with all financial covenants for the Unsecured Notes as of March 31, 2025, including minimum stockholders' equity of **$200.0 million** and maximum aggregate indebtedness of **$225.0 million**[93](index=93&type=chunk) [Interest Expense](index=29&type=section&id=Interest%20Expense) This section breaks down the Company's interest expense by debt instrument for the three months ended March 31, 2025, and 2024 | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Interest expense (Notes Payable) | $1,121,918 | $- | | Interest expense (Revolving Loan) | $790,412 | $2,007,050 | | Unused fee expense | $42,743 | $6,085 | | Amortization of debt issuance costs | $110,309 | $90,915 | | Total interest expense | $2,065,382 | $2,104,050 | - Total interest expense remained consistent year-over-year, with the introduction of **$1.2 million** in Notes Payable interest expense in Q1 2025 offset by a decrease in Revolving Loan interest expense due to lower outstanding balances[96](index=96&type=chunk) [8. RELATED PARTY TRANSACTIONS](index=31&type=section&id=8.%20RELATED%20PARTY%20TRANSACTIONS) This section discloses transactions and arrangements with related parties, including management fees and co-investments [Management Agreement](index=31&type=section&id=Management%20Agreement) This section outlines the terms of the Management Agreement with Chicago Atlantic REIT Manager, LLC, including fees and compensation - The Management Agreement with Chicago Atlantic REIT Manager, LLC was automatically renewed on April 30, 2024, and 2025[98](index=98&type=chunk) - The Manager receives Base Management Fees (**0.375%** of Equity, reduced by **50%** of origination fees) and Incentive Compensation based on Core Earnings[99](index=99&type=chunk)[100](index=100&type=chunk) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Base management fees, net | $1,209,225 | $1,058,237 | | Incentive fees | $526,308 | $696,504 | | Total management and incentive fees earned | $1,735,533 | $1,754,741 | | General and administrative expenses reimbursable | $1,148,769 | $1,237,790 | | Total related party fees and expenses | $2,884,302 | $2,992,531 | [Co-Investment in Loans](index=33&type=section&id=Co-Investment%20in%20Loans) This section describes the Company's practice of co-investing in loans with other investment vehicles managed by its affiliates - The Company co-invests with other investment vehicles managed by its affiliates, with **19** loans co-invested as of March 31, 2025, and December 31, 2024[105](index=105&type=chunk) - The Company's risk in co-investments is limited to the carrying value of its investment, and it does not provide financial support to other managed vehicles[105](index=105&type=chunk) [Loans held for investment – related party](index=33&type=section&id=Loans%20held%20for%20investment%20–%20related%20party) This section details specific related party loans held for investment, including their restructuring and impact on reserves - Loan 3 and Loan 33 are related party loans due to the Executive Chairman's appointment as CEO of Vireo Growth, Inc., an affiliate[107](index=107&type=chunk) - Loan 9, previously on non-accrual, was restructured on March 31, 2025, following foreclosure proceedings, resulting in the Company holding a **$14.5 million** first lien judgment loan and a **$2.0 million** second lien term loan, both bearing **9.0%** interest[108](index=108&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - The restructuring of Loan 9 led to a reversal of approximately **$1.2 million** in CECL reserve and a gain on extinguishment of approximately **$66 thousand**, as the Company now holds senior liquidation preference[112](index=112&type=chunk)[114](index=114&type=chunk) [Loans, at fair value - related party](index=35&type=section&id=Loans,%20at%20fair%20value%20-%20related%20party) This section describes a specific related party loan measured at fair value, including its principal and carrying value - A loan originated to a Vireo subsidiary, collateralized by Minnesota real estate, is held at fair value with a principal balance of **$5.5 million** and a carrying value of approximately **$5.3 million** as of March 31, 2025[115](index=115&type=chunk) [9. COMMITMENTS AND CONTINGENCIES](index=35&type=section&id=9.%20COMMITMENTS%20AND%20CONTINGENCIES) This section outlines the Company's off-balance sheet arrangements and other potential contingencies [Off-Balance Sheet Arrangements](index=35&type=section&id=Off-Balance%20Sheet%20Arrangements) This section details the Company's unfunded commitments on delayed draw term loans - Off-balance sheet commitments consist of unfunded commitments on delayed draw term loans, totaling **$19.8 million** as of March 31, 2025, down from **$20.9 million** at December 31, 2024[116](index=116&type=chunk)[117](index=117&type=chunk) - The Company does not have relationships with unconsolidated entities or financial partnerships for off-balance sheet arrangements[116](index=116&type=chunk) [Other Contingencies](index=37&type=section&id=Other%20Contingencies) This section discusses potential impacts from legal claims and changes in state laws affecting the cannabis industry - The Company is not aware of any legal claims that could materially impact its business as of March 31, 2025[118](index=118&type=chunk) - Business growth depends on state laws regarding the cannabis industry; adverse changes could materially affect operations[119](index=119&type=chunk) - Management mitigates risks by monitoring the legal landscape and, in case of loan default, may sell the loan, facilitate collateral sale, or initiate foreclosure to take title to real estate, potentially incurring losses[120](index=120&type=chunk) [10. STOCKHOLDERS' EQUITY](index=37&type=section&id=10.%20STOCKHOLDERS'%20EQUITY) This section provides details on the Company's equity, including its equity incentive plan and at-the-market offering program [Equity Incentive Plan](index=37&type=section&id=Equity%20Incentive%20Plan) This section describes the Company's 2021 Equity Incentive Plan, authorized awards, and stock-based compensation expense - The 2021 Plan authorizes various equity awards, with a Share Limit of **8.50%** of outstanding common stock on a fully-diluted basis[121](index=121&type=chunk)[122](index=122&type=chunk) - Stock-based compensation expense for Q1 2025 was **$649,312**, with **$3.7 million** in unamortized expense expected to be recognized over a weighted-average term of 1.6 years[126](index=126&type=chunk) | Metric | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Unvested Restricted Stock | 406,492 | 411,303 | | Weighted Average Grant Date Fair Value per Share | $15.13 | $15.14 | | Aggregate intrinsic value (Outstanding Vested) | $5,975,432 | $6,342,292 | | Aggregate intrinsic value (Outstanding Vested) | $3,033,845 | $3,182,441 | [At-the-Market Offering Program ("ATM Program")](index=38&type=section&id=At-the-Market%20Offering%20Program%20(%22ATM%20Program%22)) This section details the Company's ATM Program, including its maximum offering size, shares sold, and net proceeds - The ATM Program was amended on March 18, 2025, increasing the maximum offering size from **$75.0 million** to **$100.0 million** and reducing sales agent commissions from **3.0%** to **2.0%**[128](index=128&type=chunk) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Shares sold | 64,557 | 896,443 | | Weighted average price per share | $16.01 | $15.93 | | Net proceeds | $1.0 million | $13.9 million | [11. EARNINGS PER SHARE](index=38&type=section&id=11.%20EARNINGS%20PER%20SHARE) This section presents the calculation of basic and diluted earnings per common share for the reporting periods | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net income attributable to common stockholders | $10,041,312 | $8,730,003 | | Basic weighted average shares outstanding | 20,858,466 | 18,273,919 | | Diluted weighted average shares outstanding | 21,264,891 | 18,640,492 | | Basic earnings per common share | $0.48 | $0.48 | | Diluted earnings per common share | $0.47 | $0.47 | - Basic and diluted EPS remained consistent at **$0.48** and **$0.47**, respectively, despite an increase in net income, due to a higher weighted average number of common shares outstanding[132](index=132&type=chunk) [12. INCOME TAX](index=39&type=section&id=12.%20INCOME%20TAX) This section discusses the Company's REIT tax qualification, distribution requirements, and tax benefit status - The Company maintains its REIT qualification by distributing at least **90%** of its REIT taxable income annually[133](index=133&type=chunk) - No excise tax expense was incurred for the three months ended March 31, 2025, or 2024[133](index=133&type=chunk) - The Company has no unrecognized tax benefits as of March 31, 2025, or December 31, 2024[134](index=134&type=chunk) [13. FAIR VALUE MEASUREMENTS](index=39&type=section&id=13.%20FAIR%20VALUE%20MEASUREMENTS) This section details the Company's financial assets and liabilities measured at fair value and those not measured at fair value [Recurring Fair Value Measurements](index=39&type=section&id=Recurring%20Fair%20Value%20Measurements) This section describes the Company's financial assets measured at fair value on a recurring basis, specifically a related party loan | Financial Assets | March 31, 2025 (Level 3) | December 31, 2024 (Level 3) | | :----------------------------- | :----------------------- | :-------------------------- | | Loans, at fair value - related party | $5,335,000 | $5,335,000 | | Total loans, at fair value | $5,335,000 | $5,335,000 | - The Company's only financial asset measured at fair value on a recurring basis is a related party loan, valued at **$5.335 million** using Level 3 inputs (discounted cash flow method)[137](index=137&type=chunk) [Financial Assets and Liabilities Not Measured at Fair Value](index=40&type=section&id=Financial%20Assets%20and%20Liabilities%20Not%20Measured%20at%20Fair%20Value) This section lists financial assets and liabilities not measured at fair value, along with their carrying and aggregate fair values | Financial Assets (Carrying Value) | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Loans held for investment | $399,455,479 | $402,477,046 | | Cash and cash equivalents | $9,879,177 | $26,400,448 | | Interest receivable | $1,515,898 | $1,453,823 | | Financial Liabilities (Carrying Value) | | | | Revolving loan | $38,000,000 | $55,000,000 | | Notes payable, net | $49,155,713 | $49,096,250 | | Dividend payable | $9,820,079 | $13,605,153 | - The aggregate fair value of the held-for-investment portfolio was approximately **$397.1 million** at March 31, 2025, with gross unrecognized holding losses of **$2.4 million**[138](index=138&type=chunk) [14. DIVIDENDS AND DISTRIBUTIONS](index=40&type=section&id=14.%20DIVIDENDS%20AND%20DISTRIBUTIONS) This section reports the Company's declared cash dividends and its policy as a REIT | Dividend Type | Record Date | Payment Date | Amount Per Share | | :---------------- | :---------- | :----------- | :--------------- | | Regular cash dividend (Q1 2025) | 3/31/2025 | 4/15/2025 | $0.47 | | Regular cash dividend (Q1 2024) | 3/28/2024 | 4/15/2024 | $0.47 | - The Company declared a regular quarterly cash dividend of **$0.47** per common share for Q1 2025, consistent with Q1 2024[140](index=140&type=chunk)[141](index=141&type=chunk) [15. SEGMENT REPORTING](index=42&type=section&id=15.%20SEGMENT%20REPORTING) This section states that the Company operates as a single operating and reporting segment - The Company operates as a single operating and reporting segment, focused on generating current income and capital appreciation through loan investments[142](index=142&type=chunk) - The chief operating decision maker (CODM) assesses performance and makes operating decisions on a consolidated basis, primarily using net income[142](index=142&type=chunk) [16. SUBSEQUENT EVENTS](index=42&type=section&id=16.%20SUBSEQUENT%20EVENTS) This section discloses significant events that occurred after the reporting period, including stock awards and dividend payments - On April 1, 2025, **187,157** restricted stock awards were granted, with **15,213** to Board members and **171,944** to Manager employees[144](index=144&type=chunk) - On April 15, 2025, the Company paid its regular quarterly dividend of **$0.47** per common share for Q1 2025, totaling approximately **$9.8 million**[145](index=145&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations for the three months ended March 31, 2025, compared to the same period in 2024. It covers an overview of the business, revenue and expense drivers, income taxes, factors impacting operating results, market conditions, recent developments in the loan portfolio, and a detailed analysis of liquidity, capital resources, and risk management strategies [FORWARD-LOOKING STATEMENTS](index=43&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section highlights that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, including future operating results, the Manager's ability to implement investment strategy, inflation impact, government policies on cannabis, and changes in interest rates[146](index=146&type=chunk) [Available Information](index=45&type=section&id=Available%20Information) This section directs readers to the Company's website for important investor information and SEC filings - The Company routinely posts important investor information, including material disclosures, investor presentations, and SEC filings, on its website www.chicagoatlantic.com[147](index=147&type=chunk) [Overview](index=45&type=section&id=Overview) This section provides a general description of the Company's business as a commercial mortgage REIT specializing in cannabis operators - The Company is a commercial mortgage REIT focused on originating, structuring, and investing in first mortgage loans and alternative structured financings secured by commercial real estate, primarily for state-licensed cannabis operators[148](index=148&type=chunk) - The Manager seeks to originate real estate loans between **$5 million** and **$200 million**, with terms of one to five years, and the Company generally acts as co-lender, holding up to **$50 million** of the aggregate loan amount[149](index=149&type=chunk) - Loans are secured by real estate and other collateral (equipment, receivables, licenses) for cannabis industry owner-operators, with **61.2%** of the principal of loans backed by personal or corporate guarantees as of March 31, 2025[150](index=150&type=chunk) [Revenues](index=47&type=section&id=Revenues) This section details the primary sources of the Company's revenue, mainly interest income from senior secured loans - Revenue is primarily generated from interest income on senior secured loans to state-licensed cannabis operators, with **58.5%** of the total portfolio comprised of floating rate loans and **41.5%** of fixed rate loans as of March 31, 2025[155](index=155&type=chunk)[156](index=156&type=chunk) - Interest income includes paid-in-kind (PIK) components, original issue discounts (OID), and fees such as prepayment and exit fees[158](index=158&type=chunk) | Effective Date | Prime Rate | | :------------- | :--------- | | December 19, 2024 | 7.50% | | November 8, 2024 | 7.75% | | September 19, 2024 | 8.00% | [Expenses](index=47&type=section&id=Expenses) This section outlines the Company's main operating expenses, including management fees and allocable overhead - Primary operating expenses include Base Management Fees and Incentive Compensation paid to the Manager, along with allocable overhead and other expenses[159](index=159&type=chunk) - The Company bears all other operational and transactional costs, such as organizational expenses, valuation fees, investor relations, accounting, audit, and legal fees[159](index=159&type=chunk)[165](index=165&type=chunk) [Income Taxes](index=49&type=section&id=Income%20Taxes) This section explains the Company's REIT tax status and its obligations regarding income distribution to avoid corporate taxes - The Company operates as a REIT, requiring annual distribution of at least **90%** of its REIT taxable income to avoid corporate income tax[160](index=160&type=chunk)[161](index=161&type=chunk) - No excise tax expense was incurred for the three months ended March 31, 2025, as the Company aims to distribute sufficient income[161](index=161&type=chunk) [Factors Impacting our Operating Results](index=49&type=section&id=Factors%20Impact%20our%20Operating%20Results) This section discusses key external and internal factors that influence the Company's financial performance [Changes in Market Interest Rates and Effect on Net Interest Income](index=49&type=section&id=Changes%20in%20Market%20Interest%20Rates%20and%20Effect%20on%20Net%20Interest%20Income) This section analyzes how fluctuations in market interest rates impact the Company's net interest income - Operating results are largely dependent on net interest income, which is influenced by market interest rates, loan values, and credit events[163](index=163&type=chunk)[164](index=164&type=chunk) - Rising interest rates can increase borrowing costs faster than yields on floating-rate assets, potentially decreasing net interest spread and net income[166](index=166&type=chunk) [Interest Rate Cap Risk](index=51&type=section&id=Interest%20Rate%20Cap%20Risk) This section describes the risk that interest rate caps on floating-rate assets may limit yield increases during rising rate environments - Floating-rate assets may have interest rate caps, limiting yield increases, while borrowing costs may not have similar restrictions, potentially reducing net interest income during rising rate periods[167](index=167&type=chunk) | Prime Rate Floor | Outstanding Principal (as of March 31, 2025) | | :--------------- | :------------------------------------------- | | 8.50% | $50,469,178 | | 8.00% | $7,460,000 | | 7.75% | $16,995,029 | | 7.50% | $45,865,201 | | 7.00% | $75,616,173 | | 6.25% | $19,255,716 | | 5.50% | $520,000 | | 0.00% | $21,789,444 | | Total | $237,970,741 | [Interest Rate Mismatch Risk](index=51&type=section&id=Interest%20Rate%20Mismatch%20Risk) This section explains the risk arising from funding fixed-rate or Prime Rate-indexed assets with Prime Rate-based borrowings - Funding fixed-rate or Prime Rate-indexed assets with Prime Rate-based borrowings creates interest rate mismatch risk, where rising Prime Rates increase borrowing costs without a corresponding increase in fixed-rate earnings, potentially harming profitability[169](index=169&type=chunk) [Market Conditions](index=51&type=section&id=Market%20Conditions) This section discusses the favorable market conditions in the cannabis industry that create lending opportunities for the Company - Favorable market conditions, including an imbalance in credit supply and demand for cannabis operating companies, create attractive opportunities for non-bank lenders[171](index=171&type=chunk) - The addressable market is expected to increase as additional states legalize cannabis, which the Company intends to capitalize on[171](index=171&type=chunk) [Developments During the First Quarter of 2025](index=51&type=section&id=Developments%20During%20the%20First%20Quarter%20of%202025) This section highlights significant events and changes in the Company's loan portfolio and dividend declarations during Q1 2025 [Updates to Our Loan Portfolio during the First Quarter of 2025](index=53&type=section&id=Updates%20to%20Our%20Loan%20Portfolio%20during%20the%20First%20Quarter%20of%202025) This section provides specific updates on loan restructurings and their impact on the Company's portfolio - Loan 9 was restructured on March 31, 2025, following foreclosure, resulting in the Company holding a **$14.5 million** first lien judgment loan and a **$2.0 million** second lien term loan, both bearing **9.0%** interest[173](index=173&type=chunk)[174](index=174&type=chunk) - The restructuring led to a **$1.2 million** reversal of the CECL reserve for Loan 9, improving collectibility expectations, though it remains on non-accrual status[175](index=175&type=chunk) [Dividends Declared Per Share](index=53&type=section&id=Dividends%20Declared%20Per%20Share) This section reports the ordinary cash dividend declared per common share for Q1 2025 - The Company declared an ordinary cash dividend of **$0.47** per common share for Q1 2025, paid on April 15, 2025, totaling approximately **$9.8 million**[176](index=176&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) This section presents a comparative analysis of the Company's financial performance for the three months ended March 31, 2025, and 2024 [Comparison of the three months ended March 31, 2025 and 2024](index=54&type=section&id=Comparison%20of%20the%20three%20months%20ended%20March%2031,%202025%20and%202024) This section provides a detailed comparison of key financial metrics and their variances between the two periods | Metric | March 31, 2025 | March 31, 2024 | Variance Amount | Variance % | | :----------------------------------- | :------------- | :------------- | :-------------- | :--------- | | Interest income | $15,107,315 | $15,343,667 | $(236,352) | -2% | | Interest expense | $(2,065,382) | $(2,104,050) | $38,668 | -2% | | Net interest income | $13,041,933 | $13,239,617 | $(197,684) | -1% | | Total expenses | $3,000,621 | $4,506,438 | $(1,505,817) | -33% | | Net Income | $10,041,312 | $8,730,003 | $1,311,309 | 15% | | (Benefit) provision for current expected credit losses | $(1,073,276) | $380,279 | $(1,453,555) | -382% | - Net income increased by **15%** due to a significant decrease in total expenses, primarily driven by a **$1.1 million** benefit for current expected credit losses in Q1 2025 compared to a **$0.4 million** provision in Q1 2024[179](index=179&type=chunk)[180](index=180&type=chunk) - Interest income decreased by **2%** due to a lower proportion of floating-rate loans (**58.5%** in Q1 2025 vs. **77%** in Q1 2024) and a decrease in weighted average YTM IRR from **19.4%** to **16.9%**[179](index=179&type=chunk) - Interest expense remained consistent, with new Notes Payable expense offset by lower Revolving Loan balances[179](index=179&type=chunk) [Loan Portfolio](index=56&type=section&id=Loan%20Portfolio) This section offers an overview of the Company's loan portfolio, including its carrying value, weighted-average yield, and loan types - As of March 31, 2025, the portfolio included **30** loans held for investment with a carrying value of approximately **$399.5 million**, a slight decrease from **$402.5 million** at December 31, 2024[181](index=181&type=chunk) - The weighted-average YTM IRR decreased from **17.2%** at December 31, 2024, to **16.9%** at March 31, 2025, influenced by re-pricing amendments and prime rate decline[181](index=181&type=chunk) | Loan Type | March 31, 2025 Carrying Value | March 31, 2025 % of Total | December 31, 2024 Carrying Value | December 31, 2024 % of Total | | :---------------- | :----------------------------- | :----------------------- | :----------------------------- | :----------------------- | | Fixed-rate loans | $162,715,780 | 40.7% | $149,226,790 | 37.0% | | Floating-rate loans | $236,739,699 | 59.3% | $253,250,256 | 63.0% | | Total | $399,455,479 | 100.0% | $402,477,046 | 100.0% | [Non-GAAP Measures and Key Financial Measures and Indicators](index=60&type=section&id=Non-GAAP%20Measures%20and%20Key%20Financial%20Measures%20and%20Indicators) This section defines and presents non-GAAP financial measures used to evaluate the Company's performance [Distributable Earnings and Adjusted Distributable Earnings](index=60&type=section&id=Distributable%20Earnings%20and%20Adjusted%20Distributable%20Earnings) This section explains the calculation and purpose of Distributable Earnings and Adjusted Distributable Earnings as non-GAAP metrics - Distributable Earnings and Adjusted Distributable Earnings are non-GAAP measures used to evaluate performance and assess dividend capacity, excluding non-cash equity compensation, depreciation, amortization, unrealized gains/losses, and CECL provisions[191](index=191&type=chunk)[192](index=192&type=chunk) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net Income | $10,041,312 | $8,730,003 | | Stock based compensation | $649,312 | $531,293 | | Amortization of debt issuance costs | $110,309 | $90,915 | | (Benefit) provision for current expected credit losses | $(1,073,276) | $380,279 | | Change in unrealized gain on investments | $- | $75,604 | | Distributable Earnings | $9,727,657 | $9,808,094 | | Basic Distributable Earnings per Weighted Average Share | $0.47 | $0.54 | | Diluted Distributable Earnings per Weighted Average Share | $0.46 | $0.53 | [Book Value Per Share](index=62&type=section&id=Book%20Value%20Per%20Share) This section presents the Company's book value per share as of March 31, 2025, and December 31, 2024 | Metric | March 31, 2025 | December 31, 2024 | | :--------------- | :------------- | :---------------- | | Book value per share | $14.87 | $14.83 | [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's sources of liquidity and capital, including its credit facility and capital markets activities [Credit Facility](index=62&type=section&id=Credit%20Facility) This section details the Company's revolving loan facility, including its availability, outstanding balance, and recent repayments - As of March 31, 2025, the Company had **$72.0 million** available under its Revolving Loan, with **$38.0 million** outstanding, and net repayments of **$17.0 million** during the quarter[202](index=202&type=chunk) [Notes Payable](index=63&type=section&id=Notes%20Payable) This section provides information on the Company's senior unsecured notes, their maturity, interest rate, and use of proceeds - The Company has **$50.0 million** in senior unsecured notes, maturing October 18, 2028, with a fixed interest rate of **9.00%** per annum[203](index=203&type=chunk) - Proceeds from the Unsecured Notes were used to repay Revolving Loan obligations and for working capital[204](index=204&type=chunk) [Capital Markets](index=63&type=section&id=Capital%20Markets) This section describes the Company's capital raising activities, including its Shelf Registration Statement and At-the-Market Program - The Company has a Shelf Registration Statement allowing it to sell up to **$500 million** of securities and an ATM Program for up to **$100.0 million** of common stock[206](index=206&type=chunk) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Shares sold (ATM Program) | 64,557 | 896,443 | | Net proceeds (ATM Program) | $1.0 million | $13.9 million | [Cash Flows](index=63&type=section&id=Cash%20Flows) This section analyzes the Company's cash flows from operating, investing, and financing activities for the reporting periods | Cash Flow Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $7,625,168 | $6,917,872 | | Net cash provided by/(used in) investing activities | $5,507,310 | $(18,717,355) | | Net cash (used in)/provided by financing activities | $(29,653,749) | $10,805,556 | | Change in cash and cash equivalents | $(16,521,271) | $(993,927) | - Operating cash flow increased by **$0.7 million**, driven by decreased PIK interest and increased related party net payables, partially offset by changes in interest reserve and CECL provision[209](index=209&type=chunk) - Investing activities shifted to a **$5.5 million** inflow in Q1 2025 from an **$18.7 million** outflow in Q1 2024, primarily due to higher principal repayments of loans[210](index=210&type=chunk)[211](index=211&type=chunk) - Financing activities resulted in a **$29.7 million** outflow in Q1 2025, compared to a **$10.8 million** inflow in Q1 2024, mainly due to net repayments on the Revolving Loan and dividend payments[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) [Leverage Policies](index=65&type=section&id=Leverage%20Policies) This section outlines the Company's approach to using debt to fund loan acquisitions and for general corporate purposes - The Company employs prudent leverage, using debt to fund loan acquisitions, refinance existing debt, or for general corporate purposes, primarily for forward commitments until additional equity or long-term financing is secured[215](index=215&type=chunk) [Dividends](index=65&type=section&id=Dividends) This section reiterates the Company's dividend policy as a REIT and the implications of not meeting distribution requirements - As a REIT, the Company anticipates distributing at least **90%** of its REIT taxable income annually to stockholders[216](index=216&type=chunk) - Failure to meet distribution requirements can result in corporate taxes on undistributed income and a **4%** non-deductible excise tax[216](index=216&type=chunk)[217](index=217&type=chunk) | Dividend Type | Record Date | Payment Date | Amount Per Share | | :---------------- | :---------- | :----------- | :--------------- | | Regular cash dividend (Q1 2025) | 3/31/2025 | 4/15/2025 | $0.47 | | Regular cash dividend (Q1 2024) | 3/28/2024 | 4/15/2024 | $0.47 | [CECL Reserve](index=67&type=section&id=CECL%20Reserve) This section explains the methodology for recording allowances for current expected credit losses on loans held for investment - The Company records allowances for current expected credit losses (CECL) for loans held for investment, using third-party valuations and a probability-weighted model based on default likelihood and loss given default[221](index=221&type=chunk)[222](index=222&type=chunk) - CECL estimation involves significant judgment, considering historical loss data, expected repayment timing, calibration of default likelihood, and macroeconomic forecasts[224](index=224&type=chunk) - The Company evaluates loans on a collective basis by aggregating similar risk characteristics, such as cannabis-related loans collateralized by real estate or other assets[223](index=223&type=chunk) [Risk Ratings](index=69&type=section&id=Risk%20Ratings) This section describes the Company's loan risk rating system and the factors considered in assigning ratings - Loans are assigned a risk rating (1-5, less to greater risk) based on factors like payment history, collateral coverage, property type, financial performance, and loan structure[231](index=231&type=chunk) | Risk Rating | March 31, 2025 Carrying Value | December 31, 2024 Carrying Value | | :---------- | :----------------------------- | :----------------------------- | | 1 (Very low risk) | $23,222,643 | $42,737,017 | | 2 (Low risk) | $217,592,635 | $243,834,247 | | 3 (Moderate/average risk) | $137,054,720 | $77,918,362 | | 4 (High risk/potential for loss) | $21,585,481 | $37,987,420 | | 5 (Impaired/loss likely) | $- | $- | | Total | $399,455,479 | $402,477,046 | - As of March 31, 2025, approximately **50.4%** of the portfolio had real estate collateral value exceeding loan amounts, with the remaining **49.6%** partially collateralized by real estate and other assets[231](index=231&type=chunk) [Accounting Policies and Estimates](index=71&type=section&id=Accounting%20Policies%20and%20Estimates) This section confirms the consistency of accounting policies and estimates with the prior annual report - There were no significant changes in the application of accounting policies or estimates as of March 31, 2025, compared to the annual report on Form 10-K[234](index=234&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's exposure to market risks, primarily interest rate fluctuations, and its strategies for managing these risks. It discusses the impact of interest rate changes on net interest income, the risks associated with interest rate caps and mismatches, and the Company's approach to credit and real estate risk management within the evolving cannabis industry market conditions [Changes in Market Interest Rates and Effect on Net Interest Income](index=71&type=section&id=Changes%20in%20Market%20Interest%20Rates%20and%20Effect%20on%20Net%20Interest%20Income) This section quantifies the hypothetical impact of interest rate changes on the Company's annual cash interest income and expense - A hypothetical 100 basis points increase in the Prime Rate would increase annual cash interest income by approximately **$2.4 million** and annual cash interest expense on the Revolving Loan by **$0.4 million**[235](index=235&type=chunk)[236](index=236&type=chunk) - A 100 basis points decrease in the Prime Rate would decrease annual interest income by approximately **$0.8 million** and annual interest expense on the Revolving Loan by **$0.4 million**[235](index=235&type=chunk)[236](index=236&type=chunk) - The Unsecured Notes bear a fixed interest rate of **9.00%** and are not impacted by changes in market rates[237](index=237&type=chunk) [Risk Management](index=71&type=section&id=Risk%20Management) This section outlines the Company's strategies for managing various risks, including financing, interest rate, credit, and prepayment risks - The Company manages risk exposure by monitoring its portfolio, actively managing financing, interest rate, credit, prepayment, and convexity risks, and investing in a mix of floating-rate and fixed-rate loans[240](index=240&type=chunk)[247](index=247&type=chunk) - Risk management processes include due diligence, non-recourse financing, and evaluation of relative valuation, market trends, and collateral vintage[247](index=247&type=chunk) [Market Conditions](index=73&type=section&id=Market%20Conditions) This section discusses the market dynamics in the cannabis industry and their influence on the Company's business and growth - Favorable market conditions in the cannabis industry, characterized by an imbalance in credit supply and demand, present attractive financing opportunities for non-bank lenders[242](index=242&type=chunk) - The Company's ability to grow depends on state laws pertaining to the cannabis industry; adverse changes could materially affect the business[243](index=243&type=chunk) - Management monitors the legal landscape and, in case of loan default, may sell the loan or pursue foreclosure, acknowledging potential losses[244](index=244&type=chunk) [Credit Risk](index=73&type=section&id=Credit%20Risk) This section addresses the Company's exposure to credit risk on its loans and strategies for mitigation - The Company is exposed to credit risk on its loans and interest receivable, mitigated by originating higher-quality loans, comprehensive review, and proactive monitoring[246](index=246&type=chunk) - As of March 31, 2025, **50%** of the portfolio was fully secured by real estate, with an average real estate collateral coverage of **1.1x**, and all loans secured by equity pledges and all asset liens[245](index=245&type=chunk) - The loan portfolio is concentrated, with the top three borrowers representing approximately **24.6%** of principal outstanding and **24.3%** of total interest income as of March 31, 2025[249](index=249&type=chunk) [Real Estate Risk](index=75&type=section&id=Real%20Estate%20Risk) This section describes the risks associated with commercial real estate loans, including market volatility and property value changes - Commercial real estate loans are subject to volatility from national, regional, and local economic conditions, local real estate conditions, and changes in industry segments[251](index=251&type=chunk) - Decreases in property values reduce collateral value and borrower repayment capacity, potentially leading to losses for the Company[251](index=251&type=chunk) [Item 4. Controls and Procedures](index=75&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures and internal control over financial reporting. It confirms the effectiveness of disclosure controls as of March 31, 2025, and reports no material changes to internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=75&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures as of March 31, 2025 - Management, including the Principal Executive Officer and Principal Financial Officer, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025[254](index=254&type=chunk) [Changes in Internal Control over Financial Reporting](index=77&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports that no material changes occurred in internal control over financial reporting during the quarter - There were no material changes in internal control over financial reporting during the quarter ended March 31, 2025[255](index=255&type=chunk) PART II - OTHER INFORMATION This section covers additional information not included in the financial statements, such as legal proceedings and risk factors [Item 1. Legal Proceedings](index=78&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the Company is not involved in any material pending legal proceedings - The Company is not involved in any material pending legal proceedings as of the reporting date[258](index=258&type=chunk) [Item 1A. Risk Factors](index=78&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors detailed in the Company's Annual Report on Form 10-K - No material changes to risk factors were reported from the Annual Report on Form 10-K, except for updates provided in this Quarterly Report[259](index=259&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=78&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities or use of proceeds - There were no unregistered sales of equity securities or use of proceeds to disclose[260](index=260&type=chunk) [Item 3. Defaults Upon Senior Securities](index=78&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that no defaults occurred on senior securities - No defaults upon senior securities occurred during the period[261](index=261&type=chunk) [Item 4. Mine Safety Disclosures](index=78&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[262](index=262&type=chunk) [Item 5. Other Information](index=78&type=section&id=Item%205.%20Other%20Information) This section reports that none of the Company's officers or directors adopted, modified, or terminated trading plans under Rule 10b5-1 or non-Rule 10b5-1 arrangements during the quarter - No officers or directors adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading plans during the three months ended March 31, 2025[263](index=263&type=chunk) [Item 6. Exhibits](index=78&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including certifications, Inline XBRL documents, and the cover page interactive data file - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (Sections 302 and 906 of Sarbanes-Oxley Act) and Inline XBRL documents[264](index=264&type=chunk) ```

CHICAGO, May 07, 2025 (GLOBE NEWSWIRE) -- Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI) ("Chicago Atlantic" or the "Company"), a commercial mortgage real estate investment trust, today announced its results for the first quarter ended March 31, 2025. Peter Sack, Co-Chief Executive Officer, noted, "We have entered 2025 much like we did in 2024 with significant volatility in the financial services sector and within the cannabis industry. The broader sentiment in cannabis is more muted than most pa ...

Group 1 - Chicago Atlantic Real Estate Finance declared a base quarterly cash dividend of $0.47 per share, unchanged from the previous distribution, resulting in an annualized dividend of $1.88 per share, which equates to a 13.52% dividend yield [1] - The mortgage REIT has maintained this base quarterly dividend, indicating stability in its dividend policy [1] Group 2 - Pacifica Yield focuses on long-term wealth creation by targeting undervalued yet high-growth companies, high-dividend stocks, REITs, and firms in the green energy sector [1]

Company Overview - Chicago Atlantic Real Estate Finance, Inc. is a commercial mortgage real estate investment trust (REIT) focused on originating senior secured loans primarily to state-licensed cannabis operators in limited-license states in the United States [4] - The company has closed over $2.7 billion in credit and equity investments to date and operates offices in Chicago, Miami, New York, and London [4] Upcoming Financial Results - The company plans to release its earnings results for the first quarter ended March 31, 2025, before the market opens on May 7, 2025 [2] - A conference call and live audio webcast will be held on the same day at 9:00 a.m. Eastern Time, which will be open to the general public [2][3] - The interactive teleconference can be accessed by calling (833) 630-1956 for domestic callers and (412) 317-1837 for international callers [2]

CHICAGO, March 17, 2025 (GLOBE NEWSWIRE) -- Chicago Atlantic Real Estate Finance, Inc. (NASDAQ:REFI), a commercial mortgage real estate investment trust, announced that its board of directors has declared a regular quarterly cash dividend of $0.47 per share for the first quarter of 2025. The regular quarterly dividend, which equates to an annualized rate of $1.88 per common share, is payable on April 15, 2025, to shareholders of record as of the close of business on March 31, 2025. About Chicago Atlantic Re ...

Financial Data and Key Metrics Changes - The company's net interest income for Q4 was $14.1 million, a decrease of 2.7% from $14.5 million in Q3, primarily due to a 50 basis point decrease in the prime rate [21] - The total operating expenses, excluding management incentive fees and provision for credit losses, increased by approximately $250,000 quarter over quarter [24] - The book value per common share decreased to $14.83 as of December 31, 2024, from $14.94 as of December 31, 2023, mainly due to dividends paid in excess of GAAP net income [29] Business Line Data and Key Metrics Changes - The loan portfolio principal totaled $410 million across thirty portfolio companies, with a weighted average yield to maturity of 17.2%, down from 18.3% at the end of Q3 [16] - Gross origination during Q4 was $90.7 million, with $52.6 million funded to new borrowers and $38.1 million to existing borrowers [16] - The cannabis pipeline across the Chicago Atlantic platform now stands at approximately $490 million, with current liquidity of approximately $67 million [12] Market Data and Key Metrics Changes - The US cannabis industry is experiencing muted conditions due to the failure of Florida's adult-use ballot initiative and pricing pressure in some markets, leading to near record lows in equity values [7][8] - The company has diversified its investments across nine states, including Ohio, Nevada, Illinois, Florida, Pennsylvania, Missouri, and Minnesota [11] Company Strategy and Development Direction - The company focuses on deploying capital with consumer and product-focused operators in limited license jurisdictions, maintaining a low leverage profile [11] - The strategy emphasizes credit and collateral first, aiming to create a differentiated and low-levered risk-return profile insulated from cannabis equity volatility [9] - The company aims to be the number one top-performing exchange-listed mortgage REIT, currently ranked third based on total return [10] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing uncertainty surrounding tax policy, economy, tariffs, inflation, and Federal Reserve interest rate direction [18] - The company plans to maintain a dividend payout ratio based on basic distributable earnings per share of 90% to 100% for 2025 [31] - Management expressed confidence in the ability to execute for shareholders despite challenges in the industry [14] Other Important Information - The company raised approximately $38.4 million of net proceeds from common stock issuances through its ATM program [27] - The debt service coverage ratio on a consolidated basis was approximately 5.5 to 1, significantly above the requirement of 1.35 to 1 [20] Q&A Session Summary Question: Can you talk about demand for loans and leverage expectations? - Management indicated that while the profile of demand has changed due to compressed equity valuations, the maturation of the industry offsets this change [34] Question: Update on credit quality and loan number nine? - Overall credit quality remains stable, with only one loan on non-accrual status. Management is working to remedy operational issues with loan number nine [36][37] Question: Thoughts on scheduling and industry reform? - Management stated that the industry is awaiting clearer signals from the administration regarding reform, but they will continue to invest assuming no changes occur [40] Question: How do you view the impact of 280E on borrowers? - Management considers unpaid tax liabilities as a form of indebtedness and incorporates this into their underwriting process [45] Question: Update on New York market? - Management expressed encouragement regarding the progress in New York, highlighting the opening of stores and crackdowns on illegal operators [55] Question: Thoughts on the upcoming debt maturities in 2026? - Management aims to be a lender of choice as maturities arise, emphasizing that the market will likely work through these maturities in a normal course [75]

Group 1 - Chicago Atlantic Real Estate Finance, Inc. reported quarterly earnings of $0.46 per share, missing the Zacks Consensus Estimate of $0.48 per share, and down from $0.53 per share a year ago, representing an earnings surprise of -4.17% [1] - The company posted revenues of $14.07 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.13%, but down from $14.84 million year-over-year [2] - The stock has added about 3% since the beginning of the year, while the S&P 500 has declined by -5.3% [3] Group 2 - The earnings outlook for Chicago Atlantic Real Estate Finance is mixed, with the current consensus EPS estimate for the coming quarter at $0.54 on revenues of $14.26 million, and $2.11 on revenues of $57.57 million for the current fiscal year [7] - The Zacks Industry Rank for Financial - Miscellaneous Services is currently in the top 16% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] Group 3 - The company has surpassed consensus EPS estimates just once over the last four quarters, while it has topped consensus revenue estimates two times in the same period [2] - The current status of estimate revisions translates into a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6]

Financial Performance - Net income for the fourth quarter of 2024 was approximately $7.9 million, or $0.39 per weighted average diluted common share, a sequential decrease of 30.1%[10] - Net income for Q4 2024 was $7,919,692, a decrease of 15.7% from $9,397,523 in Q4 2023[20] - Total revenues for the year ended December 31, 2024, were $62,104,092, slightly down from $62,900,004 in 2023[20] - Net interest income for Q4 2024 was $14,068,376, compared to $14,839,485 in Q4 2023, reflecting a decrease of 5.2%[20] - Distributable earnings for the fourth quarter of 2024 were approximately $9.2 million, or $0.47 and $0.46 per basic and diluted weighted average common share, respectively[10] - Distributable Earnings for Q4 2024 were $9,214,434, compared to $9,863,450 in Q4 2023, a decline of 6.6%[24] - Basic Distributable Earnings per Weighted Average Share for Q4 2024 was $0.47, down from $0.54 in Q4 2023[24] - Diluted Distributable Earnings per Weighted Average Share for Q4 2024 was $0.46, compared to $0.53 in Q4 2023[24] Expenses and Costs - Total expenses for the fourth quarter of 2024 were approximately $5.7 million, representing a sequential increase of approximately 34.1%[10] - Total expenses for the year ended December 31, 2024, were $17,737,306, down from $18,617,241 in 2023, indicating a reduction of 4.7%[20] - Management and incentive fees for Q4 2024 were $2,863,158, a decrease from $3,243,775 in Q4 2023[20] - Stock-based compensation for the year ended December 31, 2024, was $3,058,674, significantly higher than $1,479,736 in 2023[20] Portfolio and Loans - As of December 31, 2024, total loan principal outstanding was $410.2 million across 30 portfolio companies, with $20.9 million of unfunded commitments[6] - The portfolio weighted average yield to maturity was approximately 17.2% as of December 31, 2024, down from 18.3% as of September 30, 2024[6] - The total reserve for current expected credit losses increased to $4.3 million, approximately 1.1% of the aggregate portfolio principal balance of loans held for investment[10] Shareholder Returns - The company declared a total of $2.06 in dividends per common share during 2024, compared to $2.17 during 2023[10] Leverage and Book Value - As of December 31, 2024, the company had a consolidated leverage ratio of approximately 34%[6] - The book value per common share decreased from $14.94 as of December 31, 2023, to $14.83 as of December 31, 2024[10] Future Projections - The company expects net interest income of approximately $14.1 million for full year 2025, compared to $14.5 million as of September 30, 2024[10] Share Count - The weighted average number of common shares outstanding increased to 19,830,596 in Q4 2024 from 18,182,403 in Q4 2023[24]