AFC Gamma(US:AFCG)2025-05-14 11:30Financial 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].