AFC Gamma(US:AFCG)2025-11-12 12:31Financial Performance - The company declared cash dividends totaling $11,975,530 for the nine months ended September 30, 2025, with a per-share amount of $0.53[190]. - Distributable earnings for the three months ended September 30, 2025, were $3.54 million, compared to $7.25 million for the same period in 2024, reflecting a decrease of approximately 51%[201]. - The net loss from continuing operations for the three months ended September 30, 2025, was approximately $(12.5) million, compared to a net income of approximately $1.2 million for the same period in 2024[204]. - The book value per share decreased from approximately $9.02 as of December 31, 2024, to approximately $7.49 as of September 30, 2025[196]. - The company expects to realize a taxable loss of approximately $4.1 million upon closing the settlement, significantly impacting distributable earnings for Q4 2025, leading to no anticipated dividend for that quarter[194]. Loan and Investment Activities - The company expanded its investment strategy to include senior secured mortgage loans to ancillary cannabis companies and other industries, aiming for attractive risk-adjusted returns[172]. - The company completed a spin-off of its commercial real estate portfolio into an independent publicly traded REIT, Sunrise Realty Trust, Inc., on July 9, 2024[180]. - The company reported a loan repayment of approximately $23.2 million from Private Company J, along with exit fees of approximately $0.9 million[184]. - The company placed a loan with Private Company P on nonaccrual status effective June 1, 2025, due to payment defaults[182]. - The company increased its loan commitment to Private Company O by an additional $3.0 million, extending the draw period and amortization start date[185]. - The loan portfolio as of September 30, 2025, comprised 14 loans with an aggregate originated commitment of approximately $344.6 million and outstanding principal of approximately $332.8 million[220]. - The company funded approximately $40.7 million in new loans during the nine months ended September 30, 2025, while principal repayments amounted to approximately $61.0 million[230]. Credit and Risk Management - The company is subject to credit risk on its commercial real estate loans and other targeted types of loans, which may adversely impact operating results[292]. - The company primarily provides loans to companies in the cannabis industry, which involves significant risks including federal illegality and lack of liquidity[298]. - Management plans to monitor the legal landscape to mitigate risks associated with the cannabis industry[300]. - The provision for current expected credit losses increased by approximately $7.2 million for the three months ended September 30, 2025, compared to the same period in 2024[218]. - As of September 30, 2025, the CECL Reserve was approximately $51.3 million, or 18.69%, of total loans held at carrying value of approximately $274.7 million[218]. Cash Flow and Liquidity - The company reported net cash provided by operating activities of approximately $11.8 million for the nine months ended September 30, 2025, which was less than the $12.0 million in dividends declared during the same period[243]. - As of September 30, 2025, the company had unrestricted cash totaling approximately $45.1 million, down from $103.6 million as of December 31, 2024[244]. - Net cash provided by investing activities was approximately $23.8 million for the nine months ended September 30, 2025, down from approximately $99.3 million in 2024, primarily due to a decrease in proceeds from the sale of loans[263]. - Net cash used in financing activities was approximately $(94.1) million for the nine months ended September 30, 2025, compared to $(70.9) million in 2024, largely due to a decrease in borrowings on the Revolving Credit Facility[264]. - The Company is required to maintain liquidity of at least $5.0 million and an annual debt service coverage of at least 1.50 to 1.0 under the Revolving Credit Facility[251]. Debt and Financing - The company entered into a new shelf registration statement on Form S-3, allowing for the offer and sale of up to $1.0 billion in securities[187]. - The Company issued $100.0 million in aggregate principal amount of the 2027 Senior Notes, accruing interest at a rate of 5.75% per annum, with net proceeds of approximately $97.0 million[254]. - The Revolving Credit Facility's initial maturity date was extended to April 29, 2028, with aggregate commitments of $60.0 million, potentially increasing to $100.0 million[248]. - As of September 30, 2025, the Company had total unfunded commitments of $11.4 million, with $6.2 million due in less than one year[269]. - As of September 30, 2025, the Company was in compliance with all covenants contained in the Revolving Credit Agreement[251]. Asset Management - The total loan held at fair value decreased from approximately $30.5 million as of December 31, 2024, to approximately $16.9 million as of September 30, 2025[226]. - The company wrote off a loan receivable of $1.8 million during the second quarter of 2025, which was equal to the carrying value of the loan[235]. - As of September 30, 2025, the portfolio of assets held outside of TRS1 had a weighted average real estate collateral coverage of approximately 1.0 times the aggregate committed principal amount of loans[239]. - 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%[249]. - As of September 30, 2025, the top three borrowers represented approximately 49.5% of the aggregate outstanding principal balances and 45.4% of total loan commitments[295].