Core Viewpoint - Chicago Atlantic Real Estate Finance, Inc. focuses on debt investments in the U.S. cannabis industry, leveraging its expertise and limited competition to achieve differentiated risk and high returns [1][5][11]. Company Overview - The company operates at the intersection of real estate, credit, and the cannabis sector, applying best-in-class sector expertise and relationship-based sourcing capabilities [1]. - Chicago Atlantic has a team of over 100 professionals managing $2.3 billion in capital, emphasizing the importance of expertise in generating alpha for investors [6]. Financial Performance - As of December 31, the loan portfolio principal totaled approximately $411 million across 26 companies, with a weighted average yield to maturity of 16.3% [12]. - Net interest income for the fourth quarter was $14.2 million, a 4% increase from the previous quarter, primarily due to the collection of past-due interest [17]. - The company maintains a strong real estate coverage of 1.2 times and a loan-to-enterprise value ratio of 44.2% [19]. Market Position and Strategy - Chicago Atlantic's portfolio has limited overlap with other private credit markets, insulating it from broader market pressures [7]. - The company has a strong pipeline of $616 million, indicating robust demand for debt capital in the cannabis sector [8][41]. - The strategy includes a disciplined focus on credit and collateral, with a commitment to maintaining underwriting standards despite market changes [11][43]. Regulatory Environment - Recent positive momentum in cannabis policy, including President Trump's executive order to reclassify cannabis, is expected to improve industry economics without increasing lending competition [10][11]. - The company does not anticipate significant changes in competition or pricing due to the current regulatory environment [26][43]. Loan Portfolio Management - The portfolio consists of 37.6% fixed-rate loans and 62.4% floating-rate loans, with only 9% exposed to further rate declines [13][14]. - The company has structured its loans with high interest rate floors, providing protection against interest rate volatility [14][15]. - Recent loan activity includes significant advances to borrowers, with a focus on supporting growth and restructuring efforts [21][35]. Dividend and Shareholder Returns - Distributable earnings per share for the fourth quarter were approximately $0.44, with a total of $8.47 per share distributed since inception, representing an annualized yield on cost of approximately 12.4% [20]. - The company expects to maintain a dividend payout ratio of 90% to 100% for the 2026 tax year [22].

Financial Data and Key Metrics Changes - As of December 31, 2025, the loan portfolio principal totaled approximately $411 million across 26 portfolio companies, with a weighted average yield to maturity of 16.3%, compared to 16.5% in the third quarter [11] - Net interest income for the fourth quarter was $14.2 million, a 4% increase from $13.7 million in the third quarter [17] - Distributable earnings per weighted average share were approximately $0.44 for the fourth quarter and $1.92 for the year [19] Business Line Data and Key Metrics Changes - Gross originations during the fourth quarter were approximately $19 million, with $5 million advanced to a new borrower and $14 million to existing borrowers [11] - The portfolio consisted of 37.6% fixed-rate loans and 62.4% floating-rate loans, with only 9% exposed to further rate declines [13][14] Market Data and Key Metrics Changes - The pipeline of potential loans currently stands at $616 million, indicating strong demand for debt capital in the cannabis sector [8] - The company has not observed new lenders entering the market despite the recent rescheduling announcement, which has increased demand for debt capital [26][30] Company Strategy and Development Direction - The company focuses on the cannabis sector, leveraging its expertise to create a differentiated risk-return profile [4][8] - Chicago Atlantic aims to maintain a disciplined approach to underwriting and risk management, ensuring that it does not lower its credit standards despite increased market opportunities [45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current environment and the potential for portfolio growth, although liquidity constraints may impact capital deployment [24] - The company is well-positioned to benefit from positive momentum in cannabis policy, including the recent executive order to reclassify cannabis [9] Other Important Information - The company has maintained a CECL reserve of approximately $5.1 million, representing 1.23% of outstanding principal [18] - The book value per common share was $14.60 as of December 31, 2025, with approximately 21.5 million common shares outstanding [20] Q&A Session Summary Question: Outlook on pipeline and net portfolio growth - Management remains confident in achieving net portfolio growth for the year, although liquidity is a concern [24] Question: Current yields and impact of rescheduling - Rescheduling has increased demand for debt capital but has not changed pricing or underwriting standards [26] Question: Competition in the market - No new lenders have entered the market following rescheduling, and significant reforms are needed to attract more participants [30] Question: Loan number nine and borrower situation - Loan number nine has seen improvements in cash flow and revenue, leading to a current status on interest payments, though it remains on non-accrual [38][40] Question: Early repayments on loans - Loan number one was refinanced, while loan number 27 was paid off without pursuing refinancing due to various considerations [42] Question: Pipeline increase and pricing - The increase in the pipeline does not correlate with changes in pricing or risk evaluation, as the company maintains strict underwriting standards [44][45]

Financial Data and Key Metrics Changes - As of December 31, 2025, the loan portfolio principal totaled approximately $411 million across 26 portfolio companies, with a weighted average yield to maturity of 16.3%, down from 16.5% in the third quarter [11] - Net interest income for the fourth quarter was $14.2 million, a 4% increase from $13.7 million in the third quarter, primarily due to the collection of past due interest [17] - Distributable earnings per weighted average share were approximately $0.44 for the fourth quarter and $1.92 for the year, with a book value per common share of $14.60 as of December 31, 2025 [19][20] Business Line Data and Key Metrics Changes - Gross originations during the fourth quarter were approximately $19 million, with $5 million advanced to a new borrower and $14 million to existing borrowers [11] - The portfolio consisted of 37.6% fixed-rate loans and 62.4% floating-rate loans, with only 9% exposed to further rate declines [13][14] Market Data and Key Metrics Changes - The current pipeline stands at $616 million, indicating strong demand for growth capital within the cannabis sector [8] - Recent positive momentum in cannabis policy includes President Trump's executive order to reclassify cannabis from Schedule I to Schedule III, which could improve industry economics [9] Company Strategy and Development Direction - The company focuses on debt investments in the cannabis industry, leveraging limited competition to structure senior secured positions with differentiated downside risk [4][6] - The strategy emphasizes a disciplined focus on credit and collateral, with a strong emphasis on risk management and collaboration with borrowers [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute on the pipeline and achieve net portfolio growth despite liquidity constraints [24] - The company maintains a conservative approach to underwriting, not lowering standards despite increased demand for debt capital due to rescheduling [26][45] Other Important Information - The company has a CECL reserve of approximately $5.1 million, representing 1.23% of outstanding principal, maintaining strong real estate coverage of 1.2 times [18] - Total leverage was 32% of book equity as of December 31, 2025, with $49.1 million outstanding on the senior secured revolving credit facility [15][16] Q&A Session Summary Question: Outlook on pipeline and net portfolio growth - Management remains confident in achieving net portfolio growth, with $50 million of liquidity available for deployment [24] Question: Current yields and impact of rescheduling - Rescheduling has increased demand for debt capital but has not changed pricing or underwriting processes [26] Question: Competition in the market - No new lenders have entered the market post-rescheduling, and significant reforms are needed to increase competition [30][31] Question: Loan number nine's additional funding - The additional funding was part of a recapitalization strategy to improve the borrower's cash flow and operations [37][38] Question: Early repayments on loans - Loan number one was refinanced, while loan number 27 was paid off without pursuing refinancing due to various considerations [42] Question: Pipeline increase and pricing consistency - The increase in the pipeline reflects a broader range of opportunities, but underwriting standards and pricing remain unchanged [44][45]

Financial Data and Key Metrics Changes - As of December 31, 2025, the loan portfolio principal totaled approximately $411 million across 26 portfolio companies, with a weighted average yield to maturity of 16.3%, down from 16.5% in the third quarter [12] - Net interest income for the fourth quarter was $14.2 million, a 4% increase from $13.7 million in the third quarter, primarily due to the collection of past due interest [18] - Total leverage was 32% of book equity as of December 31, compared to 33% as of September 30 [16] Business Line Data and Key Metrics Changes - Gross originations during the fourth quarter were approximately $19 million, with $5 million advanced to a new borrower and $14 million to existing borrowers [12] - The portfolio consisted of 37.6% fixed-rate loans and 62.4% floating-rate loans, with only 9% exposed to further rate declines [13][14] Market Data and Key Metrics Changes - The current pipeline stands at $616 million, indicating strong demand for debt capital in the cannabis sector [9] - The company has not experienced an over-allocation of capital, which is leading to compressed yields in other sectors of private credit [9] Company Strategy and Development Direction - The company focuses on the cannabis sector, leveraging its expertise to make debt investments in an industry with limited sources of debt capital [5] - The strategy is built on a disciplined focus on credit and collateral, with a strong emphasis on risk management [9] - The company aims to maintain a dividend payout ratio based on distributable earnings per share of 90%-100% for the 2026 tax year [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current environment, noting a strong pipeline and the potential for improved industry economics due to recent policy changes [10] - The company underwrites every investment assuming no regulatory-driven credit improvements, maintaining a conservative approach to risk [11] Other Important Information - The company has distributed $8.47 per common share in dividends since inception, representing an annualized yield on cost of approximately 12.4% [20] - The company received a total of $40.4 million in loan repayments, including early prepayments [21] Q&A Session Summary Question: Can you provide insight into the pipeline and potential net portfolio growth? - Management indicated confidence in achieving net portfolio growth, although liquidity is currently constrained relative to the pipeline [25] Question: How has rescheduling impacted current yields and underwriting? - Rescheduling has increased demand for debt capital but has not changed pricing or underwriting standards [27] Question: Are the new non-accrual loans in Arizona related to the same sponsor? - Yes, the loans are related to the same sponsor, who is navigating a challenging pricing environment [33] Question: Can you explain the logic behind lending more to a troubled borrower? - The company supported the borrower through a recapitalization and acquisition of additional dispensaries, improving cash flow and allowing the borrower to become current on interest [37] Question: What were the reasons for early repayments on certain loans? - Loan number 1 was refinanced with a new credit facility, while loan number 27 was paid off without pursuing refinancing due to various considerations [43]

Industry Overview - The U.S. cannabis industry is projected to exceed $40 billion in sales in the coming years, despite facing margin pressures and uncertain federal reforms [1] - State-level reforms are expanding access to cannabis, leading investors to seek alternative exposure methods [1] Ancillary Cannabis Companies - Ancillary cannabis companies do not directly handle the plant but provide real estate or financing to licensed operators, generating revenue through leases or interest payments [2] - Many ancillary companies operate as REITs, appealing to income-focused investors due to potential dividend income [2] Market Conditions - The cannabis sector is experiencing volatility, with operators facing pricing compression and selective capital markets [3] - Balance sheet strength is crucial, with investors focusing on rent collection, loan performance, liquidity levels, and dividend sustainability [3] Key Ancillary Companies Innovative Industrial Properties, Inc. (IIPR) - IIPR is a leading cannabis-focused REIT, acquiring industrial cultivation and processing facilities and leasing them to licensed operators [4][5] - As of late 2025, IIPR owned 112 properties across 19 states, totaling approximately 9 million rentable square feet [5] - The company reported revenue of $64.7 million for the most recent quarter, a decline attributed to tenant defaults, but maintained liquidity of roughly $79 million [8] NewLake Capital Partners, Inc. (NLCP) - NLCP operates as a smaller cannabis-focused REIT, acquiring cultivation and retail properties through sale-leaseback transactions [9][10] - As of late 2025, NLCP owned 34 properties, including 15 cultivation facilities and 19 dispensaries [10] - The company reported revenue of $12.6 million for the most recent quarter, with a quarterly dividend of $0.43 per share [12][13] Chicago Atlantic Real Estate Finance, Inc. (REFI) - REFI operates as a commercial mortgage REIT, originating senior secured loans to licensed cannabis operators [14][15] - As of late 2025, REFI reported a total loan principal outstanding of approximately $400 million [15] - The company declared regular dividends of $0.47 per share, with a weighted average yield to maturity of about 16.5% [18] Investment Focus - Investors are likely to focus on liquidity, tenant health, and dividend stability as the cannabis sector evolves in February 2026 [20]

Industry Overview - The U.S. cannabis industry is evolving with expanding legalization momentum, leading to growth in both medical and adult-use markets. Analysts predict long-term demand will continue to rise as more states approve regulated programs [1][3] - Ancillary stocks, which do not directly handle cannabis, are gaining investor interest due to regulatory hurdles and difficult banking conditions faced by plant-touching companies. These ancillary companies benefit from industry growth while reducing risk [1][2] Ancillary Stocks Characteristics - Ancillary stocks provide services or capital to licensed operators, including owning real estate for cultivation and retail operations, and offering financing that banks often avoid. This model allows investors to gain exposure to the cannabis sector without directly handling the plant [2] - Many ancillary companies operate as Real Estate Investment Trusts (REITs) or structured lenders, providing reliable income through dividends, making them attractive for long-term portfolios [2] Financial Stability and Future Outlook - As the cannabis market matures, financial strength and stability are increasingly important. Investors are looking for companies with steady revenue and disciplined management, especially those positioned to benefit from potential federal reforms [3] - The year 2026 is anticipated to be significant for ancillary growth, particularly if there are changes in federal regulations regarding cannabis [3] Leading Ancillary Stocks to Watch - **Innovative Industrial Properties (IIPR)**: Focuses on purchasing cultivation and processing facilities and leasing them back to licensed operators. It benefits from industry growth without handling cannabis directly and has shown steady performance with strong rental income [5][8] - **NewLake Capital Partners (NLCP)**: Operates as a REIT with a concentrated portfolio of dispensaries and cultivation facilities. It emphasizes careful tenant selection and has maintained conservative debt levels, appealing to cautious investors [9][11] - **Chicago Atlantic Real Estate Finance (REFI)**: Provides secured loans to licensed operators, focusing on senior secured credit. This model allows it to command attractive interest rates in a market underserved by traditional banks [12][14]

Industry Overview - The U.S. cannabis industry is projected to reach nearly $45 billion by 2025, with a total economic impact exceeding $120 billion by year-end [1] - Recreational cannabis is legal in 24 states, and medical use is permitted in 40 states, indicating strong public support for legalization [1] - Major beverage companies entering the cannabis space signal wider mainstream acceptance [1] Ancillary Companies - Ancillary cannabis stocks are gaining momentum as they provide exposure to the cannabis industry without the risks associated with handling the plant directly [1][4] - These companies support the cannabis industry through real estate, financing, and infrastructure, offering reduced regulatory risk and consistent dividends [4][13] Key Players - **Innovative Industrial Properties Inc. (IIPR)**: A real estate investment trust focusing on cannabis-related industrial properties, owning over 100 properties across 19 states, generating steady income from long-term leases [5][8] - **NewLake Capital Partners Inc. (NLCP)**: A growing REIT with 34 properties, including cultivation facilities and dispensaries, maintaining high occupancy rates and consistent cash generation [9] - **Chicago Atlantic Real Estate Finance Inc. (REFI)**: A commercial mortgage REIT specializing in lending to legal cannabis businesses, generating nearly $62 million in interest and dividend income in Q1 2025 [10][12] Financial Performance - IIPR has maintained stable performance with predictable revenue from triple-net leases and has paid dividends each quarter since 2017, with a current share price around $55 [8] - NLCP declared a dividend of $0.43 per share in Q2 2025, representing an annualized dividend of $1.72, with management optimistic about growth [9] - REFI reported strong results with a healthy profit margin and low delinquency rates, focusing on conservative lending practices [12]