Chicago Atlantic Real Estate Finance(US:REFI)2024-05-07 18:17Financial Data and Key Metrics Changes - The net interest income for Q1 2024 declined sequentially from $14.8 million to $13.2 million, a decrease of 10.8% [17] - The weighted average loan-to-enterprise value was 40.5%, down from 44.1% at year-end [9] - Adjusted distributable earnings per weighted average diluted share was $0.52 for Q1 2024, compared to $0.53 for Q4 2023 [23] - The company had $81.3 million outstanding on the credit facility as of March 31, compared to $66 million as of December 31, 2023 [19] Business Line Data and Key Metrics Changes - The loan portfolio had total commitments of $401 million across 28 portfolio companies, with a weighted average yield to maturity of 19.4%, consistent with December 31 [15] - The portfolio remains predominantly floating rate, with 77% based off the prime rate [9] - The real estate coverage ratio of the portfolio was 1.3x as of March 31, down from 1.5x at December 31, 2023 [32] Market Data and Key Metrics Changes - The company reported strong loan demand driven by improving sentiment in the cannabis industry, which has helped in accessing additional capital [28] - Positive developments in state-level cannabis legalization were noted, with Florida and Ohio making progress [13] Company Strategy and Development Direction - The company is focused on growing the loan portfolio in a disciplined manner while maintaining strong credit quality and an attractive weighted average portfolio yield [27] - The pipeline of actionable deals stands at $585 million, with a focus on operators in limited license states and those transitioning from medical to adult use [28] - The company affirmed its guidance issued in conjunction with the Q4 release [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the regulatory changes in the cannabis industry, which are expected to bring significant benefits, including increased access to capital [8] - The company does not expect any immediate changes from the recent regulatory announcements for another 18 to 24 months [34] - Management noted that creditworthiness among operators is improving, with strong EBITDA performance [36] Other Important Information - The company issued approximately 896,000 shares through the ATM program at a weighted average price of $15.93, raising net proceeds of approximately $13.9 million [14] - The company’s CECL reserve as of March 31 was approximately $5.4 million, an increase from $5 million as of December 31, 2023 [20] Q&A Session Summary Question: Insights on the short and long-term impacts of DA rescheduling on the business - Management indicated that any impact from the regulatory changes would likely be felt after the 24-month mark, with no immediate changes expected [34] Question: Changes in the industry and operator landscape - Management reported positive interactions with operators, noting improved creditworthiness and strong EBITDA performance [36] Question: Competition in the lending space post-regulatory changes - Management stated that there are currently no signs of increased competition based on recent data and deals observed [39]