The following is a summary of the Chicago Atlantic Real Estate Finance, Inc. (REFI) Q4 2023 Earnings Call Transcript:

Financial Performance:

• Chicago Atlantic reported loan commitments totaling $379 million at a yield to maturity of 19.4%.

• The loan to enterprise value was 44.1%, while principal fundings reached $25 million.

• The debt service coverage ratio was 8:1, and $66 million was outstanding on the revolving credit facility by year end.

• In Q4, the net interest income increased 8% sequentially to $14.8 million.

• Gross interest income was boosted by prepayment fees, which stood at $11 million repayments.

• Total prepayment fees in 2023 were $3.5 million.

• Operating expenses increased due to a surge in incentive fees.

• Adjusted distributable earnings increase per weighted average diluted share to $0.53 in Q4, with 2023's figure being $2.26, marking a 7.6% YoY increase.

• The total annual dividends in 2023 were about 94.3% of adjusted distributable earnings per weighted average share.

• The book value at year-end was $14.94 per common share.

Business Progress:

• The portfolio is 81% floating rate, with plans to expand banking relationships and increase the line to fund added growth.

• The credit facility maturity was extended, potentially growing the facility from $125 million to $150 million.

• The company hinted at leverage equal to 100% to 200% of book equity, indicating potential for significant portfolio growth.

• Quality of the portfolio remained strong, with 88% risk-rated 3 or better, and 70% of the portfolio fully secured.

• The dividend payout ratio for 2024 aims to be based on distributable earnings per share of 90% to 100%.

• Chicago Atlantic ended Q4 with notable growth and improved credit quality, providing a total return around 22.3%, while deal pipeline grew to $600 million.

• Going forward, positivity surrounds potential federal cannabis rescheduling leading to an improved cash flow and credit quality impact, and the rollout of adult-use sales in Ohio for 2024.

More details: Chicago Atlantic Real Estate Finance IR

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