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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