Advanced Flower Capital Inc (AFCG) 2025 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Advanced Flower Capital second quarter 2025 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

各位來賓，感謝您的耐心等待。歡迎參加Advanced Flower Capital 2025年第二季財報電話會議。 （操作說明）請注意，本次會議正在錄音。

I would now like to hand the conference over to your speaker today, Gabriel Katz, Chief Legal Officer. Please go ahead.

現在我把會議交給今天的主講人，首席法務官加布里埃爾·卡茨先生。請開始吧。

Good morning, and thank you all for joining Advanced Flower Capital's earnings call for the quarter ended June 30, 2025, and I'm joined this morning by Robyn Tannenbaum, our President and Chief Investment Officer; Daniel Neville, our Chief Executive Officer; and Brandon Hetzel, our Chief Financial Officer.

早安，感謝各位參加 Advanced Flower Capital 截至 2025 年 6 月 30 日的季度財報電話會議。今天早上與我一起參加會議的有：總裁兼首席投資長 Robyn Tannenbaum；執行長 Daniel Neville；以及財務長 Brandon Hetzel。

Before we begin, I would like to note that this call is being recorded. Replay information is included in our June 24, 2025 press release and is posted on the Investor Relations portion of AFC's website at advancedflowercapital.com along with our second quarter 2025 earnings release and investor presentation.

在開始之前，我想提醒大家，這次電話會議正在錄音。錄音回放資訊已包含在我們2025年6月24日的新聞稿中，並發佈在AFC公司網站advancedflowercapital.com的投資者關係版塊，同時發布的還有我們2025年第二季度的收益報告和投資者演示文稿。

Today's conference call includes forward-looking statements and projections that reflect the company's current views with respect to, among other things, market developments, a proposed corporate conversion and financial performance and projections in 2025 and beyond. These statements are subject to inherent uncertainties in predicting future results. Please refer to Advanced Flower Capital's most recent periodic filings with the SEC, including our quarterly report on Form 10-Q filed earlier this morning for certain conditions and significant factors that could cause actual results to differ materially from these forward-looking statements and projections.

今天的電話會議包含前瞻性陳述和預測，反映了公司目前對市場發展、擬議的公司轉型以及2025年及以後的財務表現和預測等方面的看法。這些陳述存在預測未來結果的固有不確定性。請參閱Advanced Flower Capital向美國證券交易委員會（SEC）提交的最新定期報告，包括我們今天稍早提交的10-Q季報告，以了解可能導致實際結果與這些前瞻性陳述和預測有重大差異的具體情況和重要因素。

During today's conference call, management will refer to non-GAAP financial measures including distributable earnings. Please see our second quarter earnings release uploaded to our website for reconciliations of the non-GAAP financial measures with the most directly comparable GAAP measures.

在今天的電話會議中，管理階層將提及非GAAP財務指標，包括可分配收益。請參閱我們網站上發布的第二季財報報告，以了解非GAAP財務指標與最直接可比較的GAAP指標的調節表。

Today's call will begin with Dan providing an overview of our portfolio, pipeline and the cannabis industry. Robyn will then provide information about the proposed conversion to a business development company that we announced earlier this morning. Finally, Brandon will conclude with a summary of our financial results before we open the lines for Q&A.

今天的電話會議將首先由Dan概述我們的產品組合、在研項目以及大麻產業概況。隨後，Robyn將介紹我們今天早些時候宣布的擬議轉型為業務發展公司的計劃。最後，Brandon將總結我們的財務業績，之後我們將開放問答環節。

With that, I will now turn the call over to our CEO, Dan Neville.

接下來，我將把電話交給我們的執行長丹·內維爾。

Thanks, Gabe, and good morning, everyone. I'll begin with an overview of our results, followed by an update on our portfolio. For the second quarter of 2025, AFC generated distributable earnings of $0.15 per basic weighted average share of common stock. Additionally, the Board of Directors declared a second quarter dividend of $0.15 per common share outstanding, which was paid on July 15, 2025, to shareholders of record as of June 30, 2025.

謝謝 Gabe，大家早安。我先概述一下我們的業績，然後再更新一下我們的投資組合狀況。 2025 年第二季度，AFC 每股普通股基本加權平均收益為 0.15 美元。此外，董事會宣布派發第二季度股息，每股普通股 0.15 美元，已於 2025 年 7 月 15 日支付給截至 2025 年 6 月 30 日登記在冊的股東。

While over the last year, we have made significant progress reducing our exposure to underperforming credits, there is still work to be done our earnings may be impacted by the underperformance of some of our legacy loans and any realized losses we take on assets. During the quarter, we exited Public Company A's equipment loan which impacted earnings. As a reminder, we were a participant in an equipment loan to a Nevada cultivator, which has been in liquidation for about 3 years. In Q2, we received the last payment from the collateral agent as part of the liquidation and we wrote off the remaining carrying value of the loan. This impacted distributable earnings but did not impact book value as the loan was already fully reserved.

儘管過去一年我們在降低不良信貸曝險方面取得了顯著進展，但仍有許多工作要做。部分遺留貸款表現不佳以及我們已確認的資產損失可能會影響我們的收益。本季度，我們終止了對A上市公司的設備貸款，這對收益產生了一定影響。需要說明的是，我們曾參與向內華達州種植商提供的設備貸款，該公司已清算約3年。第二季度，我們收到了抵押代理人支付的最後一筆款項，作為清算的一部分，我們將剩餘的貸款帳面價值註銷。這影響了可分配收益，但由於該貸款已全額提列準備金，因此並未影響帳面價值。

Turning to our current portfolio management efforts. I would like to touch on a few of our underperforming loans. Regarding Private Company A, the receiver has executed LOIs for 2 of the 3 main assets, and will be submitting for court approval in the near term. He is also in discussions for the timely sale of the third asset and has multiple parties interested and has been efficient in the management and liquidation of these assets. Subsequent to quarter end, Private Company P's loan was moved to nonaccrual status as of June 1, 2025, as the company did not pay interest due July 1. As a result, AFC provided a default and acceleration notice. We will look to exercise all rights and remedies to recover our principal. There is approximately $16 million of principal outstanding and the loan is secured by 1 cultivation facility and 1 nonoperational dispensary in Michigan, both of which are owned real estate.

接下來談談我們目前的投資組合管理工作。我想重點談談幾筆表現不佳的貸款。關於A公司，接管人已就其三項主要資產中的兩項簽署了意向書，並將於近期提交法院批准。接管人也在就及時出售第三項資產進行洽談，目前已有多家買家表示有興趣，並且在資產管理和清算方面表現出色。季度末後，由於P公司未能支付7月1日到期的利息，其貸款已於2025年6月1日轉為非應計貸款。因此，AFC發出了違約和加速到期通知。我們將採取一切必要措施追回本金。目前該筆貸款的未償還本金約為1600萬美元，以位於密歇根州的一處種植設施和一家已停業的藥房作為抵押，這兩處均為我們擁有的不動產。

Lastly, we wanted to take a minute to touch on subsidiary of Private Company G, which is Justice Grown. We are currently engaged in 3 separate legal proceedings with justice grown entities related to enforcing certain rights under the credit facility in connection with the alleged defaults. We have appealed a pre-discovery preliminary injunction in one of the actions, barring us from exercising rights with respect to certain alleged defaults. We also have outstanding litigation surrounding the shareholder guarantee in New York. As a reminder, our loan to Justice Grown matures in May 2026 and is secured by the vertical assets in New Jersey, including an own cultivation facility in 3 dispensaries, 2 of which are owned. In Pennsylvania, we are secured by 3 dispensaries and an own cultivation facility, which is currently not operational. We remain extremely focused on realizing maximum value from these underperforming loans.

最後，我們想花一點時間談談G私人公司的子公司Justice Grown。目前，我們正與Justice Grown的實體就其涉嫌違約行為，進行三項獨立的法律訴訟，以強制執行信貸協議項下的某些權利。我們已就其中一項訴訟中的初步禁令提出上訴，該禁令禁止我們針對某些涉嫌違約行為行使權利。此外，我們在紐約還有與股東擔保相關的未決訴訟。再次提醒，我們向Justice Grown提供的貸款將於2026年5月到期，並以我們在新澤西州的垂直資產作為擔保，其中包括在三家藥房（其中兩家為自有）內擁有的種植設施。在賓州，我們以三家藥局和一家目前未營運的自有種植設施作為擔保。我們將繼續全力以赴，從這些表現不佳的貸款中實現最大價值。

On a positive note, there's recently been talk rescheduling being considered by the Trump administration. We believe that rescheduling cannabis would increase the supply of capital for cannabis companies and lead to potentially better recoveries for our troubled loans. At the moment, however, the sector remains in a challenging environment for many operators as there continues to be limited capital entering the market. In light of this environment, as disciplined capital allocators, we have only sought to invest in established operators. However, many of these operators do not have real estate coverage which limits our pipeline and our ability to invest in size. It has become clear to the Board and leadership team that expanding our investment focus beyond real estate-backed companies is an important step to deliver value to our shareholders.

令人欣慰的是，近期有消息指出川普政府正在考慮重新安排大麻的管制期限。我們認為，重新安排大麻的管制期限將增加大麻公司的資金供應，並有可能提高我們不良貸款的回收率。然而，目前由於市場資金持續有限，許多業者仍面臨嚴峻的挑戰。有鑑於此，作為謹慎的資本配置者，我們一直只投資於成熟的業者。然而，這些業者中許多缺乏房地產投資，這限制了我們的投資管道和投資規模。董事會和管理團隊已明確，將投資重點擴展到房地產投資以外的公司，是為股東創造價值的重要一步。

As such, today, we proposed to convert the company from a REIT to a BDC, which Robyn will speak to now.

因此，今天我們提議將公司從房地產投資信託基金 (REIT) 轉變為商業發展公司 (BDC)，羅賓接下來將對此進行闡述。

Thanks, Dan, and good morning, everyone. This morning, we announced our intention to convert from a REIT, the current structure under which we operate to a business development company, or BDC. This conversion, which is subject to shareholder approval on certain related matters will enable AFC to originate and invest in a broader array of opportunities, which would include both real estate and non-real estate covered assets. We believe the conversion, if approved, would be an important turning point for AFC.

謝謝丹，大家早安。今天早上，我們宣布計劃將目前的營運結構——房地產投資信託基金（REIT）——轉型為商業發展公司（BDC）。此次轉型尚需股東就某些相關事宜批准，轉型後AFC將能夠發掘和投資更廣泛的投資機會，包括房地產和非房地產資產。我們相信，如果獲得批准，此次轉型將是AFC發展歷程中的重要轉捩點。

Given the capital-intensive nature of the cannabis industry, combined with the high cost of capital, many operators do not own real estate, which significantly limits the universe of cannabis operators AFC can lend to as a mortgage REIT. As a BDC, the investment universe for AFC would expand, allowing the company to lend to operators without real estate coverage as well as the ancillary cannabis businesses with high growth potential. Moreover, should rescheduling occur at the federal level, we believe much of the inflow of new capital will go towards established operators. As most of these companies do not own real estate, the BDC conversion should better position AFC to capitalize on this sector tailwind. We also announced that our Board has approved an expanded investment mandate effective immediately, that includes direct lending opportunities outside the cannabis industry.

鑑於大麻產業的資本密集型特性以及高昂的資本成本，許多業者並不擁有房地產，這極大地限制了AFC作為抵押型房地產投資信託基金（REIT）可向其提供貸款的大麻營運商範圍。而作為一家商業發展公司（BDC），AFC的投資範圍將擴大，使其能夠向不擁有房地產的營運商以及具有高成長潛力的輔助性大麻企業提供貸款。此外，如果聯邦層級進行重新分類，我們相信大部分新增資本將流向現有業者。由於這些公司大多不擁有房地產，BDC轉型將使AFC更能掌握此產業利好因素。我們也宣布，董事會已批准一項立即生效的擴大投資授權，其中包括向大麻產業以外的企業提供直接貸款。

We believe that there are interesting credit opportunities in other private and public middle market companies that can generate attractive risk-adjusted returns. By broadening the opportunity set AFC will be better positioned to diversify its exposure across industries and credit risk profiles. The AFC investment team has over 30 years of experience in direct lending outside of cannabis. with over $10 billion of direct lending transactions executed as well as 20 years' experience managing and scaling BDCs.

我們相信，其他私人和上市的中型市場公司也蘊藏許多極具吸引力的信貸投資機會，能夠帶來可觀的風險調整後收益。透過拓展投資範圍，AFC 將能夠更好地分散其在不同行業和信用風險等級的投資。 AFC 投資團隊在非大麻產業的直接貸款領域擁有超過 30 年的經驗，已完成超過 100 億美元的直接貸款交易，並擁有 20 年的商業發展公司 (BDC) 管理和規模化經驗。

In short, we believe this is a positive step for the company and for our shareholders going forward. the proposed conversion is subject to, among other things, approval by AFC shareholders of a new investment advisory agreement with AFCM, that complies with the requirements of the Investment Company Act of 1940. Additional information will be available when we file our proxy with the SEC. If approved by AFC shareholders and subject to additional required approvals by our Board, we anticipate that our conversion would occur in the first quarter of 2026.

簡而言之，我們相信這對公司和股東而言都是積極的一步。擬議的轉換方案需滿足多項條件，其中包括AFC股東批准與AFCM簽訂的新投資顧問協議，該協議須符合1940年《投資公司法》的要求。更多資訊將在我們向美國證券交易委員會提交委託書時公佈。如果獲得AFC股東批准，並經董事會批准，我們預計轉換將於2026年第一季完成。

now I'll turn it over to Brandon to discuss our financial results in more detail.

現在我將把發言權交給布蘭登，讓他更詳細地討論一下我們的財務表現。

Thank you, Robyn. For the quarter ended June 30, 2025, we generated net interest income of $6.2 million and distributable earnings of $3.4 million or $0.15 per basic weighted average common share and had a GAAP net loss of $13.2 million or a loss of $0.60 per basic weighted average common share. We believe providing distributable earnings is helpful to shareholders and assessing the overall performance of AFC's business. Distributable earnings represents the net income computed in accordance with GAAP, excluding noncash items such as stock compensation expense, any unrealized gains or losses, provision for current expected credit losses, also known as CECL, taxable REIT subsidiary income or loss, net of dividends and other noncash items recorded in net income or loss for the period.

謝謝Robyn。截至2025年6月30日的季度，我們實現淨利息收入620萬美元，可分配收益340萬美元，即每股基本加權平均普通股0.15美元；以美國通用會計準則（GAAP）計算，淨虧損1320萬美元，即每股基本加權平均普通股虧損0.60美元。我們認為，提供可分配收益有助於股東了解公司整體表現。可分配收益是指根據美國通用會計準則計算的淨收入，扣除非現金項目，例如股權激勵費用、任何未實現損益、預期信用損失準備金（CECL）、應納稅的房地產投資信託基金（REIT）子公司損益（扣除股息）以及當期淨收入或虧損中記錄的其他非現金項目。

We ended the second quarter of 2025 with $359.6 million of principal outstanding spread across 15 loans. As of August 1, 2025, our portfolio consisted of $357.9 million of principal outstanding across 15 loans. The weighted average portfolio yield to maturity, which is measured for each loan over the life of such loans was approximately 17% as of August 1, 2025. As of June 30, 2025, the CECL reserve was $44 million or approximately 14.6% of our loans at carrying value and we had a total unrealized loss included on the balance sheet of $21.5 million for our loans held at fair value. As of June 30, 2025, we had total assets of $290.6 million, total shareholder equity of $184.7 million and our book value per share was $8.18.

截至2025年第二季末，我們共有15筆貸款，未償還本金總額為3.596億美元。截至2025年8月1日，我們的貸款組合包含15筆貸款，未償還本金總額為3.579億美元。截至2025年8月1日，每筆貸款在其存續期內的加權平均到期收益率約為17%。截至2025年6月30日，預期信用損失準備金為4,400萬美元，約占我們貸款帳面價值的14.6%；資產負債表上列示的未實現損失總額為2,150萬美元，這些損失均以公允價值計量。截至2025年6月30日，我們的總資產為2.906億美元，股東權益總額為1.847億美元，每股帳面價值為8.18美元。

During the second quarter of AFC expanded a senior secured revolving credit facility from $30 million to $50 million, with an additional $20 million commitment from the facilities lead arranger and FDIC insured bank with over $75 billion of assets. Lastly, on July 15, 2025, we paid a second quarter dividend of $0.15 per share, common share outstanding to shareholders of record as of June 30, 2025.

在第二季度，AFC將一項優先擔保循環信貸額度從3,000萬美元擴大至5,000萬美元，其中牽頭安排行和一家資產超過750億美元的聯邦存款保險公司（FDIC）承保銀行額外承諾提供2,000萬美元。最後，在2025年7月15日，我們向截至2025年6月30日登記在冊的普通股股東派發了第二季度股息，每股0.15美元。

With that, I will now turn it back over to the operator to start the Q&A.

接下來，我將把答疑環節交還給接線員，開始問答環節。

(Operator Instructions)

（操作說明）

Aaron Grey, Alliance Global Partners.

Aaron Grey，Alliance Global Partners。

Hi, thank you very much for the questions. So first question for me, just overall in terms of the decision to convert over to a BDC versus mortgage REIT. Can you talk about why you felt like this was the right vehicle and so doing it as a conversion versus maybe setting up a different structure? I would just like to know more in terms of what happened into the thought process of going about it this way.

您好，非常感謝您的提問。我的第一個問題是關於您決定將公司轉型為商業發展公司（BDC）而不是抵押貸款房地產投資信託基金（REIT）的整體原因。您能否談談您為什麼認為BDC是合適的選擇，以及為什麼選擇轉型而不是建立其他結構？我想更多地了解您做出這個決定的想法。

Sure. So Aaron, it's Robyn. Thanks for the question. I'd say that, look, as we've seen the landscape of cannabis evolve over time, more and more operators that I'd say are growing and thriving don't have, right, don't own their real estate. And as a REIT, we're limited in the investments that we can make in those operators.

當然。我是羅賓，亞倫。謝謝你的提問。我想說的是，隨著時間的推移，我們看到大麻產業的格局發生了變化，越來越多發展壯大的業者並沒有自己的房地產。作為房地產投資信託基金（REIT），我們對這些業者的投資也受到限制。

And as we've continued evaluating options to ensure that we're best positioned for market growth, we believe that now is the right time where converting to a BDC is the best path to realizing long-term value and being able to invest in more of these opportunities that we're seeing. And that's why we went at it this way.

隨著我們不斷評估各種方案，以確保我們能夠更好地掌握市場成長機會，我們認為現在是轉型為商業發展公司（BDC）的最佳時機，這是實現長期價值並投資更多我們看到的機會的最佳途徑。這就是我們選擇這種方式的原因。

Okay. I appreciate that. So turning to the pipeline, right? So I saw it was reduced versus prior quarter. First off, so in converting to a BDC, any line of sight in terms of how much that would broaden the pipeline versus where it is today?

好的，謝謝。那我們來看看銷售通路的情況，對吧？我看到銷售管道比上一季有所減少。首先，如果轉型為商業發展公司（BDC），銷售管道預計能比現在擴大多少？

And is a lot of the limitation of the pipeline due to the fact they don't have the real estate coverage? Or is it some of the broader macro dynamics that you're talking about within the cannabis industry.

管道建​​設的諸多限制是否主要是由於房地產覆蓋不足造成的？還是如您所說，是大麻產業更廣泛的宏觀動態因素造成的？

I'll let Dan take that question. But just as, I guess, a reminder, as we are still operating as the investments that we're going to do currently, will be REIT compliant. So I'll let Dan touch on the current pipeline and potential growth once we expand the aperture.

這個問題就讓丹來回答吧。不過，我想再次提醒大家，我們目前仍在以房地產投資信託基金（REIT）的形式運營，我們即將進行的投資都將符合REIT的規定。接下來，就讓丹來談談我們目前的專案儲備以及擴大投資範圍後的潛在成長。

Yeah, sure. So Aaron, with the proposed BDC conversion, we have the opportunity to invest in cannabis companies and speaking to the cannabis pipeline that don't have real estate coverage today. And given the high cost of capital in the industry and the high cost of keeping real estate on your balance sheet, many, many companies in the universe do not have sufficient real estate coverage to be REIT-qualifying assets.

當然。亞倫，隨著擬議的BDC轉換，我們有機會投資於目前尚未擁有房地產資產的大麻公司，特別是那些正在籌建中的大麻項目。鑑於該行業的高資本成本以及維持資產負債表上房地產資產的高昂成本，許多公司都沒有足夠的房地產資產來符合REIT的資格。

So as a rough figure, I'd say, we see every opportunity that comes across in the cannabis space, about two-third of the opportunities that come across our desk are not real estate covered. And so that gives you kind of a metric to evaluate the expansion and the opportunity set associated with the conversion with respect to cannabis opportunities. You've seen over the last few quarters, our pipeline continue to move down.

所以粗略估計一下，我們處理的每個大麻領域的機會中，大約有三分之二並非房地產投資機會。因此，這為我們提供了一個衡量大麻領域擴張和相關機會的指標。正如您在過去幾個季度所看到的，我們的專案儲備持續下降。

That is a combination of one, just not seeing as many good real estate covered opportunities; and two, given the ongoing uncertainty and volatility in the industry the last couple of weeks aside, with each quarter that goes on without any equity capital coming into the space.

這主要是由於以下兩個原因：一是房地產投資機會不多；二是過去幾週以來，該行業持續存在不確定性和波動性，而且每個季度都沒有股權資本流入該領域。

I think our underwriting standards and how we evaluate credit and risk-adjusted opportunities that we're looking to pursue those kind of benchmarks and metrics get tighter and tighter, which has resulted in the apples-to-apples pipeline moving down over the course of the last few quarters.

我認為，我們的承保標準以及我們評估信用和風險調整機會的方式，以及我們尋求追求的基準和指標，變得越來越嚴格，這導致在過去幾個季度中，同類項目數量有所下降。

I appreciate that. That's helpful color. Last one for me, kind of touching on what you said a little bit in that commentary. So if rescheduling were to occur, some news articles have been coming out lately. Is it more so just helping out your existing portfolio operators?

我很感激。這很有幫助。最後一個問題，其實也稍微呼應了你剛才評論裡提到的一些內容。如果真的要重新安排賽程，最近也出現了一些相關的新聞報導。這主要是為了幫助你們現有的投資組合經營者嗎？

Obviously, it improves cash flow in terms of the 280E tax. But do you feel like that's really a big step change in terms of incremental opportunities for you? I know you're only -- you said you're mainly looking at any existing operators today. Do you feel like that opens up a whole new set of operators coming in? Or do you feel like that's more so a factor of states legalizing and licenses being distributed.

顯然，280E稅的減免確實改善了現金流。但您覺得這真的能為您帶來更多發展機會嗎？我知道您目前主要關注的是現有運營商。您覺得這會吸引更多新業者加入嗎？還是說這更取決於各州的合法化進程和許可證的發放？

So I just want to get some of how you view rescheduling in terms of opportunities versus the existing portfolio or really opening up more opportunities for you?

所以我想了解一下，您如何看待重新安排日程，您認為這會帶來哪些機會，與現有項目組合相比，或者說，這是否真的能為您創造更多機會？

Thanks, Robyn. So I think if rescheduling were to occur and you get certainty on tax positions of these companies, both with historical tax liabilities as well as taxation on a go-forward basis, that significant for the industry. And that should allow more capital to be attracted to and flow into the space.

謝謝，羅賓。所以我認為，如果重新安排能夠實現，而這些公司的稅務狀況能夠明確，包括歷史稅務負債和未來的稅務問題，這對整個產業來說意義重大。這應該能夠吸引更多資金流入這個領域。

As more capital comes in, that should be supportive of asset valuations in the space as well and potentially attract new either investment players or new potential platforms coming into this space. I think looking at AFC as we stand today, we traded a significant discount to book value, which is at least in part a function of the number of troubled legacy loans that we have on the books today.

隨著更多資本的流入，這應該也會支撐該領域的資產估值，並有可能吸引新的投資機構或潛在平台進入該領域。我認為，就目前AFC的狀況而言，我們的交易價格較帳面價值有顯著折讓，這至少部分是由於我們帳面上存在大量不良遺留貸款所致。

And if rescheduling were to occur and new capital were to come in and asset values were to appreciate that would help us to achieve better realizations as we work out as some of the troubled loans within the portfolio, which, given the size of that is significant to AFC.

如果能夠重新安排還款計劃，引入新的資金，並提升資產價值，這將有助於我們更好地實現收益，因為我們正在處理投資組合中的一些不良貸款，考慮到該投資組合的規模，這對 AFC 來說意義重大。

I think secondarily, capital coming in hopefully allows equity capital to come into the base. For anyone who's tracking it, basically all of the capital coming in over the last couple of years has been debt capital. That's not a healthy way to finance businesses. That's not a healthy way to grow the industry.

我認為其次，資金的流入可望帶動股權資本的流入。任何關注此事的人都知道，過去幾年流入的資金基本上都是債務資本。這不是一種健康的融資方式，也不是一種健康的產業發展方式。

This is a capital-intensive industry, and you need both equity capital and debt capital coming in. And I think if that were to occur, and again, there's been some fits and starts that would be positive for the industry and I think positive for the lending environment and deploying more capital into the industry.

這是一個資本密集型行業，需要股權資本和債務資本的雙重註入。我認為，如果這種情況能夠發生（儘管之前也出現過一些波折），這對整個行業以及信貸環境都將是積極的，並能促進更多資本流入該行業。

Okay, great, that's really helpful call. I'll go back into the queue.

好的，太好了，這個電話真的很有幫助。我這就重新排隊。

Pablo Zuanic, Zuanic & Associates.

Pablo Zuanic，Zuanic & Associates。

Good morning everyone. This is Rahul on for Pablo. We just have a few questions. And for our first one, on the problem loans with Private Company K, can you give an update on where the receivers are regarding asset sales? And related to this, if both Private Company A and K's loans are with receivers, why is only the loan with Private Company A booked at fair value, while the loan with Private Company K is booked at carrying value.

大家早安。我是Rahul，代Pablo為您解答。我們有幾個問題。第一個問題是關於K私人公司的不良貸款，您能否提供接管人在資產出售方面的進展？另外，如果A私人公司和K私人公司的貸款都已交由接管人處理，為什麼只有A私人公司的貸款以公允價值入賬，而K私人公司的貸款卻按賬面價值入賬？

Sure. So I'll take the first part and then Brandon will jump in on the second. So we gave a brief update in the script on progress on Public Company K. Two assets are under LOI. This is -- the assets are in receivership today. So any sales have to be approved by the court that is overseeing the receivership. And so we expect those APAs for the 2 assets to be submitted in the near term. The third asset is being actively marketed in Massachusetts, which has been a difficult state for a while there is a bit more activity recently because the legislature has proposed increasing the cap from 3 stores today, which is very low and difficult to build a scale business to 6 stores and an additional 4 partnership stores. And talking to contacts in that market, there is optimism around that happening sometime in the balance of the year. And that, I think, is driving some of the activity around companies looking to get ahead of that and potentially increase their holdings within the state from 3 to 6 or 10 depending on the model.

好的。那我先講第一部分，然後布蘭登接著講第二部分。我們在腳本中簡要介紹了上市公司K的進展。目前有兩項資產已簽署意向書。也就是說，這兩項資產目前處於接管狀態。因此，任何出售都必須得到負責接管的法院的批准。我們預計這兩項資產的資產購買協議（APA）將在近期提交。第三項資產正在馬薩諸塞州積極推廣。麻州的市場競爭一直比較激烈，但最近有所好轉，因為州議會提議將門市數量上限從目前的3家提高到6家，外加4家合作門市。目前的3家店數量非常少，難以建立規模化業務。與該市場的聯絡人交流後，他們對此持樂觀態度，認為這項提議將在今年稍後生效。我認為，這推動了一些公司積極佈局，希望搶佔先機，並有可能將其在該州的持股數量從3家增加到6家或10家，具體取決於商業模式。

This is Brandon. The loans being held at fair value or carrying value is just a function of GAAP and the elections we've made in the past. When we first started the company back in 2020, we kept all loans on our books at fair value.

我是布蘭登。貸款是以公允價值或帳面價值計價，僅取決於公認會計準則（GAAP）以及我們過去所做的選擇。 2020年公司成立之初，我們所有貸款都以公允價值計價。

And once you elect fair value, the election, you have to keep it on your books at fair value. Once we IPO-ed, we transitioned to putting new loans on the books at carrying value private company A is the only legacy loan from when we originally elected fair value status. So that's why that almost listed at fair value versus carrying value, but it is unrelated to anything for the receivership.

一旦選擇公允價值計量，就必須以公允價值記帳。公司上市後，我們開始以帳面價值記錄新貸款。 A公司是唯一一筆遺留貸款，是我們最初選擇公允價值計量時遺留下來的。所以，這筆貸款的帳面價值幾乎與公允價值持平，但這與破產管理無關。

Got it. And regarding debt leverage, please remind us how high you're willing to go in terms of the debt ratio? And at what point would you need new equity to fund future loan growth?

明白了。關於債務槓桿，請問你們願意將負債比率維持在多高？以及在什麼情況下需要新增股權來為未來的貸款成長提供資金？

It's Robyn. So I'd say we target between 1 and 1.5 times leverage. And I think that we'll operate within that. And given where our stock is currently trading, I don't see it's issuing equity.

我是Robyn。所以我說我們的目標槓桿率在1到1.5倍之間。我認為我們會在這個範圍內運作。鑑於我們股票目前的交易價格，我認為公司不會發行新股。

Sure. And also, if you could quantify for us the maturities for the second half, please.

當然可以。另外，如果您能幫我們量化下半年的到期債務就更好了。

Sure. So we have 1 maturity in the second half that is coming up next month. That is a loan that we just given where the cannabis industry is and where our stock is trading. I think we are focused on getting capital back both from the underperforming credits we have within the portfolio and as maturities are realized across the performing portfolio. So we expect that loan to be refinanced in the coming weeks. And we will not -- and just for clarity, we will not be participating in the refinancing.

當然。我們下半年有一筆貸款即將到期，就在下個月。這是我們最近發放的一筆貸款，投資方是目前大麻產業，也就是我們股票交易所在的地區。我認為我們目前的重點是收回資金，一部分來自投資組合中表現不佳的貸款，另一部分來自表現良好的貸款。所以我們預計這筆貸款將在未來幾週內再融資。而且我們不會──為了避免誤解，我再說一遍，我們不會參與這次再融資。

Got it, thank you. And finally, Beyond cannabis, can you give us a brief overview on market sentiment about the mortgage re sector in general? How are macro themes, interest rates, alternative lending solutions, including crypto, impacting the mortgage rate sector in general, and stock sentiment in the group?

明白了，謝謝。最後，除了大麻之外，您能否簡要概述一下目前市場對抵押貸款行業的整體情緒？宏觀經濟情勢、利率、包括加密貨幣在內的其他貸款解決方案，對抵押貸款市場以及該板塊的股票情緒有何影響？

Sure. It's Robyn. I think if you look across the mortgage REIT landscape, mortgage REITs have traded better since last year. I think people are overall starting to realize some of their underperforming loans and take losses as they relate. I think overall, the mortgage REITs that we track are trading at about $0.80 on the dollar.

當然，我是羅賓。我認為，縱觀整個抵押貸款房地產投資信託基金（REITs）市場，抵押貸款REITs的交易情況自去年以來有所改善。我認為，人們總體上開始意識到一些表現不佳的貸款，並因此蒙受損失。我認為，我們追蹤的抵押貸款REITs目前的整體交易價格約為面額的0.80美元。

I think that interest rates, people believe interest rates were going down earlier, which is why you saw a bump early in the year. I think that lowering of interest rates will help mortgage REITs trade better. I also think that it may unlock opportunities for mortgage REITs to make new investments and complete some refinancing. In terms of alternative investments in crypto, I'm going to pass on commenting on things that I'm not that smart on and there's a lot of people smarter than me on that.

我認為，人們之前普遍認為利率會下降，所以年初的時候市場出現了波動。我認為利率下調將有助於抵押貸款房地產投資信託基金（REITs）的交易表現。我還認為，這可能會為抵押貸款REITs創造新的投資機會，並完成一些再融資。至於加密貨幣等另類投資，我不擅長這方面，而且有很多比我更懂的人，所以我就不予置評了。

Got it thank you that's all for us.

明白了，謝謝，我們這邊就這些了。

(Operator Instructions)

（操作說明）

Chris Muller, Citizens Capital Markets.

克里斯·穆勒，公民資本市場。

Hey guys, thanks for taking the questions. So I guess, given some of the recent comments from the administration on rescheduling. Have you guys seen an uptick in interest from borrowers? Are they more waiting for something concrete to actually get done? And then similarly, are you guys looking at non-real estate loans already? And have you seen any impact there from the recent rescheduling comments?

大家好，感謝你們回答問題。我想問的是，鑑於政府最近關於重新安排還款計畫的一些表態，你們是否觀察到借款人的興趣上升？他們是否更傾向於等待一些具體的措施出台？同樣地，你們是否已經開始關注非房地產貸款？最近的重新安排還款計畫的聲明是否對這部分貸款產生了影響？

Dan, do you want to take that one?

丹，你想接那個任務嗎？

Sure, Chris. Thanks for the question. I think it's still pretty new and people were digesting again, the language in the press reports was that it's under consideration. And I think it's under active consideration. But there wasn't much of a tipping in the hand in terms of which way this decision is going to fall.

當然，克里斯。謝謝你的提問。我覺得這件事還很新，大家都在消化，新聞報導道裡也只是說正在考慮中。而且我認為確實有在積極考慮。但目前還沒有什麼跡象顯示最終會做出怎樣的決定。

So I think a lot of folks are really in a holding pattern at this point to see what the result is. There's been a lot of fits and starts related to the rescheduling conversation -- it's the middle of August. So it's not typically at a time of year where there's a ton of activity. And so there hasn't been much movement on that side of this.

所以我覺得很多人現在都在觀望，看看結果如何。關於重新安排日程的討論斷斷續續，現在已經是八月中旬了。通常來說，這個時段並不是活動頻繁的時候。因此，這方面進展不大。

Got it. And then I guess following up on the prior line of questions. So CECL reserves were up a good bit this quarter. I guess, first, is that due to the existing portfolio fundamentals? Or is there some macro aspects into that?

明白了。接下來我想繼續問之前的問題。本季CECL準備金大幅增加。首先，這是由於現有投資組合的基本面變化嗎？還是受到一些宏觀因素的影響？

And then I guess, part two of that question, if we do get Schedule III and 280E goes away, how much of an impact would that be to the credit quality of your existing borrowers? And would we see those CECL reserves start coming down?

那麼，我想問的第二部分問題是，如果我們真的實施了附表三，並且取消了280E條款，這對現有借款人的信用品質會有多大影響？我們會看到CECL準備金開始下降嗎？

Sure. This is Brandon. I'll take the first part of that with regard to CECL. Macro does have some effect on CECL overall just in general, but we do evaluate our loans on a loan-by-loan basis. And the inputs for the various loans themselves is the main driver of the increase in CECL reserves.

當然。我是布蘭登。關於CECL，我先回答第一部分。宏觀經濟因素確實會對CECL產生一定影響，但我們會逐筆評估每筆貸款。而各類貸款的投入要素才是CECL準備增加的主要驅動因素。

Could you repeat the second part of the question?

你能重複問題的第二部分嗎？

Yeah. So if Schedule III happens and 280E goes away and cash flows start improving for some of your borrowers. I guess would the impact of that be CECL reserves going down as those valuations kind of come up for the borrowers?

是的。所以如果第三期附表生效，280E條款取消，部分借款人的現金流量開始改善，那麼隨著借款人估值的提高，CECL準備金會不會下降呢？

Yes. I think, look, CECL is a function of the cash flow performance of the assets, the value of set assets and we use a third-party valuation firm to look at all of those metrics in coming to the determination of the reserve. So to the extent that cash flow improves and asset valuations within the space improve that could potentially lead to upward pressure on those valuations.

是的。我認為，CECL（預期信用損失）取決於資產的現金流量表現和既有資產的價值，我們會聘請第三方估值公司來評估所有這些指標，最終確定準備金。因此，如果現金流量和相關資產估值都得到改善，就可能對這些估值構成上行壓力。

Got it. And if I could just squeeze one last one in here. So on the BDC conversion, would that open up new opportunities to add some credit facilities? And then longer term, I guess what does that portfolio composition look like in a year or two of real estate versus non-real estate-type assets? Or is it too early to tell on that?

明白了。如果可以的話，我再補充最後一個問題。 BDC轉換後，是否會帶來增加信用額度的新機會？從長遠來看，我想一兩年後，房地產和非房地產資產的投資組合組成會是什麼樣的？還是現在判斷還太早？

Thanks for the question. I think in terms of credit lines, I think what's interesting is the credit line that we currently have is similar to how BDC is financed. BDC is a little more than REITs -- sometimes have better pricing in terms of baby bonds are unsecured. So that may be a bump. But I think that from a credit line standpoint, it's still -- we're limited by the banks that will participate in cannabis at this time.

謝謝你的提問。就信貸額度而言，我認為有趣的是，我們目前的信貸額度與商業發展公司（BDC）的融資方式類似。 BDC 的融資方式比房地產投資信託基金（REITs）略好一些——有時在發行無擔保債券時，其定價會更優惠。所以這可能是個影響因素。但我認為，從信貸額度的角度來看，我們仍然受限於目前願意參與大麻產業的銀行數量。

So it's hard to tell if the structure, right, would drive more banks in versus the REIT structure. And then I think in terms of our portfolio, it's hard to tell the composition, right? And I only say that because, look, we have non-real estate covered assets in our TRS is we're allowed to have under the REIT guidelines. But until we convert, we're operating as a REIT. So we're going to make sure that transactions have that required real estate coverage, and we maintain our REIT status.

所以很難說這種結構（對吧）是否比 REIT 結構更能吸引銀行投資。而且，就我們的投資組合而言，構成也很難說清楚，對吧？我這麼說是因為，根據 REIT 的規定，我們的總收益證券 (TRS) 中包含一些非房地產相關的資產。但在我們完成轉換之前，我們仍然是以 REIT 的形式運作的。因此，我們將確保所有交易都符合房地產相關要求，並維持我們的 REIT 地位。

So until such time where I think we've gotten a little further along and converted, it's hard to predict what that composition will look like.

所以，在我們取得更大進展並完成轉變之前，很難預測最終的方案會是什麼樣子。

Got it, very helpful, thanks for taking the questions.

明白了，很有幫助，謝謝你回答問題。

Thanks, Craig.

謝謝你，克雷格。

Thank you. I'm showing no further questions at this time. I'd now like to turn it back to Dan Neville, Chief Executive Officer, for closing remarks.

謝謝。目前我沒有其他問題。現在請執行長丹·內維爾先生作總結發言。

Thank you all for joining the call today. We anticipate filing a proxy statement to our shareholders in the coming days related to the proposed conversion to a BDC and we look forward to keeping our shareholders updated as we progress on that front.

感謝各位今天參加電話會議。我們預計在未來幾天內向股東提交一份關於擬議轉型為商業發展公司（BDC）的委託書，並期待在此過程中及時向股東通報最新進展。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您可以掛斷電話了。