Chicago Atlantic Real Estate Finance Inc (REFI) 2024 Q3 法說會逐字稿

Good day and welcome to the Chicago Atlantic Real Estate Finance third quarter 2024 earnings call. (Operator Instructions) Please note this event is being recorded.

美好的一天，歡迎參加芝加哥大西洋房地產金融 2024 年第三季財報電話會議。（操作員說明）請注意此事件正在被記錄。

I would now like to turn the conference over to Tripp Sullivan, Investor Relations. Please go ahead.

我現在想將會議交給投資者關係部 Tripp Sullivan。請繼續。

Thank you. Good morning. Welcome to the Chicago Atlantic Real Estate Finance conference call to review the company's results. On the call today will be Peter Sack, Co-Chief Executive Officer; David Kite, Chief Operating Officer; and Phil Silverman, Chief Financial Officer.

謝謝。早安.歡迎參加芝加哥大西洋房地產金融電話會議，回顧該公司的表現。今天的電話會議由聯合執行長彼得薩克 (Peter Sack) 主持。大衛凱特，營運長；菲爾·西爾弗曼（Phil Silverman），財務長。

Our results were released this morning in our earnings press release, which can be found on the Investor Relations section of our website, along with our supplemental filed with the SEC. A live audio webcast of this call is being made available today. For those who'll listen to the replay of this webcast, we remind you that the remarks made herein are as of today and will not be updated subsequent to this call.

我們的業績今天早上在我們的收益新聞稿中發布，您可以在我們網站的投資者關係部分找到該新聞稿，以及我們向美國證券交易委員會提交的補充文件。今天將提供本次電話會議的現場音訊網路廣播。對於那些將收聽本次網路廣播重播的人，我們提醒您，本文中的言論截至今天，不會在本次電話會議後更新。

During this call, certain comments and statements we make may be deemed forward-looking statements within the meaning prescribed by the securities laws, including statements related to the future performance of our portfolio, our pipeline of potential loans and other investments, future dividends and financing activities.

在本次電話會議中，我們所做的某些評論和聲明可能被視為證券法規定含義內的前瞻性聲明，包括與我們投資組合的未來業績、我們的潛在貸款和其他投資管道、未來股息和融資相關的聲明活動。

All forward-looking statements represent Chicago Atlantic's judgment as of the date of this conference call and are subject to risks and uncertainties that can cause actual results to differ materially from our current expectations. Investors are urged to carefully review various disclosures made by the company, including the risk and other information disclosed in the company's filings with the SEC.

所有前瞻性陳述均代表芝加哥大西洋航空公司截至本次電話會議之日的判斷，並受到風險和不確定性的影響，這些風險和不確定性可能導致實際結果與我們當前的預期有重大差異。投資者應仔細審查公司披露的各種信息，包括公司向 SEC 提交的文件中披露的風險和其他信息。

We also will discuss certain non-GAAP measures, including, but not limited to, distributable earnings and adjusted distributable earnings. Definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures are included in our filings with the SEC.

我們也將討論某些非公認會計原則措施，包括但不限於可分配收益和調整後的可分配收益。這些非 GAAP 衡量標準的定義以及與最具可比性的 GAAP 衡量標準的調整均包含在我們向 SEC 提交的文件中。

I'll now turn the call over to Peter Sack. Please go ahead.

我現在將把電話轉給彼得·薩克。請繼續。

Thanks, Tripp. Good morning, everyone. These are fascinating times to operate a business and invest. Cannabis is uniquely enmeshed in this country's debates on health and wellness, criminal justice, individual choice and cultural identity.

謝謝，特里普。大家早安。現在是經營企業和投資的絕佳時機。大麻在這個國家關於健康和保健、刑事司法、個人選擇和文化認同的辯論中有著獨特的影響。

This week, a majority of voters in Florida supported legalization of adult-use cannabis, but they fell short of the 60% threshold needed for the measure to pass. Nebraska voters overwhelmingly approved a medical cannabis program. And in the Dakotas, voters rejected initiatives that would have legalized adult-use cannabis.

本週，佛羅裡達州的大多數選民支持成人用大麻合法化，但他們未達到該措施通過所需的 60% 門檻。內布拉斯加州選民以壓倒性多數批准了醫用大麻計劃。在達科塔州，選民拒絕了成人大麻合法化的倡議。

On this news yesterday, the ETF MSOS, which tracks US cannabis equities, fell by more than 25%. For Chicago Atlantic Real Estate Finance, it is business as usual, and we are as enthusiastic as ever.

受此消息影響，追蹤美國大麻股票的 ETF MSOS 昨天下跌了 25% 以上。對於芝加哥大西洋房地產金融公司來說，一切如常，我們一如既往的熱情。

From inception, we aim to build an investment platform focused on serving the strongest operators in the most attractive markets with fundamental underwriting, differentiated returns and downside protection in an industry known for volatility.

從一開始，我們的目標就是建立一個投資平台，專注於為最具吸引力的市場中最強大的營運商提供基本面承保、差異化回報和下行保護，以應對波動性較大的行業。

We execute through a platform that includes the industry's most expansive origination, real estate diligence, analytics and operational teams. We underwrite to leverage levels well below the traditional private credit and commercial mortgage markets and returns well above the traditional mortgage REIT market. We can do so because of our unique competitive position and our market focus.

我們透過一個平台執行任務，該平台包括業內最廣泛的起源、房地產調查、分析和營運團隊。我們承保的槓桿水準遠低於傳統私人信貸和商業抵押貸款市場，回報率遠高於傳統抵押房地產投資信託市場。我們之所以能夠做到這一點，是因為我們獨特的競爭地位和市場焦點。

The election results change little for refi. Florida represents 7% of our portfolio. And as always, we underwrote our Florida investments assuming the continuance of the existing medical market. We do not invest based upon the expectation of speculative political or regulatory events, and that principle is fundamental to our focus on comfortable debt service coverage, collateral quality and deep understanding of our limited license markets.

選舉結果對於重新融資來說變化不大。佛羅裡達州占我們投資組合的 7%。像往常一樣，我們在假設現有醫療市場持續存在的情況下承保了佛羅裡達州的投資。我們不會根據投機性政治或監管事件的預期進行投資，這項原則是我們專注於舒適的償債覆蓋範圍、抵押品品質以及對有限許可市場的深入了解的基礎。

Still the passage of Amendment 3 in Florida would have opened up additional opportunities for investment. We do believe that federal rescheduling will likely occur in 2025 as President-elect Trump has endorsed the effort. And conceivably, an aligned Republican Senate and House could facilitate bipartisan progress on other initiatives such as safe banking.

儘管如此，佛羅裡達州第三修正案的通過仍將開啟更多的投資機會。我們確實相信，由於當選總統川普已經支持這項努力，聯邦重新安排時間可能會在 2025 年發生。可以想像，共和黨參眾兩院的一致可以促進兩黨在安全銀行業等其他措施上取得進展。

The translation of campaign promises to congressional and executive action is an arena in which we can speculate but is not a basis on which we invest. Chicago Atlantic Real Estate Finance will continue to focus on generating differentiated risk-adjusted returns by its focus on disciplined expertise and the unique competitive position.

將競選承諾轉化為國會和行政部門的行動是我們可以推測的一個舞台，但不是我們投資的基礎。芝加哥大西洋房地產金融公司將繼續致力於透過其嚴格的專業知識和獨特的競爭地位來產生差異化的風險調整回報。

Today, we report positive Q3 earnings results and subsequent events that reflect the fruits of these efforts. The pipeline across the Chicago Atlantic platform has grown to $560 million, and we continue to prioritize operators in limited license states and those positions to transition from medical to adult use. We have liquidity in excess of $75 million to fund new investments.

今天，我們報告了正面的第三季獲利結果以及反映這些努力成果的後續事件。芝加哥大西洋平台的管道已增長至 5.6 億美元，我們繼續優先考慮有限許可州的運營商以及從醫療過渡到成人的位置。我們擁有超過 7500 萬美元的流動資金來資助新投資。

Last quarter, we noted that we were exploring other sources of accretive capital to accelerate our deployment this year and next. In October, we entered into a $50 million unsecured term loan from two institutional private lending platforms.

上個季度，我們注意到我們正在探索其他增值資本來源，以加快今年和明年的部署。10 月，我們從兩個機構私人借貸平台獲得了 5000 萬美元的無擔保定期貸款。

The interest-only unsecured loan matures in October 2028, bears a fixed interest rate of 9% and may be repaid in whole or in part at any time. After two years, the loan may be repaid without penalty. We also received a rating of BBB+ from Egan-Jones on both the company and this unsecured term loan.

該只付息無抵押貸款於2028年10月到期，固定利率為9%，可隨時全部或部分償還。兩年後，貸款可以償還，無需繳納罰款。我們還獲得了 Egan-Jones 對該公司和這筆無擔保定期貸款的 BBB+ 評級。

Before I close, there are two data points on portfolio management that I'd like to highlight and at which I'd like to congratulate our team for execution. First, on interest rates, which David will touch on in more detail. We have successfully taken actions to limit our exposure to benchmark interest rate declines.

在結束之前，我想強調兩個有關投資組合管理的數據點，並祝賀我們團隊的執行力。首先是利率，大衛將更詳細地談到這一點。我們已成功採取行動限制基準利率下降的風險。

Second, on 2024 maturities, we entered 2024 with $151 million in loans maturing this year, excluding loan none, which remains on non-accrual status. $89 million of these loans we successfully retained and extended through amendment.

其次，就 2024 年到期而言，我們進入 2024 年時，今年到期的貸款為 1.51 億美元，不包括仍處於非應計狀態的無貸款。我們成功保留了其中 8,900 萬美元的貸款，並透過修訂延長了貸款期限。

$15 million were extended with new terms and $47 million were repaid with full recovery of principal and accrued interest. By every available metric we track, the portfolio's credit quality has improved throughout this transition and our management of rate risk.

1500 萬美元以新條款延期，4700 萬美元已償還，本金和應計利息全部收回。根據我們追蹤的每一個可用指標，在整個轉型和利率風險管理過程中，投資組合的信用品質都得到了改善。

David, why don't you take it from here?

大衛，你為什麼不把它從這裡拿走？

Thanks, Peter. Good morning. As of September 30, our loan portfolio totaled $362 million across 29 portfolio companies with a weighted average yield to maturity of 18.3%. That's down from 18.7% at June 30 due primarily to work Peter mentioned earlier around repricing amendments related to improving our collateral and better borrower performance. It also reflects the 50 basis point decrease in the prime rate across our floating rate portfolio.

謝謝，彼得。早安.截至 9 月 30 日，我們的貸款組合總額為 3.62 億美元，涉及 29 家投資組合公司，加權平均到期收益率為 18.3%。這比 6 月 30 日的 18.7% 有所下降，這主要是由於 Peter 之前提到的與改善我們的抵押品和更好的借款人績效相關的重新定價修訂工作。這也反映出我們浮動利率投資組合的最優惠利率下降了 50 個基點。

Gross originations during the quarter were $32.7 million of principal funding, of which $24 million and $8.7 million was funded to new borrowers and existing borrowers, respectively. To date, in the fourth quarter, we funded an additional $36.5 million of originations, including a $25 million new credit facility to an operator in Illinois.

本季的原始資金總額為 3,270 萬美元，其中 2,400 萬美元和 870 萬美元分別提供給新借款人和現有借款人。迄今為止，在第四季度，我們額外資助了 3,650 萬美元的資金，其中包括向伊利諾伊州一家營運商提供的 2,500 萬美元的新信貸額度。

Peter noted earlier how well we've executed on our maturities this year. Another point to highlight is how we've managed the portfolio throughout a declining rate environment. During the last 10 months, the prime rate was cut by 50 basis points from 8.5% to 8%. And we have worked hard to protect our portfolio yield against further interest rate cuts by the Federal Reserve.

彼得早些時候指出，我們今年的到期執行情況非常好。另一點要強調的是我們如何在利率下降的環境中管理投資組合。過去 10 個月，最優惠利率從 8.5% 下調 50 個基點至 8%。我們努力保護我們的投資組合收益率免受聯準會進一步降息的影響。

We achieved this through a series of amendments focused on increasing prime rate floors and converting certain loans to fixed interest rates. At year end 2023, approximately 24% of our loan portfolio based on outstanding principal was comprised of fixed rate loans and floating rate loans with floors greater than or equal to the prevailing prime rate. As of October 30, 2024, this percentage has increased to approximately 52%.

我們透過一系列修正案實現了這一目標，重點是提高最優惠利率下限並將某些貸款轉換為固定利率。截至 2023 年底，以未償本金計算，我們的貸款組合中約 24% 由固定利率貸款和浮動利率貸款組成，浮動利率貸款下限高於或等於現行優惠利率。截至2024年10月30日，這一比例已增至約52%。

In summary, we've decreased the percentage of our portfolio exposure to additional interest rate cuts by approximately 28%. Meanwhile, the 63% of the portfolio that remains floating is not exposed to interest rate caps at current rate levels, and we expect to be able to take advantage should the Federal Reserve decide to reverse course and increase interest rates.

總而言之，我們將投資組合中額外降息風險敞口的比例降低了約 28%。同時，仍處於浮動狀態的投資組合的 63% 在當前利率水準下不受利率上限的影響，我們預計，如果聯準會決定扭轉局面並提高利率，我們將能夠從中受益。

The potential for tax cuts, economic stimuli, tariffs on imports and a possible escalation of the wars in Europe and the Middle East all create uncertainty with regard to medium and long-term rates, but our current mix of floating and fixed rate loans leaves us well positioned.

減稅、經濟刺激、進口關稅以及歐洲和中東戰爭可能升級的可能性都為中長期利率帶來了不確定性，但我們目前的浮動利率和固定利率貸款組合讓我們位置很好。

Total leverage was at 18% of book equity at quarter end compared to 24% at year end. Our debt service coverage ratio on a consolidated basis for the quarter was approximately 7.2:1 compared with the requirement of 1.35:1. During the quarter, we increased the size of our revolving credit facility again to $110 million in total.

季末總槓桿率為帳面淨值的 18%，而年底則為 24%。本季綜合償債覆蓋率約為 7.2:1，而要求為 1.35:1。本季度，我們再次將循環信貸額度規模擴大至 1.1 億美元。

As of September 30, we had $54 million outstanding on the facility. Subsequent to quarter end, we drew down the full amount on the new unsecured term loan and used the proceeds to temporarily repay outstanding borrowings on our revolving credit facility. As of today, we have $15.5 million outstanding on the revolving credit facility and $94.5 million of available borrowing capacity.

截至 9 月 30 日，我們該設施的未償餘額為 5,400 萬美元。季度末後，我們全額提取了新的無擔保定期貸款，並用所得款項暫時償還循環信貸額度的未償還借款。截至今天，我們的循環信貸額度尚未償付 1,550 萬美元，可用借款能力為 9,450 萬美元。

I'll now turn it over to Phil.

我現在把它交給菲爾。

Thanks, David. Our net interest income for the third quarter increased to $14.5 million from $13.2 million during the second quarter. Gross interest income from recurring cash interest, PIK interest, unused fees and amortization of discounts increased by $0.6 million or 4% for the comparable period.

謝謝，大衛。我們第三季的淨利息收入從第二季的 1,320 萬美元增加到 1,450 萬美元。來自經常性現金利息、PIK 利息、未使用費用和折扣攤銷的總利息收入較同期增加了 60 萬美元，即 4%。

During the third quarter, we received full repayment of three loans totaling $32.3 million. In connection with these repayments during Q3, we recognized approximately $0.7 million of prepayment and exit fees compared with $0.1 million of such fees during the second quarter.

第三季度，我們全額償還了三筆貸款，總額達 3,230 萬美元。與第三季的這些還款相關，我們確認了約 70 萬美元的預付款和退出費用，而第二季的此類費用為 10 萬美元。

Interest expenses during the third quarter decreased modestly by approximately 2% to $1.8 million due to lower weighted average borrowings of $76.4 million during the third quarter compared with $78.4 million during the second quarter.

第三季的利息支出小幅下降約 2%，至 180 萬美元，原因是第三季的加權平均借款為 7,640 萬美元，低於第二季的 7,840 萬美元。

Total operating expenses before the provision for credit losses remained consistent quarter-over-quarter at approximately $4.2 million. Our CECL reserve as of September 30, 2024, was approximately $4.1 million compared with $5.1 million as of June 30, 2024. And on a relative size basis, our reserve for expected credit losses represents 1.1% of outstanding principal of our loans held for investment.

扣除信貸損失準備金之前的總營運費用與上一季保持一致，約 420 萬美元。截至 2024 年 9 月 30 日，我們的 CECL 儲備金約為 410 萬美元，而截至 2024 年 6 月 30 日，我們的 CECL 儲備金為 510 萬美元。從相對規模來看，我們的預期信用損失準備金占我們為投資而持有的貸款未償還本金的 1.1%。

During the quarter, $13 million of principal of loan number two was transferred at held-for-sale classification and subsequently sold to a third-party at par. In connection with the sale, we decreased the provision for credit losses by approximately $0.2 million.

本季度，第二筆貸款的 1,300 萬美元本金按照持有待售分類進行轉移，隨後按面值出售給第三方。透過出售，我們將信用損失準備金減少了約 20 萬美元。

Credit quality of the portfolio on a risk rating basis improved with approximately 72% of the portfolio at carrying value risk rated two or better as of September 30 compared to 61% as of June 30. Loan number nine remains on nonaccrual status and is included in risk rating number four and carries a reserve for credit losses of approximately $1.4 million.

基於風險評級的投資組合的信用品質有所改善，截至9 月30 日，約72% 的投資組合的帳面價值風險評級為二級或更高，而截至6 月30 日，這一比例為61% 。第九號貸款仍處於非應計狀態，並包含在第四號風險評級中，並保留了約 140 萬美元的信貸損失準備金。

In October, subsequent to quarter end, we received a full repayment of Loan number 11, together with all applicable interest and fees payable. This loan is included in risk rating one as of September 30 and carry no CECL reserve at quarter end. Our portfolio on a weighted average basis had real estate coverage of 1.2 times as of both September 30 compared to 1.3 times as of June 30, 2024.

10 月，季度末後，我們收到了 11 號貸款的全額還款，以及所有適用的利息和應付費用。截至 9 月 30 日，這筆貸款已包含在風險評級一中，並且在季度末沒有 CECL 準備金。截至 9 月 30 日，我們的投資組合按加權平均計算的房地產覆蓋率為 1.2 倍，而截至 2024 年 6 月 30 日為 1.3 倍。

Adjusted distributable earnings per weighted average diluted share was $0.56 for Q3 2024 compared with $0.50 for the second quarter. In October, we distributed the third quarter regular dividend declared by our Board of $0.47 per common share, which was consistent with the prior quarter and the third quarter of last year.

2024 年第三季調整後加權平均稀釋每股可分配收益為 0.56 美元，第二季為 0.50 美元。10 月份，我們派發了董事會宣布的第三季定期股息，每股普通股 0.47 美元，與上一季和去年第三季一致。

Our book value as of September 30 was $15.05 per common share compared with $14.92 as of June 30. On a fully diluted basis, there are approximately 20.1 million common shares outstanding as of both September 30 and June 30. Lastly, we've affirmed our guidance previously issued on March 12.

截至 9 月 30 日，我們的帳面價值為每股普通股 15.05 美元，而截至 6 月 30 日，我們的帳面價值為每股普通股 14.92 美元。截至9月30日及6月30日，在完全稀釋的基礎上，已發行普通股約2,010萬股。最後，我們確認了 3 月 12 日發布的指導意見。

Operator, we're now ready to take questions.

接線員，我們現在準備好回答問題。

(Operator Instructions) Mark Smith, Lake Street Capital.

（操作員說明）Mark Smith，Lake Street Capital。

Hi, guys. First question for me. You addressed a lot of kind of the election and results and kind of any potential changes for you. But I'm curious, as we look at kind of the core industry today, what you're seeing, any weakness in certain states? Any places where cannabis market seems to be improving? Just a general update on the industry would be great.

嗨，大家好。我的第一個問題。您談到了很多有關選舉和結果以及任何潛在變化的問題。但我很好奇，當我們審視今天的核心產業時，你看到了什麼，某些州有什麼弱點？大麻市場似乎正在改善的地方有哪些？只要提供有關該行業的一般更新資訊就很好了。

Sure. Thanks for the question. We focus on -- we tend to dissect our portfolio in terms of states that are nascent markets, emerging markets and mature markets. And we are -- because of our -- the duration of our portfolio and duration of our loans, we're able to pivot from one of those segments to another part of the market relatively quickly.

當然。謝謝你的提問。我們專注於—我們傾向於根據新生市場、新興市場和成熟市場來剖析我們的投資組合。由於我們的投資組合期限和貸款期限，我們能夠相對快速地從這些細分市場之一轉向市場的另一部分。

And that's part of our active portfolio management and the platform that we've built to originate and underwrite markets and new operators. We're spending a lot of effort on Missouri operators, Ohio operators, Maryland operators and brands that are perhaps expanding from one region of the country to another region of the country.

這是我們積極的投資組合管理的一部分，也是我們為創建和承銷市場和新營運商而建立的平台的一部分。我們在密蘇裡州營運商、俄亥俄州營運商、馬裡蘭州營運商以及可能從該國一個地區擴展到該國另一個地區的品牌上投入了大量精力。

And these are generally operators that are leveraging their success in their core market and looking to expand into neighboring markets. And we tend to spend less time thinking about what is the cannabis market as a whole in the US because there is, in some ways, not a cannabis market in the US.

這些運營商通常正在利用其在核心市場的成功並尋求擴展到鄰近市場。我們傾向於花更少的時間思考美國整個大麻市場是什麼，因為在某些方面，美國沒有大麻市場。

There's 40 distinct relatively uncorrelated markets. And so, we tend to focus in isolation on what are the competitive dynamics in each of these states and who are some of the best operators working in them.

有 40 個不同的相對不相關的市場。因此，我們傾向於單獨關注這些州的競爭動態以及誰是在這些州工作的最佳營運商。

Okay. And any thoughts around your pipeline for new loans, kind of how that looks? And I guess, any state in particular that seems to be driving more opportunities in the pipeline?

好的。關於您的新貸款管道有什麼想法嗎？我想，有哪個州似乎正在推動更多機會？

As I said, we're spending a lot of time in Ohio, Missouri and Maryland operators. The pipeline is strong at approximately $560 million today. But for us, we're just focused on finding the right operators in the right markets. And we're going to continue to focus on executing that and finding the best talent to support us in that process.

正如我所說，我們在俄亥俄州、密蘇裡州和馬裡蘭州的營運商上花費了大量時間。目前，該項目的籌建規模約為 5.6 億美元。但對我們來說，我們只專注於在合適的市場尋找合適的營運商。我們將繼續專注於執行這一目標，並尋找最優秀的人才來支持我們這個過程。

(Operator Instructions) With no further questions, I would like to conclude the question-and-answer session and turn the conference back over to Peter Sack for any closing remarks.

（操作員說明）沒有其他問題，我想結束問答環節，並將會議轉回彼得·薩克進行閉幕致辭。

Thank you for the support and the attendance, and we remain available to speak after the call. Thank you.

感謝您的支持和出席，我們在電話會議後仍可以發言。謝謝。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。