Chicago Atlantic Real Estate Finance, Inc.

Second-quarter net interest income was $12.8 million, down $0.3 million, or 2.2%, from $13.1 million in Q1. Distributable earnings were $0.44 per basic weighted average common share and $0.43 on a fully diluted basis, versus a $0.47 quarterly dividend paid in July. Book value per common share was $14.15 at June 30, and the portfolio principal totaled approximately $453 million across 26 portfolio companies with a 15.8% weighted average yield to maturity. Gross originations were about $56.8 million, repayments were about $19.7 million, and non-accruals were about 3.7% of outstanding principal, down from about 4.8% in Q1. Total leverage was 47% of book equity, compared with 38% at March 31, and management said about $15 million of liquidity remained available on the senior credit facility. Looking ahead, the company expects the REFI-LIEN merger to close in the fourth quarter of 2026, pending shareholder, SEC, lender, regulatory, and other customary approvals. Management also reiterated a dividend payout ratio of 90% to 100% of basic distributable earnings per share for the 2026 tax year.

Peter Sack framed the quarter as productive despite a temporary mismatch between prepayments and redeployment, saying the earnings shortfall reflected timing rather than a change in fundamentals. He emphasized that cannabis market reforms and broader capital-markets acceptance are creating opportunities, but he repeatedly said the company remains conservative and does not depend on policy changes to succeed. He also argued that the merger with LIEN should unlock scale, diversification, and better market visibility, while the new Koach financing gives REFI exposure to cannabis-linked real estate with potential upside if cap rates compress.

Phil Silverman highlighted that net interest income declined to $12.8 million from $13.1 million, mainly because redeployment lagged payoffs and one-time fee income fell to about $0.8 million from $1.1 million. He said interest expense rose to about $2.4 million from $2.0 million, while the revolver borrowings increased to a weighted average of $67.5 million from $48 million. He also cited a CECL reserve of about $9.4 million, equal to about 2.3% of outstanding principal on loans held for investment, and noted book value per share of $14.15 with about 21.7 million fully diluted shares outstanding. On capital structure, he said the Koach transaction issued about 4.3 million shares at $14.53 per share, or a 1% premium to March 31 book value, and increased fully diluted shares to about 26 million pro forma.

Analysts pressed on how REFI will manage the gap between prepayments and redeployment, and management said it expects to distribute all or nearly all distributable earnings through the merger date. Questions also focused on whether cannabis industry reform could attract new lenders; Peter Sack said the debt market still has major structural barriers and that REFI expects to benefit if more capital does eventually enter. On the Koach deal, management explained it was structured to gain economic exposure to cannabis-linked retail real estate without violating listing restrictions on owning cannabis properties or equity, and said the company could do similar transactions again if the opportunity persists. They also said early repayments have not materially changed in cadence and that they are actually seeing more borrower demand for capital as operators position for possible regulatory changes.