Chicago Atlantic Real Estate Finance, Inc. Common Stock 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Chicago Atlantic Real Estate Finance, Inc. reported distributable earnings of $0.44 per basic weighted average common share for the second quarter of 2026, below the dividend of $0.47 per share due to timing of capital redeployment following $16.3 million in loan prepayments early in the quarter.
- The loan portfolio principal totaled approximately $453 million across 26 companies with a weighted average yield to maturity of 15.8%, consistent with the prior quarter.
- Gross originations were $56.8 million during the quarter, offset by $19.7 million in repayments, including $16.4 million in full loan prepayments.
- Approximately 3.7% of the portfolio was on non-accrual status as of June 30, 2026, down from 4.8% at March 31, 2026.
- Total leverage was 47% of book equity at quarter end, up from 38% at March 31, 2026.
- Net interest income was $12.8 million for the quarter, a 2.2% decrease from the prior quarter, attributed to redeployment timing and lower one-time fee income.
- The company issued approximately 4.3 million new common shares at $14.53 per share in exchange for $62.5 million in second lien notes secured by 32 retail cannabis properties managed by affiliates of Koch Capital.
- The notes bear 12% annual interest (10% cash, 2% PIK) and include exit fees up to 2.5 times the commitment amount, providing potential upside from cap rate compression and property value appreciation.
- Book value per common share was $14.15 as of June 30, 2026, with approximately 21.7 million shares outstanding on a fully diluted basis, increasing to about 26 million shares post-Koch transaction.
- The company announced a proposed merger with Chicago Atlantic BDC, Inc., expected to close in Q4 2026, subject to approvals and conditions, aiming to unlock value through scale, diversification, and improved liquidity.
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Transcript
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Good day, and welcome to the Chicago Atlantic Real Estate Finance Inc. second quarter 2026 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Lisa Kampf from SCR Partners. Please go ahead. 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, President and Chief Operating Officer, and Phil Silverman, Chief Financial Officer. 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 information package furnished to the SEC. A live audio webcast of this call is being made available today. For those who 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.
During this call, certain comments and statements we make may be deemed forward-looking statements within the meaning prescribed by securities laws, including statements related to the future performance of our portfolio, our pipeline of potential loans and other investments, future dividends, financing activities, the proposed merger of the company with and into Chicago Atlantic BDC Inc., LIEN, and its expected timing and benefits, and the anticipated benefits of our recent financing transaction to affiliates of Koach Capital. We will discuss certain non-GAAP measures, including but not limited to distributable earnings. Definitions of these non-GAAP measures and reconciliations to the most directly comparable GAAP measures are included in our earnings release and supplemental information available on our website and furnished to the SEC.
I'd like to remind the listeners that today's remarks and accompanying investor presentation contain forward-looking statements that are subject to significant 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 risks and other information disclosed in the company's filings with the SEC. Risks and uncertainties include the ability to complete the merger of REFI and LIEN on the anticipated timeline, to obtain shareholder and regulatory approvals and required lender consents, to realize the anticipated benefits of the transaction and developments in the cannabis regulatory environment, as well as other risks described in our SEC filings and in the legends in today's filed materials. Actual results may differ materially, and we undertake no obligation to update except as required by law.
The transcript of this call is being filed with the SEC pursuant to Rule 425 under the Securities Act of 1933 and is being filed under Rule 14a-12 under the Securities Exchange Act of 1934. In connection with the proposed merger, LIEN filed with the SEC a registration statement on Form N-14, which includes a joint proxy statement of REFI and LIEN and a prospectus of LIEN. Investors and stockholders are urged to read those materials and any amendments or supplements when they become available because they will contain important information about the transaction. LIEN, REFI, the respective directors and executive officers, Chicago Atlantic BDC Advisers LLC, and Chicago Atlantic REIT Manager LLC, and certain other people may be deemed participants in the solicitation. Information about those persons and their interests are included in the joint proxy statement and prospectus.
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