Investment Activity and Portfolio Performance
- As of
December 31, 2022 , total loan commitments of approximately$351.4 million ($336.3 million drawn,$15.0 million in future fundings) across 22 portfolio companies. - The portfolio’s weighted average yield to maturity increased to approximately 19.7% as of
December 31, 2022 compared with approximately 18.3% as ofSeptember 30, 2022 . - On
February 15, 2023 the Company completed a direct offering of 395,779 shares of common stock to institutional investors at a price of$15.16 per share, raising net proceeds of approximately$6 million . The Company completed the offering without the use of underwriters or placement agents. - On
February 27, 2023 , Chicago Atlantic amended its$92.5 million secured revolving credit facility, without any other change in terms or structure, to extend the maturity date toDecember 2024 with a one-year extension option, subject to customary conditions.
Dividends
- On
January 13, 2023 , Chicago Atlantic paid a regular quarterly cash dividend of$0.47 per share of common stock for the fourth quarter of 2022 to common stockholders of record onDecember 30, 2022 . - On
January 13, 2023 , Chicago Atlantic paid a special cash dividend of$0.29 per share of common stock, which was included in the fiscal 2022 taxable income, to common stockholders of record onDecember 30, 2022 .
Fourth Quarter 2022 Financial Results
- Net interest income of approximately
$14.8 million , representing a sequential increase of 14.1%; primarily due to the increase in the prime rate from 6.25% to 7.50%, improved yield terms on facilities amended and/or restructured during the quarter which increased the floating rate portion of the portfolio to approximately 83%, and the impact of the$5.9 million of net new originations during the fourth quarter. - Total expenses of approximately
$5.0 million before provision for current expected credit losses, representing a sequential increase of 75.8%; attributable to the previously disclosed increase in the incentive fee of approximately$2.3 million . - Net Income of approximately
$7.3 million , or$0.41 per weighted average diluted common share, representing a sequential decrease of 25.7%; driven primarily by the provision for current expected credit losses, which amounts to approximately 1.2% of the portfolio principal balance as ofDecember 31, 2022 . - Distributable Earnings of approximately
$10.0 million , or$0.57 per weighted average diluted common share, representing a sequential decrease of 1.7%. - Book value per common share of
$14.86 as ofDecember 31, 2022 compared with$15.23 as ofSeptember 30, 2022 , primarily due to the special dividend of$0.29 per share declared in the fourth quarter. - As of
December 31, 2022 , the Company had borrowed$58.0 million on its$92.5 million secured credit facility, resulting in a leverage ratio (debt to book equity) of approximately 22%.
Full Year 2022 Financial Results
- Net interest income of approximately
$48.9 million . - Total expenses of approximately
$12.7 million before provision for current expected credit losses. - Net Income of approximately
$32.3 million , or$1.82 per weighted average diluted common share. - Distributable Earnings of approximately
$37.2 million , or$2.10 per weighted average diluted common share. - The Company declared a total of
$2.10 in dividends per common share during 2022, including regular quarterly dividends totaling$1.81 per diluted share and a special dividend of$0.29 per diluted share.
2023 Outlook
Chicago
- The Company expects to maintain a dividend payout ratio (based on Distributable Earnings per weighted average diluted share) of approximately 90% to 100% on a full year basis.
- The regular quarterly common dividend is expected to be a minimum of
$0.47 per weighted average diluted share. - If its Net Income requires additional dividends over and above the regular quarterly dividend amount to meet its 2023 taxable income distribution requirements, the Company expects to meet that requirement with a special dividend in the fourth quarter of 2023.
This outlook does not include additional adjustments to the Prime rate subsequent to the date hereof or the impact of any unscheduled loan principal repayments.
Conference Call and Quarterly Earnings Supplemental Details
The Company will host a conference call later today at
Chicago
About
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views and projections with respect to, among other things, future events and financial performance. Words such as “believes,” “expects,” “will,” “intends,” “plans,” “guidance,” “estimates,” “projects,” “anticipates,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements, including statements about our future growth and strategies for such growth, are subject to the inherent uncertainties in predicting future results and conditions and are not guarantees of future performance, conditions or results. More information on these risks and other potential factors that could affect our business and financial results is included in our filings with the SEC. New risks and uncertainties arise over time, and it is not possible to predict those events or how they may affect us. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Contact:
(615) 942-7077
IR@REFI.reit
CONSOLIDATED BALANCE SHEETS
As of
2022 | December 31, 2021 | |||||||||
Assets | ||||||||||
Loans held for investment | $ | 339,273,538 | $ | 196,984,566 | ||||||
Current expected credit loss reserve | (3,940,939 | ) | (134,542 | ) | ||||||
Loans held for investment at carrying value, net | 335,332,599 | 196,850,024 | ||||||||
Cash | 5,715,827 | 80,248,526 | ||||||||
Interest receivable | 1,204,412 | 197,735 | ||||||||
Other receivables and assets, net | 1,018,212 | 874,170 | ||||||||
Total Assets | $ | 343,271,050 | $ | 278,170,455 | ||||||
Liabilities | ||||||||||
Revolving loan | $ | 58,000,000 | $ | - | ||||||
Dividend payable | 13,618,591 | 4,537,924 | ||||||||
Management and incentive fees payable | 3,295,600 | 802,294 | ||||||||
Interest reserve | 1,868,193 | 6,636,553 | ||||||||
Related party payable | 1,397,515 | 1,902,829 | ||||||||
Accounts payable and other liabilities | 1,058,128 | 212,887 | ||||||||
Total Liabilities | 79,238,027 | 14,092,487 | ||||||||
Commitments and contingencies (Note 8) | ||||||||||
Stockholders’ equity | ||||||||||
Common stock, par value | 176,859 | 173,551 | ||||||||
Additional paid-in-capital | 268,995,848 | 264,081,977 | ||||||||
Accumulated earnings (deficit) | (5,139,684 | ) | (177,560 | ) | ||||||
Total stockholders’ equity | 264,033,023 | 264,077,968 | ||||||||
Total liabilities and stockholders’ equity | $ | 343,271,050 | $ | 278,170,455 |
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
For the three months ended | For the three months ended | |||||||||||
2022 | September 30, 2022 | |||||||||||
Revenues | ||||||||||||
Interest income | $ | 15,993,588 | $ | 13,795,097 | ||||||||
Interest expense | (1,230,966 | ) | (861,348 | ) | ||||||||
Net interest income | 14,762,622 | 12,933,749 | ||||||||||
Expenses | ||||||||||||
Management and incentive fees, net | 3,295,600 | 1,347,421 | ||||||||||
Provision for current expected credit losses | 2,483,512 | 306,885 | ||||||||||
General and administrative expense | 1,118,171 | 1,076,798 | ||||||||||
Professional fees | 502,355 | 348,785 | ||||||||||
Stock based compensation | 107,267 | 84,891 | ||||||||||
Total expenses | 7,506,905 | 3,164,780 | ||||||||||
Net Income before income taxes | 7,255,717 | 9,768,969 | ||||||||||
Income tax expense | ||||||||||||
Net Income | $ | 7,255,717 | $ | 9,768,969 | ||||||||
Earnings per common share: | ||||||||||||
Basic earnings per common share (in dollars per share) | $ | 0.41 | $ | 0.55 | ||||||||
Diluted earnings per common share (in dollars per share) | $ | 0.41 | $ | 0.55 | ||||||||
Weighted average number of common shares outstanding: | ||||||||||||
Basic weighted average shares of common stock outstanding (in shares) | 17,657,913 | 17,657,913 | ||||||||||
Diluted weighted average shares of common stock outstanding (in shares) | 17,742,065 | 17,752,290 |
Distributable Earnings and Adjusted Distributable Earnings
In addition to using certain financial metrics prepared in accordance with GAAP to evaluate our performance, we also use Distributable Earnings and Adjusted Distributable Earnings to evaluate our performance. Each of Distributable Earnings and Adjusted Distributable Earnings is a measure that is not prepared in accordance with GAAP. We define Distributable Earnings as, for a specified period, the net income (loss) computed in accordance with GAAP, excluding (i) non-cash equity compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss); provided that Distributable Earnings does not exclude, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash, (iv) provision for current expected credit losses and (v) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between our Manager and our independent directors and after approval by a majority of such independent directors. We define Adjusted Distributable Earnings, for a specified period, as Distributable Earnings excluding certain non-recurring organizational expenses (such as one-time expenses related to our formation and start-up).
We believe providing Distributable Earnings and Adjusted Distributable Earnings on a supplemental basis to our net income as determined in accordance with GAAP is helpful to stockholders in assessing the overall performance of our business. As a REIT, we are required to distribute at least 90% of our annual REIT taxable income and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of such taxable income. Given these requirements and our belief that dividends are generally one of the principal reasons that stockholders invest in our common stock, we generally intend to attempt to pay dividends to our stockholders in an amount equal to our net taxable income, if and to the extent authorized by our Board. Distributable Earnings is one of many factors considered by our Board in authorizing dividends and, while not a direct measure of net taxable income, over time, the measure can be considered a useful indicator of our dividends.
In our Annual Report on Form 10-K, we defined Distributable Earnings so that, in addition to the exclusions noted above, the term also excluded from net income Incentive Compensation paid to our Manager. We believe that revising the term Distributable Earnings so that it is presented net of Incentive Compensation, while not a direct measure of net taxable income, over time, can be considered a more useful indicator of our ability to pay dividends. This adjustment to the calculation of Distributable Earnings has no impact on period-to-period comparisons.
Distributable Earnings and Adjusted Distributable Earnings should not be considered as substitutes for GAAP net income. We caution readers that our methodology for calculating Distributable Earnings and Adjusted Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our reported Distributable Earnings and Adjusted Distributable Earnings may not be comparable to similar measures presented by other REITs.
For the three months ended 2022 | For the three months ended 2022 | |||||||
Net Income | $ | 7,255,717 | $ | 9,768,969 | ||||
Adjustments to net income | ||||||||
Non-cash equity compensation expense | 107,267 | 84,891 | ||||||
Depreciation and amortization | 183,820 | 138,549 | ||||||
Provision for current expected credit losses | 2,483,512 | 306,885 | ||||||
Distributable Earnings | 10,030,316 | 10,299,294 | ||||||
Adjustments to Distributable Earnings | ||||||||
Adjusted Distributable Earnings | 10,030,316 | 10,299,294 | ||||||
Basic weighted average shares of common stock outstanding (in shares) | 17,657,913 | 17,657,913 | ||||||
Adjusted Distributable Earnings per Weighted Average Share | $ | 0.57 | $ | 0.58 | ||||
Diluted weighted average shares of common stock outstanding (in shares) | 17,742,065 | 17,752,290 | ||||||
Adjusted Distributable Earnings per Weighted Average Share | $ | 0.57 | $ | 0.58 |
Source:
2023 GlobeNewswire, Inc., source