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Chicago Atlantic Q1 2025 Earnings Report
Chicago Atlantic Real Estate Finance, Inc. reported its earnings for the first quarter of 2025, showing an increase in net income and a decrease in total expenses compared to the same period last year.
Key Takeaways
Chicago Atlantic Real Estate Finance, Inc. reported a net income of $10,041,312 for the first quarter of 2025, an increase of 15% from the $8,730,003 reported in the first quarter of 2024. Total expenses decreased by 33% to $3,000,621, primarily due to a significant benefit from current expected credit losses. EPS remained consistent at $0.48.
Net income increased by 15% to $10,041,312 in Q1 2025 compared to Q1 2024.
Total expenses decreased by 33% due to a benefit from current expected credit losses.
Basic and diluted EPS remained stable at $0.48 and $0.47, respectively.
Interest income slightly decreased by 2% to $15,107,315, while net interest income also saw a slight decrease.
Chicago Atlantic
Chicago Atlantic
Forward Guidance
The Company anticipates continued growth in its loan portfolio, driven by favorable market conditions in the cannabis industry and increasing demand for capital. They expect to raise additional equity and/or debt financing to support this growth and maintain liquidity.
Positive Outlook
- Favorable market conditions and an imbalance in supply and demand of credit in the cannabis industry provide attractive opportunities for non-bank lenders.
- Continued legalization of cannabis in additional states is expected to increase the addressable market.
- The Company intends to continue capitalizing on these opportunities and growing the size of its portfolio.
- The Company believes its cash on hand, available capacity under the Revolving Loan, and cash flows from operations will be sufficient to meet operating requirements for the next twelve months.
- The Company aims to maintain a portfolio diversified across jurisdictions and verticals, including cultivators, processors, dispensaries, and ancillary businesses.
Challenges Ahead
- The Company's ability to grow or maintain its business depends on state laws pertaining to the cannabis industry, and adverse changes could impede growth.
- Strict enforcement against borrowers due to federal illegality of cannabis poses significant risks.
- The Company may be prohibited from owning cannabis assets in case of loan default or seizure, potentially leading to losses.
- Competition for capital in the cannabis industry is increasing, which could impact opportunities.
- Interest rate mismatches between assets and borrowings could adversely affect profitability, especially with rising Prime Rates.