
Chicago Atlantic Real Estate Finance Announces First Quarter 2024 Financial Results
CHICAGO ATLANTIC REAL ESTATE FINANCE, INC. CONSOLIDATED BALANCE SHEETS | ||||||||
March 31, 2024 | December 31, 2023 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Loans held for investment | $ | 359,317,126 | $ | 337,238,122 | ||||
Loans held for investment - related party (Note 7) | 16,527,188 | 16,402,488 | ||||||
Loans held for investment, at carrying value | 375,844,314 | 353,640,610 | ||||||
Current expected credit loss reserve | (5,356,018 | ) | (4,972,647 | ) | ||||
Loans held for investment at carrying value, net | 370,488,296 | 348,667,963 | ||||||
Cash and cash equivalents | 6,904,113 | 7,898,040 | ||||||
Other receivables and assets, net | 5,143,318 | 705,960 | ||||||
Interest receivable | 926,852 | 1,004,140 | ||||||
Related party receivables | 192,354 | 107,225 | ||||||
Debt securities, at fair value | - | 842,269 | ||||||
Total Assets | $ | 383,654,933 | $ | 359,225,597 | ||||
Liabilities | ||||||||
Revolving loan | $ | 81,250,000 | $ | 66,000,000 | ||||
Dividend payable | 9,007,244 | 13,866,656 | ||||||
Related party payables | 1,819,428 | 3,243,775 | ||||||
Management and incentive fees payable | 1,754,741 | 2,051,531 | ||||||
Accounts payable and other liabilities | 1,342,872 | 1,135,355 | ||||||
Interest reserve | 2,519,871 | 1,074,889 | ||||||
Total Liabilities | 97,694,156 | 87,372,206 | ||||||
Commitments and contingencies (Note 8) | ||||||||
Stockholders' equity | ||||||||
Common stock, par value $0.01 per share, 100,000,000 shares authorized and 19,100,282 and 18,197,192 shares issued and outstanding, respectively | 191,003 | 181,972 | ||||||
Additional paid-in-capital | 291,858,521 | 277,483,092 | ||||||
Accumulated deficit | (6,088,747 | ) | (5,811,673 | ) | ||||
Total stockholders' equity | 285,960,777 | 271,853,391 | ||||||
Total liabilities and stockholders' equity | $ | 383,654,933 | $ | 359,225,597 |
CHICAGO ATLANTIC REAL ESTATE FINANCE, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||
For the three months ended | For the three months ended | For the three months ended | ||||||||
March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||||||
Revenues | ||||||||||
Interest income | $ | 15,343,667 | $ | 16,530,028 | $ | 16,527,304 | ||||
Interest expense | (2,104,050 | ) | (1,690,543 | ) | (1,618,296 | ) | ||||
Net interest income | 13,239,617 | 14,839,485 | 14,909,008 | |||||||
Expenses | ||||||||||
Management and incentive fees, net | 1,754,741 | 3,243,775 | 2,138,005 | |||||||
General and administrative expense | 1,390,267 | 1,426,554 | 1,274,825 | |||||||
Professional fees | 449,858 | 555,623 | 569,375 | |||||||
Stock based compensation | 531,293 | 537,131 | 138,335 | |||||||
Provision for current expected credit losses | 380,279 | (253,495 | ) | 96,119 | ||||||
Total expenses | 4,506,438 | 5,509,588 | 4,216,659 | |||||||
Change in unrealized gain on debt securities, at fair value | (75,604 | ) | (37,163 | ) | - | |||||
Realized gain on debt securities, at fair value | 72,428 | 104,789 | - | |||||||
Net Income before income taxes | 8,730,003 | 9,397,523 | 10,692,349 | |||||||
Income tax expense | - | - | - | |||||||
Net Income | $ | 8,730,003 | $ | 9,397,523 | $ | 10,692,349 | ||||
Earnings per common share: | ||||||||||
Basic earnings per common share | $ | 0.48 | $ | 0.52 | $ | 0.60 | ||||
Diluted earnings per common share | $ | 0.47 | $ | 0.51 | $ | 0.60 | ||||
Weighted average number of common shares outstanding: | ||||||||||
Basic weighted average shares of common stock outstanding | 18,273,919 | 18,182,403 | 17,879,444 | |||||||
Diluted weighted average shares of common stock outstanding | 18,640,492 | 18,564,530 | 17,960,103 |
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 | For the three months ended | For the three months ended | |||||||
March 31, 2024 | December 31, 2023 | March 31, 2023 | |||||||
(unaudited) | (unaudited) | (unaudited) | |||||||
Net Income | $ | 8,730,003 | $ | 9,397,523 | $ | 10,692,349 | |||
Adjustments to net income | |||||||||
Stock based compensation | 531,293 | 537,131 | 138,335 | ||||||
Amortization of debt issuance costs | 90,915 | 145,128 | 167,304 | ||||||
Provision/(reversal) for current expected credit losses | 380,279 | (253,495 | ) | 96,119 | |||||
Change in unrealized gain on debt securities, at fair value | 75,604 | 37,163 | - | ||||||
Realized gain on debt securities, at fair value | (72,428 | ) | (104,789 | ) | - | ||||
Distributable Earnings | $ | 9,735,666 | $ | 9,758,661 | $ | 11,094,107 | |||
Adjustments to Distributable Earnings | |||||||||
Adjusted Distributable Earnings | 9,735,666 | 9,758,661 | 11,094,107 | ||||||
Basic weighted average shares of common stock outstanding (in shares) | 18,273,919 | 18,182,403 | 17,879,444 | ||||||
Adjusted Distributable Earnings per Weighted Average Share | $ | 0.53 | $ | 0.54 | $ | 0.62 | |||
Diluted weighted average shares of common stock outstanding (in shares) | 18,640,492 | 18,564,530 | 17,960,103 | ||||||
Adjusted Distributable Earnings per Weighted Average Share | $ | 0.52 | $ | 0.53 | $ | 0.62 |

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