Chicago Atlantic Real Estate Finance (NASDAQ:REFI) executives emphasized their focus on senior secured lending to U.S. cannabis operators with what they described as conservative underwriting and collateral-driven structuring, as the company reviewed fourth-quarter 2025 results and discussed early 2026 activity. Management said the firm’s strategy is designed to operate with limited overlap to broader private credit markets and to benefit from limited competition in cannabis lending.
Management highlights: strategy, market backdrop, and pipeline
Co-CEO Peter Sack said Chicago Atlantic targets what he called an “intersection of real estate, credit, and the emerging sector of the U.S. cannabis industry,” aiming to structure senior secured positions with “outsized” returns relative to broader credit and real estate lending portfolios. Sack argued that recent pressures in parts of private credit are not directly relevant to the company, citing no exposure to areas such as software, receivables factoring, or syndicated facilities.
Management also discussed policy developments. Sack said that in December 2025, President Trump signed an executive order directing his administration to reclassify cannabis from Schedule I to Schedule III. While noting this would not be federal legalization, Sack described rescheduling as potentially meaningful for industry economics. However, he said the company’s underwriting does not assume regulatory-driven credit improvements.
Portfolio composition, originations, and credit updates
President and COO David Kite said that as of December 31, the loan portfolio principal totaled approximately $411 million across 26 portfolio companies, with a weighted average yield to maturity of 16.3%, compared with 16.5% in the third quarter.
Kite reported gross originations during the quarter of approximately $19 million, including $5 million to a new borrower and $14 million to existing borrowers. Loans that matured at the end of 2025 were extended with new contractual maturities in 2026, he said.
Management provided an update on “loan number nine,” which Kite said saw an advance that enabled the borrower to acquire three additional dispensaries in Pennsylvania, bringing the total to six operating dispensaries. Kite said the company received all past due interest from the borrower, bringing the loan current as of December 31, 2025. While the loan’s risk rating was upgraded from four to three, Kite said it remained on non-accrual status as of year-end, with accrual status expected to be restored after sustained performance and timely payments are demonstrated.
Interest rate positioning and leverage
Kite said the portfolio was 37.6% fixed-rate and 62.4% floating-rate as of December 31, with floating-rate loans primarily benchmarked to the prime rate. After a 25-basis-point reduction in December that brought prime to 6.75%, Kite said only 9% of the portfolio remained exposed to further rate declines; 91% was either fixed-rate or protected by prime rate floors of 6.75% or higher. He added that the company’s floating-rate loans are not exposed to interest rate caps.
Based on the portfolio as of December 31, Kite said a hypothetical 100-basis-point decline in benchmark rates was estimated to reduce net investment income by approximately $14,000, while a 200-basis-point decline would result in an increase to net investment income, citing the interaction of limited asset exposure and lower interest expense on a revolver with a prime rate floor of 3.25%.
Total leverage equaled 32% of book equity at December 31, compared with 33% at September 30, Kite said. The company had $49.1 million outstanding on its senior secured revolving credit facility and $49.3 million outstanding on an unsecured term loan. Kite said that as of the call date, the company had approximately $53 million available on the senior credit facility and total liquidity, net of estimated liabilities, of approximately $50 million.
Quarterly financial results, reserves, and dividend commentary
CFO Phil Silverman said net interest income was $14.2 million for the fourth quarter, up 4% from $13.7 million in the third quarter. Silverman attributed the increase primarily to the collection of past due accrued interest on loan number nine totaling $1.7 million, recognized upon receipt, partially offset by 50 basis points of prime rate cuts in the quarter (25 basis points each in October and December 2025).
Total interest expense, including non-cash amortization of financing costs, was approximately $1.8 million, up from $1.6 million in the third quarter. Silverman said weighted average borrowings on the revolving loan increased to $33.6 million from $14 million in the prior quarter.
Silverman said the company’s CECL reserve on loans held for investment was approximately $5.1 million as of December 31, representing 1.23% of outstanding principal, and was consistent with the prior quarter. He also cited portfolio metrics including weighted average real estate coverage of 1.2x and a weighted average loan-to-enterprise value ratio of 44.2%.
Distributable earnings per weighted average share were approximately $0.44 (basic) and $0.43 (fully diluted) for the quarter, and $1.92 and $1.88, respectively, for the year. The company paid a fourth-quarter dividend of $0.47 per common share in January, which had been declared in December. Silverman said that since inception, the company has distributed $8.47 per common share in dividends, representing an annualized yield on cost of approximately 12.4% relative to its IPO price.
Book value per common share was $14.60 as of December 31, 2025, with approximately 21.5 million common shares outstanding on a fully diluted basis, Silverman said.
Early 2026 activity, repayments, and Q&A takeaways
Silverman said that from January 1, 2026 through the call date, the company advanced new gross loan principal of approximately $51.1 million, including $16.2 million to one new borrower and $34.9 million to existing borrowers. Over the same period, the company received $40.4 million in loan repayments, including $3.1 million of scheduled amortization and $37.3 million of early prepayments, which included the full repayment of loan number one and loan number 27.
Silverman said the company expects to maintain a dividend payout ratio based on basic distributable earnings per share of 90% to 100% for the 2026 tax year, and noted that if taxable income requires additional distributions beyond the regular quarterly dividend, management expects to address it with a special dividend in the fourth quarter.
During the Q&A, management addressed several themes:
- Portfolio growth and liquidity: Sack said the company is still targeting net portfolio growth in 2026 and expressed “a fairly high degree of confidence” in executing on the pipeline, while noting liquidity of about $50 million as of March 12 and uncertainty around the timing of repayments.
- Rescheduling and competition: Sack said rescheduling has increased demand for debt capital and accelerated operator investment and M&A decisions, but has not changed pricing discussions or underwriting standards, and management has not seen new lenders enter the market due to the announcement.
- Non-accrual and Arizona exposure: Sack said two new non-accrual loans were related to the same sponsor in Arizona, describing the state as having a challenging pricing environment that the borrower is navigating with the company.
- Loan number nine rationale and accounting: Sack described the loan as involving a foreclosure and change of control in 2025, operational improvements, and additional acquisitions that improved the operating profile and enabled the borrower to become current on interest. Silverman added that despite non-accrual status, the borrower made January and February payments that were recognized on a cash basis.
- Early repayments: Sack said loan number one was refinanced with a new credit facility in which Chicago Atlantic participated. He said loan number 27 paid off and the company opted not to pursue a refinancing, citing a mix of pricing and credit considerations.
- 280E and credit improvement: Sack said the company does not view non-payment of 280E-related taxes as “not mattering,” and instead monitors unpaid tax liabilities closely in underwriting and covenants. He said that if rescheduling occurs and those taxes are no longer due on a go-forward basis, the company would view that as a credit improvement.
About Chicago Atlantic Real Estate Finance (NASDAQ:REFI)
Chicago Atlantic Real Estate Finance, Inc (NASDAQ:REFI) is a publicly listed real estate finance company that specializes in originating and acquiring commercial real estate debt. Pursuant to its election to be treated as a real estate investment trust (REIT), REFI’s investment strategy focuses on floating-rate senior mortgage loans secured by income-producing properties across the United States. The company targets stabilized, performing assets in sectors such as multifamily, office, retail and industrial, aiming to generate attractive risk-adjusted returns through current income.
Established in 2015 and headquartered in Chicago, Illinois, REFI completed its initial public offering in 2019.
