Chicago Atlantic Real Estate Finance NASDAQ: REFI reported what executives described as steady first-quarter 2026 results, as management highlighted the company’s cannabis-focused lending strategy, a strong pipeline of opportunities and potential credit benefits from recent federal cannabis policy developments.
Co-Chief Executive Officer Peter Sack said the quarter reflected the “strength and resilience” of the company’s business model amid concerns in private credit markets, a pause in the Federal Reserve’s rate-easing cycle and geopolitical volatility. Chicago Atlantic focuses on lending to operators and property owners in the cannabis industry, a niche Sack said continues to offer limited competition and favorable lending terms.
“Overall, REFI delivered consistent, stable financial results for the first quarter of 2026 against an unstable macro environment,” Sack said.
Loan Portfolio Totals $414 Million
President and Chief Operating Officer David Kite said Chicago Atlantic’s loan portfolio principal totaled approximately $414 million as of March 31, spread across 25 portfolio companies. The weighted average yield to maturity was 15.8%, down from 16.3% in the fourth quarter of 2025.
The company recorded approximately $54 million of gross originations during the quarter, including $16.2 million funded to new borrowers and $37.8 million to existing borrowers. Those fundings were offset by about $52 million of repayments, including $3.3 million in scheduled amortization and $48.2 million in full and partial loan prepayments.
Management said early repayments were not unusual. In response to an analyst question, Sack said the company labeled the repayments as unscheduled, but “unscheduled doesn’t necessarily mean a surprise,” noting that several loans were nearing maturity.
As of March 31, 35.2% of the portfolio consisted of fixed-rate loans and 64.8% of floating-rate loans. Kite said 71.9% of floating-rate loans were benchmarked to the prime rate, while 28.1% were benchmarked to SOFR. With the prime rate at 6.75%, all of the company’s prime-rate loans were at their floors, and only about 4% of total loan principal was exposed to further rate declines.
Credit Reserves Rise; Loan No. 9 Returns to Accrual
Chicago Atlantic reported that approximately 10.7% of its portfolio was risk rated four or higher as of March 31, compared with 4.8% at the end of 2025. Kite said the increase was primarily attributable to Loan No. 36 being downgraded from a three to a four, which contributed to a roughly $3.8 million increase in current expected credit loss, or CECL, reserves.
Chief Financial Officer Phillip Silverman said the CECL reserve on loans held for investment was approximately $8.7 million as of March 31, representing 2.1% of outstanding principal. He attributed the reserve increase primarily to higher loan-to-value ratios on specific loans, especially Loan No. 4, Loan No. 34 and Loan No. 36. On a weighted average basis, he said the portfolio maintained real estate coverage of 1.2 times.
Kite also said Loan No. 9 was restored to accrual status after three consecutive months of timely payments and improved performance. As a result, approximately 4.8% of the portfolio was on non-accrual status as of March 31, down from 11.1% as of Dec. 31.
In the question-and-answer session, Sack described the Illinois-based Loan No. 36 as involving a vertically integrated operator with “strong real estate coverage.” He said discussions with the borrower were constructive and that management expects performance can be improved and resolved collaboratively.
Net Interest Income Declines From Prior Quarter
Silverman said net interest income was $13.1 million in the first quarter, down $1.2 million, or 8%, from $14.2 million in the fourth quarter of 2025. The decline was primarily tied to the fourth-quarter collection of $1.7 million of past-due accrued interest on Loan No. 9, which had been recognized in the prior period.
Total interest expense, including non-cash amortization of financing costs, was approximately $2 million, up from $1.8 million in the fourth quarter. Silverman said weighted average borrowings on the revolving loan increased to $48 million from $33.6 million.
Distributable earnings per weighted average share were approximately $0.47 on a basic basis and $0.46 on a fully diluted basis for the first quarter. In April, the company distributed a fourth-quarter dividend of $0.47 per common share. Since inception, Chicago Atlantic has distributed $8.94 per common share in dividends, which Silverman said represented an 11.8% yield on cost when measured against the IPO price.
Book value per common share was $14.39 as of March 31, and the company had approximately 21.5 million common shares outstanding on a fully diluted basis.
Cannabis Rescheduling Seen as Potential Credit Positive
Sack devoted a significant portion of management’s remarks to the Department of Justice’s April 23 announcement that certain medical marijuana products would be rescheduled to Schedule III from Schedule I. He called the move “the most significant federal policy change in years” for the cannabis industry, while cautioning that details remain uncertain.
Management said the company expects the most immediate benefit to come from elimination of the additional tax burden associated with Section 280E for affected operators, along with potential retrospective relief on legacy tax liabilities. Sack said those changes should improve operator cash flows, strengthen balance sheets, drive higher valuation multiples and improve borrower credit profiles.
He also said the federal order sets up an expedited process for state-licensed medical cannabis operators to register with the DEA and could lower barriers to U.S. exchange listings. An administrative hearing is scheduled for June 29 through July 15, which Sack said may provide a pathway to broader cannabis rescheduling, potentially including adult-use products.
Still, Sack emphasized that Chicago Atlantic has not relied on regulatory change in its underwriting. “We have remained conservative and underwrite every investment assuming no regulatory-driven credit improvements,” he said.
Pipeline Remains Strong
Chicago Atlantic’s cannabis opportunity pipeline stood at $482 million, including approximately $133 million backed by real estate collateral. Sack said the pipeline typically refreshes every three to six months, making it difficult to forecast exactly which opportunities will close.
As of March 31, total leverage equaled 38% of book equity, compared with 32% at Dec. 31. The company had $67.1 million outstanding on its senior secured revolving credit facility and $49.4 million outstanding on its unsecured term loan. Kite said the company had approximately $59 million available on the senior credit facility as of the call and total liquidity, net of estimated liabilities, of about $54 million.
Silverman said that from April 1 through the date of the call, the company advanced approximately $15.8 million of new gross loan principal and received $14.3 million in loan repayments, including full repayment of Loans No. 6 and No. 30.
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. Silverman said that if taxable income requires distributions above the regular quarterly dividend, the company expects to address the requirement with a special dividend in the fourth quarter.
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.
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