Adam JacksonChicago Atlantic Real Estate Finance Inc. (Nasdaq: REFI) obtained a $50 million unsecured term loan and received its first credit rating from Egan-Jones.
The four-year facility carries a 9% fixed interest rate and matures in October 2028, according to a statement Wednesday. The company paid a 1.50% upfront fee at closing and faces penalties of 3% in the first year and 2% in the second year if it pays off the debt early, filings show.
Chicago Atlantic used the proceeds to pay down its existing $110 million revolving credit facility and for working capital, according to the company. The firm has been actively deploying capital across the cannabis sector, including a $20 million loan to Massachusetts-based Nova Farms in April and dispensary buildouts in New York’s social equity program.
“This unsecured note is the latest example of our ability to source accretive financing that further enhances our operational liquidity to pursue additional opportunities within our active originations pipeline,” ceo-CEO Peter Sack said in a statement.
Egan-Jones assigned both the company and the new term loan a BBB+ investment grade rating. According to the credit rating firm, that rating means the company appears to have the means to repay such a debt, however it does have “sensitivity to evolving credit conditions.”
The long play
The real estate investment trust has maintained an active deal pipeline. Earlier this year, the company’s executive chairman, John Mazarakis, cited improving industry sentiment and growth opportunities in states like Maryland, Missouri and Ohio. The firm’s portfolio demonstrated “remarkable stability” with weighted average yields above 19% in the first quarter, according to Sack.
Chicago Atlantic posted second-quarter net income of $9.2 million, or 46 cents per share, missing analyst estimates, according to an August earnings report. Distributable earnings fell to their lowest level since mid-2022.
Recent transactions include amending a credit agreement with Vireo Growth in August to extend loan maturities to January 2027 and convert $10.5 million in convertible notes to equity. The company’s business development arm also began trading under the ticker LIEN this month after completing its acquisition of Silver Spike Investment’s loan portfolio.
Chicago Atlantic has deployed more than $2.2 billion in credit and equity investments through its platform, according to Wednesday’s statement.
