Chicago Atlantic Real Estate Finance, Inc.
For the period ended Jun 30, 2026. Filed Aug 11, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 11, 2026
REFI$8.80-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001193125-26-210274
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-11.
0001193125-26-343398
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 187 previous paragraphs and 216 current paragraphs.
135 unchanged; 46 reworded; 27 added; 6 removed; 0 previous and 8 current paragraphs rearranged.
Tables are not compared: 19 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (27)
Current report
the timing, completion and expected benefits of our proposed merger with Chicago Atlantic BDC, Inc. (“LIEN”), and the risk that the anticipated benefits may not be realized;
Current report
our ability to obtain the required stockholder approvals of the Company and LIEN and the approvals required under Rule 17a-8 of the 1940 Act;
Current report
the risk that required regulatory approvals or non-objections relating to our proposed merger with LIEN, may not be obtained, including SEC acceptance of the Company's election to be regulated as a business development company;
Current report
movement in the Exchange Ratio between signing of the merger agreement for our proposed merger with LIEN and closing of the transaction due to changes in the net asset values of the Company and LIEN;
Current report
the incurrence of significant transaction and integration costs and the risk of litigation relating to the merger;
Current report
the risk that the share repurchase program of up to $25.0 million that the Board has agreed to consider following completion of the proposed merger may not be adopted or may differ from current expectations; and
Current report
As of June 30, 2026, we held one loan at fair value with a principal balance of $41 million, which bears a floating rate. As of December 31, 2025, none of our loans were held at fair value.
Current report
In April 2026, the Company entered into an amendment for Loan #36, in which a portion of the unpaid outstanding interest was capitalized and added to the outstanding principal amount of the Loan. Further, the Company amended the terms of interest income wherein all future interest income amounts are payable in kind ("PIK"), monthly. The agreed upon PIK interest rate is 13.75% as of the date of the amendment. No other terms of the loan were modified in connection with this amendment.
Current report
In June 2026, Loan #8 was amended to extend the maturity date to September 30, 2026. No other terms of the loan were modified in connection with this amendment.
Current report
In June 2026, the Company received a full repayment of Loans #38a and 38b amounting to approximately $2.9 million, all of which related to principal repayment.
Current report
In June 2026, the Company acquired a $41.0 million second-lien secured mortgage loan (Loan #51) to a subsidiary of Vireo Growth, Inc., an entity considered a related party by virtue of the relationship between the Company’s Executive Chairman and Vireo. The loan bears interest at Prime plus 5.25% and has a 24-month maturity. See Note 8 for additional information.
Current report
In June 2026, the Company completed a non-cash exchange with Chicago Atlantic Credit Opportunities, LLC (“CACO”), an affiliated private investment fund, pursuant to which the Company transferred one loan with a fair value of approximately $27.1 million and received five loans of equal aggregate fair value. See Note 8 for additional information.
Current report
Proposed Merger with Chicago Atlantic BDC, Inc.
Current report
On June 17, 2026, we entered into an Agreement and Plan of Merger with LIEN pursuant to which the Company will elect to be regulated as a business development company under the Investment Company Act of 1940, as amended (the "Investment Company Act"), and merge with and into LIEN, with LIEN as the surviving company and continuing to trade on Nasdaq under the symbol “LIEN.” REFI stockholders will receive shares of LIEN common stock based on an Exchange Ratio determined by the relative adjusted net asset values per share of the Company and LIEN shortly before closing. The Merger, which is subject to stockholder approvals, regulatory approvals, effectiveness of a Form N-14 registration statement filed by LIEN on July 31, 2026, which contains a joint proxy statement/prospectus, and other customary conditions, is currently expected to close in the fourth quarter of 2026. There can be no assurance that the Merger will be completed on the anticipated terms or timing, or at all. See Note 16 to the consolidated financial statements.
Current report
In July 2026, Loan #21 was amended to extend the maturity date to August 18, 2026. No other terms of the loan were modified in connection with this amendment.
Current report
Private Placement of Common Stock
Current report
On July 9, 2026, the Company entered into a Loan Agreement with Koach, pursuant to which the Company issued 4,306,754 shares of its common stock at a price of $14.53 per share in a private placement, in exchange for second-lien promissory notes issued by Koach with an aggregate principal amount of approximately $62.5 million. The shares issued represent approximately 16.8% of the Company’s common stock outstanding immediately after giving effect to the issuance. The Koach Notes are secured by mortgages on 32 retail and related properties leased to cannabis operators, bear interest at an aggregate rate of 12.0% per annum (10.0% cash and 2.0% payable in kind), provide for an exit fee of up to 2.5x the commitment amount of each Note, and have a weighted average remaining life of approximately 12.0 years. The shares issued in connection with the transaction will be reflected in the inputs used to determine the Exchange Ratio for the Merger. See Note 17 to the consolidated financial statements.
Current report
During the three months ended June 30, 2026, the Company paid approximately $1.0 million of accrued dividends relating to the 234,120 restricted stock awards which vested to common shares during the period.
Current report
Interest income decreased by approximately $1.3 million during the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025. The decrease was driven primarily by a decrease of $1.0 million in exit/success fees associated with the repayments and amendments of certain loans during the respective periods. During the second quarter of 2026, the Company recognized $0.9 million associated with amendments of its existing loans during the period. In the second quarter of 2025, the Company recognized $1.0 million related to an amendment of one of its existing loans, $0.5 million of success fees on one of its loans, and $0.4 million related to OID accelerations. Interest income from acceleration of original issue discounts and other upfront fees generated approximately $0.4 million and $0.3 million of gross interest income during the three months ended June 30, 2026 and 2025, respectively. Additionally, the weighted average YTM IRR on our portfolio decreased from 16.8% at June 30, 2025 to 15.6% at June 30, 2026, as a result of certain re-pricing amendments relating to de-risking of our portfolio and the impact of the 75 basis point prime rate decline on our floating rate portfolio during the comparative periods, resulting in a $1.3 million decrease in cash interest income, offset by an additional $0.9 million in PIK interest income.
Current report
Comparison of the six months ended June 30, 2026 and 2025
Current report
Management and incentive fees payable to our Manager slightly decreased over the comparative period. Management fees were approximately $2.4 million for the six months ended June 30, 2026 and 2025. The origination fee offsets in the six months ended June 30, 2026 was $108 thousand, compared to approximately $137 thousand for the six months ended June 30, 2025. Incentive fees were approximately $1.0 million for the six months ended June 30, 2026, compared to $1.4 million for the six months ended June 30, 2025.
Current report
General and administrative expenses and professional fees increased by approximately $213 thousand for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was primarily due to an increase in overhead reimbursements for costs incurred by the Manager on behalf of the Company, which were approximately $2.4 million for the six months ended June 30, 2026 compared to $2.3 million during the six months ended June 30, 2025. Further, there was an increase in consulting and legal expenses during the comparative periods by $70 thousand, partially offset by net decreases in other professional fee expenses.
Current report
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Current report
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Current report
Under the Merger Agreement, the Company has agreed that, subject to specified exceptions and absent LIEN’s prior written consent, it will not issue or sell shares of its capital stock or other equity securities, or securities convertible into or exercisable for such securities, pending completion of the merger. Accordingly, even if the New Registration Statement becomes effective, the Company will remain subject to these restrictions unless an applicable exception applies or LIEN provides its prior written consent.
Removed paragraphs (6)
Previous report
In January 2026, the Company and other co-lenders party thereto, entered into an amendment to Loan #42 which increased the Company's aggregate commitment from $33.3 million to $53.3 million. In March 2026, the Company advanced $33.3 million, on Loan #42, leaving a remaining unfunded commitment of $0 as of March 12, 2026.
Previous report
In January 2026, the Company received a full repayment of Loan #27 amounting to approximately $17.3 million, of which $17.2 million and $0.1 million related to principal repayment and accrued interest, respectively.
Previous report
In February 2026, the Company received an early partial repayment of Loan #30 amounting to approximately $4.5 million, of which $4.4 million and $0.1 million related to principal repayment and prepayment fee, respectively.
Previous report
In March 2026, the Company received a full repayment of Loan #1 amounting to approximately $15.8 million, of which $15.7 million and $0.1 million related to principal repayment and accrued interest, respectively.
Previous report
In April 2026, Loan #36 was amended, which decreased the cash interest rate from 13.75% to 0% and increased the PIK rate from 0% to 21.25%.
Previous report
Loan #9(a)(b), which was placed on non-accrual in May 2023, were restructured during 2025. The Company made incremental advances to fund accretive acquisitions which management expects to result in improved operating performance. As a result of the borrowers acquisitions, the estimated LTV ratio decreased by approximately 19% year over year. Additionally, in December 2025 the Company collected all past due unpaid interest and the borrower was brought to current. Management restored Loan #9 to accrual status as of March 31, 2026. The borrower demonstrated sustained ability to meet debt service obligations for a minimum of 60 days.
Reworded paragraphs (46)
Previous wording
Some of the statements contained in this quarterly report constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend such statements to be covered by the safe harbor provisions contained therein. Forward-looking statements relate to future events or the future performance or financial condition of Chicago Atlantic Real Estate Finance, Inc. (the “Company,” “we,” “us,” and “our”). The information contained in this section should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q. This description contains forward-looking statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the forward-looking statements due to the factors set forth in this quarterly report and in “Risk Factors” in our annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) and in Part II, Item 1A of this quarterly report on Form 10-Q, as such risks may by updated, amended, or superseded from time to time by subsequent reports we file with the SEC. The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:
Current wording
Some of the statements contained in this quarterly report constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend such statements to be covered by the safe harbor provisions contained therein. Forward-looking statements relate to future events or the future performance or financial condition of Chicago Atlantic Real Estate Finance, Inc. (the “Company,” “we,” “us,” and “our”). The information contained in this section should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q. This description contains forward-looking statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the forward-looking statements due to the factors set forth in this quarterly report and in “Risk Factors” in our annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) and in Part II, Item 1A of this quarterly report on Form 10-Q, as such risks may be updated, amended, or superseded from time to time by subsequent reports we file with the SEC. The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:
Previous wording
The following table sets forth the components of interest and fee income for the three months ended March 31, 2026 and 2025:
Current wording
The following table sets forth the components of interest and fee income for the three months and six months ended June 30, 2026 and 2025:
Previous wording
1 Other fee income includes prepayment fees, make-whole fees, and exit/success fees which are included in interest income on the Consolidated Statements of Operations.
Current wording
1 Other fee income includes prepayment fees, make-whole fees, exit/success fees, and/or other upfront fees on loans for which the fair value option was elected, which are included in interest income on the Consolidated Statements of Income.
Previous wording
The below table summarizes the gross interest income derived from fixed and floating-rate loans during the three months ended March 31, 2026 and 2025 based on portfolio composition as of the quarter end date.
Current wording
The below table summarizes the gross interest income derived from fixed and floating-rate loans during the three months and six months ended June 30, 2026 and 2025 based on portfolio composition as of the quarter end date.
Previous wording
To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute annually to our stockholders at least 90% of our REIT taxable income prior to the deduction for dividends paid. To the extent that we distribute less than 100% of our REIT taxable income in any tax year (taking into account any distributions made in a subsequent tax year under Sections 857(b)(9) or 858 of the Code), we will pay tax at regular corporate rates on that undistributed portion. Furthermore, if we distribute less than the sum of 1) 85% of our ordinary income for the calendar year, 2) 95% of our capital gain net income for the calendar year, and 3) any undistributed shortfall from our prior calendar year (the “Required Distribution”) to our stockholders during any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year), then we are required to pay a non-deductible excise tax equal to 4% of any shortfall between the Required Distribution and the amount that was actually distributed. The 90% distribution requirement does not require the distribution of net capital gains. However, if we elect to retain any of our net capital gain for any tax year, we must notify our stockholders and pay tax at regular corporate rates on the retained net capital gain. Our stockholders must include their proportionate share of the retained net capital gain in their taxable income for the tax year, and they are deemed to have paid the REIT’s tax on their proportionate share of the retained capital gain. Furthermore, such retained capital gain may be subject to the nondeductible 4% excise tax. If it is determined that our estimated current year taxable income will be in excess of estimated dividend distributions (including capital gain dividend) for the current year from such income, we will accrue excise tax on estimated excess taxable income as such taxable income is earned. The annual expense is calculated in accordance with applicable tax regulations. Excise tax expense, if any, is included in the line item, income tax expense. For the three months ended March 31, 2026, we did not incur excise tax expense.
Current wording
To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute annually to our stockholders at least 90% of our REIT taxable income prior to the deduction for dividends paid. To the extent that we distribute less than 100% of our REIT taxable income in any tax year (taking into account any distributions made in a subsequent tax year under Sections 857(b)(9) or 858 of the Code), we will pay tax at regular corporate rates on that undistributed portion. Furthermore, if we distribute less than the sum of 1) 85% of our ordinary income for the calendar year, 2) 95% of our capital gain net income for the calendar year, and 3) any undistributed shortfall from our prior calendar year (the “Required Distribution”) to our stockholders during any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year), then we are required to pay a non-deductible excise tax equal to 4% of any shortfall between the Required Distribution and the amount that was actually distributed. The 90% distribution requirement does not require the distribution of net capital gains. However, if we elect to retain any of our net capital gain for any tax year, we must notify our stockholders and pay tax at regular corporate rates on the retained net capital gain. Our stockholders must include their proportionate share of the retained net capital gain in their taxable income for the tax year, and they are deemed to have paid the REIT’s tax on their proportionate share of the retained capital gain. Furthermore, such retained capital gain may be subject to the nondeductible 4% excise tax. If it is determined that our estimated current year taxable income will be in excess of estimated dividend distributions (including capital gain dividend) for the current year from such income, we will accrue excise tax on estimated excess taxable income as such taxable income is earned. The annual expense is calculated in accordance with applicable tax regulations. Excise tax expense, if any, is included in the line item, income tax expense. For the six months ended June 30, 2026 and 2025, we did not incur excise tax expense.
Previous wording
As of March 31, 2026 our loan portfolio included 29 loans held for investment, with $413.6 million in principal outstanding, and approximately $4.5 million in unfunded commitments under delayed draw term loan facilities. Our loans are generally classified as held for investment and carried at amortized cost on the consolidated balance sheets. Such loans are generally secured by real estate, equipment, licenses, intellectual property and other assets of the borrowers to the extent permitted by the applicable laws and the regulations governing such borrowers. The below table summarizes the total outstanding principal and carrying value, net of current expected credit loss reserves as of March 31, 2026 and December 31, 2025:
Current wording
As of June 30, 2026 our loan portfolio included 29 loans held for investment, with an aggregate of $412.1 million in principal outstanding, and approximately $2.4 million in unfunded commitments under delayed draw term loan facilities. Our loans are generally classified as held for investment and carried at amortized cost on the consolidated balance sheets. Such loans are generally secured by real estate, equipment, licenses, intellectual property and other assets of the borrowers to the extent permitted by the applicable laws and the regulations governing such borrowers. The below table summarizes the total outstanding principal and carrying value, net of current expected credit loss reserves as of June 30, 2026 and December 31, 2025:
Previous wording
As of March 31, 2026 and December 31, 2025, our loan portfolio had a weighted-average yield-to-maturity internal rate of return (“YTM IRR”) of 15.8% and 16.3%, respectively, and was substantially secured by real estate and, with respect to certain of our loans, substantially all assets of the borrowers and certain of their subsidiaries, including equipment, receivables, and licenses. YTM IRR is calculated using various inputs, including (i) cash and paid-in-kind (“PIK”) interest, which is capitalized and added to the outstanding principal balance of the applicable loan, (ii) original issue discount (“OID”), (iii) amortization, (iv) unused fees, and (v) exit fees. Certain of our loans have extension or amendment fees, which are not included in our YTM IRR calculations, but may increase YTM IRR if such extension options are exercised by borrowers.
Current wording
As of June 30, 2026 and December 31, 2025, our loan portfolio had a weighted-average yield-to-maturity internal rate of return (“YTM IRR”) of 15.6% and 16.3%, respectively, and was substantially secured by real estate and, with respect to certain of our loans, substantially all assets of the borrowers and certain of their subsidiaries, including equipment, receivables, and licenses. YTM IRR is calculated using various inputs, including (i) cash and paid-in-kind (“PIK”) interest, which is capitalized and added to the outstanding principal balance of the applicable loan, (ii) original issue discount (“OID”), (iii) amortization, (iv) unused fees, and (v) exit fees. Certain of our loans have extension or amendment fees, which are not included in our YTM IRR calculations, but may increase YTM IRR if such extension options are exercised by borrowers.
Previous wording
Our floating-rate loans typically include a Prime or SOFR interest rate floor that is generally set at the prevailing Prime or SOFR rate, as applicable, on the date of origination. As of March 31, 2026 and December 31, 2025 none of our loans were subject to an interest rate ceiling. We typically include an interest rate floor with our floating rate loans in order to provide us with protection against decreases in interest rates. As of March 31, 2026 and December 31, 2025, 64.8% and 58.2% of our loans were subject to an interest rate floor. As of March 31, 2026 and December 31, 2025, our portfolio had the following interest rate floors:
Current wording
Our floating-rate loans typically include a Prime or SOFR interest rate floor that is generally set at the prevailing Prime or SOFR rate, as applicable, on the date of origination. As of June 30, 2026 and December 31, 2025 none of our loans were subject to an interest rate ceiling. We typically include an interest rate floor with our floating rate loans in order to provide us with protection against decreases in interest rates. As of June 30, 2026 and December 31, 2025, 58.8% and 58.2% of our loans were subject to an interest rate floor. As of June 30, 2026 and December 31, 2025, our portfolio had the following interest rate floors:
Previous wording
The following tables present changes in loans held for investment at carrying value as of and for the three months ended March 31, 2026 and 2025:
Current wording
The following tables present changes in loans held for investment at carrying value as of and for the six months ended June 30, 2026 and 2025:
Previous wording
Developments During the First Quarter of 2026
Current wording
Recent Developments During the Second Quarter of 2026
Previous wording
Subsequent Updates to Our Loan Portfolio during the Second Quarter of 2026
Current wording
Updates to Our Loan Portfolio during the Second Quarter of 2026
Previous wording
During the period from January 1, 2026 through March 31, 2026, we advanced approximately $52.8 million of principal to new and existing borrowers under delayed draw and revolving loan facilities. Additionally, we received approximately $51.6 million of repayments, comprised of $3.4 million in schedule amortization payments, $4.4 million in partial prepayments and $43.8 from full repayments. A brief description of certain investment activities are described below:
Current wording
During the period from April 1, 2026 through June 30, 2026, we advanced approximately $56.9 million of principal, excluding capitalized PIK interest and fees, to new and existing borrowers under delayed draw and revolving loan facilities. Additionally, we received approximately $19.7 million of repayments, comprised of $3.3 million in scheduled amortization payments, $1.0 million in partial prepayments and $15.4 million from full repayments. A brief description of certain investment activities are described below:
Previous wording
In April 2026, the Company received a full repayment of Loan #6 amounting to approximately $3.2 million, all of which related to the outstanding principal balance.
Current wording
In April 2026, the Company received a full repayment of Loan #6 amounting to approximately $3.2 million, all of which related to principal repayment.
Previous wording
Updates to Our Loan Portfolio during the First Quarter of 2026
Current wording
Subsequent Updates to Our Loan Portfolio during the Third Quarter of 2026
Previous wording
During the period from April 1, 2026 through May 7, 2026, we advanced approximately $15.9 million of principal to new and existing borrowers under delayed draw and revolving loan facilities, inclusive of $13.1 million to related parties. Additionally, we received approximately $13.4 million of repayments, comprised of $0.9 million in schedule amortization payments and $12.5 from full repayments. A brief description of certain investment activities are described below:
Current wording
During the period from July 1, 2026 through August 11, 2026, we advanced approximately $4.2 million of principal to new and existing borrowers under delayed draw and revolving loan facilities, inclusive of $0.2 million to related parties. The amounts advanced exclude incremental loans issued in connection with the Koach Transaction, as further explained below. Additionally, we received approximately $2.3 million of repayments, comprised entirely of scheduled amortization payments. A brief description of certain investment activities are described below:
Previous wording
During the three months ended March 31, 2026, we declared an ordinary cash dividend of $0.47 per share of our common stock, relating to the first quarter of 2026, which was paid on April 15, 2026 to stockholders of record as of the close of business on March 31, 2026. The total amount of the cash dividend payment was approximately $9.9 million.
Current wording
During the three months ended June 30, 2026, we declared an ordinary cash dividend of $0.47 per share of our common stock, relating to the second quarter of 2026, which was paid on July 15, 2026 to stockholders of record as of the close of business on June 30, 2026. The total amount of the cash dividend payment was approximately $10.0 million.
Previous wording
While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain loans, particularly those not fully collateralized by real estate. In order to mitigate that risk, our loans are generally collateralized by other assets, such as equipment, receivables, licenses or other assets of the borrowers to the extent permitted by applicable laws and regulations. In addition, we seek to impose strict loan covenants and seek personal or corporate guarantees for additional protection. As of March 31, 2026, 61.0% of our portfolio is fully secured by real estate, and 2.4% has no real estate collateral. Our portfolio on average had real estate collateral coverage of 1.2x as of March 31, 2026. Our loans are generally secured by equity pledges of the borrower and all asset liens and our portfolio had a weighted average loan to enterprise value ratio of 43.7%. As of March 31, 2025, 50.0% of our portfolio was fully secured by real estate and 1.6% had no real estate collateral. Our portfolio on average had real estate collateral coverage of 1.1x as of March 31, 2025, and a weighted average loan to enterprise value ratio of 47.5%.
Current wording
While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain loans, particularly those not fully collateralized by real estate. In order to mitigate that risk, our loans are generally collateralized by other assets, such as equipment, receivables, licenses or other assets of the borrowers to the extent permitted by applicable laws and regulations. In addition, we seek to impose strict loan covenants and seek personal or corporate guarantees for additional protection. As of June 30, 2026, 55.7% of our portfolio is fully secured by real estate, and 2.6% has no real estate collateral. Our portfolio on average had real estate collateral coverage of 1.2x as of June 30, 2026. Our loans are generally secured by equity pledges of the borrower and all asset liens and our portfolio had a weighted average loan to enterprise value ratio of 46.0%. As of June 30, 2025, 47.6% of our portfolio was fully secured by real estate and 2.3% had no real estate collateral. Our portfolio on average had real estate collateral coverage of 1.2x as of June 30, 2025, and a weighted average loan to enterprise value ratio of 43.2%..
Previous wording
The April 2026 order represents a significant shift in federal policy and is expected to be followed by additional administrative proceedings. The DEA has scheduled a hearing for June 29, 2026 to consider related regulatory considerations for adult-use cannabis, and further rulemaking, interpretive guidance, or enforcement policy statements may be issued thereafter. As a result, the scope, implementation, and practical effects of the rescheduling action remain subject to ongoing administrative review and uncertainty.
Current wording
The April 2026 order represents a significant shift in federal policy and is expected to be followed by additional administrative proceedings. The DEA commenced additional hearings in June 2026 to consider related regulatory considerations for adult-use cannabis, and further rulemaking, interpretive guidance, or enforcement policy statements may be issued thereafter. Closing briefs and in-person hearings, if any, are expected to occur in August 2026. As a result, the scope, implementation, and practical effects of the rescheduling action remain subject to ongoing administrative review and uncertainty.
Previous wording
As of the date of this Quarterly Report, no final regulatory framework has been established with respect to cannabis rescheduling beyond the April 2026 order, and no formal action has been taken to reclassify or de-schedule adult-use cannabis. While federal authorities have initiated additional administrative proceedings, including the June 2026 DEA hearing, the outcome, timing, and scope of any further actions remain uncertain.
Current wording
As of the date of this Quarterly Report, no final regulatory framework has been established with respect to cannabis rescheduling beyond the April 2026 order and June 2026 administrative hearings, and no formal action has been taken to reclassify or de-schedule adult-use cannabis. While federal authorities have initiated additional administrative proceedings, the outcome, timing, and scope of any further actions remain uncertain.
Previous wording
Interest expense remained consistent over the comparative period. This decrease is driven primarily by a decrease in unused fees and the amortization of debt issuance costs in the amount of $43 thousand, which was partially offset by an increase in the weighted average outstanding balance on the Revolving Loan, which was approximately $48.0 million and $41.6 million, as of March 31, 2026 and 2025, respectively.
Current wording
Interest expense remained relatively consistent over the comparative period. The increase is driven primarily by an increase in the weighted average outstanding balance on the Revolving Loan, which was approximately $67.5 million and $42.3 million, as of June 30, 2026 and 2025, respectively.
Previous wording
Management and incentive fees payable to our Manager remained consistent over the comparative period. Management fees were approximately $1.2 million for the three months ended March 31, 2026 and 2025. The origination fee offsets in the three months ended March 31, 2026 was $0, compared to approximately $4 thousand for the three months ended March 31, 2025. Incentive fees were approximately $0.5 million for the three months ended March 31, 2026 and 2025.
Current wording
Management and incentive fees payable to our Manager slightly decreased over the comparative period. Management fees were approximately $1.2 million for the three months ended June 30, 2026 and 2025. The origination fee offsets in the three months ended June 30, 2026 was $108 thousand, compared to approximately $133 thousand for the three months ended June 30, 2025. Incentive fees were approximately $0.5 million for the three months ended June 30, 2026, compared to $0.8 million for the three months ended June 30, 2025.
Previous wording
General and administrative expenses and professional fees decreased by approximately $60 thousand for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease was primarily due to a decrease in overhead reimbursements for costs incurred by the Manager on behalf of the Company, which were approximately $1.0 million for the three months ended March 31, 2026, compared to approximately $1.1 million for the three months ended March 31, 2025.
Current wording
General and administrative expenses and professional fees increased by approximately $258 thousand for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was primarily due to an increase in overhead reimbursements for costs incurred by the Manager on behalf of the Company, which were approximately $1.4 million for the three months ended June 30, 2026, compared to approximately $1.1 million for the three months ended June 30, 2025.
Previous wording
Stock based compensation expense increased slightly by approximately $0.2 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase over the comparative period is driven by the incremental expense recognized on the 187,157 of restricted stock awards granted during 2025, which had not been granted as of March 31, 2025.
Current wording
Stock based compensation expense increased slightly by approximately $0.1 million for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase over the comparative period is driven by the incremental expense recognized on the 229,764 of restricted stock awards granted during 2026, which had not been granted as of June 30, 2025.
Previous wording
The CECL reserve relating to loans with a risk rating of "2" and "3" was $2.9 million or 0.7% of outstanding principal as of March 31, 2026 and $2.2 million or 0.6% of outstanding principal as of March 31, 2025. Management notes that loans risk rated "2" and "3" are generally deemed to be performing loans and generally carry similar CECL reserves,
Current wording
The CECL reserve relating to loans with a risk rating of "2" and "3" was 4.6 million or 1.2% of outstanding principal of such loans, as of June 30, 2026 and $2.9 million or 0.8% of outstanding principal of such loans, as of March 31, 2026. Management notes that loans risk rated "2" and "3" are generally deemed to be performing loans and generally carry similar CECL reserves.
Previous wording
The CECL reserve for loans included in risk rating "4" was $4.7 million or 1.15% of outstanding principal as of March 31, 2026 and $1.1 million or 0.3% of outstanding principal as of March 31, 2025. Loans that are risk rated "4"are high risk for potential loss and require regular monitoring.
Current wording
The CECL reserve for loans included in risk rating "4" was $3.7 million or 9.8% of outstanding principal of such loans, as of June 30, 2026 and $4.7 million or 12.7% of outstanding principal of such loans, as of June 30, 2025. Loans that are risk rated "4" are high risk for potential loss and require regular monitoring.
Previous wording
Interest income increased by approximately $0.1 million during the quarter ended March 31, 2026, compared to the quarter ended March 31, 2025. The increase was driven primarily by an increase of $0.8 million in exit/success fees associated with the full repayments of three loans during the period. Interest income from acceleration of original issue discounts and other upfront fees generated approximately $0.7 million and $0.4 million of gross interest income during the three months ended March 31, 2026 and 2025, respectively. Additionally, the weighted average YTM IRR on our portfolio decreased from 16.9% at March 31, 2025 to 15.8% at March 31, 2026, as a result of certain re-pricing amendments relating to de-risking of our portfolio and the impact of the 75 basis point prime rate decline on our floating rate portfolio during the comparative periods.
Current wording
Interest income decreased by approximately $1.2 million during the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025. The decrease was driven primarily by a decrease of $0.1 million in exit/success fees associated with the repayments and amendments of certain loans during the respective periods. Interest income from acceleration of original issue discounts and other upfront fees generated approximately $1.0 million and $0.7 million of gross interest income during the three months ended June 30, 2026 and 2025, respectively. Additionally, the weighted average YTM IRR on our portfolio decreased from 16.8% at June 30, 2025 to 15.6% at June 30, 2026, as a result of certain re-pricing amendments relating to de-risking of our portfolio and the impact of the 75 basis point prime rate decline on our floating rate portfolio during the comparative periods, resulting in a $2.1 million decrease in cash interest income, offset by an additional $0.7 million in PIK interest income.
Previous wording
During the three months ended March 31, 2026, the Company recorded reserves on new originations of approximately $0.6 million, which were offset by $0.1 million of reserves which existed at March 31, 2025 and were reversed as a result of full loan repayments. The net effect of new originations and full repayments on the CECL reserve was approximately a $0.5 million increase.
Current wording
During the six months ended June 30, 2026, the Company recorded reserves on new originations of approximately $1.1 million, which were offset by $0.5 million of reserves which existed at June 30, 2025 and were reversed as a result of full loan repayments. The net effect of new originations and full repayments on the CECL reserve was approximately a $0.9 million increase.
Previous wording
Loans remaining on non-accrual for the three months ended March 31, 2026, specifically Loan #4 and Loan #34, resulted in a $2.5 million increase to the CECL reserve compared to March 31, 2025. When the loans were placed on non-accrual status in December 2025, an aggregate of $0.9 million of accrued interest receivable was reversed. The non-performing nature of these loans as of March 31, 2026 is a key input to the Company's CECL analysis.
Current wording
Loans remaining on non-accrual for the six months ended June 30, 2026, specifically Loan #4 and Loan #34, resulted in a $1.5 million increase to the CECL reserve compared to June 30, 2025. When the loans were placed on non-accrual status in December 2025, an aggregate of $0.9 million of accrued interest receivable was reversed. The non-performing nature of these loans as of June 30, 2026 is a key input to the Company's CECL analysis.
Previous wording
Loan #36 CECL reserve increased $2.6 million during the three months ended March 31, 2026. LTV increased to 96.4% as of March 31, 2026 from 65.3% as of December 31, 2025 and payments were delayed during the three months ended March 31, 2026. The Company collected all past due interest in early April 2026 and Management kept Loan #36 on accrual status as of March 31, 2026.
Current wording
Loan #36 CECL reserve increased $1.5 million during the six months ended June 30, 2026. LTV increased to 107.2% as of June 30, 2026 from 65.3% as of December 31, 2025 and payments were delayed during the three months ended March 31, 2026. The Company collected all past due interest in early April 2026 and Management kept Loan #36 on accrual status as of June 30, 2026.
Previous wording
The following table provides a reconciliation of GAAP net income to Distributable Earnings and Adjusted Distributable Earnings (in thousands, except per share data):
Current wording
The following table provides a reconciliation of GAAP net income to Distributable Earnings and Adjusted Distributable Earnings:
Previous wording
The book value per share of our common stock as of March 31, 2026 and December 31, 2025 was approximately $14.39 and $14.60, respectively.
Current wording
The book value per share of our common stock as of June 30, 2026 and December 31, 2025 was approximately $14.15 and $14.60, respectively.
Previous wording
As of March 31, 2026 and December 31, 2025, all of our cash was unrestricted and totaled approximately $27.9 million and $14.9 million, respectively. We believe that our cash on hand, capacity available under our Revolving Loan, and cash flows from operations for the next twelve months will be sufficient to satisfy the operating requirements of our business through at least the next twelve months. The sources of financing for our target investments are described below.
Current wording
As of June 30, 2026 and December 31, 2025, all of our cash was unrestricted and totaled approximately $13.4 million and $14.9 million, respectively. We believe that our cash on hand, capacity available under our Revolving Loan, and cash flows from operations for the next twelve months will be sufficient to satisfy the operating requirements of our business through at least the next twelve months. The sources of financing for our target investments are described below.
Previous wording
We may seek to raise further equity capital and issue debt securities in order to fund our future investments in loans. Our Shelf Registration Statement on Form S-3 became effective on January 19, 2023 (the "Previous Registration Statement"), allowing us to sell, from time to time in one or more offerings, up to $500 million of our securities, including common stock, preferred stock, debt securities, warrants and rights (including as part of a unit) to purchase shares of our common stock, preferred stock, or debt securities. We filed a replacement Shelf Registration Statement on Form S-3 on January 16, 2026 (the “New Registration Statement), which extends the effectiveness period of the Previous Registration Statement 180 days or until the effectiveness of the New Registration Statement, whichever comes first. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering. We may also access liquidity through our ATM Program, which was established in June 2023 and amended in March 2025, pursuant to which we may sell, from time to time, up to $100.0 million of our common stock.
Current wording
We may seek to raise further equity capital and issue debt securities in order to fund our future investments in loans. Our prior Shelf Registration Statement on Form S-3 became effective on January 19, 2023 (the "Previous Registration Statement") and expired on January 19, 2026. On January 16, 2026 we filed a replacement Shelf Registration Statement on Form S-3 (the “New Registration Statement), to replace the Previous Registration Statement. We were permitted to continue to offer and sell securities under the Previous Registration Statement for a period of up to 180 days following its expiration or until the New Registration Statement was declared effective, whichever occurred first. That 180-day period expired on July 18, 2026, and as of the date of this Quarterly Report on Form 10-Q, the New Registration Statement has not been declared effective by the SEC. Accordingly, we do not currently have an effective shelf registration statement, and we are not currently able to conduct primary offerings of our securities under a shelf registration statement, including offerings under our ATM Program (as defined below). Once the New Registration Statement is declared effective, it will allow us to sell, from time to time in one or more offerings, up to $500 million of our securities, including common stock, preferred stock, debt securities, warrants and rights (including as part of a unit) to purchase shares of our common stock, preferred stock, or debt securities. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering. We may also access liquidity through our ATM Program, which was established in June 2023 and amended in March 2025, pursuant to which we may sell, from time to time, up to $100.0 million of our common stock. Sales under the ATM Program are conducted pursuant to prospectus supplements filed under our shelf registration statement. Because the Previous Registration Statement has expired and the New Registration Statement has not been declared effective, sales under the ATM Program are currently suspended. Once the New Registration Statement is declared effective and a prospectus supplement is filed thereunder, we expect to be able to resume sales under the ATM Program, subject to the restrictions on equity issuances contained in the Merger Agreement.
Previous wording
During the quarter ended March 31, 2025, the Company sold an aggregate of 64,557 shares of the Company’s common stock under the Sales Agreement at a weighted average price of $16.01 per share, generating net proceeds of approximately $1.0 million.
Current wording
During the six months ended June 30, 2025, the Company sold an aggregate of 64,557 shares of the Company’s common stock under the Sales Agreements relating to our ATM Program at a weighted average price of $16.01 per share, generating net proceeds of approximately $1.0 million.
Previous wording
During the quarter ended March 31, 2026, the Company sold 0 shares of the Company’s common stock under the Sales Agreement.
Current wording
During the six months ended June 30, 2026, the Company sold 0 shares of the Company’s common stock under the Sales Agreements.
Previous wording
As of March 31, 2026 and December 31, 2025, unamortized debt issuance costs related to the Revolving Loan, including all amendments and amendments and restatements thereto, as applicable, of $221,958 and $246,620, respectively, are recorded in other receivables and assets, net on the consolidated balance sheets.
Current wording
As of June 30, 2026 and December 31, 2025, unamortized debt issuance costs related to the Revolving Loan, including all amendments and restatements thereto, as applicable, of $197,297 and $246,620, respectively, are recorded in other receivables and assets, net on the consolidated balance sheets.
Previous wording
As of and for the three months ended March 31, 2026, the Company had net repayments of $18.0 million against the Revolving Loan. As of March 31, 2026, the Company had $43.0 million available and $67.1 million outstanding under the Revolving Loan (Note 6 of Part 1, Item 1 -Financial Information).
Current wording
As of and for the three months ended June 30, 2026, the Company had net borrowings of $42.0 million against the Revolving Loan. As of June 30, 2026, the Company had $19.0 million available and $91.1 million outstanding under the Revolving Loan (Note 6 of Part 1, Item 1 -Financial Information).
Previous wording
The following table sets forth changes in cash and cash equivalents for the three months ended March 31, 2026 and 2025, respectively:
Current wording
The following table sets forth changes in cash and cash equivalents for the six months ended June 30, 2026 and 2025, respectively:
Previous wording
For the three months ended March 31, 2026 and 2025, we reported “Net cash provided by operating activities” of approximately $3.2 million and $7.6 million, respectively. Net cash provided by operating activities decreased approximately $4.5 million, primarily attributable to an increase in other receivables and assets of $1.8 million, a decrease in interest payable of approximately $1.3 million, a decrease in related party net payable of approximately $1.3 million related to timely collections of interest income, an increase in interest receivable of $0.8 million consisting of certain 'past due' amounts, a decrease in management and incentive fees payable of approximately $0.3 million and a decrease in net income over the comparable period of approximately $5.2 million. These changes were offset by a provision for current expected credit losses of $3.8 million during the first quarter of 2026 compared to a benefit of $1.1 million during the first quarter of 2025. Further, there was a decrease in the interest reserve for applied interest payments of approximately $0.8 million, an increase in stock based compensation of approximately $0.2 million, a $0.2 million unrealized loss on investments, and a decrease over the comparable period.
Current wording
For the six months ended June 30, 2026 and 2025, we reported “Net cash provided by operating activities” of approximately $12.2 million and $14.1 million, respectively. Net cash provided by operating activities decreased approximately $1.9 million, primarily attributable to an increase in other receivables and assets of $2.5 million, a decrease in related party net payable of approximately $2.5 million related to timely collections of interest income, an increase in management and incentive fees payable of approximately $0.6 million, and a decrease in net income over the comparable period of approximately $6.6 million. These changes were offset by a provision for current expected credit losses of $4.3 million during the first six months of 2026 compared to $0.1 million during the first six months of 2025. Further, there was an increase in the interest reserve for applied interest payments of approximately $3.6 million, a decrease in interest receivable of $0.8 million consisting of certain 'past due' amounts, an increase in interest payable of approximately $0.4 million, an increase in stock based compensation of approximately $0.3 million, a $0.4 million unrealized loss on investments, compared to a $0.2 million gain over the comparable period.
Previous wording
Net Cash Provided by Investing Activities
Current wording
Net Cash (Used in)/Provided by Investing Activities
Showing the first 40 of 46 pairs. Open the source sections for the rest.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
The quarterly increase in the CECL reserve results from a combination of changes in portfolio composition driven by new originations and repayments, as well as portfolio company specific events and credit quality changes that impacted expected loss estimates. The key drivers of the change in the CECL reserve during the comparative period are outlined below:
Current report — wording carried from elsewhere
During the three months ended June 30, 2026, the Company recorded reserves on new originations of approximately $0.5 million, which were offset by $0.3 million of reserves which were reversed as a result of full loan repayments during the quarter. The net effect of new originations and full repayments on the CECL reserve was approximately a $0.2 million increase for the three months ended June 30, 2026.
Current report — wording carried from elsewhere
Loans remaining on non-accrual for the three months ended June 30, 2026, specifically Loan #4 and Loan #34, the CECL reserve remained flat compared to March 31, 2026. When the loans were placed on non-accrual status in December 2025, an aggregate of $0.9 million of accrued interest receivable was reversed. The non-performing nature of these loans as of June 30, 2026 is a key input to the Company's CECL analysis.
Current report — wording carried from elsewhere
Loan #36 CECL reserve decreased $1.0 million during the three months ended June 30, 2026. LTV increased to 107.2% as of June 30, 2026 from 96.4% as of March 31, 2026. The Company collected all past due interest in early April 2026 and Management kept Loan #36 on accrual status as of June 30, 2026. In May 2026, Loan #36 was amended to 0% cash, 7.5% default interest and 13.75% PIK.
Current report — wording carried from elsewhere
Interest expense increased over the comparative period. The increase is driven primarily by an increase in the weighted average outstanding balance on the Revolving Loan, which was approximately $67.5 million and $42.3 million, as of June 30, 2026 and 2025, respectively.
Current report — wording carried from elsewhere
Stock based compensation expense increased slightly by approximately $0.3 million for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase over the comparative period is driven by the incremental expense recognized on the 229,764 of restricted stock awards granted during 2026, which had not been granted as of June 30, 2025.
Current report — wording carried from elsewhere
The CECL reserve relating to loans with a risk rating of "2" and "3" was $4.6 million or 1.2% of outstanding principal of such loans, as of June 30, 2026 and $1.9 million or 0.6% of outstanding principal of such loans, as of June 30, 2025. Management notes that loans risk rated "2" and "3" are generally deemed to be performing loans and generally carry similar CECL reserves.
Current report — wording carried from elsewhere
The CECL reserve for loans included in risk rating "4" was $3.7 million or 9.8% of outstanding principal of such loans, as of June 30, 2026 and $2.6 million or 6.6% of outstanding principal of such loans, as of June 30, 2025. Loans that are risk rated "4" are high risk for potential loss and require regular monitoring.