Chicago Atlantic Real Estate Finance, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Chicago Atlantic Real Estate Finance, Inc., and its wholly owned consolidated subsidiary, Chicago Atlantic Lincoln, LLC (“CAL”) (collectively the “Company”, “we”, or “our”), is a commercial real estate finance company that incorporated in the state of Maryland on March 30, 2021 and completed its initial public offering (the "IPO") in December 2021.

The Company operates as one operating segment and its primary investment objective is to provide attractive, risk-adjusted returns for stockholders over time, primarily through consistent current income (dividends and distributions) and secondarily, through capital appreciation. The Company intends to achieve this objective by originating, structuring and investing in first mortgage loans and alternative structured financings secured by commercial real estate properties. The Company’s loan portfolio is primarily comprised of senior loans to state-licensed operators in the cannabis industry, secured by real estate, equipment, receivables, licenses and/or other assets of the borrowers to the extent permitted by applicable laws and regulations governing such borrowers. The Company may also lend to and invest in companies or properties that are not related to the cannabis industry if they provide return characteristics consistent with its investment objective.

The Company is externally managed by Chicago Atlantic REIT Manager, LLC (the “Manager”), a Delaware limited liability company, pursuant to the terms of the management agreement dated May 1, 2021, and amended in October 2021, by and among the Company and the Manager (the "Management Agreement"). After the initial three-year term, the Management Agreement is automatically renewed for one-year periods unless the Company or the Manager elects not to renew in accordance with the terms of the Management Agreement. Following the initial term, the Management Agreement was most recently automatically renewed on April 30, 2026. The Manager conducts substantially all of the Company’s operations and provides asset management services for its real estate investments. For its services, the Manager is entitled to management fees and incentive compensation, both defined in, and in accordance with, the terms of the Management Agreement (Note 8). All of the Company’s investment decisions are made by the investment committee of the Manager, subject to oversight by the Company’s board of directors (the “Board”). The Manager is wholly-owned by Chicago Atlantic Group, LP. (the “Sponsor”).

The Company has elected to be taxed as a real estate investment trust (“REIT”) for United States federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2021. The Company generally will not be subject to United States federal income taxes on its REIT taxable income if it annually distributes to stockholders at least 90% of its REIT taxable income prior to the deduction for dividends paid and complies with various other requirements as a REIT.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and related notes of the Company have been prepared on the accrual basis of accounting and in conformity with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Our consolidated financial statements present the financial position, results of operations, and cash flows of the Company, and its wholly owned consolidated subsidiary, CAL. All intercompany accounts and transactions have been eliminated in consolidation. Accordingly, these financial statements may not contain all disclosures required by GAAP. Reference should be made to Note 2 of the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2025. In the opinion of the Company, all normal recurring adjustments have been made that are necessary to the fair statement of the results of operations and financial position as of and for the periods presented. Operating results for the three and six month periods ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant estimates include the provision for current expected credit losses.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. Specifically, interest payable, which was previously included within accounts payable and other liabilities during the comparative interim periods, is presented as a separate line item on the Consolidated Balance Sheets. Additionally, dividends declared on restricted stock awards which were previously included in dividends declared on common shares, were reclassified and presented as an individual line item on the Consolidated Statements of Equity.

The reclassifications were made to improve transparency regarding the Company’s accrued interest obligations and dividends paid on vested restricted stock awards. The reclassifications had no impact on total assets, total liabilities, stockholders’ equity, net income, or cash flows for the periods presented.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures("ASU 2024-03"), which requires disaggregated disclosures of certain costs and expenses, including purchases of inventory, employee compensation, depreciation, amortization and depletion, within relevant income statement captions. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning with the first quarter ended March 31, 2027. Early adoption and retrospective application is permitted. The Company is currently evaluating the impact of this guidance on the Company's future consolidated financial statements.

In November 2025, the FASB issued ASU 2025-08, Financial Instruments—Credit Losses (Topic 326): Accounting for Purchased Loans. This ASU clarifies the accounting for certain purchased loans by requiring entities to recognize an allowance for expected credit losses at the time of purchase for loans that do not qualify as purchased credit-deteriorated assets. The guidance also clarifies the measurement and presentation of the allowance for credit losses and related interest income recognition for such purchased loans. ASU 2025-08 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. The ASU is required to be applied prospectively. The Company is currently evaluating the impact of the adoption of ASU 2025-08 on its consolidated financial statements and related disclosures.

3. LOANS HELD FOR INVESTMENT, NET

The Company primarily originates senior secured loans that it has the intent and ability to hold until maturity or payoff. Such loans are classified as held for investment and are reported on the consolidated balance sheets at amortized cost. Our loans bear interest rates that are either fixed or determined periodically on the basis of U.S. Prime Rate (“Prime”) or Secured Overnight Financing Rate (“SOFR”) plus a premium. Loans which bear interest on either Prime or SOFR are collectively referred to as "Floating-rate loans". The following tables present summarized information regarding our loans held for investment by interest rate type as of June 30, 2026 and December 31, 2025:

The following tables summarize the Company’s aggregate portfolio of loans held for investment, net of current expected credit loss reserve as of June 30, 2026 and December 31, 2025:

(1)

Weighted average remaining life is calculated based on the carrying value of the loans as of June 30, 2026 and December 31, 2025, respectively.

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.

A more detailed listing of the Company’s loans held at carrying value based on information available as of June 30, 2026, is as follows:

(1)

Loan numbering in the table above is maintained from origination for purposes of comparability and may not be sequential due to maturities, payoffs, or refinancings.

(2)

Certain loans are subject to contractual extension options as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein and certain borrowers may have the right to prepay with or without a contractual prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.

(3)

"P" = prime rate; "SOFR" = Secured Overnight Financing Rate. "P" and "SOFR" represent floating rate loans that pay interest at the designed benchmark rate plus an applicable spread; "SOFR" loans are typically indexed to 30-day, 90-day or 180-day rates (1 month, 3 month, or 6 month, respectively); "PIK" = paid-in-kind interest.

(4)

P&I = principal and interest. I/O = interest only. P&I loans may include interest only periods for a portion of the loan term. The frequency of loan payments may be monthly or quarterly as required by the respective credit agreement governing such loan.

(5)

Estimated YTM, calculated on a weighted average principal basis, includes a variety of fees and features that affect the total yield, which may include, but is not limited to, OID, exit fees, prepayment fees, unused fees and contingent features. OID is recognized as a discount to the funded loan principal and is accreted to income over the term of the loan. The estimated YTM calculations require management to make estimates and assumptions, including, but not limited to, the timing and amounts of loan draws on delayed draw loans, the timing and collectability of exit fees, the probability and timing of prepayments and the probability of contingent features occurring. For example, certain credit agreements contain provisions pursuant to which certain PIK interest rates and fees earned by us under such credit agreements will decrease upon the satisfaction of certain specified criteria which we believe may improve the risk profile of the applicable borrower. To be conservative, we have not assumed any prepayment penalties or early payoffs in our estimated YTM calculation. Estimated YTM is based on current management estimates and assumptions, which may change. Actual results could differ from those estimates and assumptions.

(6)

This Loan is subject to a SOFR floor of 4.00%

(7)

This Loan is subject to a SOFR floor of 3.72%

(8)

This Loan is subject to a prime rate floor of 6.75%

(9)

This Loan is subject to a prime rate floor of 7.00%

(10)

This Loan is subject to a prime rate floor of 7.50%

(11)

This Loan is subject to a prime rate floor of 8.00%

(12)

This Loan is subject to a prime rate floor of 8.50%

(13)

The borrower of this subject Loan is considered by management to be a related party. Refer to Note 8 for additional information.

(14)

Loan #4 and Loan #34 were placed on non-accrual on December 1, 2025 and all accrued interest through such date was reversed. These loans remain on non-accrual as of June 30, 2026 and the interest receivable balance relating to these loans was $0.

(15)

In May 2026, Loan #36 was amended to pay a default interest rate of 7.5% and 13.75% PIK.

(16)

In June 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.

The following tables present aging analyses of past due loans by amortized cost, excluding the CECL reserve, as of June 30, 2026 and December 31, 2025.

(1)

Loans 1-30 days past due are included in the current loans.

Non-Accrual Loans

As of June 30, 2026 and December 31, 2025, there weretwo andfour loans placed on non-accrual status, respectively.

As more fully described in Note 8, Loan #9 was placed on non-accrual status as of May 1, 2023 and has a carrying value of approximately $29.0 million as of both June 30, 2026 and December 31, 2025. Loan #9 carried a reserve for current expected credit losses of approximately $0.1 million and$0.5 million as of June 30, 2026 and as of December 31, 2025, respectively. In December 2025, the

Company collected all past due unpaid interest and the borrower was current on all principal and interest payments. Management restored Loan #9 to accrual status as of March 31, 2026 as the borrower demonstrated sustained ability to meet debt service obligations for a minimum of 60 days.

Loan #6 was placed on non-accrual status as of May 9, 2025 and had an outstanding principal balance and carrying value of approximately $3.2 million as of December 31, 2025. A Default Notice was sent to the borrower on May 9, 2025 specifying certain events of default such as outstanding tax liens and recent non-payment of interest and principal. Loan #6 was repaid in full on April 6, 2026.

Loan #4 and Loan #34 were placed on non-accrual status as of December 1, 2025 following periods of non-collection of interest since August 1, 2025. The loan and security agreements governing these loans include cross-default and cross-collateral provisions. During the quarter ended June 30, 2026, the Company collected a payment of approximately $0.1 million related to Loan #34 which was applied to the principal balance given the collection of contractual interest cannot yet be reasonably assured. As of June 30, 2026, Loan #4 and Loan #34 had an aggregate outstanding principal balance and carrying value of approximately $16.5 and $16.6 million as of June 30, 2026 and December 31, 2025, respectively. At the time these loans were placed on non-accrual status $0.9 million of interest receivable was reversed, and interest receivable as of June 30, 2026 and December 31, 2025 is $0.

Credit Quality Indicators

The Company assesses the risk factors of each loan, and assigns a risk rating based on a variety of factors, including, without limitation, payment history, real estate collateral coverage, property type, geographic and local market dynamics, financial performance, loan to enterprise value and fixed charge coverage ratios, loan structure and exit strategy, and project sponsorship. This review is performed quarterly. Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows:

The risk ratings are primarily determined based on current and historical performance metrics specific to each portfolio company, as well as consideration of future economic conditions and each borrower’s estimated ability to meet debt service requirements. The risk ratings shown in the following table as of June 30, 2026 and December 31, 2025 consider borrower specific credit history and performance and reflect a quarterly re-evaluation of overall current macroeconomic conditions affecting the Company’s borrowers, specifically those designated as held for investment.

As of June 30, 2026 and December 31, 2025, the carrying value, excluding the current expected credit loss reserve (the “CECL Reserve”), of the Company’s loans within each risk rating category by year of origination is as follows:

(1)

Amounts are presented by loan origination year with subsequent advances on delayed draw facilities shown in the initial year of origination.

Real estate collateral coverage is also a significant credit quality indicator, and real estate collateral coverage, excluding the CECL Reserve, was as follows as of June 30, 2026 and December 31, 2025:

(1)

Real estate collateral coverage is calculated based upon most recent third-party appraised values. The Company generally obtains new appraisals of all material real estate collateral at least once annually.

Geographic concentration of our loans held for investment is also a significant credit quality indicator. As of June 30, 2026 and December 31, 2025, our borrowers have operations in the jurisdictions in the table below:

(1)

The principal balance of the loans not secured by real estate collateral are included in the jurisdiction representing the borrower's principal place of business.

(2)

Represents Connecticut, Washington, and New Jersey

CECL Reserve

The Company records an allowance for current expected credit losses for its loans held for investment. The allowances are deducted from the gross carrying amount of the assets to present the net carrying value of the amounts expected to be collected on such assets. The Company estimates its CECL Reserve using, among other inputs, third-party valuations and a third-party probability-weighted model that considers the likelihood of default and expected loss given default for each individual loan based on the risk profile for approximately three years after which we immediately revert to use of historical loss data.

ASC 326 requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment. The Company considers multiple datapoints and methodologies that may include likelihood of default and expected loss given default for each individual loan, valuations derived from discount cash flows (“DCF”), and other inputs including the risk rating of the loan, how recently the loan was originated compared to the measurement date, and expected prepayment, if applicable. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, and off-balance sheet credit exposures such as unfunded loan commitments.

The Company evaluates its loans on a collective (pool) basis by aggregating on the basis of similar risk characteristics as explained above. We make the judgment that loans to cannabis-related borrowers that are collateralized by real estate exhibit similar risk characteristics and are evaluated as a pool. Further, loans that have no real estate collateral, but are secured by other forms of collateral, including equity pledges of the borrower, and otherwise have similar characteristics as those collateralized by real estate may be evaluated as a separate pool. All other loans are analyzed individually, either because they operate in a different industry, may have a different risk profile, or maturities that extend beyond the forecast horizon for which we are able to derive reasonable and supportable forecasts.

Estimating the CECL Reserve also requires significant judgment with respect to various factors, including (i) the appropriate historical loan loss reference data, (ii) the expected timing of loan repayments, (iii) calibration of the likelihood of default to reflect the risk characteristics of the Company’s loan portfolio, and (iv) the Company’s current and future view of the macroeconomic environment including benchmark interest rate fluctuations. The Company also considers loan-specific qualitative factors which may include; among other factors; (i) whether cash from the borrower’s operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan, and (iii) the liquidation value of collateral. For loans where we have deemed the borrower/sponsor to be experiencing financial difficulty, we may elect to apply a practical expedient, in which the fair value of the underlying collateral is compared to the amortized cost of the loan in determining a CECL Reserve.

To estimate the historic loan losses relevant to the Company’s portfolio, the Company evaluates its historical loan performance, which includes zero realized loan losses since the inception of its operations. Additionally, the Company analyzed its repayment history, noting it has limited operating history, since its incorporation on March 30, 2021. However, the Company’s Sponsor and its affiliates have had operations for the past six fiscal years and have made investments in similar loans that have similar characteristics including interest rate, collateral coverage, guarantees, and prepayment/make whole provisions, which fall into the pools identified above, and may be considered by management in determining the extent to which a CECL Reserve shall be recorded.

In addition, the Company reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest and principal, if required, as well as the loan-to-value (LTV) ratio. When evaluating qualitative factors that may indicate the need for a CECL Reserve, the Company forecasts losses considering a variety of factors. In considering the potential current expected credit loss, the Manager primarily considers significant inputs to the Company’s forecasting methods, which include (i) key loan-specific inputs such as the value of the real estate collateral, liens on equity (including the equity in the entity that holds the state-issued license to cultivate, process, distribute, or retail cannabis), presence of personal or corporate guarantees, among other credit enhancements, LTV ratio, rate type (fixed or floating) and IRR, loan-term, geographic location, and expected timing and amount of future loan fundings, (ii) performance against the underwritten business plan and the Company’s internal loan risk rating, and (iii) a macro-economic forecast. Estimating the enterprise value of our borrowers in order to calculate LTV ratios is often a significant estimate. The Manager utilizes a third-party valuation appraiser to assist with the Company’s valuation process primarily using comparable transactions to estimate enterprise value of its portfolio companies and supplement such analysis with a multiple-based approach to enterprise value to revenue multiples of publicly-traded comparable companies obtained from S&P Capital IQ as of June 30, 2026, to which the Manager may apply a private company discount based on the Company’s current borrower profile.

Regarding the determination of value of real estate collateral, the Company generally cannot take the position of mortgagee-in-possession as long as the property is used by a cannabis operator, but it can request that the court appoint a receiver to manage and operate the subject real property until the foreclosure proceedings are completed. Additionally, while the Company cannot foreclose under state Uniform Commercial Code (“UCC”) and take title or sell equity in a licensed cannabis business, a potential purchaser of a delinquent or defaulted loan could. In order to estimate the future expected loan losses relevant to the Company’s portfolio, the Company utilizes historical market loan loss data obtained from a third-party database for commercial real estate loans, which the Company believes is a reasonably comparable and available data set to use as an input for its type of loans. The Company believes this dataset to be representative for future credit losses without historical loss data.

All of the above assumptions, although made with the most available information at the time of the estimate, are subjective and actual activity may not follow the estimated schedule. These assumptions impact the future balances that the loss rate will be applied to and as such impact the Company’s CECL Reserve. As the Company acquires new loans and the Manager monitors loan and borrower performance, these estimates will be revised each period.

During the period ended June 30, 2026, the Company's CECL Reserve increased by approximately $4.4 million compared to December 31, 2025. On a relative size basis, the CECL reserve represented 2.27% and 1.23% of principal on our loans held for investment as of June 30, 2026 and December 31, 2025 respectively. The period over period 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:

•

During the six months ended June 30, 2026, the Company recorded reserves on new originations of approximately $1.1 million, which were offset by $0.8 million of reserves, which existed at December 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 $0.3 million increase.

•

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 December 31, 2025 Management notes that loans risk rated "2" and "3" are generally deemed to be performing loans and generally carry similar CECL reserves.

•

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 $2.2 million or 11.3% of outstanding principal of such loans, as of December 31, 2025. The increase during the period primarily relates to Loan #36, which has a CECL reserve of $1.8 million as of June 30, 2026. Loans that are risk rated "4" are high risk for potential loss and require regular monitoring. One loan was included in risk rating "5", Loan #4, which is on non-accrual.

•

Loans remaining on non-accrual, specifically Loan #4 and Loan #34, resulted in a $1.2 million increase to the CECL reserve compared to December 31, 2025. This was primarily due to LTV increasing to 92.9% as of June 30, 2026 from 69.6% as of December 31, 2025 and deteriorating fixed charge coverage ratio ("FCCR"). 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.

•

The CECL reserve relating to Loan #36 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. Payments were delayed during the three months ended March 31, 2026, which resulted in deterioration in debt service coverage ratios. The Company collected all past due interest in early April 2026. In May 2026, Loan #36 was amended to 0% cash,7.5% default interest and 13.75% PIK and Management kept Loan #36 on accrual status as of June 30, 2026.

Activity related to the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value and loans receivable at carrying value as of and for the three months ended June 30, 2026 and 2025 is presented in the table below.

The Company has made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of the related loans held for investment in determining the CECL Reserve, as any uncollectible accrued interest receivable is written off in a timely manner. To date, the Company has had zero write-offs related to uncollectible interest receivable, but will discontinue accrual of interest on loans if deemed to be uncollectible, with any previously accrued uncollected interest on the loan charged to interest income in the same period. For the loan placed on non-accrual, the Company ceased accruing interest on the first date of delinquency, based on expectation of its ability to collect all amounts then due from the borrower. As a result, there was no accrued interest to write-off when the loan was placed on non-accrual status.

4. LOANS, AT FAIR VALUE

The following table summarizes the Company's loan held at fair value as of June 30, 2026:

During the three months ended June 30, 2026, the Company, through its wholly-owned subsidiary, Chicago Atlantic Lincoln, LLC, originated a $41.0 million second-lien secured term loan to a related party, which isincluded within Loans, at fair value - related party on the consolidated balance sheet. Further, all interest collected on this loan is included within interest income on the income statement.

The Loan bears interest at the Prime Rate plus 5.25% per annum, subject to a Prime Rate floor of 6.75%, resulting in an all-in interest rate of 12.00% as of June 30, 2026. The aggregate commitment under this loan was approximately $41.0 million. The loan is current on all interest and principal payments due.

The Loan is secured by a second-priority mortgage and a second-priority lien on all personal property, fixtures, leases, and rents of the borrower. The Company elected the fair value option for this asset due to other indebtedness of the borrower that is senior to our loan and the potential sale of the asset which was contemplated at the time of underwriting. Both of these factors contributed to management's uncertainty with respect to the intent to hold the loan to maturity or payoff. See Note 13 for additional information on fair value measurement.

5. INTEREST RECEIVABLE

As of June 30, 2026 and December 31, 2025, the Company had interest receivable of approximately $5.1 million and $4.0 million, respectively.

The following tables categorize the aging of interest receivable on past due loans (including non-accrual loans) by class as of June 30, 2026 and December 31, 2025, respectively:

6. INTEREST RESERVE

The following table presents changes in interest reserves as of June 30, 2026 and December 31, 2025, respectively:

7. DEBT

Revolving Loan

In May 2021, in connection with the Company's acquisition of its wholly-owned financing subsidiary, CAL, the Company was assigned a secured revolving credit facility (the "Revolving Loan"). As of December 31, 2024, the Revolving Loan was governed by the Sixth Amended and Restated Loan and Security Agreement (the "Sixth Amendment and Restatement"), had an aggregate commitment of $110.0 million, which may be increased to $150.0 million pursuant to its accordion feature, and had a maturity date of June 30, 2026. The Revolving Loan bore interest, payable in cash in arrears, at a per annum rate equal to the greater of (1) the Prime Rate plus the applicable margin and (2)3.25%. The applicable margin is derived from a floating rate grid based upon the ratio of debt to book equity of CAL and increases from 0% at a ratio of 0.25 to 1 to 1.25% at a ratio of 1.5 to 1. The base interest rate in effect as of June 30, 2026 is 6.75%.

On August 5, 2025, CAL entered into the First Amendment to the Sixth Amended and Restated Loan and Security Agreement (the "August 2025 Amendment"). The August 2025 Amendment extended the contractual maturity date from June 30, 2026 to June 30, 2028. No other material terms were modified as a result of the execution of this amendment, and the Company incurred approximately $0.1 million in financing costs relating thereto.

As of June 30, 2026, the Revolving Loan has aggregate commitments of $110.0 million, which may be increased to $150.0 million pursuant to its accordion feature, and has a maturity date of June 30, 2028. The Revolving Loan bears interest, payable in cash in arrears, at a per annum rate equal to the greater of (1) the Prime Rate plus the applicable margin and (2)3.25%. The applicable margin is derived from a floating rate grid based upon the ratio of debt to equity of CAL and increases from 0% at a ratio of 0.25 to 1 to 1.25% at a ratio of 1.5 to 1.

The Revolving Loan provides for certain affirmative covenants, including requiring us to deliver financial information and any notices of default, and conducting business in the normal course. Additionally, the Company must comply with certain financial covenants including: (1) maximum capital expenditures of $150,000, (2) maintaining a debt service coverage ratio greater than 1.35 to 1, and (3) maintaining a leverage ratio less than 1.50 to 1. As of June 30, 2026, the Company is in compliance with all financial covenants with respect to the Revolving Loan.

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.

For the six months ended June 30, 2026, the Company received net proceeds of $42.0 million on the Revolving Loan. As of June 30, 2026, the Company had $91.1 million outstanding and$19.0 million of borrowing available under the Revolving Loan. Additionally, as of June 30, 2026, $216.9 million of loans held for investment, at principal, are pledged as collateral in the borrowing base of the Revolving Loan.

Notes Payable

On October 18, 2024 (the "Closing Date"), the Company entered into a Loan Agreement by and among the Company and the various financial institutions party thereto, for an aggregate commitment of $50.0 million in senior unsecured notes (the "Unsecured Notes"). The Unsecured Notes have a contractual four year term maturing on October 18, 2028 and bear a fixed interest rate of 9.00% per annum. The Company may prepay the Unsecured Notes at any time without penalty following the second anniversary of the Closing Date. A prepayment penalty of 3.00% and 2.00% would be due and payable in the event of prepayment prior to the first and second anniversary of the Closing Date, respectively.

The $50.0 million aggregate commitment was advanced on the closing date and proceeds were used to temporarily repay outstanding obligations on the Revolving Loan and for other working capital purposes. The Company incurred debt issuance costs of approximately $0.9 million related to the Unsecured Notes, which were capitalized and offset against the outstanding face value of the Unsecured Notes within the line item Notes Payable, net on the consolidated balance sheets. As of June 30, 2026 and December 31, 2025, the unamortized debt issuance costs associated with the Notes Payable were $547,449 and $665,541, respectively.

The Unsecured Notes provide for certain affirmative covenants, including requiring us to deliver certain financial information and any notices of default, and conducting business in the normal course. Additionally, the Company must comply with certain financial and non-financial covenants including but not limited to: (1) minimum stockholders' equity of $200.0 million, (2) maximum aggregate indebtedness of $225.0 million, subject to increase from time to time based upon ratable increases in stockholders' equity, and (3) maintenance of an investment-grade credit rating. As of June 30, 2026, the Company is in compliance with all financial covenants with respect to the Unsecured Notes.

The following table presents the mandatory scheduled principal payments on the Unsecured Notes:

Interest Expense

The following table reflects a summary of interest expense incurred during the three and six months ended June 30, 2026 and 2025.

8. RELATED PARTY TRANSACTIONS

Management Agreement

Pursuant to the Management Agreement, the Manager manages the loans and day-to-day operations of the Company, subject at all times to the further terms and conditions set forth in the Management Agreement and such further limitations or parameters as may be imposed from time to time by the Company’s Board.

The initial term of our Management Agreement was three years. After the initial term, our Management Agreement shall automatically renew every year for an additional one-year period, unless we or our Manager elect not to renew. Our Management Agreement may be terminated by us or our Manager under certain specified circumstances. Most recently on April 30, 2026, the Management Agreement was automatically renewed.

The Manager is entitled to receive base management fees (the “Base Management Fee”) that are calculated and payable quarterly in arrears, in an amount equal to 0.375% of the Company’s Equity, determined as of the last day of each such quarter; reduced by an amount equal to 50% of the pro rata amount of origination fees earned and paid to the Manager during the applicable quarter for loans that were originated on the Company’s behalf by the Manager or affiliates of the Manager (“Outside Fees”). For the three and six months ended June 30, 2026, the Base Management Fee payable was reduced by Outside Fees in the amount of $107,500. For the three and six months ended June 30, 2025, the Base Management Fee payable was reduced by Outside Fees in the amount of $133,046 and $136,617, respectively.

In addition to the Base Management Fee, the Manager is entitled to receive incentive compensation (the “Incentive Compensation” or “Incentive Fees”) under the Management Agreement. The Company will pay Incentive Fees to the Manager based upon the Company’s achievement of targeted levels of Core Earnings, as defined in the Management Agreement. Incentive compensation for the three months ended June 30, 2026 and 2025 was $0.8 million and $0.7 million, respectively. Incentive compensation for the six months ended June 30, 2026 and 2025 was $1.0 and $1.4 million, respectively.

The Company shall pay all of its costs and expenses and shall reimburse the Manager or its affiliates for expenses of the Manager and its affiliates paid or incurred on behalf of the Company, excepting only those expenses that are specifically the responsibility of the Manager pursuant to the Management Agreement. We reimburse our Manager or its affiliates, as applicable, for the Company’s fair and equitable allocable share of the compensation, including annual base salary, bonus, any related withholding taxes and employee benefits, paid to (i) subject to review by the Compensation Committee of the Board, the Manager’s personnel serving as an officer of the Company, based on the percentage of his or her time spent devoted to the Company’s affairs and (ii) other corporate finance, tax, accounting, internal audit, legal, risk management, operations, compliance, and other non-investment personnel of the Manager and its affiliates who spend all or a portion of their time managing the Company’s affairs, with the allocable share of the compensation of such personnel described in this clause (ii) being as reasonably determined by the Manager to appropriately reflect the amount of time spent devoted by such personnel to our affairs.

The following table summarizes related party fees and expenses for the three and six months ended June 30, 2026 and 2025.

The following table presents amounts payable to the Manager as of June 30, 2026 and December 31, 2025:

General administrative expenses reimbursable to the Manager are included in the related party payable line item of the consolidated balance sheets as of June 30, 2026 and December 31, 2025.

Transaction Expenses - Proposed Merger with Chicago Atlantic BDC, Inc.

Asmore fully described in Note 16, on June 17, 2026, the Company entered into a definitive merger agreement with Chicago Atlantic BDC, Inc. ("LIEN"). Pursuant to the merger agreement, transaction expenses incurred in connection with the merger generally will be shared equally between the Company and LIEN, except for specified SEC and printing and mailing costs. Additionally, our Manager has agreed to bear up to $2.0 million of the Company's share of such expenses.

During the three months ended June 30, 2026, the Company's allocable share of transaction expenses relating to the proposed merger was approximately $1.3 million, all of which shall be borne by our Manager. Accordingly, as of June 30, 2026, approximately $0.7 million of any transaction expenses remain payable by the Manager, and any excess will be borne by the Company.

Co-Investment in Loans

From time to time, the Company may co-invest with other investment vehicles managed by its affiliates, in accordance with the Manager’s co-investment allocation policies. The Company is not obligated to provide, nor has it provided, any financial support to the other managed investment vehicles. As such, the Company’s risk is limited to the carrying value of its investment in any such loan. As of June 30, 2026 and December 31, 2025,69% and 55% of the Company’s loans, based on outstanding principal balance were co-invested by affiliates of the Company, respectively.

Certain syndicated co-investments originated by affiliates of the Manager may include other consideration, generally in the form of warrants or other equity interests. Prior to, or concurrent with, the origination of the investment, the Company may elect to assign the right (the “Assigned Right”) to the equity consideration to an affiliate, in exchange for an additional upfront fee in an amount equal to the fair value of the equity consideration on a pro-rata basis. There wereno sales of Assigned Rights for the three and six month periods ended June 30, 2026 and 2025.

Investment Transaction with Affiliated Fund

On June 1, 2026, the Audit Committee of the Board of Directors, by unanimous written consent, approved a non-cash exchange of loans by and between the Company and Chicago Atlantic Credit Opportunities, LLC and subsidiaries ("CACO"), an affiliated private investment fund under common control with the Manager (the "Exchange"). The Exchange closed during the three months ended June 30, 2026 (the “Exchange Date”). In connection therewith, the Company transferred one loan with a fair value of approximately $27.1 million and received five loans, with the loans transferred by each party having equal aggregate fair value as of the Exchange Date, as determined in good faith by management consistent with the Company’s fair value policies and procedures. No cash consideration was paid or received, and the Exchange resulted in no net cash outflow to the Company.

Because the loans exchanged are financial assets, the Company accounted for the Exchange as a transfer of financial assets under ASC Topic 860, Transfers and Servicing. The Company reclassified the transferred loan from held for investment to held for sale during the quarter, reversing the related current expected credit loss reserve of approximately $0.3 million as a benefit to the provision for current expected credit losses and measuring the loan at the lower of amortized cost or fair value. As the loan was transferred at its fair value, no material gain or loss was recognized on derecognition, and because the decision to sell and the closing occurred in the same quarter, no held-for-sale balance related to the Exchange remained as of June 30, 2026. The five loans received were recorded at fair value as consideration received and, as the Company has the intent and ability to hold them until maturity or payoff, were classified as held for investment as of June 30, 2026 and are carried at amortized cost subject to the Company’s current expected credit loss reserve thereafter.

Loans held for investment – related party

Loan #9

The borrower of Loan #9, Hive Holdings, Inc. and its subsidiaries (“Hive”), is a portfolio company with operations in the commonwealth of Pennsylvania. Certain private investment funds managed by affiliates of the Company's Manager can exercise significant influence over Hive by virtue of their controlling equity investment in Hive, as further explained below. Accordingly, Hive is deemed to be a related party.

On March 31, 2025, following events of default under the Hive loan agreement, the Company and the other lenders party thereto, completed a foreclosure proceeding, executed by the Administrative Agent ("Agent") of the loan. In connection therewith, the Company extinguished the original term loanand the Agent distributed the assets acquired from the foreclosure, on a pro-rata fair value basis, to the Lenders pursuant to an Agreement Among Lenders by and between the Agent and Lenders (the "AAL"). Pursuant to the AAL, the affiliated co-lender received rights to the membership interests of Hive acquired in the UCC sale. Further pursuant to the AAL, in satisfaction of the original loan, the Company now holds two loans with an aggregate principal balance of approximately $29.1 million, comprised of a $14.6 million first lien judgment loan (the "Judgment Loan") and a $14.5 million second lien term loan (the "Term Loan"). The Judgment Loan bears interest at a statutory rate of 9.0% pursuant to Illinois law, and will remain outstanding until paid by the borrower. The Term Loan bears interest at a contractual rate of 9.0% and has a maturity of March 31, 2028. The assets securing the original loan, which included mortgaged cultivation real estate in Pennsylvania and operations related thereto, continue to secure the Judgment Loan and the Term Loan. Accordingly, by virtue of the relationship between the Company, as holder of the Judgment Loan and the Term Loan, and the affiliated co-lender, as new owner of the equity of the borrower credit parties, Loan #9 is determined to be arelated party loan. For comparability to all previously issued financial statements, the Judgment Loan and the Term Loan, collectively, are presented as Loan #9 in Note 3.

During the year ended December 31, 2025, the Company advanced approximately $12.6 million of gross principal to the borrower of Loan #9. The use of proceeds of the advance included: (a) the acquisition of three operational dispensaries and (b) the payment of all past due accrued and unpaid interest and fees totaling approximately $1.7 million owed on existing senior indebtedness through December 31, 2025. In connection therewith, the borrower was brought to current on all interest and payments through December 31, 2025. Management elected to restore Loan #9 to accrual status as of March 31, 2026 as the borrower was able to demonstrate sustained ability to meet debt service obligations under both the Judgment Loan and the Term Loan and continued to make interest payments as of June 30, 2026. During the six months ended June 30, 2026, the Company made no incremental advances under the aforementioned loans. As of June 30, 2026, Loan #9 is held on the consolidated balance sheets as a loan held for investment - related party with a carrying value, before CECL reserves of approximately $29.0 million.

Loan #18

The borrower of Loan #18, FarmaceuticalRX, LLC (an Ohio limited liability company) and its subsidiaries and affiliates (“FRX”), is a portfolio company operating in the state of Ohio. Certain common control affiliates of the Company can exercise significant influence over certain credit parties to the Loan Agreement with FRX by virtue of voting representation on its board of managers and is therefore a related party. During the period ended June 30, 2026 and December 31, 2025, the Company made principal advances of $0. As of June 30, 2026 and December 31, 2025, the carrying value of $48.4 million and $47.1 million, respectively, is included in the line item, “Loans held for investment – related party” and had interest receivable of $0.7 million as of each period, on its loan to FRX. All accrued interest as of both June 30, 2026 and December 31, 2025 is current (Note 4).

Loan #48

The borrower of Loan #48, FarmaceuticalRX, LLC (a Pennsylvania limited liability company) and its subsidiaries and affiliates (“FRX PA”), is a portfolio company with operations in the commonwealth of Pennsylvania. Certain common control affiliates of the Company can exercise significant influence over certain credit parties to the Loan Agreement with FRX PA by virtue of convertible features embedded in other investments made by affiliates in FRX PA that, when converted provide for controlling interest in certain credit parties to the Company's loan. Accordingly, FRX PA is deemed to be a related party.

As of June 30, 2026, Loan #48 has an outstanding principal balance of approximately $13.2 million, bears interest at a rate of Prime +4.5% cash and 4.0% PIK per annum, and has a contractual maturity date of April 8, 2030. As of June 30, 2026, the interest receivable balance was $0.1 million.

Loan #50

In connection with the aforementioned Exchange, the Company acquired a term loan, Loan #50, to Intrinsic Manufacturing & Processing, LLC (“Intrinsic”) with a principal balance and fair value of $12,922,248 and $12,768,066, respectively, as of the Exchange Date. Affiliates of the Company through common control relationships with the Manager, are co-invested in the subject loan and also beneficially hold equity interests in this portfolio company. As of June 30, 2026, the interest receivable balance was $0.1 million.

Intrinsic is owned by David Kite, the Company’s President and Chief Operating Officer, who holds such interest as nominee for CACO. Pursuant to a written nominee agreement between Mr. Kite and CACO, the entire economic and beneficial interest in Intrinsic, including all economic risks and rewards of ownership, are attributable to CACO. Mr. Kite has recused himself from all deliberations regarding the acquisition of this loan and the transaction was subject to the review and approval of the Audit Committee in connection with the Exchange.

Loan #51

On May 26, 2026, the Company entered into a second-lien secured mortgage loan to 256 County Route 117 Perth, LLC, a property-holding company which is a wholly-owned indirect subsidiary of Vireo Growth, Inc ("Vireo"). Loan#51 has a principal balance of $41.0 million as of June 30, 2026 and bears interest at a rate of Prime plus 5.25% cash per annum, has a 24 month maturity, and is second-lien secured by a cultivation property in New York. As of June 30, 2026, the interest receivable balance was $0.4 million.

John Mazarakis, who serves the Company's Executive Chairman of the Board, was appointed in December 2024 to serve as Chief Executive Officer and Co-Executive Chairman of the Board of Vireo. Certain affiliated investment funds that are managed by entities under common control with our Manager, and for which Mr. Mazarakis can exercise significant influence, also hold material equity interests in Vireo. Mr. Mazarakis has agreed to recuse himself from all matters that involve us, Vireo, and other target portfolio companies ancillary thereto; including as it relates to any actions that would arise, including exercise of rights and remedies under our credit agreements, if Vireo were to default on any potential obligations to us or if a similar material event occurred that presented a direct conflict between us and Vireo. As a result of the relationship between the Company and Vireo, the Company considers the origination of this loan to be a related party transaction and was subject to the review and approval by the Audit Committee.

As described in Note 4, at the time of origination the Company elected the fair value option for this asset due to other indebtedness of the borrower that is senior to our loan and the potential sale of the asset which was contemplated at the time of underwriting. Both of these factors contributed to management's uncertainty with respect to the intent to hold the loan to maturity or payoff. Accordingly, upfront fees in the amount of approximately $0.8 million were recognized in earnings during three months ended June 30, 2026 and not deferred.

9. COMMITMENTS AND CONTINGENCIES

Off-Balance Sheet Arrangements

Off-balance sheet commitments may consist of unfunded commitments on delayed draw term loans. The Company does not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured investment vehicles, special purpose entities, or variable interest entities, established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Further, the Company has not guaranteed any obligations of unconsolidated entities or entered into any commitment to provide additional funding to any such entities. As of June 30, 2026 and December 31, 2025, the Company had unfunded commitments on existing loans of$2.4 million and $31.1 million, respectively.

Refer to “Note 3 - Loans Held for Investment, Net” for further information regarding the CECL Reserve attributed to unfunded commitments. Total original loan commitments include the impact of principal payments received since origination of the loan and future amounts to be advanced at sole discretion of the lender.

The following table summarizes our material commitments as of June 30, 2026:

Other Contingencies

The Company from time to time may be a party to litigation in the normal course of business. As of June 30, 2026, the Company is not aware of any legal claims that could materially impact its business, financial condition, or results of operations.

The Company’s ability to grow or maintain its business depends, in part, on state laws pertaining to the cannabis industry. New laws that are adverse to the Company’s portfolio companies may be enacted, and current favorable state or national laws or enforcement guidelines relating to cultivation, production, and distribution of cannabis may be modified or eliminated in the future, which would impede the Company’s ability to grow and could materially and adversely affect its business.

Management’s plan to mitigate risks include monitoring the legal landscape as deemed appropriate. Also, should a loan default or otherwise be seized, the Company may be prohibited from owning cannabis assets and thus could not take possession of collateral, in which case the Company would look to sell the loan, provide consent to allow the borrower to sell the real estate to a third party, institute a foreclosure proceeding to have the real estate sold or evict the tenant, have the cannabis operations removed from the property and take title to the underlying real estate, each of which may result in the Company realizing a loss on the transaction.

10. STOCKHOLDERS’ EQUITY

Equity Incentive Plan

Concurrent with our IPO, the Company established the 2021 Plan, which is administered by the Compensation Committee of the Board. The 2021 Plan authorizes stock options, stock appreciation rights, restricted stock, stock bonuses, stock units, and other forms of awards granted or denominated in the Company’s common stock. The 2021 Plan retains flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances. Any award may be structured to be paid or settled in cash. The Company has and currently intends to continue to grant restricted stock awards ("RSA's") to participants in the 2021 Plan, but it may also grant any other type of award available under the 2021 Plan in the future. Persons eligible to receive awards under the 2021 Plan include the Company’s officers and employees of the Manager and its affiliates or officers and employees of the Company’s subsidiaries, if any, the members of the Board, and certain consultants and other service providers.

As of June 30, 2026 and December 31, 2025, the maximum number of shares of the Company’s common stock that may be delivered pursuant to awards under the 2021 Plan (the “Share Limit”) equals 8.50% of the issued and outstanding shares of the Company’s common stock on a fully-diluted basis following the completion of the IPO. Shares that are subject to or underlie awards that expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under the 2021 Plan will not be counted against the Share Limit and will again be available for subsequent awards under the 2021 Plan.

There were 0 and 6,469 shares forfeited during the six months ended June 30, 2026 and 2025, respectively. As individual awards and options become fully vested, stock-based compensation expense is adjusted to recognize actual forfeitures.

Shares that are exchanged by a participant or withheld by the Company as full or partial payment in connection with any award granted under the 2021 Plan, as well as any shares exchanged by a participant or withheld by the Company to satisfy tax withholding obligations related to any award granted under the 2021 Plan, will not be counted against the Share Limit and will again be available for subsequent awards under the 2021 Plan. To the extent that an award is settled in cash or a form other than shares, the shares that would have been delivered had there been no such cash or other settlement will not be counted against the Share Limit and will again be available for subsequent awards under the 2021 Plan.

Based on the closing market price of our common stock on June 30, 2026 and December 31, 2025 of $10.72 and $12.26, respectively, the aggregate intrinsic value of our restricted stock awards was as follows:

The following table summarizes the restricted stock activity for the Company’s directors and officers and employees of the Manager during the six months ended June 30, 2026 and 2025.

Restricted stock compensation expense is based on the Company’s stock price at the date of the grant and is amortized over the vesting period. Forfeitures are recognized as they occur. The share-based compensation expense for the Company was $1.8 million and $1.5 million for the six months ended June 30, 2026 and 2025, respectively. The unamortized share-based compensation expense for the Company was approximately $4.6 million and $5.5 million as of June 30, 2026 and 2025, respectively, which the Company expects to recognize over the remaining weighted-average term of 2.1 years.

At-the-Market Offering Program (“ATM Program”)

On June 20, 2023, the Company entered into separate At-the-Market Sales Agreement (each, a "Sales Agreement" and together, the “Previous Sales Agreements”) with BTIG, LLC, Compass Point Research & Trading, LLC and Oppenheimer & Co. Inc. (each a “Sales Agent” and together the “ Previous Sales Agents”) under which the Company may, from time to time, offer and sell shares of common stock, having an aggregate offering price of up to $75.0 million. Under the terms of the Previous Sales Agreement, the Company has agreedto pay the Sales Agents a commission of up to a maximum of 3.0% of the gross proceeds from each sale of common stock sold through the Sales Agents. On March 17, 2025, the Company entered into new separate at-the-market sales agreements (each a “New Sales Agreement” and together with the Previous Sales Agreements, the “Sales Agreements”) with BTIG, LLC, A.G.P./Alliance Global Partners LLC, ATB Capital Markets USA Inc. and Oppenheimer & Co. Inc., (each a “New Sales Agent” and together with the Previous Sales Agents, the “Sales Agents”), which increased the aggregate offering size of the at-the-market offering from $75 million to $100 million and reduced the maximum commission paid to the Sales Agents from 3.0% to 2.0% of the gross proceeds from each sale of common stock sold through the Sales Agents. Sales of common stock, if any, may be made in transactions that are deemed to be “at-the-market” offerings, as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

During the three and six months ended June 30, 2025, the Company sold an aggregate of 0 and 64,557 shares, respectively, of the Company’s common stock under the Sales Agreement. The weighted average sales price during the three and six months ended June 30, 2025 was $0 and $16.01 per share, generating net proceeds of approximately $0 and $1.0 million, respectively.

There wereno shares sold by the Company under the Sales Agreement during the six months ended June 30, 2026.

As of June 30, 2026 and December 31, 2025, the shares of common stock sold pursuant to the registered direct offering in February 2023 and under the ATM Program are the only offerings that have been initiated under the Shelf Registration Statement.

11. EARNINGS PER SHARE

The following information sets forth the computations of basic earnings per common share for the three and six months ended June 30, 2026 and 2025, respectively:

There wereno anti-dilutive shares excluded from the computations of earnings per common share for the three months ended June 30, 2026 and 2025.

12. INCOME TAX

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. The income tax provision for the Company was $0 for the six months ended June 30, 2026 and 2025.

As of June 30, 2026 and December 31, 2025, the Company does not have any unrecognized tax benefits.

13. FAIR VALUE MEASUREMENTS

GAAP requires disclosure of fair value information about financial and non-financial assets and liabilities, whether or not recognized in the financial statements, for which it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows using market yields, or other valuation methodologies. Any changes to the valuation methodology will be reviewed by the Company’s management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Company anticipates that the valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial and non-financial assets and liabilities could result in a different estimate of fair value at the reporting date. The Company uses inputs that are current as of the measurement date, which may fall within periods of market dislocation, during which price transparency may be reduced.

Recurring Fair Value Measurements

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2026:

(1)Warrants are included within other receivables and assets, net on the consolidated balance sheets.

The following table presents the changes in assets classified within Level 3 of the fair value hierarchy during the six months ended June 30, 2026:

The following table summarizes the significant unobservable inputs used by the Company to value the assets categorized within Level 3 as of June 30, 2026. The tables are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant to the Company’s determination of fair values.

The portion of the fair value adjustments related to credit risk was determined based on a yield analysis and discount rate applied to the subject loan. Interest income on the loan measured at fair value is calculated based on the interest rate of the loan and is recorded in the interest income on the consolidated statement of operations. For the six months ended June 30, 2026, our loan held at fair value using the fair value option had $0 in unrealized gains (losses) in net income before income taxes, that are attributable to changes in instrument-specific credit risk.

Financial Assets and Liabilities Not Measured at Fair Value

As of June 30, 2026 and December 31, 2025, the carrying values and fair values of the Company’s financial assets and liabilities recorded at amortized cost are as follows:

Our loans are generally held for investment and are substantially secured by real estate, equipment, licenses and other assets of the borrowers to the extent permitted by the applicable laws and the regulations governing such borrowers. The aggregate fair value of the Company’s loans held for investment was approximately$405.3 million and$407.4 million, with gross unrecognized holding losses of$2.6 million and$1.6 million as of June 30, 2026 and December 31, 2025, respectively. The fair values, which are classified as Level 3 in the fair value hierarchy, are estimated using discounted cash flow models based on current market inputs for similar types of arrangements. The primary sensitivity in these models is based on the selection of appropriate discount rates. Fluctuations in these assumptions could result in different estimates of fair value.

14. DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared during the three months ended June 30, 2026 and 2025.

15. SEGMENT REPORTING

The Company uses the management approach to determine reportable operating segments. The Company operates through asingle operating and reporting segment with an investment objective to generate both current income and capital appreciation through its investments in loans. The management approach considers the internal organization and reporting used by the Company’s Co-Chief Executive Officers, the Chief Financial Officer, and the President which comprise the chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The CODM assesses the performance and makes operating decisions of the Company on a consolidated basis primarily based on the Company’s net incomeas presented on the accompanying consolidated statements of income. In addition to other factors and metrics, the CODM utilizesnet income as a key determinant of the amount of dividends to be distributed to the Company's stockholders.

As the Company’s operations comprise of asingle reporting segment, the segment assets are reflected on the accompanying consolidated balance sheets as “total assets” and the significant segment expenses are listed on the accompanying consolidated statement of operations.

16. PROPOSED MERGER WITH CHICAGO ATLANTIC BDC, INC.

On June 17, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with LIEN, Chicago Atlantic BDC Advisers, LLC, a Delaware limited liability company, the investment adviser to LIEN (the “LIEN Adviser”), and the Manager (together with LIEN Adviser, the “Advisers”). Pursuant to the terms of the Merger Agreement, the Company will merge with and into LIEN (the “Merger”), with LIEN continuing as the surviving company (the “Surviving Company”). Following the Merger, the Surviving Company intends to continue to be treated as a regulated investment company (a “RIC”) under Sections 851 and 852 of the Internal Revenue Code of 1986, as amended (the “Code”). The parties intend the Merger to be treated as a “reorganization” within the meaning of Section 368(a) of the Code. Prior to the Merger, the Company, which has previously elected to be taxed as a REIT, will elect to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”), by filing a Form N-54A with the United States Securities and Exchange Commission (the “SEC”) (the “BDC Election” and the time of such filing, the “BDC Election Time”). Prior to the BDC Election, the Company will adopt, subject to approval by its stockholders, a new investment advisory agreement (the “New BDC Advisory Agreement”) with the LIEN Adviser, which will remain in effect until the Merger Effective Time (defined herein). The Company’s current management agreement with the Manager will terminate automatically upon the BDC Election Time, and the New BDC Advisory Agreement will terminate automatically upon the Merger Effective Time, in each case without termination notice or termination payment. All capitalized terms not defined in this section have the meaning set forth in the Merger Agreement filed with the SEC on Form 8-K on June 18, 2026.

At the Merger Effective Time, each share of common stock, par value $0.01 per share, of the Company (“Company Common Stock”) issued and outstanding immediately prior to the Merger Effective Time (other than shares owned by LIEN or any of its consolidated subsidiaries, which will be cancelled for no consideration) will be converted into the right to receive a number of shares of common stock, par value $0.01 per share, of LIEN (“LIEN Common Stock”) equal to the Exchange Ratio (defined herein) (the “Merger Consideration”).

The “Exchange Ratio” is the ratio of the net asset value per share of Company Common Stock (the “Closing Company Net Asset Value”) to the net asset value per share of LIEN Common Stock (the “LIEN Closing Net Asset Value”), each of which will be calculated in good faith as of a date no earlier than 48 hours (excluding Sundays and holidays) prior to the Merger Effective Time, based on the valuation principles, assumptions and methodologies set forth in Exhibit A to the Merger Agreement, and subject to customary approval and certification procedures.

The Merger Agreement was approved by the Company’s Board of Directors upon the unanimous recommendation of a special committee comprised solely of independent directors, which received a fairness opinion from Oppenheimer and Co, Inc. Consummation of the Merger is subject to customary closing conditions, including, without limitation, approval by the Company’s and LIEN’s stockholders, the approvals required under Rule 17a-8 of the 1940 Act, effectiveness of a registration statement on Form N-14 (which will contain a joint proxy statement/prospectus), Nasdaq listing authorization for the shares to be issued, receipt of required regulatory approvals, and completion of the closing net asset value determinations. Concurrently with the Merger Agreement, certain stockholders of the Company and LIEN entered into support agreements covering approximately 4.8% of the Company’s outstanding common stock and approximately 12.9% of LIEN’s outstanding common stock.

The Merger Agreement may be terminated under specified circumstances, including if the Merger has not been consummated by June 30, 2027, and does not provide for a termination fee. Except for specified SEC and printing and mailing costs, fees and expenses incurred in connection with the Merger generally will be shared equally between the Company and LIEN, with our Manager paying $2.0 million of the Company's share. The Merger Agreement also provides that, prior to the effective time, the Board will consider in good faith the adoption of a share repurchase program of up to $25.0 million to be implemented following closing. The Merger had not closed as of June 30, 2026 and accordingly, no amounts related to the Merger are reflected in the accompanying financial statements. There can be no assurance that the Merger will be completed on the contemplated terms or at all.

17. SUBSEQUENT EVENTS

Private Placement of Common Stock

On July 9, 2026, the Company entered into a Loan Agreement with Koach Capital Fund I LLC, Koach Capital Fund II LP, Koach Capital Fund III LP and their respective wholly owned subsidiaries (collectively, “Koach”), pursuant to which the Company issued 4,306,754 shares of its common stock, par value $0.01 per share, at a price of $14.53 per share, in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder, in exchange for second lien promissory notes issued by Koach with an aggregate principal amount of approximately $62.5 million (the “Koach Notes”). The shares issued to Koach represented 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, paid monthly, of which 10.0% is payable in cash and 2.0% payable in kind, and an additional exit fee of up to 2.5 x the commitment amount of each Note, calculated net of interest and principal amortization, if any, paid through maturity. The Koach Notes have a weighted average remaining life of approximately 12.0 years.

Because the Koach Notes were received as consideration for the issuance of the Company’s common stock, the Koach Notes will be presented as a reduction of stockholders’ equity rather than as loans held for investment in accordance with ASC Topic 505 - Equity, and the associated cash flows shall be recorded through stockholders’ equity rather than as interest income or within total assets on the consolidated balance sheets. Accordingly, the transaction increased the number of shares of common stock outstanding but had no material net effect on total stockholders’ equity, and did not increase total assets, upon issuance. Notwithstanding this financial statement presentation, the Koach Notes constitute bona fide debt secured by real property and, for purposes of the Company’s qualification as a real estate investment trust, are treated as qualifying real estate assets that generate qualifying income under the applicable REIT gross income and asset tests.

The issuance was permitted under, and the additional shares will be reflected in the exchange ratio inputs pursuant to, the Agreement and Plan of Merger, dated June 17, 2026, by and among the Company, Chicago Atlantic BDC, Inc. and the other parties thereto. For purposes of calculating the exchange ratio, the Koach Notes will be treated as assets of the Company rather than as a reduction of stockholders' equity. The shares issued in the private placement are subject to the terms of a lock-up letter pursuant to which the holders agree not to sell, transfer, pledge, or otherwise dispose of the common stock for a period of (i)three months (with respect to 20% of the Common Stock issued to such investor) and (ii)six months (with respect to the remaining 80% of such Common Stock), in each case following the closing date, subject to limited exceptions.

Payment of Dividend

On July 15, 2026, the Company paid its regular quarterly dividend of $0.47 per common share relating to the second quarter of 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.