Chicago Atlantic Real Estate Finance Reports 15% Increase in Net Income for Q1 2025

Chicago Atlantic Real Estate Finance, Inc. reported its financial results for the first quarter of 2025, revealing a net income of $10.04 million, a 15% increase from $8.73 million in the same period last year. The company’s interest income for the quarter was $15.11 million, down 2% from $15.34 million in the prior year, while interest expense decreased slightly to $2.07 million from $2.10 million. This resulted in a net interest income of $13.04 million, reflecting a marginal decline of 1% compared to the previous year.

The company’s total assets decreased to approximately $414.67 million as of March 31, 2025, down from $435.15 million at the end of 2024. This decline was primarily attributed to a reduction in cash and cash equivalents, which fell to $9.88 million from $26.40 million. The company’s loans held for investment, net of expected credit loss reserves, were valued at $396.18 million, a slight decrease from $398.13 million at the end of the previous fiscal year. The current expected credit loss reserve also improved, decreasing to $3.27 million from $4.35 million, indicating a positive shift in credit quality.

Strategically, Chicago Atlantic has made significant operational adjustments, including the restructuring of Loan #9, which was placed on non-accrual status in May 2023. Following foreclosure proceedings, the company extinguished the original loan and now holds two new loans with a combined principal balance of approximately $16.5 million. This restructuring is expected to enhance the company's expectations regarding the collectibility of principal and interest, although the loan remains on non-accrual status as of the end of the quarter.

In terms of market positioning, the company continues to focus on the cannabis industry, with 61.2% of its loan portfolio backed by personal or corporate guarantees. As of March 31, 2025, the company held 30 loans with a carrying value of approximately $399.5 million, with a weighted average yield-to-maturity internal rate of return of 16.9%. The company aims to capitalize on favorable market conditions and the increasing demand for capital in the cannabis sector, while also managing risks associated with interest rate fluctuations and credit quality.

Looking ahead, Chicago Atlantic remains committed to its strategy of providing attractive, risk-adjusted returns to its stockholders through consistent income and capital appreciation. The company plans to continue monitoring the legal landscape surrounding the cannabis industry and adapt its investment strategies accordingly. The management expressed confidence in its ability to maintain liquidity and meet operational needs, supported by cash flows from operations and available borrowing capacity.