Advanced Flower Capital Inc.

Good day and thank you for standing by. Welcome to the AFC Gamma Q1 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Francesca Smith. Thank you. Please go ahead.

Thank you, Chelsea. Good morning and welcome to ASC Gamma Inc.'s first quarter 2021 earnings conference call. I am joined this morning by Leonard Tannenbaum, Chief Executive Officer, Jonathan Kalikow, Head of Real Estate, Robyn Tannenbaum, Head of Origination, and Thomas Jeffrey, Chief Financial Officer. Before we begin, I would like to note that this call is being recorded. Replay information is included in our April 26, 2021 press release and is posted on the Investor Relations section of ASC Gamma's website at ASCGamma.com, along with our first quarter 2021 earnings release and investor presentation. Today's conference call includes forward-looking statements and projections that reflect the company's current views with respect to, among other things, anticipated market size, expected consolidation in the industry, future events, and financial performance. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. New risks and uncertainties arise over time, and it is not possible for the company to predict those events or how they may affect it. Therefore, you should not place undue reliance on these forward-looking statements. We ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these forward-looking statements and projections. During this call, we will refer to distributable earnings, which is a non-GAAP financial measure. Reconciliations of net income, the most comparable GAAP measure to distributable earnings can be found in our earnings release or in the investor presentation available on our website. The format for today's call is as follows. Len will provide introductory remarks, an overview of our results, and strategic commentary. John will discuss the real estate lending environment. Robyn will discuss the origination pipeline and Tom will summarize the financials. Then we will open the line for Q&A. With that, I will now turn the call over to our Chief Executive Officer, Len Tannenbaum.

Thank you, Francesca, and welcome to AFC Gamma's first quarter earnings conference call. I would like to thank our current shareholders, prospective shareholders and analysts for joining us today. We are excited to have gone public on NASDAQ as the first U.S. listed cannabis lender on March 19, 2021. With the IPO process behind us, our team is focused on continuing to build a leading institutional cannabis lending platform. Today, I want to provide an overview of AFC Gamma and the many opportunities that we have in front of us. First, let me share who we are and what we do. AFC Gamma is an institutional provider of loans to the cannabis industry, structured as a real estate investment trust. The loans that we make are typically secured by three pillars. Cashflow, licenses, and real estate. The companies that we lend to are domestic, single, and multi-state operators, which include those that are privately held, as well as those listed on the Canadian exchanges. Since the IPO, we have completed several deals and expanded into a number of new states, including Texas, Missouri, and New Jersey. Just some highlights on those three states. We are really excited about Texas, as there are currently only three licenses in the state, and given its potential market size, we believe it's going to be one of the largest revenue generating states. Missouri is a really interesting state given patient growth, but also the fact that the residency requirement makes it difficult for multi-state operators to enter, which should provide our borrowers an opportunity to make outsized returns. And New Jersey, which recently legalized adult use cannabis, we believe will also see significant growth and require an almost $1 billion build-out. Our robust pipeline of potential borrowers includes many operators expanding into new states. We believe that a company loan is preferred over a saley spec, though we do see both sources of financing being successful given the extremely high demand for capital in the current environment. Turning to the industry, the cannabis market continues to rapidly evolve and grow. I've heard it likened to dog years. One year in cannabis is equal to seven. We continue to be excited about the massive opportunities ahead as more states legalize both medicinal and or adult use cannabis. This dynamic is causing an increased demand for capital to quickly scale, meet their license requirements, and build a presence in that given state. For instance, when New Jersey legalized late last year, we estimated the amount of capital needed to build that state is close to a billion. And with its bordering state, New York, recently legalizing adult use, we believe that capital build-out could reach three to five billion. which supports the forecast for New York for 2025 cannabis revenue of over $5 billion. We closely monitor the industry and have also watched the recent M&A boom with many large public multi-state operators using a combination of equity, debt, and cash as currencies to acquire the smaller single state operators. We believe we are in a one to two year period of consolidation where the big operators will continue to get bigger. We remain focused on lending to operators in limited license markets, as we believe the licenses in those states have additional value as a form of security. Additionally, our business contains many barriers to entry, including licensing approval by various state regulatory agencies in states such as New Jersey, Ohio, Arizona, and Missouri. Our goal is to be the lender of choice to half of the top 15 multi-state operators. as well as companies that are seeking to achieve scale or seek to be acquired by a multi-state operator. We lend at different rates to the top MSOs, the mid-size operators, and the smaller single-state operators. We maintain a high degree of selectivity and a stringent lending criteria backed by our three pillars, cash flows, licenses, and real estate. Turning to our capital structure, we are pleased to be a NASDAQ listed company and have already found that the visibility into our capital structure is a competitive differentiator. Many borrowers have found that one of the challenges in the industry is finding lenders that can commit to the full amount of capital without having to raise it from a third party. The IPO has helped us compete for and win deals as our available capital and hold size has greatly expanded. As we continue to source and evaluate new transactions We have grown our team and continue to build out our corporate infrastructure. And, as I mentioned, our pipeline remains robust. Since January of 2020, we have viewed over $5 billion in transactions, and we currently have an actionable pipeline of over $500 million. As a reminder, the actionable pipeline could take between three and nine months to close upon a transaction. And many of the deals that we complete are high touch in nature and require significant due diligence and potentially regulatory approval, making it difficult to predict the exact timing of closings. We are pleased that our Board of Directors has declared a quarterly dividend of 38 cents per share for the June quarter. We intend to pay regular quarterly dividends that are covered by our distributable earnings. Additionally, our dividend policy is to pay 90 to 100 percent of distributable earnings over the year with a special dividend at the end of the year, if necessary, paid in January of the following year. Lastly, as a newly listed company, we plan on having a higher level of communication regarding our progress and outlook this year. I will now turn it over to our partner, John. Thanks, Glenn.