Chicago Atlantic Real Estate Finance, Inc.

Good evening, and welcome to the Chicago Atlantic Real Estate Finance Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask a question. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Tripp Sullivan. Please go ahead. Tripp Sullivan Thank you.

Good morning. Welcome to the Chicago Atlantic Real Estate Finance Conference call to review the company's results for the second quarter of 2022. On the call today will be John Mazarrakis, Executive Chairman, Tony Kappel, Chief Executive Officer, Andreas Bodemeier, Co-President and Chief Investment Officer, and Lindsey Minns, Chief Financial Officer. Our results were released this morning in our earnings press release, which can be found on the Investor Relations section of our website, along with our supplemental filed with the SEC. A live audio webcast of this call is being made available today. For those who listened to the replay of this webcast, it reminds you that the remarks made herein are as of today, August 9th, 2022, and will not be updated subsequent to this call. During this call, certain comments and statements we make may be deemed forward-looking statements within the meaning prescribed by the securities law, including statements related to the future performance of our portfolio, our pipeline of potential loans and other investments, future dividends, and financing activities. All forward-looking statements represent Chicago Atlantic's judgment as of the date of this conference call and are subject to risk and uncertainties that can cause actual results to differ materially from our current expectations. Investors are urged to carefully review various disclosures made by the company, including the risk and other information disclosed in the company's filings with the SEC. We also will discuss certain non-GAAP measures, including but not limited to distributable earnings, and adjust distributable earnings. Definition to these non-GAAP measures and reconciliations to the most comparable GAAP measures are included in our filings with the SEC. I'll now turn the call over to John Masarakis. Please go ahead.

Thanks, Tripp. Good morning, everyone, and thank you for joining us. We have a real tale of two cities today. On the one hand, our fundamentals are strong in the states where we're focused and within our portfolio. On the other hand, the states The state of the stock market and the capital markets in general is showing vulnerability. We've invested a lot of time instilling the right perspective into the discussion around the growth potential of this industry, its counter-cyclical nature, and how it responds much like the pharmaceutical, alcohol, and tobacco industries. The focus on limited license states and operators who are vertically integrated is a far superior approach in our opinion to trying to pick winners and losers in crowded markets with significant price compression, destroying the margins of weaker operators. What we've experienced to date backs up every thesis we've ever had about this industry and how well it can perform. As Tony will note in a moment, we are busier than ever across our platform. New markets such as New Jersey, New York, Ohio, and others are gradually adding new licenses and creating new demands. Our operators continue to be in good shape with lowered leverage and no other debt on their capital structure except ours. They have entrusted us with the growth of their business, and Chicago Atlantic will be there with them for the long term. Private market and industry participants understand the real value we're creating. In the public market, everything in this sector appears to be trading at a fire sale. I don't think it's our job to calm all fears about the broader market that we can control, but it is our responsibility to make the right strategic decisions to ensure the long-term growth of the REIT and the success of the platform we've established in Chicago Atlantic. Until the broader capital markets can experience more stability and clarity, we have ruled out the pursuit of any debt or equity offering to provide additional growth in the REIT portfolio. Our threshold has always been that any new growth had to be funded with accretive capital. It's obvious that is only available today in the form of our credit facility. Therefore, we're redoubling our efforts to expand our existing facility through its existing accordion feature or pursue other growth options that are accretive to book value. As noted in our earnings release, we have provided a range of estimates for our expected performance in the second half of the year. We're currently anticipating that Q3 and Q4, absent any additional increase in the facility, would look a lot like Q2 with adjusted distributable earnings in the range of $1 to $1.05 for the second half of 2022. That would equate to $1.95 to $2 for the full year of 2022. We would also expect our dividend to be at least 47 cents per share for both quarters, which, if too conservative, might require a special dividend at the end of the year to true up our taxable income. Given what the market is presenting, we believe this is the right calibration to make for the REIT. We're very under levered at only 17% to book value and our dividend is well covered. We have a fortress balance sheet and generating strong returns for our shareholders. This is the right move to make for the REIT today. Tony, why don't you take it from here?