Chicago Atlantic Real Estate Finance, Inc.

Good day, and thank you for standing by. Welcome to the Chicago Atlantic Real Estate Finance Inc. Third Quarter 2023 Earnings 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 the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tripp Sullivan. Please go ahead.

Thank you. Good morning. Welcome to the Chicago Atlantic Real Estate Finance Conference call to review the company's results for the third quarter of 2023. On the call today will be John Masarakis, Executive Chairman, Tony Kappel, Chief Executive Officer, Andreas Bodemeier, Co-President and Chief Investment Officer, Peter Sack, Co-President, and Phil Silverman, Interim 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 files 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, we remind you that the remarks made herein are as of today, November 8, 2023, 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 risks 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 violence with the SEC. We also will discuss certain non-GAAP measures, including but not limited to distributable earnings and adjusted distributable earnings. Definitions of 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 Mazarrakis.

Please go ahead. Thanks, Tripp. Good morning, everyone. I said last quarter that it might be time to be cautiously optimistic and we continue to stand by that same outlook. In addition to the positive developments in a number of states, in the last 90 days we've seen HHS come out with a recommendation to reschedule cannabis from a Schedule 1 to Schedule 3, a positive development towards the elimination of the punitive tax burden of operators resulting from 280E, as well as safe banking taking a different form as safer. While we remain skeptical about the near-term prospects of safer passing Congress anytime soon and the all-important rule implementation to take even longer, the new perception is that changes at the federal level are more possible. That change in perception is positively affecting the reality for equity capital among investors and operators. That reality has had a clear impact on the credit of our borrowers in absolute dollars. Now that there has been some movement at the federal level, we've been asked if we think that there will be a new supply of capital entering the industry, particularly among the larger banks. We continue to believe that the cannabis industry will remain capital constrained for some time, with demand accelerating and overall credit quality improving. If larger banks get involved in the industry as the federal regulations settle, we still think the first and best option will be to provide capital to proven lenders, such as Chicago Atlantic. The learning curve and need implementations will be a tough initial hurdle for the larger and more highly regulated financial institutions. We have remained fully committed to this industry from day one, and we're big believers in the space. There isn't an operator we work with and or lend to or investor in the industry who has doubted our commitment or ability to deliver on their capital needs. With the largest platform, our own originations team, experience in direct lending, a well-capitalized and conservative balance sheet, and a diversified loan portfolio, we make the strongest case as the leading capital provider in the space. Another indication of how the environment has improved is that our pipeline of actionable deals has increased to over 600 million from 400 million last quarter. The originations team has been active in states such as Maryland, Missouri, and Ohio, where transaction activity has picked up because of the adult-use transitions. The maturities that we and other capital providers have talked about for some time still present a tangible and sizable opportunity. There are large operators that still need to refinance their bond and or debt facilities in the next 12 to 18 months. When you add that to the growth in new states, the outcome is an upward lift to our pipeline. We have always tried to be proven and realistic when evaluating the cannabis space. I want to close with a point that drives everything we do here at Chicago Atlantic. Each investment decision we make must provide our investors with an attractive yield and protection of principle. We've proven to be good stewards of our investors' capital, and you can expect more of that stewardship as we navigate these opportunities ahead of us. I will now turn it over to Peter.