Chicago Atlantic BDC (LIEN) Q3 2024 earnings summary

Executive summary

• Completed acquisition of a loan portfolio (reported as $219.6M and $273M in different sources), rebranded as Chicago Atlantic BDC Inc. (LIEN), and began trading under new ticker symbol.

• Net assets increased to $302 million and portfolio companies to 28 as of October 1, 2024.

• Platform has closed over $2.3 billion in loans since inception, with an active pipeline of $559 million across 39 potential borrowers as of September 30, 2024.

• Expanded investment strategy beyond cannabis, with management bullish on sector growth and pursuing opportunities in underfollowed non-cannabis sectors.

• Leadership changes include new CEO, President, and board members following the joint venture and portfolio acquisition.

Financial highlights

• Gross investment income for Q3 2024 was $3.2 million, up from $2.9 million year-over-year.

• Net investment income excluding acquisition expenses was $2.4 million ($0.39/share), up from $1.6 million ($0.26/share) year-over-year.

• Transaction-related expenses of $2.4 million for Q3 and $5.07 million for the nine months ended September 30, 2024, significantly reduced reported net investment income.

• Net assets at quarter-end were $82.5 million, with net asset value per share at $13.28.

• Portfolio size increased fivefold post-acquisition, with greater diversification and 28 portfolio companies.

Outlook and guidance

• Additional transaction expenses expected in Q4, but at a lower magnitude; acquisition considered a non-recurring event.

• Quarterly dividend per share is expected to be higher than prior, with a formal update pending board approval.

• Management anticipates improved returns as leverage is added and capital is deployed, with robust deal flow in both cannabis and non-cannabis sectors.