Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI)

Sector: Real Estate Industry: REIT - Mortgage CIK: 0001867949
Market Cap 266.52 Mn
P/B 0.86
P/E 7.45
P/S 4.83
ROIC (Qtr) 8.50
Div Yield % 16.17
Rev 1y % (Qtr) -5.35
Total Debt (Qtr) 101.67 Mn
Debt/Equity (Qtr) 0.33

About

Chicago Atlantic Real Estate Finance, Inc., also known as REFI, is a commercial mortgage real estate investment trust (REIT) that operates in the cannabis industry. The company's primary investment objective is to provide attractive, risk-adjusted returns for its stockholders through consistent current income dividends and other distributions, and secondarily through capital appreciation. REFI is a significant player in the cannabis industry, with its main business activities revolving around the provision of capital to companies operating in this...

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Price action

Investment thesis

Bull case

  • Strong tangible asset base of 427.08M provides 4.20x coverage of total debt 101.67M, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 24.10M provides 4.59x coverage of SG&A expenses 5.26M, showing efficient operational cost management.
  • Operating cash flow of 24.10M provides strong 3.87x coverage of operating expenses 6.22M, showing operational efficiency.
  • Operating cash flow of 24.10M exceeds receivables of 26432 by 911.82x, demonstrating excellent collection efficiency.
  • Strong free cash flow of 24.10M provides 4.59x coverage of SG&A expenses 5.26M, indicating efficient cost management.

Bear case

  • Operating cash flow of 24.10M barely covers its investment activities of (25.25M), with a coverage ratio of -0.95, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 24.10M provides thin coverage of dividend payments of (43.21M) with a -0.56 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • R&D investment of 0 represents just 0x of SG&A expenses of 5.26M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Other current assets of 0 provide weak coverage of payables of 5.57M, which is 0x, suggesting potential working capital stress in near term.
  • Equity issuance of 19.83M represents 0.55x of earnings 35.77M, suggesting concerning reliance on share issuance

Peer comparison

Companies in the REIT - Mortgage
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NLY Annaly Capital Management Inc 13.98 Bn 10.42 8.17 107.02 Bn
2 AGNC AGNC Investment Corp. 11.44 Bn 16.65 30.74 95.01 Bn
3 STWD Starwood Property Trust, Inc. 6.55 Bn 17.88 3.63 21.43 Bn
4 RITM Rithm Capital Corp. 5.78 Bn 7.43 1.16 34.97 Bn
5 BXMT Blackstone Mortgage Trust, Inc. 3.36 Bn 31.37 6.62 15.46 Bn
6 ARR Armour Residential REIT, Inc. 1.83 Bn 34.78 15.64 16.56 Bn
7 DX Dynex Capital Inc 1.59 Bn 9.04 6.88 11.75 Bn
8 ABR Arbor Realty Trust Inc 1.50 Bn 9.84 2.84 10.40 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.80 0.83
EV to Cash from Ops. EV/CFO 14.16 -102.96
EV to Debt EV to Debt 3.36 1.31
EV to EBIT EV/EBIT 9.54 -260.73
EV to EBITDA EV/EBITDA 9.54 -16.37
EV to Free Cash Flow [EV/FCF] EV/FCF 14.16 3.47
EV to Market Cap EV to Market Cap 1.33 9.18
EV to Revenue EV/Rev 6.18 26.77
Price to Book Value [P/B] P/B 0.83 0.68
Price to Earnings [P/E] P/E 7.17 -4.85
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.83 -0.55
Dividend Payout Ratio % Div Payout % (Qtr) 120.50 29.47
Dividend per Basic Share Div per Share (Qtr) 2.06 1.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 180.07 57.60
Interest Coverage Interest Coverage 0.00 -0.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % 0.00 37.60
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 327.79 24.22
Dividend Growth (1y) % Div 1y % (Qtr) -5.07 4.53
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -7.14 17.83
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -6.98 9.86
EBIT Growth (1y) % EBIT 1y % (Qtr) -7.14 20.98
EBT Growth (1y) % EBT 1y % (Qtr) -7.14 11.17
EPS Growth (1y) % EPS 1y % (Qtr) -16.18 59.25
FCF Growth (1y) % FCF 1y % (Qtr) -34.57 59.63
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -0.05 20.65
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.13 0.04
Cash Payout Ratio Cash Payout (Qtr) 1.79 0.83
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 0.33 5.05
Interest Cover Ratio Interest Cover Ratio 0.00 -0.17
Times Interest Earned Times Interest Earned 0.00 -0.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 64.80 137.11
EBIT Margin % EBIT Margin % (Qtr) 64.78 142.19
EBT Margin % EBT Margin % (Qtr) 64.78 129.16
Gross Margin % Gross Margin % (Qtr) 85.60 117.97
Net Profit Margin % Net Margin % (Qtr) 64.80 125.89