[Management View]
Chicago Atlantic Real Estate Finance (REFI) reported a sequential decline in net interest income and distributable earnings per share, primarily due to lower nonrecurring fee income. Management emphasized insulation from further interest rate declines through structured loans with floor protections and highlighted a strong capital pipeline of approximately $141 million focused on cannabis investments. The company maintained high portfolio yield, conservative leverage at 33% of book equity, and strong real estate plus other asset collateral coverage. Proactive share purchases by management and board members expanded insider ownership, signaling alignment with shareholders.

[Outlook]
Management expects to maintain a dividend payout ratio of 90%-100% based on basic distributable earnings per share (non-GAAP), with a special dividend possible if taxable income requires it. The company remains committed to disciplined underwriting, limited license markets, and supporting existing borrower relationships, reflecting a strategy distinct from peers considering diversification outside cannabis lending.

[Financial Performance]
Net interest income decreased by 5.1% to $13.7 million from $14.4 million in Q2 2025. Distributable earnings per share were 50¢ basic and 49¢ fully diluted, modestly lower than 52¢ and 51¢ in the previous quarter. The loan portfolio principal totaled approximately $400 million across 26 portfolio companies, with a weighted average yield to maturity of 16.5%, down from 16.8% in the previous quarter. Total leverage measured 33% of book equity as of September 30, 2025, compared with 39% at June 30.

[Q&A Highlights]
Question 1: Hi. Good morning, and thank you very much for the questions here. First question for me, just want to talk about the pipeline a bit. So I know it's down a little bit from prior quarters. Just wanted to talk a bit about whether there are some large potential originations that exited the pipeline. And I know in the prior quarter, you had talked about ESOPs and potential opportunity there. So I want to see if you still see those as appealing within the pipeline opportunities. Thank you.
Answer: Yes. ESOPs continue to form a large part of the pipeline. There was no significant exits other than the ordinary turnaround of our pipeline quarter over quarter. Our pipeline tends to refresh every quarter or so as deals either disappear, get turned down by us, or get funded. And so, yes, changes quarter over quarter are ordinary.

Question 2: Okay. Great. Glad to hear ESOPs are still a good opportunity for you guys. Second question for me. Just in terms of some of the loans that are maturing before year-end, any color you can talk about in terms of how those conversations are panning out? I know you're still targeting net portfolio growth for the year. Any color on those would be greatly appreciated.
Answer: We are negotiating the terms under which we may extend to maintain the business and maintain the position. And I expect that the vast majority of those loans that are maturing before the end of the year we will retain in some form or another.

Question 3: Okay. That's great to hear. Last question for me. You don't have direct implications for new cannabis legalization in the election today, but some indirect, particularly for Virginia. You know, if there is a new government that comes in that's more pro-cannabis, particularly looking at that state, I know new states coming online could be a good opportunity for you guys. So how would you guys start to look at a state like Virginia in terms of opportunities there? And how the regulatory landscape exists today and could exist tomorrow based on past legislation for retail set? Thank you.
Answer: No. We think Virginia is a very attractive medical market due to its very controlled licensure structure and the way in which the regulatory is set up, the geographic orientation of license holders. And we think it'll be an extremely attractive recreational market as well. So as those discussions progress, we're looking to extend our relationships in the state and deploy capital.

Question 4: Good afternoon. Congrats on another solid quarter here. So you guys have done a really great job underwriting a pretty challenging part of the market here. So can you guys talk about your approach to underwriting and what's driving that success? Is it more the type of borrowers you focus on, the geographies, or maybe a combination of those?
Answer: I think you put on some of the key points. The first, I think, the foundation of our underwriting is an analysis of each of the markets, each of the 40 states that have legalized medical or recreational cannabis. And that underwrite begins before we've deployed a single dollar into that market. And it's not just a focus on the state. It's also a focus, it's also a deeper dive into each piece of the supply chain within that market. We focus on limited license jurisdictions because we find that in these spaces, the regulatory mode creates greater predictability of wholesale prices, margins, and the competitive environment. Within that framework, we're focused on operators with diverse sources of earning streams, whether that's earnings coming from a diverse portfolio of retail operations, retail and vertical integration, or retail vertical integration spread across multiple limited licenses states. And then lastly, in addition to real estate collateral, we are focused on lending to operators at conservative leverage levels under two times EBITDA. The combination of all of these factors, frankly, allows for diversity of repayment, diversity of potential growth opportunities. And then while we're in structuring loans, I think it's important that in the majority of our loans, not only is our capital going towards growth initiatives that drive EBITDA improvement, but the majority of our loans also include amortization. And so the aim is that our loans will be less risky by their maturity date by virtue of EBITDA growth and loan paydown than they were at the outset. And that we can then continue to support those clients in the next phase of their growth, whether that's acquisitions, expansion of cultivation, expansion of retail. And it's really consistency with what we think are simple fundamentals, an approach to this industry, a focus on credit quality, and a focus on principal protection. That's allowed us to maintain the track record a lot of volatility in equity valuations and in the marketplace operating market in each of these states.

Question 5: Got it. That's all very helpful. And I guess maybe looking forward a little bit. So looking at the LTVs of your portfolio, they're well below what we see for a typical commercial mortgage rate. So if we do end up getting some type of reform, whether it's this year or next year, whenever that timing, what type of normalized LTV would you expect to see in the portfolio?
Answer: Well, it's a difficult question to answer. There's a few variables. I would expect that in the case if the reform that we're discussing about is rescheduling, I haven't seen examples of a significant amount of new lenders entering the market in the event of rescheduling. And so I think there's opportunity to increase our loan sizes in many cases with many of our borrowers by nature of the improved cash flow dynamics of operators in a rescheduling environment because of the lack of the impact of 280E taxes. So that's one reason why you might see loan balances go up in a post-rescheduling world because the fundamental cash flow profile of the industry and of individual operators improved significantly. Also, on the other hand, I would expect there to be a lot more equity interest in the sector as a result of rescheduling. And so I'd expect to see the denominator, the V in that ratio, increase significantly starting with public operators and public cannabis valuations. And so the combination of those two is difficult. It's difficult to parse exactly what would be the change in LTV.

Question 6: Got it. There's a lot of unknowns out there.
Answer: Yeah. But, you know, I would note that we focus in our underwriting on the ability of a cannabis operator to service its indebtedness and to pay back that indebtedness. And that was our focus when cannabis companies were valued in the high teens EV to EBITDA, and that's our focus today when cannabis companies are valued in single-digit EV to EBITDA. And so it's an understanding of the cash flow and diversity of cash flows and the collateral is really fundamental to us and more fundamental to us than an ephemeral, potentially ephemeral market cap, potentially license value.

Question 7: Got it. It's all very, very helpful. And I guess, just one clarifying one real quick, if I could. Did I hear you guys correctly say that 86% of the portfolio has active floors in place as we sit today?
Answer: That's a combination of floors and fixed rate.

Question 8: Got it. Got it. Got it. Alright. That was all the questions I had. Thanks very much.
Answer: Thank you, Chris.

Question 9: Thank you, and good morning, everyone. Peter, I realize that every company is different. But, for example, you know, AIPR this morning announced an investment outside cannabis, AFC Gamma into a BDC, investing outside cannabis. Chicago Atlantic BDC also is investing outside cannabis. Would Chicago Atlantic Real Estate Finance also consider, given the environment in cannabis?
Answer: We have on occasion invested outside of cannabis. But we find that the risk-reward profile for real estate-backed loans in the cannabis space is simply much more attractive than the risk-reward in most cases than the risk-reward profile of real estate-backed loans in non-cannabis real estate opportunities. And that's what's driving the overwhelming allocation of the portfolio to cannabis opportunities in refi. But to the extent that changes, to the extent that we find attractive real estate-backed opportunities, we will certainly offer them to refi and may deploy them in refi. But, you know, Chicago Atlantic was founded with a focus on idiosyncratic and niche areas of the private credit market and with a focus on cannabis. And that's part of our DNA, and that focus on cannabis and our fidelity to the sector is not going to change. And I think it's one of the reasons why we've persisted in this industry and continue to deploy in this industry as the equity markets have experienced significant volatility. As other lenders have exited the space, we think that focus and specialization can drive outsized returns and really differentiated returns for our investors. And that we can provide a better product, better support, better relationship with our clients, with our borrowers. And we find that consistent presence in the market, that consistent support to our borrowers leads to better relationships, leads to more longevity of relationships, and leads to a greater ability for us to build relationships with the next top operator that emerges from the ecosystem.

Question 10: Good color. Thank you. Just moving on in terms of 280E, you mentioned in the prior question that your main focus is on the company's ability to service debt, right? So how do you think about the uncertain tax provision that most MSOs have, right? The majority of them, well, most MSOs, not the majority, pretty much all of them except one, are paying their taxes, declaring taxes as a normal corporation and assuming 280E does not apply, and based on lawyers and auditors' recommendations, they are putting an item that's called uncertain as an uncertain tax provision or benefits as a long-term liability, right? We will see if it's ever due, and it doesn't have a maturity date. But how do you factor that in your ability to service that?
Answer: We consider it as another form of leverage. And so we aim to create covenants that limit the ability of our borrowers to incur uncertain tax liabilities above a certain amount. And that amount is set by our comfort with the total leverage profile of the company.

Question 11: Thank you. Look, I know we normally do not talk about specific borrowers, but you mentioned Verano in your prepared remarks. I'm trying to understand here the dynamics. In the case of Verano, Chicago Atlantic, I believe as a group, not just refi, has about a $300 million facility, $292 million booked in Verano due next year, right? And now you have issued these revolvers for $75 million, a three-year revolver. I'm trying to understand the dynamics in terms of why not just restructure the whole thing and, you know, just have to restructure the $300 million loan that was due next year. Or given that we know what's going to happen, before, you might have just, I'm just trying to understand why not do that as opposed to, you know, issuing a three-year short-term revolver here.
Answer: We have incredible respect for the team at Verano and what the team at Verano has accomplished, what they're executing on today, and their growth prospects. And we think their footprint, their asset base, and their mindset when approaching the industry is something that we think is really unique within the space. And we really value the partnership. And so to the extent that we can support them in any way, we're going to be ready and willing, and we'll do our best to further their next growth initiatives, and that applies for the rest of our portfolio as well. And so I can't, don't want to speak for what the team's aims are and how they wish to structure their balance sheet, but I can say that we value their relationship, we value their partnership, and we'd love to support them in any way we can. And I'm really excited for what they're executing on within their portfolio.

Question 12: Okay. And then one last one, if I may. I know that we've discussed, you know, the competition from other sectors before. I was recently at the Blangrom conference, but neither there, they said that they have issued about $500 million in loans to the cannabis sector, including Curaleaf most recently. They said it would never go to $2 billion, but they imply that it could, you know, double the current amount. So my read is that the competition from the regional banks under the current regulatory statute pool is increasing. Whether it's Valley Bank, Needham, or other people. Am I wrong about that read?
Answer: I think those banks that have developed an expertise, that have invested in the infrastructure and invested in the relationships with the cannabis space, in general, those banks have done well because they've deployed capital with discipline and conservatism and built relationships with some of the strongest operators in the space. And in many cases, those banks are now opting to go deeper because they've seen success. So I think we've seen that amongst some of the largest banks that have consistently deployed capital in the space, they're seeking to do more. And that's great. We view banks as partners in our strategy. There are leverage providers in both our public and private funds. There are co-lenders in many transactions. There are co-lenders in unitranche transactions. And so we think they're an integral part of the lending ecosystem, and they're part of this process of building a mature capital market for the cannabis industry. And I think to compare just to compare where the banking industry sits within the broader private credit ecosystem today, banks are not outside of the cannabis industry. Banks are operators alongside the private credit space. And the private credit space, whether that's mortgage REITs or BDCs, operate alongside the banking ecosystem, and they benefit one another significantly and work together as part of this ecosystem. And that's what we hope to see develop in the cannabis industry, and that's what we're trying to build at Chicago Atlantic through our various partnerships with nearly all of the major banks that are operating in the cannabis space today. So long story short, we welcome and have worked to help banking institutions enter the cannabis space, and we hope more will do so.

Question 13: Can you give an update in terms of your lending program to New York? I know it's a loan to a regulator, right? It's not to a fund or not necessarily to stores. I can wait up to 251 stores. Obviously, the state continues to expand in terms of retail stores, but I haven't seen that necessarily reflected in your loan book, or maybe I'm missing something. If you can provide an update on that. Thank you.
Answer: The New York Social Equity Fund has opted not to draw additional capital from our funds. They've supported the construction of close to 23 stores across the state, and they've taken a pause on deployment. That being said, we are ready and willing to support them if they decide to continue deployments and continue to grow the portfolio of stores that they're supporting.

[Sentiment Analysis]
The tone of the analysts was inquisitive and supportive, seeking clarity on pipeline dynamics, loan maturities, and market opportunities. Management's responses were confident and detailed, emphasizing strategic priorities, risk management, and strong borrower relationships.

[Quarterly Comparison]
| Key Metrics | Q3 2025 | Q2 2025 |
|----------------------------------|---------------|---------------|
| Net Interest Income | $13.7 million | $14.4 million |
| Distributable Earnings per Share | 50¢ basic, 49¢ fully diluted | 52¢ basic, 51¢ fully diluted |
| Loan Portfolio Principal | $400 million | $400 million |
| Weighted Average Yield to Maturity | 16.5% | 16.8% |
| Total Leverage | 33% of book equity | 39% of book equity |
| CECL Reserve | $5 million | $4.4 million |
| Book Value per Share | $14.71 | Not provided |

[Risks and Concerns]
- Exposure to interest rate declines: 14% of the portfolio remains exposed to further rate reductions.
- Market volatility: Broader concerns in private credit markets and cannabis equity valuations.
- Regulatory changes: Potential impacts from cannabis legalization and rescheduling.
- Uncertain tax provisions: Impact on borrowers' ability to service debt.

[Final Takeaway]
Chicago Atlantic Real Estate Finance demonstrated resilience in a challenging market environment, maintaining strong portfolio yield and conservative leverage. Management's strategic focus on limited license markets, disciplined underwriting, and proactive share purchases signal confidence in the company's long-term growth prospects. The robust cannabis pipeline and insulation from interest rate volatility position the company favorably compared to peers. Investors should monitor regulatory developments and market dynamics closely, as these factors could significantly impact future performance.