Good day and welcome to the Chicago Atlantic Real Estate Finance, Inc. Third Quarter 2026 Earnings 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 questions. 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 Lisa Camp from SCR Partners. Please go ahead.

Thank you. Good morning. Welcome to the Chicago Atlantic Real Estate Finance Conference call to review the company's results. On the call today will be Peter Sack, Co-Chief Executive Officer, David Kite, President and Chief Operating Officer, and Phil Silverman, Chief Financial Officer. Our results are released this morning in our earnings press released, which can be found in the investor relations section of our website, along with our earnings supplemental, each of which has been furnished to and 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, we remind you that the remarks made herein are as of today 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 securities laws, including statements related to the future performance of our portfolio, our pipeline of potential loans and other investments, future dividends, financing activities, the proposed merger of the company with the Chicago Atlantic BBC, Inc., ticker LIEN, and its expected timing and benefits. We also discussed certain non-gap measures, including but not limited to, distributable earnings. Definitions of these non-gap measures and reconciliations to the most directly comparable gap measures are included in our earnings release and supplemental information, available on our website and furnished to the SEC. I'd like to remind listeners that today's remarks and earnings supplemental contain forward-looking statements that are subject to significant 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 risks and other information disclosed in the company's filings with the SEC. Risks and uncertainties include the ability to complete the merger of Refi and Lean on the anticipated timeline, to obtain the required approvals of Refi and Lean stockholders, including their affiliated stockholders, the post-BDC election approvals and required third-party consent, the risk that refi elects to be regulated as a BDC but the merger is not completed, conflicts of interest arising from the affiliation of the company's advisors, changes in the exchange ratio, to realize the anticipated benefits of the transaction and developments in the cannabis regulatory environment, as well as other risks described in our SEC filings and in the legends in today's filed materials. Actual results may differ materially and we undertake no obligation to update except as required by law. The transcript of this call will be filed with the SEC pursuant to Rule 425 under the Securities Act of 1933 and is deemed filed under Rule 14A-12 under the Securities Act of 1934. In connection with the proposed merger, Lien has filed with the SEC a registration statement on Form N-14 as amended, which includes a preliminary joint proxy statement of refi and lien and a preliminary prospectus of lien. The registration statement has not been declared effective. Investors and stockholders are urged to read those materials, the definitive joint proxy statement prospectus, when it becomes available and any amendments or supplements because they contain or will contain important information about the transaction. Lean Refi, the respective directors and executive officers, Chicago Atlantic DBC Advisor, LLC, and Chicago Atlantic REIT Manager, LLC, and certain other people may be deemed participants in the solicitation. Information about those persons and their interests is included in the preliminary joint proxy statement perspective. Copies of all filed materials will be available free of charge on the SEC's website and on each company's investor relations website. Please note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any securities. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the 1933 Act. I'll now turn the call over to Peter Sack. Please go ahead.

Thank you, Lisa. Good morning, everyone. During the quarter, we remained focused on the priorities that have defined our strategy. originating high-quality loans, maintaining disciplined underwriting standards, and actively managing our existing portfolio to generate attractive risk-adjusted returns for our shareholders. As I have stated before, Chicago Atlantic Real Estate Finance operates within a unique intersection of real estate, credit, and the U.S. cannabis industry with very little overlap with the broader mortgage REIT and credit markets. Focusing on one sector enables us to develop deep expertise across loan origination, underwriting, and real estate analytics. These are capabilities that differentiate us from other lenders in the industry. Our specialized market knowledge, established relationships, and deep understanding of risk allow us to structure investments with a level of insight that broader based lenders often do not have the means to replicate. I'd like to spend some time contrasting Chicago Atlantic Real Estate Finance, Inc. with the broader mortgage rate market as of September 30th, 2026. We believe that the performance of Revise borrowers have little correlation with the broader residential and commercial mortgage real estate markets. As far as we know, Revise portfolio has no overlap in borrowers with any other public mortgage rate. Approximately 57% of the portfolio benefits from interest rate increases, and given the absence of interest rate caps on our loans, each 25 basis point interest rate increase is expected to lead to 1.5 cents per share improvement in quarterly distributable earnings. ReFi had an unlevered weighted average portfolio yield of approximately 14.8% compared to approximately 6 to 8% on a comparable basis among select commercial mortgage-free peers. ReFi operates with leverage of 0.48 times debt to equity versus an approximate range of 3 to 5x total debt to stockholder equity across that same peer group. ReFi holds no residential mortgage-backed securities, no commercial mortgage-backed securities, no agency securities, and, instead, agents and directly originates nearly the entirety of its portfolio, making investments at low leverage levels, strong covenant-laden documentation, and direct insight into the operations of its borrowers. We believe that ReFi's portfolio and operating model are highly differentiated from the broader mortgage-read market. Nonetheless, ReFi's share price has recently moved closely with the broader mortgage-read market. Year-to-date through November 6, 2026, and the VanEck Mortgage Rate Income ETF, ticker MORT, each generated total returns of approximately negative 17% to 18%. Further, over the course of September, the 10-year Treasury yield increased by approximately 54 basis points. Following the Fed's 25 basis point rate hike on September 17th, the share prices of ReFi and Mort both declined in line by about 9% through September 30th. despite rising interest rates actually benefiting ReFi's net interest income. As I've noted previously, I believe that ReFi has not been rewarded for its differentiation from the mortgage-rate market. It is possible that some mortgage-rate investors find that ReFi is just too small to justify the time and effort of underwriting a significant investment in ReFi, particularly relative to the learning curve of understanding our industry. Pivoting for a moment, In evaluating the proposed merger with Chicago Atlantic BDC, Inc., or LEAN, the special committee and the board considered that the cannabis-focused mortgage REIT model presents structural constraints that may limit REFI's ability over time to enhance shareholder value. Those constraints include REFI's relatively small scale, the limits that our REIT election places on our investment mandate, and a constrained ability to access institutional debt capital and broaden our investor base. They also considered that our cannabis-only mandate has limited institutional investor participation in refi common stock. In June, acting on the special committee's unanimous recommendation, the board approved the merger agreement with Lean, refi's election to be regulated as a BDC and the merger, each of which remains subject to stockholder approval. The assets of refi, while secured by real estate, are similar to those of a BDC in that refi lends to operating businesses, and ReFi and Lean share substantially similar investment strategies and management teams. The special committee and the board considered that the combined company would have greater scale and broader investment mandate that could provide diversification across borrowers, sectors, and collateral types. They also considered that its trading liquidity could increase, broadening the universe of potential investors, and that it could attract additional institutional investor interest over time, although there can be no assurance that this will happen. For these, among other reasons, I support the board's recommendation on the refi and lien merger. The factors the special committee and the board considered, the risks of the transaction, and the interests of refi's directors, officers, and manager in the merger, which may differ from those of stockholders generally, are described in the joint proxy statement and prospectus, and we encourage stockholders to read it. I will let my colleagues David and Phil comment on the performance, but I wanted to congratulate the team on an active quarter. We deployed more than 85 million of new principal fundings, added capacity to our revolving credit facility, completed the coach transaction, delivered 49 cents of adjusted distributor earnings on a fully diluted basis, and paid a regular quarterly dividend of 47 cents per share, our 18th consecutive quarter doing so. The coach transaction closed in July with ReFi issuing approximately 4.3 million new common shares at a price of 14.353 per share. in exchange for secondly notes with an aggregate principal balance of $62.6 million. We refer to these instruments as the coach notes throughout our comments. During the third quarter, one of the 32 coach notes was repaid in full upon the sale of a property in Florida, generating approximately $900,000 in fee income. In total, the Coach notes contributed approximately $2.6 million to distributable earnings in the third quarter, and we remain optimistic about continuing to generate attractive yield from the transaction. The Coach portfolio has a stated annual yield of approximately 12%, which reduces the weighted average yield of ReFi's portfolio. However, the Coach notes this quarter generated an annualized return greater than 18%, accretive to our portfolio yield. I would encourage you to review the slides on the Coach notes and the case study on Coach's property sale in the quarter in our earnings supplemental. In closing, we've continued deliberate execution while making strategic decisions to strengthen refi and position the company for long-term success for the benefit of shareholders. We remain confident in our ability to navigate a volatile economic landscape while staying disciplined and are underwriting and true to the strategy that has driven our performance to date. We look forward to the refi and lien stockholder meetings, and if the merger is approved and completed, to continue to execute our strategy as a part of a combined company. David will now speak to the portfolio in greater detail. David?

Thank you, Peter. As of September 30, the total principal balance of our loan portfolio, which includes loans held for investment, loans at fair value, and the coach notes presented within stockholders' equity under GAAP totaled approximately $527.7 million across 28 portfolio companies with a weighted average yield to maturity of 14.8%. Gross originations during the quarter were approximately $85.1 million of principal fundings, of which $17.5 million and $5 million were funded to new borrowers and existing borrowers, respectively. and 62.6 million was represented by the coach transactions. These fundings were offset by approximately 13.2 million of repayments comprised of approximately 3.8 million in scheduled amortization payments, seven million from full loan prepayments and 2.4 million of partial prepayments. Portfolio risk ratings and credit quality remain relatively consistent in the third quarter with 89.3% risk rated three and below while 10.7% of our portfolio is risk-rated 4 or 5. As of September 30, 2026, non-accruals remained unchanged in amount from June 30 and were approximately 3.1% of our total loan portfolio based on outstanding principal compared to approximately 3.7% as of June 30, 2026 with a comparative decrease primarily due to the increase in portfolio size. As of September 30, 2026, our portfolio consisted of 36% fixed rate loans and 64% floating rate loans. Approximately 69.2% and 30.8% of floating rate loans are benchmarked to the prime rate and SOFA rate, respectively. With the current prime rate at 7%, 73% of our prime rate loans are at their floors, and become accretive with interest rates above 7.2%. Importantly, our floating rate loans have no interest rate caps and benefit from rate floors, providing a structural advantage over most mortgage REITs. Total leverage equaled 48% of book equity at September 30th, just up 1% from June 30th. As of September 30th, We had $94.4 million outstanding on our senior secured revolving credit facility and $50 million outstanding on our unsecured term loan. During the third quarter, through additional commitments from our existing bank syndicate, we increased the available borrowing capacity under the revolving loan by $7.5 million, resulting in total availability of $117.5 million. As of today, we have approximately $15.2 million available on the senior credit facility and Total Liquidity, Net of Estimated Liabilities and Anticipated Fundings of approximately $12 million. Subsequent to quarter end, we funded $3.2 million to existing borrowers under fully discretionary delayed draw term loan facilities. We're exploring opportunities to expand our liquidity, but expect originations to slow during the fourth quarter of 2026. And I'll turn it over to Phil.

Thanks, David. I'd like to begin reiterating how the coach transaction is presented in our consolidated financial statements as of and for the period ended September 30th. As previously disclosed, because the coach notes were received as consideration for the issuance of the company's common stock, the coach notes are presented as a reduction of stockholders' equity rather than as loans held for investment or within total assets on the consolidated balance sheet. Further, the associated cash flows from interest, principal, and exit fees, if any, are classified as financing activities and recorded through stockholders' equity rather than recognized as interest income in the consolidated statement of operations. Moving on to results for the third quarter. Our net interest income of $12.5 million for the third quarter represented a 0.3 million or 2.3% decrease from $12.8 million during the second quarter. However, adjusted for cash interest proceeds from the Coach Notes, total net interest income was $15.1 million, representing an approximate 18% increase. As adjusted, the increase was attributed to approximately $2.6 million of interest and fee income on the Coach Notes, timing of capital deployments and repayments, as well as the modest impact of the 25 basis point prime rate increase in mid-September. These increases were offset by an increase in interest expense from approximately $2.4 million in Q2 to $2.9 million in Q3, resulting from an increase in the weighted average borrowings on our revolving loan from $67.5 million to $95.5 million in the comparative periods. Our CECL reserve on our loans held for investment as of September 30th was approximately $12.3 million, and on a relative size basis, our reserve for expected credit losses represents approximately 2.9% of outstanding principal of our loans held for investment. While we do not record CECL reserves on the coach notes in our consolidated financial statements, we estimate a CECL reserve attributable to the notes of $1.8 million, or approximately 3% of the principal balance. There were no material changes to the company's non-accrual positions, which represent 3.1% of our total portfolio, inclusive of the coach notes, all of which are current on-interest payments. Distributable earnings per weighted average share on a basic and fully diluted basis were approximately 50 cents and 49 cents respectively. Third quarter distributable earnings includes approximately 2.6 million of interest and fees earned on the coach notes during the quarter, which are excluded from GAAP net income, but will be included in REIT taxable income for the 2026 tax year. In October, we distributed the third quarter dividend of 47 cents per common share declared by our board in September. In addition to GAAP book value per share, we present adjusted book value per share on an as-paid basis, which is a non-GAAP financial measure. We define adjusted book value as paid basis as total stockholders' equity computed in accordance with GAAP plus the outstanding principal balance of the coach notes and any accrued unpaid interest thereon that have been deducted from or not recognized in stockholders' equity under GAAP. This measure presents our book value as if the coach notes had been repaid in full in cash as of the balance sheet date. We believe adjusted book value per share on an as-paid basis is useful to investors because it reflects the capital contributed to us in the coach transaction on the same basis as the shares issued. It is consistent with the manner in which the coach notes are treated for purposes of the exchange ratio under the merger agreement. and it enables our shareholders to compare our book value per share with that of prior periods and of other commercial mortgage REITs whose loans are recognized as assets. Our adjusted book value per common share outstanding was $14.12 as of September 30th, 2026 compared with $14.15 as of June 30th. There were approximately 26 million and 21.7 million common shares outstanding on a fully diluted basis as of September 30th and June 30th respectively. Operator, we're now ready to take questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Aaron Gray with Alliance Global Partners. Please go ahead.

Good morning, and thank you very much for the question. First of all, understanding that the need for real estate coverage could change momentarily post the merger with Lean, while keeping it in the context of refi, how do we think about the pipeline with proper real estate coverage and how that could change potentially Thanks, Aaron. Thanks, Aaron.

The pipeline declined this quarter in part due to quarter over quarter, in part due to the significant amount of funding that we made this quarter of the pipeline, and B, because our available liquidity as of today is largely expended. That being said, I am excited about the opportunities that may arise from this month's election results. I think that in particular, medical states such as Pennsylvania, Texas, Georgia will benefit from Democratic executive leaders in the governor's office potentially leading to expansions of those medical markets and in the case of Pennsylvania, potentially, and expansion of bills for adult use. And that will open up opportunities for both refi and lean and for cannabis investment across the space that we're quite excited about. I don't think, however, it changes the long-term thesis that we expounded upon in the materials regarding the lean refi merger. and the belief that a vehicle that's not constrained by a real estate mandate has a much stronger set of opportunities.

Okay, great. Appreciate that, Collin.

Next question for me, just in terms of the higher yields or higher rates and the impact that it's had on the broader mortgage-free category. You kind of alluded to, you know, opportunity to kind of decouple, you know, how you differentiate maybe from broader mortgage-free. to maybe expand on that and why, maybe not even just on a standalone basis, but even on a portfolio with lean, how you think that will better create a picture of how you're differentiated from broader mortgage rates, even in a higher rate environment. Thanks.

Thank you. In our prepared remarks, we attempted to elaborate on what we see as a contradiction, that we think that our portfolio is highly differentiated from the broader mortgage rate market in terms of the actual assets that it holds, the industry and economic fundamentals that it's exposed to, and the impact of rising interest rates on our portfolio versus the broader mortgage rate market. Oddly, in contrast to that, we laid out some of the data points under which we observe refi trading very much in line with the broader mortgage rate market and in line with the broader mortgage rate market as interest rate rises have come to fruition. And that discrepancy or contradiction is what we wanted to highlight. And as we think about The BDC and the mortgage rate as a combined vehicle. I think one of the opportunities that I think it presents is to comp to a different set of comparables. Thank you very much. and many more. Thank you. Every 25 basis points of interest rate increase leads to approximately 1.5 cents per quarter of increase of distributable earnings. And that's a powerful tool, and it's driven by very thoughtful portfolio construction. of creating of originating transactions with floating rates with really high interest rate floors that give refi investors the benefit of convexity when interest rates go up without losing income when interest rates go down. Did I address your points, Aaron?

Yeah, that was great. Really appreciate that, Collar. I'm going to jump back into the queue.

The next question comes from Chris Muller with Citizens Capital Markets. Please go ahead.

Hey, guys. Thanks for taking the questions. So I got a couple questions on the coach deal, and sorry if I missed some of this in Phil's comments, but the 231 out-of-book value from the coach notes, should that come back into book value over time? Is that correct? And then could there be more upside to that, or does that include the potential exit fees in that number?

All right. Yeah, I can take this one.

Thanks, Chris. Yes, that 231, that's a reduction. The reason that occurs is because we obviously issued the approximately 4.3 million shares, but book value doesn't change because the note is offset all with inequity. As the loans are repaid, the book value will accrete up significantly. back to where it was last quarter, which is why we've presented the reconciliation of book value and adjusted book value, which assumes all of the notes are repaid in full. And to answer the second part of your question, there is incremental upside in the exit fees. Those also run through equity until the notes are repaid, so any exit fees are also accretive to book value in the same regard.

Got it. And then maybe dig a little deeper on the Palm Beach sale. That was a quick improvement on cap rate there from July to September. I guess, was there improvements at the property level? Kind of what changed and drove that cap rate improvement in such a quick period? And is there a cadence of sales that you guys expect, or is it more so just opportunistic from the coach side?

This was an opportunity that we... That specific property, there was not a specific catalyst of improvements of the property to drive the sale. It reflects a long-running process. The coach transaction took a significant amount of time to drive from negotiation to execution. And during that time, we began the process of marketing some of those properties for which we thought there was opportunity for sale so that once the transaction closed, we'd be ready to execute on the portfolio changes that we wanted to execute on. The sale in the first quarter is not a reflection of something new happening within that quarter. It's more a reflection of the preparatory work that we have been doing in the run-up to the closing of the coach deal to be prepared to execute. We expect, as we find opportunities to rotate properties out of the portfolio at an attractive cap rate and rotate properties into the portfolio at an attractive cap rate, we'll continue to do so. and so I think it's too early to tell what the specific cadence will be, but we expect to have additional opportunities to do so in the future.

Got it. Very helpful. Appreciate you guys taking the questions today.

The next question comes from Pablo Zuanek with Zuanek and Associates. Please go ahead.

Thank you and good morning everyone. Peter, just can you start by giving us a reminder in terms of the steps and milestones to get the BDC merger closed? You know, you have the shareholders agreement, then state level, I guess, approvals. Can you just go through the different steps that are left? That's the first part of the question. And the second one, not to get too precise on the wording, but it used to be, I think, late 26, then early 27, and today in the press releases it just says 27. I don't know if there's been any delays that were not expected initially. Thank you.

Sure. I'll let Phil take the question on merger completion steps.

Yeah. Hey, Pablo. Thanks. As you know, or as we've publicly filed under the lien filings, LEAN filed its initial N-14 preliminary joint proxy prospectus back in July and then updated it again in September. At this point, we're going through just the customary review process with the SEC and working collaboratively with them to do so. Once that process is resolved, we then need shareholder approval on both the election to be treated as a BDC and then to merge with and into LEAN in kind of a two-step shareholder voting process. At this point, that's the only public comment we can make on the rest of the process and that it's just ongoing as is customary.

Right. Okay. Thank you. And then just going back to the coach transaction, I mean, given the experience to date since the deal closed, is there an appetite for more deals of that structure or was this very one-offish?

I think there are significant additional opportunities to continue this process of selling properties at a lower cap rate and cycling into properties at a higher cap rate. The exact cadence of which is difficult to forecast, but this is exactly the thesis under which we executed the coach transaction. And so we're happy to have the opportunity to showcase the first instance of that in this quarter.

All right. and look at just a couple of more. I know you're probably going to say too much about the future merge entity, but you've talked about the idea of gaining larger scale as a result of a merger, right? Get more shareholders, more investor interest, all of that understood. But as a way to grow in the longer term, would doing syndicates and agency deals be part of a strategy or would you still be very focused on just Chicago Atlantic origination? I'm just thinking in terms of buying books out there, mid-market books, or again, joining syndicates if you have the credit available as a way to speed up the scale gains for the new company.

Today we're focused on The same type of opportunities that we've always been focused on of originating attractive risk-adjusted return transactions directly with borrowers. So I don't expect a broad shift into syndicates and certainly don't expect a broad shift into agency credits or mortgage-backed securities.

All right. That's all for me. Thank you.

This concludes our question and answer session and the conference. Thank you for attending today's presentation. You may now disconnect.