Chicago Atlantic Real Estate Finance Extends Maturity of its Revolving Credit Facility to June 2026 and Increases Size of the Accordion Feature to $150 Million
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Insights
The extension and expansion of Chicago Atlantic's secured revolving credit facility signal a strategic move to strengthen the company's financial flexibility. The extension of the maturity date from December 2024 to June 2026 provides the company with a longer runway to manage its debt obligations, which can be particularly beneficial in a fluctuating interest rate environment. This extension also indicates lender confidence in the company's financial health and business model.
The increase in the accordion feature from $100.0 million to $150.0 million offers additional liquidity that can be accessed if needed. This is a proactive measure that enhances the company's ability to capitalize on investment opportunities or weather potential financial downturns. The interest rate, pegged to the Prime Rate with an Applicable Margin, is competitive and reflects the company's leverage ratio. The Prime Rate floor ensures that lenders receive a minimum return on their loan, which is a common risk management practice in credit agreements.
From a market perspective, the announcement by Chicago Atlantic could be interpreted as a positive signal to investors and analysts. The company's ability to renegotiate credit terms amidst potentially tightening credit markets may indicate a strong position within the commercial mortgage REIT sector. Furthermore, the supportive stance of the lending group suggests that the company is seen as a reliable borrower with a solid credit profile.
The extended credit facility may also enable Chicago Atlantic to pursue growth initiatives more aggressively, such as acquiring additional properties or investing in property development. This could potentially increase the company's market share and competitiveness. However, it is important to monitor how the company utilizes this increased financial leverage, as excessive borrowing could lead to higher financial risk.
Examining the broader economic implications, the adjustment of the credit facility's terms comes at a time when interest rates are a focal point for many businesses. With a Prime Rate floor set at 3.25%, Chicago Atlantic is hedging against future interest rate decreases while accepting a minimum interest payment that could be above market rates if the Prime Rate falls below this threshold. This decision reflects an anticipation of interest rate trends and displays a cautious approach to managing interest expenses.
The credit facility's flexibility, with its accordion feature, suggests that the company is preparing for both expansion and potential economic uncertainty. The ability to quickly increase financial resources without negotiating a new agreement provides a competitive edge in a dynamic real estate market, where timing can be critical for seizing investment opportunities.
CHICAGO, Feb. 29, 2024 (GLOBE NEWSWIRE) -- Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI) (“Chicago Atlantic” or the “Company”), a commercial mortgage real estate investment trust, announced that Chicago Atlantic Lincoln, LLC (“Chicago Atlantic Lincoln”), its wholly-owned financing subsidiary, entered into the Fifth Amended and Restated Loan and Security Agreement by and among Chicago Atlantic Lincoln and a syndicate of FDIC-insured financial institutions to extend the maturity of its
The Company extended the contractual maturity date from December 16, 2024 to June 30, 2026 and retained the one-year extension option, subject to customary conditions. The Revolving Loan bears interest at the Prime Rate plus an Applicable Margin, based upon Chicago Atlantic Lincoln’s leverage ratio. The Applicable Margin ranges from
John Mazarakis, Executive Chairman of Chicago Atlantic, noted, “Our lending group has been very supportive, and we are pleased to extend the debt maturity to June 2026 as well as increase the accordion feature. We will continue our efforts to expand the size of this facility and broaden the lending group.”
About Chicago Atlantic Real Estate Finance, Inc.
Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI) is a market-leading commercial mortgage REIT utilizing significant real estate, credit and cannabis expertise to originate senior secured loans primarily to state-licensed cannabis operators in limited-license states in the United States. REFI is part of the Chicago Atlantic platform, which has over 70 employees and has deployed over
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views and projections with respect to, among other things, future events and financial performance. Words such as “believes,” “expects,” “will,” “intends,” “plans,” “guidance,” “estimates,” “projects,” “anticipates,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements, including statements about our future growth and strategies for such growth, are subject to the inherent uncertainties in predicting future results and conditions and are not guarantees of future performance, conditions or results. More information on these risks and other potential factors that could affect our business and financial results is included in our filings with the SEC. New risks and uncertainties arise over time, and it is not possible to predict those events or how they may affect us. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Contact:
Tripp Sullivan
SCR Partners
IR@REFI.reit
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