LIEN — Chicago Atlantic BDC, Inc.

Summary of Chicago Atlantic BDC, Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Net Investment Income (NII): $8.3 million, or $0.36 per share for Q4 2025, down from $9.5 million or $0.42 per share in Q3 2025.
• Full-Year NII: $1.45 per share, yielding 11% on book value.
• Gross Investment Income: $14.2 million for Q4, a decrease from $15.1 million in Q3, primarily due to one-time fees in Q3.
• Net Assets: $303.4 million with a Net Asset Value (NAV) per share of $13.30, slightly up from $13.27 in Q3.
• Debt: $25 million outstanding, with a low debt-to-equity ratio of 0.08x compared to the BDC average of 1.2x.
• Dividend: Maintained at $0.34 per share for the sixth consecutive quarter, totaling $1.36 for the year.

2. Strategic Updates and Business Highlights:

• Chicago Atlantic BDC focuses on lending to cannabis companies and lower middle-market businesses, aiming for high returns with downside protection.
• Funded $31.7 million across seven new investments in Q4, with 100% being senior secured loans.
• The company's investment portfolio consists of 39 companies, with 25% in non-cannabis sectors.
• The weighted-average yield on debt investments was 15.8%, significantly higher than the average public BDC yield of 10.8%.
• Positive momentum in the cannabis sector due to potential federal rescheduling of cannabis, which could enhance cash flows for borrowers.

3. Forward Guidance and Outlook:

• The company anticipates continued growth in the cannabis sector and lower middle markets, with a robust pipeline of approximately $732 million in potential debt transactions.
• Management remains cautious, emphasizing a disciplined approach to underwriting and investment, regardless of regulatory changes.
• The company is well-positioned to capitalize on M&A activity in the cannabis market, which could increase financing opportunities.

4. Bad News, Challenges, or Points of Concern:

• The broader BDC market is facing negative sentiment, with many firms trading below net asset value due to concerns over potential dividend cuts and loan performance.
• There are fears regarding looser underwriting standards in private credit markets, which could lead to higher default rates.
• The decline in the Fed Funds rate raises concerns about future earnings and dividends.
• The company noted that while it is insulated from many industry pressures, it remains cautious about the overall market environment and potential regulatory uncertainties.

5. Notable Q&A Insights:

• The $732 million pipeline includes opportunities across the entire Chicago Atlantic platform, with a notable increase from the previous quarter's $600 million.
• Discussions with potential borrowers have become more optimistic following the talk of rescheduling cannabis, with increased eagerness for consolidation and investment.
• The company is exploring providing state-level disclosures in future reports to enhance transparency.
• Chicago Atlantic BDC employs a rigorous third-party valuation process for its portfolio, differing from some peers who may rely more heavily on internal evaluations.

Overall, Chicago Atlantic BDC, Inc. demonstrated resilience in a challenging market, maintaining strong financial metrics while strategically positioning itself for growth in the cannabis sector and lower middle markets. However, it faces industry-wide pressures and must navigate potential regulatory uncertainties.