Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 07, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | CHICAGO ATLANTIC REAL ESTATE FINANCE, INC. | |
Trading Symbol | REFI | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 17,657,913 | |
Amendment Flag | false | |
Entity Central Index Key | 0001867949 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-41123 | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 86-3125132 | |
Entity Address, Address Line One | 420 North Wabash Avenue | |
Entity Address, Address Line Two | Suite 500 | |
Entity Address, City or Town | Chicago | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60611 | |
City Area Code | (312) | |
Local Phone Number | 809-7002 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Loans held for investment | $ 331,075,547 | $ 196,984,566 |
Current expected credit loss reserve | (1,497,933) | (134,542) |
Loans held for investment at carrying value, net | 329,577,614 | 196,850,024 |
Cash | 9,331,530 | 80,248,526 |
Interest receivable | 727,279 | 197,735 |
Other receivables and assets, net | 844,486 | 874,170 |
Total Assets | 340,480,909 | 278,170,455 |
Liabilities | ||
Revolving Loan | 53,000,000 | |
Dividend payable | 8,435,222 | 4,537,924 |
Interest reserve | 5,625,979 | 6,636,553 |
Management and incentive fees payable | 1,347,421 | 802,294 |
Related party payable | 1,203,030 | 1,902,829 |
Accounts payable and other liabilities | 716,463 | 212,887 |
Total Liabilities | 70,328,115 | 14,092,487 |
Commitments and contingencies (Note 8) | ||
Stockholders’ equity | ||
Common stock, par value $0.01 per share, 100,000,000 shares authorized at September 30, 2022 and December 31, 2021, respectively, and 17,742,915 and 17,453,553 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 176,579 | 173,551 |
Additional paid-in-capital | 268,888,861 | 264,081,977 |
Accumulated earnings (deficit) | 1,087,354 | (177,560) |
Total stockholders’ equity | 270,152,794 | 264,077,968 |
Total liabilities and stockholders’ equity | $ 340,480,909 | $ 278,170,455 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 17,742,915 | 17,453,553 |
Common stock, shares outstanding | 17,742,915 | 17,453,553 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2022 | |
Revenues | ||||
Interest income | $ 13,795,097 | $ 4,141,323 | $ 5,295,812 | $ 35,478,178 |
Interest expense | (861,348) | (25,206) | (41,918) | (1,383,172) |
Net interest income | 12,933,749 | 4,116,117 | 5,253,894 | 34,095,006 |
Expenses | ||||
Management and incentive fees, net | 1,347,421 | 3,266,487 | ||
General and administrative expense | 1,076,798 | 13,531 | 13,531 | 2,410,151 |
Organizational expense | 35,065 | 104,291 | ||
Provision for current expected credit losses | 306,885 | 1,403,892 | ||
Professional fees | 348,785 | 1,649,360 | ||
Stock based compensation | 84,891 | 328,356 | ||
Total expenses | 3,164,780 | 48,596 | 117,822 | 9,058,246 |
Net Income before income taxes | 9,768,969 | 4,067,521 | 5,136,072 | 25,036,760 |
Income tax expense | ||||
Net Income | $ 9,768,969 | $ 4,067,521 | $ 5,136,072 | $ 25,036,760 |
Earnings per common share: | ||||
Basic earnings per common share (in dollars per share) (in Dollars per share) | $ 0.55 | $ 0.83 | $ 1.4 | $ 1.42 |
Diluted earnings per common share (in dollars per share) (in Dollars per share) | $ 0.55 | $ 0.83 | $ 1.4 | $ 1.41 |
Weighted average number of common shares outstanding: | ||||
Basic weighted average shares of common stock outstanding (in shares) (in Shares) | 17,657,913 | 4,895,694 | 3,658,310 | 17,652,367 |
Diluted weighted average shares of common stock outstanding (in shares) (in Shares) | 17,752,290 | 4,895,694 | 3,658,310 | 17,747,612 |
Consolidated Statements of Equi
Consolidated Statements of Equity (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-In-Capital | Accumulated Earnings |
Balance at Mar. 29, 2021 | ||||
Balance (in Shares) at Mar. 29, 2021 | ||||
Issuance of common stock in connection with sale of unregistered equity securities | 100,000 | $ 64 | 99,936 | |
Issuance of common stock in connection with sale of unregistered equity securities (in Shares) | 6,427 | |||
Balance at Mar. 31, 2021 | 100,000 | $ 64 | 99,936 | |
Balance (in Shares) at Mar. 31, 2021 | 6,427 | |||
Balance at Mar. 29, 2021 | ||||
Balance (in Shares) at Mar. 29, 2021 | ||||
Net income | 5,136,072 | |||
Balance at Sep. 30, 2021 | 128,690,634 | $ 80,404 | 124,542,709 | 4,067,521 |
Balance (in Shares) at Sep. 30, 2021 | 8,040,422 | |||
Balance at Mar. 31, 2021 | 100,000 | $ 64 | 99,936 | |
Balance (in Shares) at Mar. 31, 2021 | 6,427 | |||
Issuance of common stock in connection with sale of unregistered equity securities | 56,299,744 | $ 36,184 | 56,263,560 | |
Issuance of common stock in connection with sale of unregistered equity securities (in Shares) | 3,618,401 | |||
Dividends declared on common shares | (1,068,551) | (1,068,551) | ||
Net income | 1,068,551 | 1,068,551 | ||
Balance at Jun. 30, 2021 | 56,399,744 | $ 36,248 | 56,363,496 | |
Balance (in Shares) at Jun. 30, 2021 | 3,624,828 | |||
Issuance of common stock in connection with sale of unregistered equity securities | 68,223,369 | $ 44,156 | 68,179,213 | |
Issuance of common stock in connection with sale of unregistered equity securities (in Shares) | 4,415,594 | |||
Net income | 4,067,521 | 4,067,521 | ||
Balance at Sep. 30, 2021 | 128,690,634 | $ 80,404 | 124,542,709 | 4,067,521 |
Balance (in Shares) at Sep. 30, 2021 | 8,040,422 | |||
Balance at Dec. 31, 2021 | 264,077,968 | $ 173,551 | 264,081,977 | (177,560) |
Balance (in Shares) at Dec. 31, 2021 | 17,453,553 | |||
Dividends declared on common shares | (7,100,875) | (7,100,875) | ||
Net income | 7,803,952 | 7,803,952 | ||
Issuance of common stock in connection with initial public offering and concurrent private placement, net of offering costs, underwriting discounts and commissions | 4,481,556 | $ 3,028 | 4,478,528 | |
Issuance of common stock in connection with initial public offering and concurrent private placement, net of offering costs, underwriting discounts and commissions (in Shares) | 302,800 | |||
Stock-based compensation | 121,915 | 120,940 | 975 | |
Stock-based compensation (in Shares) | (3,750) | |||
Balance at Mar. 31, 2022 | 269,384,516 | $ 176,579 | 268,681,445 | 526,492 |
Balance (in Shares) at Mar. 31, 2022 | 17,752,603 | |||
Balance at Dec. 31, 2021 | 264,077,968 | $ 173,551 | 264,081,977 | (177,560) |
Balance (in Shares) at Dec. 31, 2021 | 17,453,553 | |||
Net income | 25,036,760 | |||
Balance at Sep. 30, 2022 | 270,152,794 | $ 176,579 | 268,888,861 | 1,087,354 |
Balance (in Shares) at Sep. 30, 2022 | 17,742,915 | |||
Balance at Mar. 31, 2022 | 269,384,516 | $ 176,579 | 268,681,445 | 526,492 |
Balance (in Shares) at Mar. 31, 2022 | 17,752,603 | |||
Dividends declared on common shares | (8,343,576) | (8,343,576) | ||
Net income | 7,463,839 | 7,463,839 | ||
Stock-based compensation | 122,732 | 122,525 | 207 | |
Stock-based compensation (in Shares) | (313) | |||
Balance at Jun. 30, 2022 | 268,627,511 | $ 176,579 | 268,803,970 | (353,038) |
Balance (in Shares) at Jun. 30, 2022 | 17,752,290 | |||
Dividends declared on common shares | (8,339,170) | (8,339,170) | ||
Net income | 9,768,969 | 9,768,969 | ||
Stock-based compensation | 95,484 | 84,891 | 10,593 | |
Stock-based compensation (in Shares) | (9,375) | |||
Balance at Sep. 30, 2022 | $ 270,152,794 | $ 176,579 | $ 268,888,861 | $ 1,087,354 |
Balance (in Shares) at Sep. 30, 2022 | 17,742,915 |
Consolidated Statements of Eq_2
Consolidated Statements of Equity (Unaudited) (Parentheticals) - $ / shares | 3 Months Ended | ||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
Statement of Stockholders' Equity [Abstract] | |||
Dividends declared on common shares, per share | $ 0.47 | $ 0.47 | $ 0.4 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2022 | |
Operating activities | ||
Net income | $ 5,136,072 | $ 25,036,760 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Accretion of deferred loan origination fees and other discounts | (276,838) | (2,139,972) |
Payment-in-kind interest | (278,079) | (4,096,721) |
Provision for current expected credit losses | 1,403,892 | |
Amortization of deferred debt issuance costs | 41,918 | 379,644 |
Stock based compensation | 328,356 | |
Changes in operating assets and liabilities: | ||
Interest receivable | (517,026) | (529,544) |
Other assets | (84,384) | |
Other receivables | (13,868) | (172,699) |
Interest reserve | 6,590,885 | (9,940,290) |
Escrow payable | 800,000 | |
Related party payable | 683,842 | 1,100,201 |
Management fee payable | 545,127 | |
Accounts payable and accrued expenses | 159,047 | 463,075 |
Net cash provided by operating activities | 12,241,569 | 12,377,829 |
Cash flows from investing activities | ||
Issuance of and fundings of loans held for investment | (104,174,344) | (134,314,003) |
Proceeds from sale of loan held for investment | 6,696,777 | |
Principal repayment of loans held for investment | 9,582,613 | 6,892,654 |
Net cash used in investing activities | (94,591,731) | (120,724,572) |
Cash flows from financing activities | ||
Proceeds from sale of common stock | 92,546,597 | 4,505,664 |
Proceeds from borrowings on revolving loan | 53,000,000 | |
Dividends paid | (1,068,551) | (19,874,715) |
Payment of debt issuance costs | (177,261) | |
Payment of deferred offering costs | (485,978) | (23,941) |
Net cash provided by financing activities | 90,992,068 | 37,429,747 |
Change in cash | 8,641,906 | (70,916,996) |
Cash, beginning of period | 100,000 | 80,248,526 |
Cash, end of period | 8,741,906 | 9,331,530 |
Supplemental disclosure of non-cash financing and investing activity | ||
Loans acquired for issuance of shares of common stock | 31,976,516 | |
Interest reserve withheld from funding of loan | 7,501,842 | 8,929,716 |
OID withheld from funding of loans | 2,180,593 | |
Dividends declared and not yet paid | 8,409,628 | |
Supplemental information: | ||
Interest paid during the period | 646,278 | |
Income taxes paid during the period |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Chicago Atlantic Real Estate Finance, Inc., and its wholly owned subsidiary, Chicago Atlantic Lincoln, LLC (“CAL”) (collectively the “Company”, “we”, or “our”), is a commercial mortgage real estate investment trust (“REIT”) incorporated in the state of Maryland on March 30, 2021. The Company has elected to be taxed as a REIT for United States federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2021. The Company generally will not be subject to United States federal income taxes on its REIT taxable income if it annually distributes to stockholders all of its REIT taxable income prior to the deduction for dividends paid and complies with various other requirements as a REIT. The Company operates as one operating segment and its primary investment objective is to provide attractive, risk-adjusted returns for stockholders over time, primarily through consistent current income (dividends and distributions) and secondarily, through capital appreciation. The Company intends to achieve this objective by originating, structuring, and investing in first mortgage loans and alternative structured financings secured by commercial real estate properties. The Company’s loan portfolio is primarily comprised of senior loans to state-licensed operators in the cannabis industry, secured by real estate, equipment, receivables, licenses, and/or other assets of the borrowers to the extent permitted by applicable laws and regulations governing such borrowers. The Company is externally managed by Chicago Atlantic REIT Manager, LLC (the “Manager”), a Delaware limited liability company, pursuant to the terms of the management agreement dated May 1, 2021, as amended in October 2021, which has a three-year initial term set to expire on April 30, 2024 (the “Management Agreement”), by and among the Company and the Manager. After the initial term, the management agreement is automatically renewed for one-year periods unless the Company or the Manager elects not to renew in accordance with the terms of the Management Agreement. The Manager conducts substantially all of the Company’s operations and provides asset management services for its real estate investments. For its services, the Manager is entitled to management fees and incentive compensation, both defined in and in accordance with the terms of the Management Agreement (Note 7). All of the Company’s investment decisions are made by the investment committee of the Manager, subject to oversight by the Company’s board of directors (the “Board”). The Manager is wholly-owned by Chicago Atlantic Group, LLC (the “Sponsor”). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements and related notes of the Company have been prepared on the accrual basis of accounting and in conformity with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements may not contain all disclosures required by generally accepted accounting principles. Reference should be made to Note 2 of the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2021. In the opinion of the Company, all normal recurring adjustments have been made that are necessary to the fair statement of the results of operations and financial position as of and for the periods presented. Operating results for the three and nine-month periods ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. Use of Estimates in the Preparation of Consolidated Financial Statements The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant estimates include the provision for current expected credit losses. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Interest expense was previously presented as an operating expense and has been reclassified as a reduction to net revenue on the consolidated statements of income. General and administrative expense reimbursements due to the Manager, which were previously included in the line item management and incentive fees payable, have been reclassified into related party payable in the consolidated balance sheets. In addition, other receivables amounts have been reclassified to other receivables and assets, net in the consolidated balance sheets. These reclassifications do not result in any changes to previously reported total assets and net income. Investment Payable Investment transactions are reported on a trade-date basis. Unsettled trades as of the balance sheet date, if any, are included in payable for investments purchased. Recent Accounting Pronouncements As of September 30, 2022, the Company is evaluating the potential impact of recently issued accounting pronouncements on its consolidated financial statements. |
Loans Held For Investment, Net
Loans Held For Investment, Net | 9 Months Ended |
Sep. 30, 2022 | |
Loans Held For Investment Net Abstract | |
LOANS HELD FOR INVESTMENT, NET | 3. LOANS HELD FOR INVESTMENT, NET As of September 30, 2022 and December 31, 2021, the Company’s portfolio was comprised of loans to 22 and 21 portfolio companies, respectively, that the Company has the ability and intends to hold the loans to maturity. The portfolio loans are held on the consolidated balance sheet at amortized cost. The Company’s aggregate loan commitments and outstanding principal were approximately $348.9 million and $334.5 million, respectively as of September 30, 2022, and $235.1 million and $200.6 million as of December 31, 2021. During the three and nine months ended September 30, 2022, the Company funded approximately $5.7 million and $143.6 million, respectively, in new loan principal. As of September 30, 2022 and December 31, 2021, approximately 59.7% and 53.2%, respectively, of the Company’s portfolio was comprised of floating rate loans that pay interest at the prime rate plus an applicable margin, and were subject to prime rate floors. The outstanding principal of these loans was approximately $199.7 million and $106.7 million as of September 30, 2022 and December 31, 2021, respectively. The remaining 40.3% and 46.8% of the portfolio as of September 30, 2022 and December 31, 2021, respectively, was comprised of fixed rate loans that had outstanding principal of approximately $134.8 million and $93.9 million. The following tables summarize the Company’s loans held for investment as of September 30, 2022 and December 31, 2021: As of September 30, 2022 Weighted Outstanding Principal (1) Original Issue Discount Carrying Value (1) Remaining Life (Years) (2) Senior Term Loans $ 334,502,935 $ (3,427,388 ) $ 331,075,547 2.1 Current expected credit loss reserve - - (1,497,933 ) Total loans held at carrying value, net $ 334,502,935 $ (3,427,388 ) $ 329,577,614 As of December 31, 2021 Weighted Outstanding Principal (1) Original Issue Discount Carrying Value (1) Remaining Life (Years) (2) Senior Term Loans $ 200,632,056 $ (3,647,490 ) $ 196,984,566 2.2 Current expected credit loss reserve - - (134,542 ) Total loans held at carrying value, net $ 200,632,056 $ (3,647,490 ) $ 196,850,024 (1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount, deferred loan fees and other upfront fees. Outstanding principal balance includes capitalized PIK interest, if applicable. (2) Weighted average remaining life is calculated based on the carrying value of the loans as of September 30, 2022 and December 31, 2021, respectively. The following tables present changes in loans held at carrying value as of and for the nine months ended September 30, 2022 and the period from March 30, 2021 (inception) to September 30, 2021. Principal (1) Original Current Carrying Balance at December 31, 2021 $ 200,632,056 $ (3,647,490 ) $ (134,542 ) $ 196,850,024 Issuance of and funding of loans 143,624,312 (2,180,593 ) - 141,443,719 Principal repayment of loans (6,892,654 ) - - (6,892,654 ) Accretion of original issue discount - 2,139,972 - 2,139,972 Proceeds from sale of loans (6,957,500 ) 260,723 - (6,696,777 ) PIK Interest 4,096,721 - - 4,096,721 Current expected credit loss reserve - - (1,363,391 ) (1,363,391 ) Balance at September 30, 2022 $ 334,502,935 $ (3,427,388 ) $ (1,497,933 ) $ 329,577,614 (1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount, deferred loan fees and other upfront fees. Outstanding principal balance includes capitalized PIK interest, if applicable. Principal (1) Original Issue Discount Current Expected Credit Loss Reserve Carrying Value (1) Balance at March 30, 2021 (inception) $ - $ - $ - $ - Loans contributed 32,589,907 (613,391 ) - 31,976,516 New fundings 105,952,844 (1,778,500 ) - 104,174,344 Principal repayment of loans (9,582,613 ) - - (9,582,613 ) Accretion of original issue discount - 276,838 - 276,838 Sale of loans - - - - PIK Interest 278,079 - - 278,079 Balance at September 30, 2021 $ 129,238,217 $ (2,115,053 ) $ - $ 127,123,164 (1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount, deferred loan fees and other upfront fees. Outstanding principal balance includes capitalized PIK interest, if applicable. A more detailed listing of the Company’s loans held at carrying value based on information available as of September 30, 2022, is as follows: Loan Location Outstanding Original Issue Carrying Contractual Maturity Payment Initial 1 Various (6) 30,000,000 (287,746 ) 29,712,254 10.07% (7) 5/30/2023 I/O 7/2/2020 2 Michigan 36,646,551 (182,125 ) 36,464,426 P + 6.65% (5)(11) 12/31/2024 P&I 3/5/2021 3 Various (6) 20,673,831 (444,457 ) 20,229,374 13.91% Cash, 2.59% PIK (10) 11/29/2024 P&I 3/25/2021 4 Arizona 11,909,539 - 11,909,539 19.01% (8) 12/31/2023 P&I 4/19/2021 5 Massachusetts 1,500,000 - 1,500,000 P + 12.25% (5) 4/30/2023 P&I 4/19/2021 6 Pennsylvania 13,263,665 - 13,263,665 P + 10.75% (5) (9) 5/31/2025 P&I 5/28/2021 7 Michigan 4,443,750 (5,558 ) 4,438,192 P + 9.00% (5) 2/20/2024 P&I 8/20/2021 8 Various (6) 23,168,151 (242,929 ) 22,925,222 13% Cash, 2.5% PIK 6/30/2025 P&I 8/24/2021 9 West Virginia 9,554,960 (121,586 ) 9,433,374 P + 9.25% (5) 9/1/2024 P&I 9/1/2021 10 Pennsylvania 15,536,102 - 15,536,102 P + 10.75% (5) 6/30/2024 P&I 9/3/2021 11 Michigan 313,607 - 313,607 11.00% 9/30/2024 P&I 9/20/2021 12 Maryland 32,479,495 (714,967 ) 31,764,528 P + 8.75% (5) 9/30/2024 I/O 9/30/2021 13 Various (6) 20,000,000 (210,110 ) 19,789,890 13.00% 10/31/2024 P&I 11/8/2021 14 Michigan 10,600,000 (22,487 ) 10,577,513 P + 7.00% (5) 11/22/2022 I/O 11/22/2021 15 Various (6) 5,000,000 - 5,000,000 15% Cash, 2.5% PIK 12/27/2026 P&I 12/27/2021 16 Michigan 3,739,861 (56,096 ) 3,683,765 10.50% Cash, 12/29/2023 I/O 12/29/2021 17 Various (6) 7,500,000 (56,267 ) 7,443,733 P + 9.25% (5) 12/31/2024 I/O 12/30/2021 18 Florida 15,000,000 (293,989 ) 14,706,011 11.00% 1/31/2025 P&I 1/18/2022 19 Ohio 30,602,729 (472,079 ) 30,130,650 P + 8.25% (5) 2/28/2025 P&I 2/3/2022 20 Florida 20,327,703 (84,518 ) 20,243,185 11.00% Cash, 3% PIK 8/29/2025 P&I 3/11/2022 21 Missouri 17,204,978 (148,084 ) 17,056,894 11.00% Cash, 3% PIK 5/30/2025 P&I 5/9/2022 22 Illinois 5,038,013 (84,390 ) 4,953,623 P + 8.50% (5) 6/30/2026 P&I 7/1/2022 Current expected credit loss reserve - - (1,497,933 ) Total loans held at carrying value $ 334,502,935 $ (3,427,388 ) $ 329,577,614 (1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discounts, deferred loan fees and other upfront fees. Outstanding principal balance includes capitalized PIK interest, if applicable. (2) Certain loans are subject to contractual extension options and may be subject to performance based on other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without a contractual prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications. (3) P&I = principal and interest. I/O = interest only. P&I loans may include interest only periods for a portion of the loan term. (4) P = prime rate and depicts floating rate loans that pay interest at the prime rate plus a specific percentage; “PIK” = paid in kind interest. (5) This Loan is subject to prime rate floor. (6) Loans with material collateral in multiple jurisdictions, namely multi-state operators, are disclosed as “various.” (7) The aggregate loan commitment to Loan #1 includes a $4.005 million initial advance, which has an interest rate of 15.25%, a second advance of $15.995 million, which has an interest rate of 9.75%, and a third advance of $10.0 million, which has an interest rate of 8.50%. The statistics presented reflect the weighted average of the terms under all three advances for the total aggregate loan commitment. (8) The aggregate loan commitment to Loan #4 includes a $10.0 million initial advance, which has a base interest rate of 15.00%, and a second advance of $2.0 million, which has an interest rate of 39%. The statistics presented reflect the weighted average of the terms under both advances for the total aggregate loan commitment. (9) Subject to adjustment not below 2% if borrower receives at least two consecutive quarters of positive cash flow after the closing date. (10) The aggregate loan commitment to Loan #3 includes a $15.9 million initial advance, which has a base interest rate of 13.625%, 2.75% PIK and a second advance of $4.2 million, which has an interest rate of 15.00%, 2.00% PIK. The statistics presented reflect the weighted average of the terms under both advances for the total aggregate loan commitment. (11) This Loan is subject to an interest rate cap. As of September 30, 2022, all loans are current and none have been placed on non-accrual status. These loans are generally held for investment and are substantially secured by real estate, equipment, licenses and other assets of the borrowers to the extent permitted by the applicable laws and the regulations governing such borrowers. The aggregate fair value of the Company’s loan portfolio was $328,984,374 and $197,901,779, with gross unrecognized holding losses of $2,091,173 and unrecognized holding gains of $917,213 as of September 30, 2022 and December 31, 2021, respectively. The fair values, which are classified as Level 3 in the fair value hierarchy, are estimated using discounted cash flow models based on current market inputs for similar types of arrangements. The primary sensitivity in these models is based on the selection of appropriate discount rates. Fluctuations in these assumptions could result in different estimates of fair value. As of September 30, 2022, the Company calculated the estimated fair value of the loans held for investment using unobservable inputs such as discount rates ranging from 11.36% to 24.79% with a weighted average discount rate of 17.54%. Credit Quality Indicators The Company assesses the risk factors of each loan, and assigns a risk rating based on a variety of factors, including, without limitation, payment history, real estate collateral coverage, property type, geographic and local market dynamics, financial performance, loan to enterprise value and fixed charge coverage ratios, loan structure and exit strategy, and project sponsorship. This review is performed quarterly. Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows: Rating Definition 1 Very low risk 2 Low risk 3 Moderate/average risk 4 High risk/potential for loss: a loan that has a risk of realizing a principal loss 5 Impaired/loss likely: a loan that has a high risk of realizing principal loss, has incurred principal loss or an impairment has been recorded The risk ratings are primarily based on historical data and current conditions specific to each portfolio company, as well as consideration of future economic conditions and each borrower’s estimated ability to meet debt service requirements. The declines in risk ratings shown in the following table from December 31, 2021 to September 30, 2022 are not due to any borrower specific credit issues relating to the borrowers, but rather, are primarily due to the Company’s quarterly re-evaluation of overall current macroeconomic conditions affecting its borrowers. This decline in risk ratings did not have a significant effect on the level of the current expected credit loss reserve because the loans continued to perform as expected, and the fair value of the underlying collateral exceeded the amounts outstanding under the loans. As of September 30, 2022 and December 31, 2021, the carrying value, excluding the current expected credit loss reserve (the “CECL Reserve”), of the Company’s loans within each risk rating category by year of origination is as follows: As of September 30, 2022 As of December 31, 2021 Risk Rating 2022 2021 2020 2019 Total 2021 2020 2019 Total 1 $ - $ 20,542,981 $ 29,712,254 $ - $ 50,255,235 $ 135,076,307 $ 32,242,114 $ 590,384 $ 167,908,805 2 93,424,139 79,819,303 - - 173,243,442 29,075,761 - - 29,075,761 3 30,130,650 77,446,220 - - 107,576,870 - - - - 4 - - - - - - - - - 5 - - - - - - - - - Total $ 123,554,789 $ 177,808,504 $ 29,712,254 $ - $ 331,075,547 $ 164,152,068 $ 32,242,114 $ 590,384 $ 196,984,566 (1) Amounts are presented by loan origination year with subsequent advances shown in the original year of origination. Real estate collateral coverage is also a significant credit quality indicator, and real estate collateral coverage, excluding the CECL Reserve, was as follows as of September 30, 2022 and December 31, 2021: As of September 30, 2022 Real Estate Collateral Coverage < 1.0x 1.0x - 1.25x 1.25x - 1.5x 1.50x - 1.75x 1.75x - 2.0x > 2.0x Total Fixed-rate $ 5,000,000 $ - $ 20,243,185 $ 17,056,894 $ - $ 91,130,749 $ 133,430,828 Floating-rate 8,943,733 97,660,654 - 31,920,426 13,263,665 45,856,241 197,644,719 $ 13,943,733 $ 97,660,654 $ 20,243,185 $ 48,977,320 $ 13,263,665 $ 136,986,990 $ 331,075,547 As of December 31, 2021 Real Estate Collateral Coverage < 1.0 1.0 - 1.25 1.25 - 1.5 1.50 - 1.75 1.75 - 2.0 > 2.0 Total Fixed-rate $ 7,017,793 $ - $ 35,836,099 $ 3,086,298 $ - $ 45,373,778 $ 91,313,968 Floating-rate 8,925,068 18,022,518 - 30,029,953 32,377,087 16,315,972 105,670,598 $ 15,942,861 $ 18,022,518 $ 35,836,099 $ 33,116,251 $ 32,377,087 $ 61,689,750 $ 196,984,566 CECL Reserve The Company records an allowance for current expected credit losses for its loans held for investment. The allowances are deducted from the gross carrying amount of the assets to present the net carrying value of the amounts expected to be collected on such assets. The Company estimates its CECL Reserve using among other inputs, third-party valuations, and a third-party probability-weighted model that considers the likelihood of default and expected loss given default for each individual loan based on the risk profile for approximately three years after which we immediately revert to use of historical loss data. In the future, we may use other acceptable methods, such as a discounted cash flow method, WARM method, or other methods permitted under the standard. ASC 326 requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment. The Company considers multiple datapoints and methodologies that may include likelihood of default and expected loss given default for each individual loan, valuations derived from discount cash flows (“DCF”), and other inputs including the risk rating of the loan, how recently the loan was originated compared to the measurement date, and expected prepayment, if applicable. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, and off-balance sheet credit exposures such as unfunded loan commitments. The Company evaluates its loans on a collective (pool) basis by aggregating on the basis of similar risk characteristics as explained above. We make the judgment that loans to cannabis-related borrowers that are fully collateralized by real estate exhibit similar risk characteristics and are evaluated as a pool. Further, loans that have no real estate collateral, but are secured by other forms of collateral, including equity pledges of the borrower, and otherwise have similar characteristics as those collateralized by real estate are evaluated as a pool. All other loans are analyzed individually, either because they operate in a different industry, may have a different risk profile, or maturities that extend beyond the forecast horizon for which we are able to derive reasonable and supportable forecasts. Estimating the CECL Reserve also requires significant judgment with respect to various factors, including (i) the appropriate historical loan loss reference data, (ii) the expected timing of loan repayments, (iii) calibration of the likelihood of default to reflect the risk characteristics of the Company’s loan portfolio, and (iv) the Company’s current and future view of the macroeconomic environment. From time to time, the Company may consider loan-specific qualitative factors on certain loans to estimate its CECL Reserve, which may include (i) whether cash from the borrower’s operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan, and (iii) the liquidation value of collateral. For loans where we have deemed the borrower/sponsor to be experiencing financial difficulty, we may elect to apply a practical expedient, in which the fair value of the underlying collateral is compared to the amortized cost of the loan in determining a CECL Reserve. To estimate the historic loan losses relevant to the Company’s portfolio, the Company evaluates its historical loan performance, which includes zero realized loan losses since the inception of its operations. Additionally, the Company analyzed its repayment history, noting it has limited “true” operating history, since the incorporation date of March 30, 2021. However, the Company’s Sponsor and its affiliates have had operations for the past three fiscal years and have made investments in similar loans that have similar characteristics including interest rate, collateral coverage, guarantees, and prepayment/make whole provisions, which fall into the pools identified above. Given the similarity of the structuring of the credit agreements for the loans in the Company’s portfolio to the loans originated by its Sponsor, management considered it appropriate to consider the past repayment history of loans originated by the Sponsor and its affiliates in determining the extent to which a CECL Reserve shall be recorded. In addition, the Company reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest and principal, if required, as well as the loan-to-value (LTV) ratio. When evaluating qualitative factors that may indicate the need for a CECL Reserve, the Company forecasts losses considering a variety of factors. In considering the potential current expected credit loss, the Manager primarily considers significant inputs to the Company’s forecasting methods, which include (i) key loan-specific inputs such as the value of the real estate collateral, liens on equity (including the equity in the entity that holds the state-issued license to cultivate, process, distribute, or retail cannabis), presence of personal or corporate guarantees, among other credit enhancements, LTV ratio, rate type (fixed or floating) and IRR, loan-term, geographic location, and expected timing and amount of future loan fundings, (ii) performance against the underwritten business plan and the Company’s internal loan risk rating, and (iii) a macro-economic forecast. Estimating the enterprise value of our borrowers in order to calculate LTV ratios is often a significant estimate. The Manager utilizes a third-party valuation appraiser to assist with the Company’s valuation process primarily using comparable transactions to estimate enterprise value of its portfolio companies and supplement such analysis with a multiple-based approach to enterprise value to revenue multiples of publicly-traded comparable companies obtained from S&P CapitalIQ as of September 30, 2022, to which the Manager may apply a private company discount based on the Company’s current borrower profile. These estimates may change in future periods based on available future macro-economic data and might result in a material change in the Company’s future estimates of expected credit losses for its loan portfolio. Regarding real estate collateral, the Company generally cannot take the position of mortgagee-in-possession as long as the property is used by a cannabis operator, but it can request that the court appoint a receiver to manage and operate the subject real property until the foreclosure proceedings are completed. Additionally, while the Company cannot foreclose under state Uniform Commercial Code (“UCC”) and take title or sell equity in a licensed cannabis business, a potential purchaser of a delinquent or defaulted loan could. In order to estimate the future expected loan losses relevant to the Company’s portfolio, the Company utilizes historical market loan loss data obtained from a third-party database for commercial real estate loans, which the Company believes is a reasonably comparable and available data set to use as an input for its type of loans. The Company believes this dataset to be representative for future credit losses whilst considering that the cannabis industry is maturing, and consumer adoption, demand for production, and retail capacity are increasing akin to commercial real estate over time. For periods beyond the reasonable and supportable forecast period, the Company reverts back to historical loss data. All of the above assumptions, although made with the most available information at the time of the estimate, are subjective and actual activity may not follow the estimated schedule. These assumptions impact the future balances that the loss rate will be applied to and as such impact the Company’s CECL Reserve. As the Company acquires new loans and the Manager monitors loan and borrower performance, these estimates will be revised each period. Activity related to the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value and loans receivable at carrying value as of and for the nine months ended September 30, 2022 is presented in the table below. The Company had no CECL Reserve as of and for the period March 30, 2021 (inception) to September 30, 2021. Outstanding (1) Unfunded (2) Total Balance at December 31, 2021 $ 134,542 $ 13,407 $ 147,949 Provision for current expected credit losses 1,363,391 40,501 1,403,892 Write-off charged - - - Recoveries - - - Balance at September 30, 2022 $ 1,497,933 $ 53,908 $ 1,551,841 (1) As of September 30, 2022, the CECL Reserve related to outstanding balances on loans at carrying value is recorded within current expected credit loss reserve in the Company’s consolidated balance sheets. (2) As of September 30, 2022, the CECL Reserve related to unfunded commitments on loans at carrying value is recorded within accounts payable and accrued liabilities in the Company’s consolidated balance sheets. Outstanding Unfunded Balance at December 31, 2021 $ 134,542 $ 13,407 Provision for current expected credit losses 48,296 3,047 Balance at March 31, 2022 182,838 16,454 Provision for current expected credit losses 1,020,586 25,079 Balance at June 30, 2022 1,203,424 41,533 Provision for current expected credit losses 294,509 12,375 Balance at September 30, 2022 $ 1,497,933 $ 53,908 The Company has made an accounting policy election to exclude accrued interest receivable, ($727,279 as of September 30, 2022) included in Interest Receivable on its consolidated balance sheet, from the amortized cost basis of the related loans held for investment in determining the CECL Reserve, as any uncollectible accrued interest receivable is written off in a timely manner. To date, the Company has had zero write-offs related to uncollectible interest receivable, but will discontinue accrual of interest on loans if deemed to be uncollectible, with any previously accrued uncollected interest on the loan charged to interest income in the same period. As of September 30, 2022, there were no loans with principal or interest greater than 30 days past due. |
Interest Receivable
Interest Receivable | 9 Months Ended |
Sep. 30, 2022 | |
Interest Receivable [Abstract] | |
INTEREST RECEIVABLE | 4. INTEREST RECEIVABLE The following table summarizes the interest receivable by the Company as of September 30, 2022 and December 31, 2021: As of As of Interest receivable $ 627,709 $ 193,790 PIK interest receivable 95,139 - Unused fees receivable 4,431 3,945 Total interest receivable $ 727,279 $ 197,735 |
Interest Reserve
Interest Reserve | 9 Months Ended |
Sep. 30, 2022 | |
Interest Reserve [Abstract] | |
INTEREST RESERVE | 5. INTEREST RESERVE At September 30, 2022, the Company had six loans that included a prepaid interest reserve. The following table presents changes in interest reserves as of September 30, 2022 and December 31, 2021, respectively: As of As of Initial reserves $ 6,636,553 $ - New reserves 8,929,716 9,223,802 Reserves disbursed (9,940,290 ) (2,587,249 ) Total interest reserve $ 5,625,979 $ 6,636,553 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | 6. DEBT In May 2021, in connection with the Company’s acquisition of its financing subsidiary, CAL, the Company was assigned a secured revolving credit facility (the “Revolving Loan”). The Revolving Loan has an aggregate borrowing base of up to $10,000,000 and bore interest, payable in cash in arrears, at a per annum rate equal to the greater of (x) Prime Rate plus 1.00% and (y) 4.75%. The Company incurred debt issuance costs of $100,000 related to the origination of the Revolving Loan, which were capitalized and are subsequently being amortized through maturity. The maturity date of the Revolving Loan was the earlier of (i) February 12, 2023 and (ii) the date on which the Revolving Loan is terminated pursuant to terms in the Revolving Loan Agreement. On December 16, 2021, the Company amended the Revolving Loan Agreement (the “First Amendment”). The First Amendment increased the loan commitment from $10,000,000 to $45,000,000 and decreased the interest rate, from the greater of the (1) Prime Rate plus 1.00% and (2) 4.75% to the greater of (1) the Prime Rate plus the applicable margin and (2) 3.25%. The applicable margin is derived from a floating rate grid based upon the ratio of debt to equity of CAL and increases from 0% at a ratio of 0.25 to 1 to 1.25% at a ratio of 1.5 to 1. The First Amendment also extended the maturity date from February 12, 2023 to the earlier of (i) December 16, 2023 and (ii) the date on which the Revolving Loan is terminated pursuant to the terms of the Revolving Loan agreement. The Company has the option to extend the initial term for an additional one-year term, provided no events of default exist and the Company provides the required notice of the extension pursuant to the First Amendment. The Company incurred debt issuance costs of $859,500 related to the First Amendment, which were capitalized and are subsequently being amortized through maturity. On May 12, 2022, the Company amended the Revolving Loan Agreement (the “Second Amendment”). The Second Amendment increased the loan commitment from $45,000,000 to $65,000,000. No other material terms of the Revolving Loan were modified as a result of the execution of the Second Amendment. The Company incurred debt issuance costs of $177,261 related to the Second Amendment, which were capitalized and are subsequently amortized through maturity. As of September 30, 2022 and December 31, 2021, unamortized debt issuance costs related to the Revolving Loan and the First and Second Amendments of $665,639 and $868,022, respectively, are recorded in other receivables and assets, net on the consolidated balance sheets. The Revolving Loan incurs unused fees at a rate of 0.25% per annum which began on July 1, 2022 pursuant to the Second Amendment. Additionally, during the period from January 1, 2022 to September 30, 2022, the Company borrowed $53.0 million against the Revolving Loan and incurred $991,694 in interest expense for the period then ended. The Second Amendment provides for certain affirmative covenants, including requiring us to deliver financial information and any notices of default, and conducting business in the normal course. Additionally, the Company must comply with certain financial covenants including: (1) maximum capital expenditures of $150,000, (2) maintaining a debt service coverage ratio greater than 1.35 to 1, and (3) maintaining a leverage ratio less than 1.50 to 1. As of September 30, 2022, we were in compliance with all financial covenants with respect to the Revolving Loan. The fair value of the Revolving Loan, which is classified as Level 2 in the fair value hierarchy, approximates the carrying value as it bears a market rate of interest that is reset frequently. The following table reflects a summary of interest expense incurred during the three and nine months ended September 30, 2022. There was no interest expense incurred during the period March 30, 2021 (inception) to September 30, 2021. Three months Nine months Interest expense $ 715,132 $ 991,694 Unused fee expense 7,667 11,834 Amortization of deferred financing costs 138,549 379,644 Total interest expense $ 861,348 $ 1,383,172 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 7. RELATED PARTY TRANSACTIONS Management Agreement Pursuant to the Management Agreement, the Manager is responsible for managing the loan portfolio and the day-to-day operations of the Company, subject at all times to the further terms and conditions set forth in the Management Agreement and such further limitations or parameters as may be imposed from time to time by the Company’s Board. The Manager is entitled to receive base management fees (the “Base Management Fee”) that are calculated and payable quarterly in arrears, in an amount equal to 0.375% of the Company’s Equity, determined as of the last day of each such quarter; reduced by an amount equal to 50% of the pro rata amount of origination fees earned and paid to the Manager during the applicable quarter for loans that were originated on the Company’s behalf by the Manager or affiliates of the Manager (“Outside Fees”). For the three and nine months ended September 30, 2022, the Base Management Fee payable was reduced by Outside Fees in the amount of $192,751 and $1,275,001, respectively. In addition to the Base Management Fee, the Manager is entitled to receive incentive compensation (the “Incentive Compensation” or “Incentive Fees”) under the Management Agreement. Under the Management Agreement, the Company will pay Incentive Fees to the Manager based upon the Company’s achievement of targeted levels of Core Earnings. “Core Earnings” is defined in the Management Agreement as, for a given period, the net income (loss) for such period, computed in accordance with GAAP, excluding (i) non-cash equity compensation expense, (ii) the Incentive Compensation, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other non-cash items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, and (v) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between the Manager and the members of the Compensation Committee of the Board, each of whom are Independent Directors, and approved by a majority of the members of the Compensation Committee. Incentive compensation for the three and nine months ended September 30, 2022 was $519,223 and $1,500,129, respectively. The Company shall pay all of its costs and expenses and shall reimburse the Manager or its affiliates for expenses of the Manager and its affiliates paid or incurred on behalf of the Company, excepting only those expenses that are specifically the responsibility of the Manager pursuant to the Management Agreement. We reimburse our Manager or its affiliates, as applicable, for the Company’s fair and equitable allocable share of the compensation, including annual base salary, bonus, any related withholding taxes and employee benefits, paid to (i) subject to review by the Compensation Committee of the Board, the Manager’s personnel serving as an officer of the Company, based on the percentage of his or her time spent devoted to the Company’s affairs and (ii) other corporate finance, tax, accounting, internal audit, legal, risk management, operations, compliance, and other non-investment personnel of the Manager and its affiliates who spend all or a portion of their time managing the Company’s affairs, with the allocable share of the compensation of such personnel described in this clause (ii) being as reasonably determined by the Manager to appropriately reflect the amount of time spent devoted by such personnel to our affairs. The following table summarizes the related party fees and expenses incurred by the Company and amounts payable to the Manager for the three and nine months ended September 30, 2022, the three months ended September 30, 2021 and for the period from March 30, 2021 (inception) to September 30, 2021. The Manager waived all amounts owed to it for the period ended September 30, 2021. For the For the For the Period from Affiliate Payments Management fees earned $ 1,020,949 $ - $ 3,041,359 $ - Less: Outside fees earned (192,751 ) - (1,275,001 ) - Base management fee, net 828,198 - 1,766,358 - Incentive fees 519,223 - 1,500,129 - Total management and incentive fees earned 1,347,421 - 3,266,487 - General and administrative expenses reimbursable to Manager 980,949 - 2,132,419 - Total $ 2,328,370 $ - $ 5,398,906 $ - General administrative expenses reimbursable to the Manager are included in the related party payable line item of the consolidated balance sheets as of September 30, 2022 and December 31, 2021. Amounts payable to the Manager as of September 30, 2022 and December 31, 2021 were approximately $2.6 million and $2.7 million, respectively, which included bonuses accrued for fiscal year 2022 which are not reimbursed to the Manager until paid. Co-Investment in Loans From time to time, the Company may co-invest with other investment vehicles managed by its affiliates, in accordance with the Manager’s co-investment allocation policies. The Company is not obligated to provide, nor has it provided, any financial support to the other managed investment vehicles. As such, the Company’s risk is limited to the carrying value of its investment in any such loan. As of September 30, 2022, 15 of the Company’s loans were co-invested by affiliates of the Company. On July 8, 2022, the Company sold a senior secured loan to an affiliate under common control. The selling price of approximately $6.7 million was approved by the audit committee of the Board. The fair value approximated the carrying value of the loan plus accrued and unpaid interest. On August 4, 2022, the Company assigned $10.0 million of unfunded commitment of a senior secured loan to an affiliate. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES Off-Balance Sheet Arrangements Off-balance sheet commitments may consist of unfunded commitments on delayed draw term loans. The Company does not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured investment vehicles, special purpose entities, or variable interest entities, established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Further, the Company has not guaranteed any obligations of unconsolidated entities or entered into any commitment to provide additional funding to any such entities. As of September 30, 2022 and December 31, 2021, the Company had the following unfunded commitments on existing loans. As of As of Total original loan commitments $ 348,867,706 $ 235,063,593 Less: drawn commitments (330,384,897 ) (200,359,026 ) Total undrawn commitments $ 18,482,809 $ 34,704,567 Refer to “Note 3 – Loans Held for Investment, Net” for further information regarding the CECL Reserve attributed to unfunded commitments. Other Contingencies The Company from time to time may be a party to litigation in the normal course of business. As of September 30, 2022, the Company is not aware of any legal claims that could materially impact its business, financial condition, or results of operations. The Company’s ability to grow or maintain its business depends, in part, on state laws pertaining to the cannabis industry. New laws that are adverse to the Company’s portfolio companies may be enacted, and current favorable state or national laws or enforcement guidelines relating to cultivation, production, and distribution of cannabis may be modified or eliminated in the future, which would impede the Company’s ability to grow and could materially and adversely affect its business. Management’s plan to mitigate risks include monitoring the legal landscape as deemed appropriate. Also, should a loan default or otherwise be seized, the Company may be prohibited from owning cannabis assets and thus could not take possession of collateral, in which case the Company would look to sell the loan, provide consent to allow the borrower to sell the real estate to a third party, institute a foreclosure proceeding to have the real estate sold or evict the tenant, have the cannabis operations removed from the property and take title to the underlying real estate, each of which may result in the Company realizing a loss on the transaction. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS’ EQUITY | 9. STOCKHOLDERS’ EQUITY Common Stock On January 5, 2022, the underwriters of the Company’s initial public offering (the “IPO”) partially exercised their over-allotment option to purchase 302,800 shares of the Company’s common stock at a price of $16.00 per share, raising $4,844,800 in additional gross proceeds or $4,505,664 in net proceeds after underwriting commissions of $339,136, which is reflected as a reduction of additional paid-in capital on the consolidated statements of stockholders’ equity. During the period from March 30, 2021 (inception) to December 31, 2021, the Company issued 10,636,363 shares of its common stock pursuant to transactions that were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. On December 10, 2021, the Company completed its IPO of 6,250,000 shares of its common stock at a price of $16.00 per share, raising $100,000,000 in gross proceeds. The underwriting commission of $7,000,000 is reflected as a reduction of additional paid-in capital on the consolidated statements of stockholders’ equity. The Company incurred approximately $1,265,877 of expenses in connection with the IPO, which is reflected as a reduction in additional paid-in capital. The net proceeds to the Company totaled approximately $91,734,123. Concurrent with the closing of the IPO, the Company sold 468,750 shares of its common stock at the public offering price of $16.00 per share in a private placement to John Mazarakis, the Company’s Executive Chairman, Anthony Cappell, the Company’s Chief Executive Officer, and Dr. Andreas Bodmeier, the Company’s Co-President. Gross proceeds received were $7,500,000, and no underwriting discounts or commissions were paid in respect of these shares. On October 21, 2021, the Board approved a 6,427-for-one stock split of the Company’s common stock. All common shares and per share information presented in the consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis for all periods presented, including reclassifying an amount equal to the increase in par value of common stock from additional paid-in capital. There was no change in the par value of the Company’s common stock. Equity Incentive Plan The Company has established an equity incentive compensation plan (the “2021 Plan”). The Board authorized the adoption of the 2021 Plan and the Compensation Committee of the Board approved restricted stock award grants of 98,440 shares of common stock during the quarter ended December 31, 2021. The Compensation Committee appointed by the Board administers the 2021 Plan. The 2021 Plan authorizes stock options, stock appreciation rights, restricted stock, stock bonuses, stock units, and other forms of awards granted or denominated in the Company’s common stock. The 2021 Plan retains flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances. Any award may be structured to be paid or settled in cash. The Company has and currently intends to continue to grant restricted stock awards to participants in the 2021 Plan, but it may also grant any other type of award available under the 2021 Plan in the future. Persons eligible to receive awards under the 2021 Plan include the Company’s officers and employees of the Manager and its affiliates or officers and employees of the Company’s subsidiaries, if any, the members of the Board, and certain consultants and other service providers. As of September 30, 2022 and December 31, 2021, the maximum number of shares of the Company’s common stock that may be delivered pursuant to awards under the 2021 Plan (the “Share Limit”) equals 8.50% of the issued and outstanding shares of the Company’s common stock on a fully-diluted basis following the completion of the IPO. Shares that are subject to or underlie awards that expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under the 2021 Plan will not be counted against the Share Limit and will again be available for subsequent awards under the 2021 Plan. There were 13,438 shares forfeited during the nine months ended September 30, 2022. There is no forfeiture rate applied to awards or options granted to non-employee directors or executive employees because their pre-vesting forfeitures are anticipated to be highly unlikely. As individual awards and options become fully vested, stock-based compensation expense is adjusted to recognize actual forfeitures. Shares that are exchanged by a participant or withheld by the Company as full or partial payment in connection with any award granted under the 2021 Plan, as well as any shares exchanged by a participant or withheld by the Company to satisfy tax withholding obligations related to any award granted under the 2021 Plan, will not be counted against the Share Limit and will again be available for subsequent awards under the 2021 Plan. To the extent that an award is settled in cash or a form other than shares, the shares that would have been delivered had there been no such cash or other settlement will not be counted against the Share Limit and will again be available for subsequent awards under the 2021 Plan. The following table summarizes the restricted stock activity for the Company’s directors and officers and employees of the Manager as of September 30, 2022 and December 31, 2021. As of As of Non-vested 98,440 98,440 Forfeited (13,438 ) - Balance 85,002 98,440 Restricted stock compensation expense is based on the Company’s stock price at the date of the grant and is amortized over the vesting period. Forfeitures are recognized as they occur. The share-based compensation expense for the Company was $328,356 and $0 for the nine months ended September 30, 2022 and for the period from March 30, 2021 (inception) to September 30, 2021, respectively. The unamortized share-based compensation expense for the Company was approximately $1.0 million as of September 30, 2022. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 10. EARNINGS PER SHARE The following information sets forth the computations of basic earnings per common share for the three and nine months ended September 30, 2022, the three months ended September 30, 2021 and for the period from March 30, 2021 (inception) to September 30, 2021: For the For the For the Period from Net income attributable to common stockholders $ 9,768,969 $ 4,067,521 $ 25,036,760 $ 5,136,072 Divided by: Basic weighted average shares of common stock outstanding 17,657,913 $ 4,895,694 17,652,367 3,658,310 Diluted weighted average shares of common stock outstanding 17,752,290 $ 4,895,694 17,747,612 3,658,310 Basic earnings per common share $ 0.55 $ 0.83 $ 1.42 $ 1.40 Diluted earnings per common share $ 0.55 $ 0.83 $ 1.41 $ 1.40 |
Income Tax
Income Tax | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | 11. INCOME TAX The income tax provision for the Company was $0 for the nine months ended September 30, 2022. For the three and nine months ended September 30, 2022, the Company incurred no expense for United States federal excise tax. If it is determined that the Company’s estimated current year taxable income will be in excess of estimated dividend distributions (including capital gain dividend) for the current year from such income, the Company will accrue excise tax on estimated excess taxable income as such taxable income is earned. The annual expense is calculated in accordance with applicable tax regulations. As of September 30, 2022 and December 31, 2021, the Company does not have any unrecognized tax benefits and does not expect that to change in the next 12 months. |
Dividends and Distributions
Dividends and Distributions | 9 Months Ended |
Sep. 30, 2022 | |
Dividends And Distributions Abstract | |
DIVIDENDS AND DISTRIBUTIONS | 12. DIVIDENDS AND DISTRIBUTIONS The following table summarizes the Company’s dividends declared during the nine months ended September 30, 2022. Record Date Payment Date Common Share Distribution Amount Taxable Ordinary Income Return of Capital Section 199A Dividends Regular cash dividend 3/31/2022 4/14/2022 $ 0.40 $ 0.40 $ - $ 0.40 Regular cash dividend 6/30/2022 7/15/2022 $ 0.47 $ 0.47 $ - $ 0.47 Regular cash dividend 9/30/2022 10/14/2022 $ 0.47 $ 0.47 $ - $ 0.47 Total cash dividend $ 1.34 $ 1.34 $ - $ 1.34 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 13. SUBSEQUENT EVENTS On October 27, 2022, one borrower with $30.0 million of outstanding principal in multiple tranches maturing in April and May of 2023 refinanced and consolidated the multiple tranches of debt into one loan maturing in October 2026. On November 7, 2022, the Company’s wholly-owned financing subsidiary, CAL, entered into a Third Amended and Restated Loan and Security Agreement (the “Third Amendment”), whereby CAL exercised the existing accordion feature of the Revolving Loan to increase the aggregate commitment by $27.5 million, from $65 million to $92.5 million. No other material terms of the Revolving Loan were modified as a result of the execution of the Third Amendment. As of November 9, 2022, the Company has approximately $34.5 million of availability under the Revolving Loan. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements and related notes of the Company have been prepared on the accrual basis of accounting and in conformity with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements may not contain all disclosures required by generally accepted accounting principles. Reference should be made to Note 2 of the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2021. In the opinion of the Company, all normal recurring adjustments have been made that are necessary to the fair statement of the results of operations and financial position as of and for the periods presented. Operating results for the three and nine-month periods ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. |
Use of Estimates in the Preparation of Consolidated Financial Statements | Use of Estimates in the Preparation of Consolidated Financial Statements The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant estimates include the provision for current expected credit losses. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Interest expense was previously presented as an operating expense and has been reclassified as a reduction to net revenue on the consolidated statements of income. General and administrative expense reimbursements due to the Manager, which were previously included in the line item management and incentive fees payable, have been reclassified into related party payable in the consolidated balance sheets. In addition, other receivables amounts have been reclassified to other receivables and assets, net in the consolidated balance sheets. These reclassifications do not result in any changes to previously reported total assets and net income. |
Investment Payable | Investment Payable Investment transactions are reported on a trade-date basis. Unsettled trades as of the balance sheet date, if any, are included in payable for investments purchased. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements As of September 30, 2022, the Company is evaluating the potential impact of recently issued accounting pronouncements on its consolidated financial statements. |
Loans Held For Investment, Net
Loans Held For Investment, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Loans Held For Investment Net Abstract | |
Schedule of loans held for investment | As of September 30, 2022 Weighted Outstanding Principal (1) Original Issue Discount Carrying Value (1) Remaining Life (Years) (2) Senior Term Loans $ 334,502,935 $ (3,427,388 ) $ 331,075,547 2.1 Current expected credit loss reserve - - (1,497,933 ) Total loans held at carrying value, net $ 334,502,935 $ (3,427,388 ) $ 329,577,614 As of December 31, 2021 Weighted Outstanding Principal (1) Original Issue Discount Carrying Value (1) Remaining Life (Years) (2) Senior Term Loans $ 200,632,056 $ (3,647,490 ) $ 196,984,566 2.2 Current expected credit loss reserve - - (134,542 ) Total loans held at carrying value, net $ 200,632,056 $ (3,647,490 ) $ 196,850,024 |
Schedule of changes in loans held at carrying value | Principal (1) Original Current Carrying Balance at December 31, 2021 $ 200,632,056 $ (3,647,490 ) $ (134,542 ) $ 196,850,024 Issuance of and funding of loans 143,624,312 (2,180,593 ) - 141,443,719 Principal repayment of loans (6,892,654 ) - - (6,892,654 ) Accretion of original issue discount - 2,139,972 - 2,139,972 Proceeds from sale of loans (6,957,500 ) 260,723 - (6,696,777 ) PIK Interest 4,096,721 - - 4,096,721 Current expected credit loss reserve - - (1,363,391 ) (1,363,391 ) Balance at September 30, 2022 $ 334,502,935 $ (3,427,388 ) $ (1,497,933 ) $ 329,577,614 Principal (1) Original Issue Discount Current Expected Credit Loss Reserve Carrying Value (1) Balance at March 30, 2021 (inception) $ - $ - $ - $ - Loans contributed 32,589,907 (613,391 ) - 31,976,516 New fundings 105,952,844 (1,778,500 ) - 104,174,344 Principal repayment of loans (9,582,613 ) - - (9,582,613 ) Accretion of original issue discount - 276,838 - 276,838 Sale of loans - - - - PIK Interest 278,079 - - 278,079 Balance at September 30, 2021 $ 129,238,217 $ (2,115,053 ) $ - $ 127,123,164 |
Schedule of loans held at carrying value based on information | Loan Location Outstanding Original Issue Carrying Contractual Maturity Payment Initial 1 Various (6) 30,000,000 (287,746 ) 29,712,254 10.07% (7) 5/30/2023 I/O 7/2/2020 2 Michigan 36,646,551 (182,125 ) 36,464,426 P + 6.65% (5)(11) 12/31/2024 P&I 3/5/2021 3 Various (6) 20,673,831 (444,457 ) 20,229,374 13.91% Cash, 2.59% PIK (10) 11/29/2024 P&I 3/25/2021 4 Arizona 11,909,539 - 11,909,539 19.01% (8) 12/31/2023 P&I 4/19/2021 5 Massachusetts 1,500,000 - 1,500,000 P + 12.25% (5) 4/30/2023 P&I 4/19/2021 6 Pennsylvania 13,263,665 - 13,263,665 P + 10.75% (5) (9) 5/31/2025 P&I 5/28/2021 7 Michigan 4,443,750 (5,558 ) 4,438,192 P + 9.00% (5) 2/20/2024 P&I 8/20/2021 8 Various (6) 23,168,151 (242,929 ) 22,925,222 13% Cash, 2.5% PIK 6/30/2025 P&I 8/24/2021 9 West Virginia 9,554,960 (121,586 ) 9,433,374 P + 9.25% (5) 9/1/2024 P&I 9/1/2021 10 Pennsylvania 15,536,102 - 15,536,102 P + 10.75% (5) 6/30/2024 P&I 9/3/2021 11 Michigan 313,607 - 313,607 11.00% 9/30/2024 P&I 9/20/2021 12 Maryland 32,479,495 (714,967 ) 31,764,528 P + 8.75% (5) 9/30/2024 I/O 9/30/2021 13 Various (6) 20,000,000 (210,110 ) 19,789,890 13.00% 10/31/2024 P&I 11/8/2021 14 Michigan 10,600,000 (22,487 ) 10,577,513 P + 7.00% (5) 11/22/2022 I/O 11/22/2021 15 Various (6) 5,000,000 - 5,000,000 15% Cash, 2.5% PIK 12/27/2026 P&I 12/27/2021 16 Michigan 3,739,861 (56,096 ) 3,683,765 10.50% Cash, 12/29/2023 I/O 12/29/2021 17 Various (6) 7,500,000 (56,267 ) 7,443,733 P + 9.25% (5) 12/31/2024 I/O 12/30/2021 18 Florida 15,000,000 (293,989 ) 14,706,011 11.00% 1/31/2025 P&I 1/18/2022 19 Ohio 30,602,729 (472,079 ) 30,130,650 P + 8.25% (5) 2/28/2025 P&I 2/3/2022 20 Florida 20,327,703 (84,518 ) 20,243,185 11.00% Cash, 3% PIK 8/29/2025 P&I 3/11/2022 21 Missouri 17,204,978 (148,084 ) 17,056,894 11.00% Cash, 3% PIK 5/30/2025 P&I 5/9/2022 22 Illinois 5,038,013 (84,390 ) 4,953,623 P + 8.50% (5) 6/30/2026 P&I 7/1/2022 Current expected credit loss reserve - - (1,497,933 ) Total loans held at carrying value $ 334,502,935 $ (3,427,388 ) $ 329,577,614 |
Schedule of risk rating | Rating Definition 1 Very low risk 2 Low risk 3 Moderate/average risk 4 High risk/potential for loss: a loan that has a risk of realizing a principal loss 5 Impaired/loss likely: a loan that has a high risk of realizing principal loss, has incurred principal loss or an impairment has been recorded |
Schedule of carrying value of loans held for investment | As of September 30, 2022 As of December 31, 2021 Risk Rating 2022 2021 2020 2019 Total 2021 2020 2019 Total 1 $ - $ 20,542,981 $ 29,712,254 $ - $ 50,255,235 $ 135,076,307 $ 32,242,114 $ 590,384 $ 167,908,805 2 93,424,139 79,819,303 - - 173,243,442 29,075,761 - - 29,075,761 3 30,130,650 77,446,220 - - 107,576,870 - - - - 4 - - - - - - - - - 5 - - - - - - - - - Total $ 123,554,789 $ 177,808,504 $ 29,712,254 $ - $ 331,075,547 $ 164,152,068 $ 32,242,114 $ 590,384 $ 196,984,566 |
Schedule of real estate collateral coverage | As of September 30, 2022 Real Estate Collateral Coverage < 1.0x 1.0x - 1.25x 1.25x - 1.5x 1.50x - 1.75x 1.75x - 2.0x > 2.0x Total Fixed-rate $ 5,000,000 $ - $ 20,243,185 $ 17,056,894 $ - $ 91,130,749 $ 133,430,828 Floating-rate 8,943,733 97,660,654 - 31,920,426 13,263,665 45,856,241 197,644,719 $ 13,943,733 $ 97,660,654 $ 20,243,185 $ 48,977,320 $ 13,263,665 $ 136,986,990 $ 331,075,547 As of December 31, 2021 Real Estate Collateral Coverage < 1.0 1.0 - 1.25 1.25 - 1.5 1.50 - 1.75 1.75 - 2.0 > 2.0 Total Fixed-rate $ 7,017,793 $ - $ 35,836,099 $ 3,086,298 $ - $ 45,373,778 $ 91,313,968 Floating-rate 8,925,068 18,022,518 - 30,029,953 32,377,087 16,315,972 105,670,598 $ 15,942,861 $ 18,022,518 $ 35,836,099 $ 33,116,251 $ 32,377,087 $ 61,689,750 $ 196,984,566 |
Schedule of Activity related to the CECL Reserve for outstanding balances | Outstanding (1) Unfunded (2) Total Balance at December 31, 2021 $ 134,542 $ 13,407 $ 147,949 Provision for current expected credit losses 1,363,391 40,501 1,403,892 Write-off charged - - - Recoveries - - - Balance at September 30, 2022 $ 1,497,933 $ 53,908 $ 1,551,841 |
Schedule of Provision for current expected credit losses | Outstanding Unfunded Balance at December 31, 2021 $ 134,542 $ 13,407 Provision for current expected credit losses 48,296 3,047 Balance at March 31, 2022 182,838 16,454 Provision for current expected credit losses 1,020,586 25,079 Balance at June 30, 2022 1,203,424 41,533 Provision for current expected credit losses 294,509 12,375 Balance at September 30, 2022 $ 1,497,933 $ 53,908 |
Interest Receivable (Tables)
Interest Receivable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Interest Receivable [Abstract] | |
Schedule of summarizes the interest receivable | As of As of Interest receivable $ 627,709 $ 193,790 PIK interest receivable 95,139 - Unused fees receivable 4,431 3,945 Total interest receivable $ 727,279 $ 197,735 |
Interest Reserve (Tables)
Interest Reserve (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Schedule of changes in interest reserves | |
Schedule of changes in interest reserves | As of As of Initial reserves $ 6,636,553 $ - New reserves 8,929,716 9,223,802 Reserves disbursed (9,940,290 ) (2,587,249 ) Total interest reserve $ 5,625,979 $ 6,636,553 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of summary of interest expense incurred during period | Three months Nine months Interest expense $ 715,132 $ 991,694 Unused fee expense 7,667 11,834 Amortization of deferred financing costs 138,549 379,644 Total interest expense $ 861,348 $ 1,383,172 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of summarizes the related party costs | For the For the For the Period from Affiliate Payments Management fees earned $ 1,020,949 $ - $ 3,041,359 $ - Less: Outside fees earned (192,751 ) - (1,275,001 ) - Base management fee, net 828,198 - 1,766,358 - Incentive fees 519,223 - 1,500,129 - Total management and incentive fees earned 1,347,421 - 3,266,487 - General and administrative expenses reimbursable to Manager 980,949 - 2,132,419 - Total $ 2,328,370 $ - $ 5,398,906 $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of commitments to fund various existing loans | As of As of Total original loan commitments $ 348,867,706 $ 235,063,593 Less: drawn commitments (330,384,897 ) (200,359,026 ) Total undrawn commitments $ 18,482,809 $ 34,704,567 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule of restricted stock activity | As of As of Non-vested 98,440 98,440 Forfeited (13,438 ) - Balance 85,002 98,440 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of basic earnings per common share | For the For the For the Period from Net income attributable to common stockholders $ 9,768,969 $ 4,067,521 $ 25,036,760 $ 5,136,072 Divided by: Basic weighted average shares of common stock outstanding 17,657,913 $ 4,895,694 17,652,367 3,658,310 Diluted weighted average shares of common stock outstanding 17,752,290 $ 4,895,694 17,747,612 3,658,310 Basic earnings per common share $ 0.55 $ 0.83 $ 1.42 $ 1.40 Diluted earnings per common share $ 0.55 $ 0.83 $ 1.41 $ 1.40 |
Dividends and Distributions (Ta
Dividends and Distributions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Dividends And Distributions Abstract | |
Schedule of dividends declared | Record Date Payment Date Common Share Distribution Amount Taxable Ordinary Income Return of Capital Section 199A Dividends Regular cash dividend 3/31/2022 4/14/2022 $ 0.40 $ 0.40 $ - $ 0.40 Regular cash dividend 6/30/2022 7/15/2022 $ 0.47 $ 0.47 $ - $ 0.47 Regular cash dividend 9/30/2022 10/14/2022 $ 0.47 $ 0.47 $ - $ 0.47 Total cash dividend $ 1.34 $ 1.34 $ - $ 1.34 |
Loans Held For Investment, Ne_2
Loans Held For Investment, Net (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Loans Held For Investment, Net (Details) [Line Items] | |||
Aggregate loan commitments | $ 348,900,000 | $ 348,900,000 | |
Outstanding principal | 334,500,000 | 334,500,000 | $ 200,600,000 |
New loan principal | $ 5,700,000 | $ 143,600,000 | |
Portfolio percentage | 59.70% | 59.70% | 53.20% |
Loan carrying value | $ 134,800,000 | $ 134,800,000 | $ 93,900,000 |
RemainingPortfolioPercentage | 40.30% | 46.80% | |
Interest rate | 2% | 2% | |
Interest rate | 39% | 39% | |
Aggregate fair value | $ 328,984,374 | $ 328,984,374 | $ 197,901,779 |
Gross proceeds | $ 2,091,173 | 917,213 | |
Weight-average discount rates | 17.54% | 17.54% | |
Interest eceivable | $ 727,279 | $ 727,279 | |
Minimum [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Weight-average discount rates | 11.36% | 11.36% | |
Maximum [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Weight-average discount rates | 24.79% | 24.79% | |
London Inter-bank [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Loan carrying value | $ 199,700,000 | $ 199,700,000 | 106,700,000 |
PIK Intial rate [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Aggregate loan | 15,900,000 | 15,900,000 | |
Twenty-one [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Aggregate loan commitments | $ 235,100,000 | ||
Debt [Member] | First Advance [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Aggregate loan | $ 4,005,000 | $ 4,005,000 | |
Interest rate | 15.25% | 15.25% | |
Debt [Member] | Second Advance [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Aggregate loan | $ 15,995,000 | $ 15,995,000 | |
Interest rate | 9.75% | 9.75% | |
Debt [Member] | Third Advance [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Aggregate loan | $ 10,000,000 | $ 10,000,000 | |
Interest rate | 8.50% | 8.50% | |
Base Three [Member] | Loans [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Aggregate loan | $ 10,000,000 | $ 10,000,000 | |
Interest rate | 15% | 15% | |
Second Commitment [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Aggregate loan | $ 2,000,000 | $ 2,000,000 | |
Two Consecutive [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Borrower percentage | 2% | ||
Base Ten [Member] | One Commitment [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Interest rate | 13.625% | 13.625% | |
PIK [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Interest rate | 2.75% | 2.75% | |
PIK Equal Rate [Member] | |||
Loans Held For Investment, Net (Details) [Line Items] | |||
Aggregate loan | $ 4,200,000 | $ 4,200,000 | |
Interest rate | 15% | 15% |
Loans Held For Investment, Ne_3
Loans Held For Investment, Net (Details) - Schedule of loans held for investment - USD ($) | 9 Months Ended | ||
Sep. 30, 2022 | Dec. 31, 2021 | ||
Loans Held For Investment, Net (Details) - Schedule of loans held for investment [Line Items] | |||
Total loans held at carrying value, Outstanding Principal | [1] | $ 334,502,935 | $ 200,632,056 |
Total loans held at carrying value, Original Issue Discount | (3,427,388) | (3,647,490) | |
Total loans held at carrying value, Carrying Value | [1] | 329,577,614 | 196,850,024 |
Senior Term Loans [Member] | |||
Loans Held For Investment, Net (Details) - Schedule of loans held for investment [Line Items] | |||
Total loans held at carrying value, Outstanding Principal | [1] | 334,502,935 | 200,632,056 |
Total loans held at carrying value, Original Issue Discount | (3,427,388) | (3,647,490) | |
Total loans held at carrying value, Carrying Value | [1] | $ 331,075,547 | $ 196,984,566 |
Total loans held at carrying value, Weighted Average Remaining Life (Years) | [2] | 2 years 1 month 6 days | 2 years 2 months 12 days |
Current expected credit loss reserve [Member] | |||
Loans Held For Investment, Net (Details) - Schedule of loans held for investment [Line Items] | |||
Total loans held at carrying value, Outstanding Principal | [1] | ||
Total loans held at carrying value, Original Issue Discount | |||
Total loans held at carrying value, Carrying Value | [1] | $ (1,497,933) | $ (134,542) |
[1]The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount, deferred loan fees and other upfront fees. Outstanding principal balance includes capitalized PIK interest, if applicable.[2]Weighted average remaining life is calculated based on the carrying value of the loans as of September 30, 2022 and December 31, 2021, respectively. |
Loans Held For Investment, Ne_4
Loans Held For Investment, Net (Details) - Schedule of changes in loans held at carrying value - USD ($) | 6 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2022 | ||
Principal [Member] | |||
Debt Instrument [Line Items] | |||
Principal Loans, Beginning | [1] | $ 200,632,056 | |
Principal, Ending | [1] | 129,238,217 | 334,502,935 |
Principal Issuance of and funding of loans | [1] | 143,624,312 | |
Principal Loans contributed | [1] | 32,589,907 | |
Principal New fundings | [1] | 105,952,844 | |
Principal repayment of loans | [1] | (9,582,613) | (6,892,654) |
Principal Accretion of original issue discount | [1] | ||
Principal Sale of loans | [1] | (6,957,500) | |
Principal PIK Interest | [1] | 278,079 | 4,096,721 |
Principal Current expected credit loss reserve | [1] | ||
Original Issue Discount [Member] | |||
Debt Instrument [Line Items] | |||
Original Issue Discount, Beginning | (3,647,490) | ||
Original Issue Discount, Ending | (2,115,053) | (3,427,388) | |
Original Issue Discount Issuance of and funding of loans | (2,180,593) | ||
Original Issue Discount contributed | (613,391) | ||
Original Issue Discount New fundings | (1,778,500) | ||
Original Issue Discount Principal repayment of loans | |||
Original Issue Discount Accretion of original issue discount | 276,838 | 2,139,972 | |
Original Issue Discount Sale of loans | 260,723 | ||
Original Issue Discount PIK Interest | |||
Original Issue Discount Current expected credit loss reserve | |||
Current Expected Credit Loss Reserve [Member] | |||
Debt Instrument [Line Items] | |||
Current Expected Credit Loss Reserve, Beginning | (134,542) | ||
Current Expected Credit Loss Reserve, Ending | (1,497,933) | ||
Current Expected Credit Loss Reserve Issuance of and funding of loans | |||
Current Expected Credit Loss Reserve Loans contributed | |||
Current Expected Credit Loss Reserve New fundings | |||
Current Expected Credit Loss Reserve Principal repayment of loans | |||
Current Expected Credit Loss Reserve Accretion of original issue discount | |||
Current Expected Credit Loss Reserve Sale of loans | |||
Current Expected Credit Loss Reserve PIK Interest | |||
Current Expected Credit Loss Reserve Current expected credit loss reserve | (1,363,391) | ||
Carrying Value [Member] | |||
Debt Instrument [Line Items] | |||
Carrying Value, Beginning | [1] | 196,850,024 | |
Carrying Value, Ending | [1] | 127,123,164 | 329,577,614 |
Carrying Value Issuance of and funding of loans | [1] | 141,443,719 | |
Carrying Value Loans contributed | [1] | 31,976,516 | |
Carrying Value New fundings | [1] | 104,174,344 | |
Carrying Value Principal repayment of loans | [1] | (9,582,613) | (6,892,654) |
Carrying Value Accretion of original issue discount | [1] | 276,838 | 2,139,972 |
Carrying Value Sale of loans | [1] | (6,696,777) | |
Carrying Value PIK Interest | [1] | $ 278,079 | 4,096,721 |
Carrying Value Current expected credit loss reserve | [1] | $ (1,363,391) | |
[1]The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount, deferred loan fees and other upfront fees. Outstanding principal balance includes capitalized PIK interest, if applicable. |
Loans Held For Investment, Ne_5
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information | 9 Months Ended | |
Sep. 30, 2022 USD ($) | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Outstanding Principal | $ 334,502,935 | [1] |
Original Issue Premium/(Discount) | (3,427,388) | |
Carrying Value | $ 329,577,614 | [1] |
Various [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Various(6) | [2] |
Outstanding Principal | $ 30,000,000 | [1] |
Original Issue Premium/(Discount) | (287,746) | |
Carrying Value | $ 29,712,254 | [1] |
Contractual Interest Rate | 10.07%(7) | [3],[4] |
Maturity Date | 5/30/2023 | [5] |
Payment Terms | I/O | [6] |
Initial Funding Date | 7/2/2020 | [1] |
Michigan [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Michigan | |
Outstanding Principal | $ 36,646,551 | [1] |
Original Issue Premium/(Discount) | (182,125) | |
Carrying Value | $ 36,464,426 | [1] |
Contractual Interest Rate | P + 6.65%(5)(11) Cash, 3.25% PIK | [3],[7],[8] |
Maturity Date | 12/31/2024 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 3/5/2021 | [1] |
Various [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Various(6) | [2] |
Outstanding Principal | $ 20,673,831 | [1] |
Original Issue Premium/(Discount) | (444,457) | |
Carrying Value | $ 20,229,374 | [1] |
Contractual Interest Rate | 13.91% Cash, 2.59% PIK(10) | [3],[9] |
Maturity Date | 11/29/2024 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 3/25/2021 | [1] |
Arizona [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Arizona | |
Outstanding Principal | $ 11,909,539 | [1] |
Original Issue Premium/(Discount) | ||
Carrying Value | $ 11,909,539 | [1] |
Contractual Interest Rate | 19.01%(8) | [3],[10] |
Maturity Date | 12/31/2023 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 4/19/2021 | [1] |
Massachusetts [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Massachusetts | |
Outstanding Principal | $ 1,500,000 | [1] |
Original Issue Premium/(Discount) | ||
Carrying Value | $ 1,500,000 | [1] |
Contractual Interest Rate | P + 12.25%(5) | [3],[8] |
Maturity Date | 4/30/2023 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 4/19/2021 | [1] |
Pennsylvania [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Pennsylvania | |
Outstanding Principal | $ 13,263,665 | [1] |
Original Issue Premium/(Discount) | ||
Carrying Value | $ 13,263,665 | [1] |
Contractual Interest Rate | P + 10.75%(5) Cash, 4% PIK(9) | [3],[8],[11] |
Maturity Date | 5/31/2025 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 5/28/2021 | [1] |
Michigan [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Michigan | |
Outstanding Principal | $ 4,443,750 | [1] |
Original Issue Premium/(Discount) | (5,558) | |
Carrying Value | $ 4,438,192 | [1] |
Contractual Interest Rate | P + 9.00%(5) | [3],[8] |
Maturity Date | 2/20/2024 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 8/20/2021 | [1] |
Various [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Various(6) | [2] |
Outstanding Principal | $ 23,168,151 | [1] |
Original Issue Premium/(Discount) | (242,929) | |
Carrying Value | $ 22,925,222 | [1] |
Contractual Interest Rate | 13% Cash, 2.5% PIK | [3] |
Maturity Date | 6/30/2025 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 8/24/2021 | [1] |
West Virginia [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | West Virginia | |
Outstanding Principal | $ 9,554,960 | [1] |
Original Issue Premium/(Discount) | (121,586) | |
Carrying Value | $ 9,433,374 | [1] |
Contractual Interest Rate | P + 9.25%(5) Cash, 2% PIK | [3],[8] |
Maturity Date | 9/1/2024 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 9/1/2021 | [1] |
Pennsylvania [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Pennsylvania | |
Outstanding Principal | $ 15,536,102 | [1] |
Original Issue Premium/(Discount) | ||
Carrying Value | $ 15,536,102 | [1] |
Contractual Interest Rate | P + 10.75%(5) Cash, 3% PIK | [3],[8] |
Maturity Date | 6/30/2024 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 9/3/2021 | [1] |
Michigan [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Michigan | |
Outstanding Principal | $ 313,607 | [1] |
Original Issue Premium/(Discount) | ||
Carrying Value | $ 313,607 | [1] |
Contractual Interest Rate | 11.00% | [3] |
Maturity Date | 9/30/2024 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 9/20/2021 | [1] |
Maryland [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Maryland | |
Outstanding Principal | $ 32,479,495 | [1] |
Original Issue Premium/(Discount) | (714,967) | |
Carrying Value | $ 31,764,528 | [1] |
Contractual Interest Rate | P + 8.75%(5) Cash, 2% PIK | [3],[8] |
Maturity Date | 9/30/2024 | [5] |
Payment Terms | I/O | [6] |
Initial Funding Date | 9/30/2021 | [1] |
Various [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Various(6) | [2] |
Outstanding Principal | $ 20,000,000 | [1] |
Original Issue Premium/(Discount) | (210,110) | |
Carrying Value | $ 19,789,890 | [1] |
Contractual Interest Rate | 13.00% | [3] |
Maturity Date | 10/31/2024 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 11/8/2021 | [1] |
Michigan [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Michigan | |
Outstanding Principal | $ 10,600,000 | [1] |
Original Issue Premium/(Discount) | (22,487) | |
Carrying Value | $ 10,577,513 | [1] |
Contractual Interest Rate | P + 7.00%(5) | [3],[8] |
Maturity Date | 11/22/2022 | [5] |
Payment Terms | I/O | [6] |
Initial Funding Date | 11/22/2021 | [1] |
Various [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Various(6) | [2] |
Outstanding Principal | $ 5,000,000 | [1] |
Original Issue Premium/(Discount) | ||
Carrying Value | $ 5,000,000 | [1] |
Contractual Interest Rate | 15% Cash, 2.5% PIK | [3] |
Maturity Date | 12/27/2026 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 12/27/2021 | [1] |
Michigan [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Michigan | |
Outstanding Principal | $ 3,739,861 | [1] |
Original Issue Premium/(Discount) | (56,096) | |
Carrying Value | $ 3,683,765 | [1] |
Contractual Interest Rate | 10.50% Cash, 5% PIK | [3] |
Maturity Date | 12/29/2023 | [5] |
Payment Terms | I/O | [6] |
Initial Funding Date | 12/29/2021 | [1] |
Various [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Various(6) | [2] |
Outstanding Principal | $ 7,500,000 | [1] |
Original Issue Premium/(Discount) | (56,267) | |
Carrying Value | $ 7,443,733 | [1] |
Contractual Interest Rate | P + 9.25%(5) | [3],[8] |
Maturity Date | 12/31/2024 | [5] |
Payment Terms | I/O | [6] |
Initial Funding Date | 12/30/2021 | [1] |
Florida [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Florida | |
Outstanding Principal | $ 15,000,000 | [1] |
Original Issue Premium/(Discount) | (293,989) | |
Carrying Value | $ 14,706,011 | [1] |
Contractual Interest Rate | 11.00% | [3] |
Maturity Date | 1/31/2025 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 1/18/2022 | [1] |
Ohio [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Ohio | |
Outstanding Principal | $ 30,602,729 | [1] |
Original Issue Premium/(Discount) | (472,079) | |
Carrying Value | $ 30,130,650 | [1] |
Contractual Interest Rate | P + 8.25%(5) Cash, 3% PIK | [3],[8] |
Maturity Date | 2/28/2025 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 2/3/2022 | [1] |
Florida [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Florida | |
Outstanding Principal | $ 20,327,703 | [1] |
Original Issue Premium/(Discount) | (84,518) | |
Carrying Value | $ 20,243,185 | [1] |
Contractual Interest Rate | 11.00% Cash, 3% PIK | [3] |
Maturity Date | 8/29/2025 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 3/11/2022 | [1] |
Missouri [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Missouri | |
Outstanding Principal | $ 17,204,978 | [1] |
Original Issue Premium/(Discount) | (148,084) | |
Carrying Value | $ 17,056,894 | [1] |
Contractual Interest Rate | 11.00% Cash, 3% PIK | [3] |
Maturity Date | 5/30/2025 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 5/9/2022 | [1] |
Illinois [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Location | Illinois | |
Outstanding Principal | $ 5,038,013 | [1] |
Original Issue Premium/(Discount) | (84,390) | |
Carrying Value | $ 4,953,623 | [1] |
Contractual Interest Rate | P + 8.50% Cash, 3%(5) PIK | [3],[8] |
Maturity Date | 6/30/2026 | [5] |
Payment Terms | P&I | [6] |
Initial Funding Date | 7/1/2022 | [1] |
Current expected credit loss reserve [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value based on information [Line Items] | ||
Outstanding Principal | [1] | |
Original Issue Premium/(Discount) | ||
Carrying Value | $ (1,497,933) | [1] |
[1]The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discounts, deferred loan fees and other upfront fees. Outstanding principal balance includes capitalized PIK interest, if applicable.[2]Loans with material collateral in multiple jurisdictions, namely multi-state operators, are disclosed as “various.”[3]P = prime rate and depicts floating rate loans that pay interest at the prime rate plus a specific percentage; “PIK” = paid in kind interest.[4]The aggregate loan commitment to Loan #1 includes a $4.005 million initial advance, which has an interest rate of 15.25%, a second advance of $15.995 million, which has an interest rate of 9.75%, and a third advance of $10.0 million, which has an interest rate of 8.50%. The statistics presented reflect the weighted average of the terms under all three advances for the total aggregate loan commitment.[5]Certain loans are subject to contractual extension options and may be subject to performance based on other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without a contractual prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.[6]P&I = principal and interest. I/O = interest only. P&I loans may include interest only periods for a portion of the loan term.[7]This Loan is subject to an interest rate cap.[8]This Loan is subject to prime rate floor.[9]The aggregate loan commitment to Loan #3 includes a $15.9 million initial advance, which has a base interest rate of 13.625%, 2.75% PIK and a second advance of $4.2 million, which has an interest rate of 15.00%, 2.00% PIK. The statistics presented reflect the weighted average of the terms under both advances for the total aggregate loan commitment.[10]The aggregate loan commitment to Loan #4 includes a $10.0 million initial advance, which has a base interest rate of 15.00%, and a second advance of $2.0 million, which has an interest rate of 39%. The statistics presented reflect the weighted average of the terms under both advances for the total aggregate loan commitment.[11]Subject to adjustment not below 2% if borrower receives at least two consecutive quarters of positive cash flow after the closing date. |
Loans Held For Investment, Ne_6
Loans Held For Investment, Net (Details) - Schedule of risk rating | 6 Months Ended |
Jun. 30, 2022 | |
Risk Rating One [Member] | |
Loans Held For Investment, Net (Details) - Schedule of risk rating [Line Items] | |
Risk rating | Very low risk |
Risk Rating Two [Member] | |
Loans Held For Investment, Net (Details) - Schedule of risk rating [Line Items] | |
Risk rating | Low risk |
Risk Rating Three [Member] | |
Loans Held For Investment, Net (Details) - Schedule of risk rating [Line Items] | |
Risk rating | Moderate/average risk |
Risk Rating Four [Member] | |
Loans Held For Investment, Net (Details) - Schedule of risk rating [Line Items] | |
Risk rating | High risk/potential for loss: a loan that has a risk of realizing a principal loss |
Risk Rating Five [Member] | |
Loans Held For Investment, Net (Details) - Schedule of risk rating [Line Items] | |
Risk rating | Impaired/loss likely: a loan that has a high risk of realizing principal loss, has incurred principal loss or an impairment has been recorded |
Loans Held For Investment, Ne_7
Loans Held For Investment, Net (Details) - Schedule of carrying value of loans held for investment - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Schedule of Investments [Line Items] | ||
Risk Rating 1 | $ 50,255,235 | $ 167,908,805 |
Risk Rating 2 | 173,243,442 | 29,075,761 |
Risk Rating 3 | 107,576,870 | |
Risk Rating 4 | ||
Risk Rating 5 | ||
Total | 331,075,547 | 196,984,566 |
2022 [Member] | ||
Schedule of Investments [Line Items] | ||
Risk Rating 1 | ||
Risk Rating 2 | 93,424,139 | |
Risk Rating 3 | 30,130,650 | |
Risk Rating 4 | ||
Risk Rating 5 | ||
Total | 123,554,789 | |
2021 [Member] | ||
Schedule of Investments [Line Items] | ||
Risk Rating 1 | 20,542,981 | 135,076,307 |
Risk Rating 2 | 79,819,303 | 29,075,761 |
Risk Rating 3 | 77,446,220 | |
Risk Rating 4 | ||
Risk Rating 5 | ||
Total | 177,808,504 | 164,152,068 |
2020 [Member] | ||
Schedule of Investments [Line Items] | ||
Risk Rating 1 | 29,712,254 | 32,242,114 |
Risk Rating 2 | ||
Risk Rating 3 | ||
Risk Rating 4 | ||
Risk Rating 5 | ||
Total | 29,712,254 | 32,242,114 |
2019 [Member] | ||
Schedule of Investments [Line Items] | ||
Risk Rating 1 | 590,384 | |
Risk Rating 2 | ||
Risk Rating 3 | ||
Risk Rating 4 | ||
Risk Rating 5 | ||
Total | $ 590,384 |
Loans Held For Investment, Ne_8
Loans Held For Investment, Net (Details) - Schedule of real estate collateral coverage - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
1.0x [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of real estate collateral coverage [Line Items] | ||
Fixed-rate | $ 5,000,000 | $ 7,017,793 |
Floating-rate | 8,943,733 | 8,925,068 |
Net real estate collateral coverage | 13,943,733 | 15,942,861 |
1.0 - 1.25 [member] | ||
Loans Held For Investment, Net (Details) - Schedule of real estate collateral coverage [Line Items] | ||
Fixed-rate | ||
Floating-rate | 97,660,654 | 18,022,518 |
Net real estate collateral coverage | 97,660,654 | 18,022,518 |
1.25x - 1.5x [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of real estate collateral coverage [Line Items] | ||
Fixed-rate | 20,243,185 | 35,836,099 |
Floating-rate | ||
Net real estate collateral coverage | 20,243,185 | 35,836,099 |
1.50x - 1.75x [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of real estate collateral coverage [Line Items] | ||
Fixed-rate | 17,056,894 | 3,086,298 |
Floating-rate | 31,920,426 | 30,029,953 |
Net real estate collateral coverage | 48,977,320 | 33,116,251 |
1.75x - 2.0x [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of real estate collateral coverage [Line Items] | ||
Fixed-rate | ||
Floating-rate | 13,263,665 | 32,377,087 |
Net real estate collateral coverage | 13,263,665 | 32,377,087 |
> 2.0x [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of real estate collateral coverage [Line Items] | ||
Fixed-rate | 91,130,749 | 45,373,778 |
Floating-rate | 45,856,241 | 16,315,972 |
Net real estate collateral coverage | 136,986,990 | 61,689,750 |
Total [Member] | ||
Loans Held For Investment, Net (Details) - Schedule of real estate collateral coverage [Line Items] | ||
Fixed-rate | 133,430,828 | 91,313,968 |
Floating-rate | 197,644,719 | 105,670,598 |
Net real estate collateral coverage | $ 331,075,547 | $ 196,984,566 |
Loans Held For Investment, Ne_9
Loans Held For Investment, Net (Details) - Schedule of activity related to the CECL Reserve for outstanding balances | 9 Months Ended | |
Sep. 30, 2022 USD ($) | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Balance | $ 147,949 | |
Balance | 1,551,841 | |
Provision for current expected credit losses | 1,403,892 | |
Write-off charged | ||
Recoveries | ||
Outstanding [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Balance | 134,542 | [1] |
Balance | 1,497,933 | [1] |
Provision for current expected credit losses | 1,363,391 | [1] |
Write-off charged | [1] | |
Recoveries | [1] | |
Unfunded [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Balance | 13,407 | [2] |
Balance | 53,908 | [2] |
Provision for current expected credit losses | 40,501 | [2] |
Write-off charged | [2] | |
Recoveries | [2] | |
[1]As of September 30, 2022, the CECL Reserve related to outstanding balances on loans at carrying value is recorded within current expected credit loss reserve in the Company’s consolidated balance sheets.[2]As of September 30, 2022, the CECL Reserve related to unfunded commitments on loans at carrying value is recorded within accounts payable and accrued liabilities in the Company’s consolidated balance sheets. |
Loans Held For Investment, N_10
Loans Held For Investment, Net (Details) - Schedule of Provision for current expected credit losses - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2022 | |
Outstanding [Member] | ||||
Loans Held For Investment, Net (Details) - Schedule of Provision for current expected credit losses [Line Items] | ||||
Balance | $ 1,203,424 | $ 182,838 | $ 134,542 | $ 134,542 |
Provision for current expected credit losses | 294,509 | 1,020,586 | 48,296 | |
Balance | 1,497,933 | 1,203,424 | 182,838 | 1,497,933 |
Unfunded [Member] | ||||
Loans Held For Investment, Net (Details) - Schedule of Provision for current expected credit losses [Line Items] | ||||
Balance | 41,533 | 16,454 | 13,407 | 13,407 |
Provision for current expected credit losses | 12,375 | 25,079 | 3,047 | |
Balance | $ 53,908 | $ 41,533 | $ 16,454 | $ 53,908 |
Interest Receivable (Details) -
Interest Receivable (Details) - Schedule of summarizes the interest receivable - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Schedule Of Summarizes The Interest Receivable Abstract | ||
Interest receivable | $ 627,709 | $ 193,790 |
PIK interest receivable | 95,139 | |
Unused fees receivable | 4,431 | 3,945 |
Total interest receivable | $ 727,279 | $ 197,735 |
Interest Reserve (Details) - Sc
Interest Reserve (Details) - Schedule of changes in interest reserves - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Schedule Of Changes In Interest Reserves Abstract | ||
Initial reserves | $ 6,636,553 | |
New reserves | 8,929,716 | 9,223,802 |
Reserves disbursed | (9,940,290) | (2,587,249) |
Total interest reserve | $ 5,625,979 | $ 6,636,553 |
Debt (Details)
Debt (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Jul. 02, 2022 | Dec. 16, 2021 | May 31, 2021 | May 12, 2021 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Debt (Details) [Line Items] | |||||||
Aggregate borrowing | $ 10,000,000 | ||||||
Incurred debt issuance costs | $ 859,500 | $ 100,000 | $ 177,261 | ||||
Debt to equity, description | On December 16, 2021, the Company amended the Revolving Loan Agreement (the “First Amendment”). The First Amendment increased the loan commitment from $10,000,000 to $45,000,000 and decreased the interest rate, from the greater of the (1) Prime Rate plus 1.00% and (2) 4.75% to the greater of (1) the Prime Rate plus the applicable margin and (2) 3.25%. The applicable margin is derived from a floating rate grid based upon the ratio of debt to equity of CAL and increases from 0% at a ratio of 0.25 to 1 to 1.25% at a ratio of 1.5 to 1. The First Amendment also extended the maturity date from February 12, 2023 to the earlier of (i) December 16, 2023 and (ii) the date on which the Revolving Loan is terminated pursuant to the terms of the Revolving Loan agreement. | ||||||
Unamortized debt issuance costs | $ 665,639 | $ 665,639 | $ 868,022 | ||||
Interest expense | 861,348 | $ 1,383,172 | |||||
Debt description | Additionally, the Company must comply with certain financial covenants including: (1) maximum capital expenditures of $150,000, (2) maintaining a debt service coverage ratio greater than 1.35 to 1, and (3) maintaining a leverage ratio less than 1.50 to 1. As of September 30, 2022, we were in compliance with all financial covenants with respect to the Revolving Loan. | ||||||
Minimum [Member] | |||||||
Debt (Details) [Line Items] | |||||||
Prime rate plus percentage | 1% | ||||||
Loan commitment | 45,000,000 | ||||||
Maximum [Member] | |||||||
Debt (Details) [Line Items] | |||||||
Prime rate plus percentage | 4.75% | ||||||
Loan commitment | $ 65,000,000 | ||||||
Revolving Loan [Member] | |||||||
Debt (Details) [Line Items] | |||||||
Unused fees rate | 0.25% | ||||||
Borrowed | $ 53,000,000 | $ 53,000,000 | |||||
Interest expense | $ 991,694 |
Debt (Details) - Schedule of su
Debt (Details) - Schedule of summary of interest expense incurred during period - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Schedule Of Summary Of Interest Expense Incurred During Period Abstract | ||
Interest expense | $ 715,132 | $ 991,694 |
Unused fee expense | 7,667 | 11,834 |
Amortization of deferred financing costs | 138,549 | 379,644 |
Total interest expense | $ 861,348 | $ 1,383,172 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jul. 08, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | Aug. 04, 2022 | Dec. 31, 2021 | |
Related Party Transactions (Details) [Line Items] | |||||
Management fees, percentage | 0.375% | ||||
Origination fees, percentage | 50% | ||||
Outside fees | $ 192,751 | $ 1,275,001 | |||
Incentive compensation | 519,223 | 1,500,129 | |||
Accounts payable | $ 2,600,000 | $ 2,600,000 | $ 2,700,000 | ||
Unfunded commitment | $ 10,000,000 | ||||
Level 3 [Member] | |||||
Related Party Transactions (Details) [Line Items] | |||||
Selling price | $ 6,700,000 |
Related Party Transactions (D_2
Related Party Transactions (Details) - Schedule of summarizes the related party costs - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule Of Summarizes The Related Party Costs Abstract | ||||
Management fees earned | $ 1,020,949 | $ 3,041,359 | ||
Less: Outside fees earned | (192,751) | (1,275,001) | ||
Base management fee, net | 828,198 | 1,766,358 | ||
Incentive fees | 519,223 | 1,500,129 | ||
Total management and incentive fees earned | 1,347,421 | 3,266,487 | ||
General and administrative expenses reimbursable to Manager | 980,949 | 2,132,419 | ||
Total | $ 2,328,370 | $ 5,398,906 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - Schedule of commitments to fund various existing loans - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Schedule Of Commitments To Fund Various Existing Loans Abstract | ||
Total original loan commitments | $ 348,867,706 | $ 235,063,593 |
Less: drawn commitments | (330,384,897) | (200,359,026) |
Total undrawn commitments | $ 18,482,809 | $ 34,704,567 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 9 Months Ended | |||
Jan. 05, 2022 | Dec. 10, 2021 | Oct. 21, 2021 | Sep. 30, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | ||||||
Underwriters shares purchase (in Shares) | 302,800 | |||||
Common stock price par value (in Dollars per share) | $ 16 | |||||
Additional gross proceeds | $ 4,844,800 | |||||
Additional net proceeds | 4,505,664 | |||||
Underwriting commissions | $ 339,136 | |||||
Shares issued (in Shares) | 10,636,363 | |||||
Common stock shares issued (in Shares) | 6,250,000 | |||||
Common stock per share (in Dollars per share) | $ 16 | |||||
IPO gross proceeds | $ 100,000,000 | |||||
Underwriting commission | 7,000,000 | |||||
Expenses | 1,265,877 | |||||
Net proceeds | $ 91,734,123 | |||||
Sold shares of common stock (in Shares) | 468,750 | |||||
Offering price, per share (in Dollars per share) | $ 16 | |||||
Gross proceeds | $ 7,500,000 | |||||
Stock split (in Shares) | 6 | |||||
Restricted common stock shares (in Shares) | 98,440 | |||||
Issued and outstanding shares percentage | 8.50% | 8.50% | ||||
Shares forfeited (in Shares) | 13,438 | |||||
Share-based compensation expense | $ 0 | $ 328,356 | ||||
Unamortized share-based compensation expense | $ 1,000,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule of restricted stock activity - shares | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Schedule Of Restricted Stock Activity Abstract | ||
Non-vested | 98,440 | 98,440 |
Forfeited | (13,438) | |
Balance | 85,002 | 98,440 |
Earnings Per Share (Details) -
Earnings Per Share (Details) - Schedule of basic earnings per common share - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2022 | |
Schedule Of Basic Earnings Per Common Share Abstract | ||||
Net income attributable to common stockholders | $ 9,768,969 | $ 4,067,521 | $ 5,136,072 | $ 25,036,760 |
Divided by: | ||||
Basic weighted average shares of common stock outstanding | 17,657,913 | 4,895,694 | 3,658,310 | 17,652,367 |
Diluted weighted average shares of common stock outstanding | 17,752,290 | 4,895,694 | 3,658,310 | 17,747,612 |
Basic earnings per common share | $ 0.55 | $ 0.83 | $ 1.4 | $ 1.42 |
Diluted earnings per common share | $ 0.55 | $ 0.83 | $ 1.4 | $ 1.41 |
Income Tax (Details)
Income Tax (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Income Tax Disclosure [Abstract] | |
Income tax provision | $ 0 |
Dividends and Distributions (De
Dividends and Distributions (Details) - Schedule of dividends declared | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares | |
Regular cash dividend [Member] | |
Dividends and Distributions (Details) - Schedule of dividends declared [Line Items] | |
Record Date | Mar. 31, 2022 |
Payment Date | Apr. 14, 2022 |
Common Share Distribution Amount | $ 0.4 |
Taxable Ordinary Income | $ 0.4 |
Return of Capital (in Dollars) | $ | |
Section 199A Dividends | $ 0.4 |
Regular cash dividend One [Member] | |
Dividends and Distributions (Details) - Schedule of dividends declared [Line Items] | |
Record Date | Jun. 30, 2022 |
Payment Date | Jul. 15, 2022 |
Common Share Distribution Amount | $ 0.47 |
Taxable Ordinary Income | $ 0.47 |
Return of Capital (in Dollars) | $ | |
Section 199A Dividends | $ 0.47 |
Regular cash dividend Two [Member] | |
Dividends and Distributions (Details) - Schedule of dividends declared [Line Items] | |
Record Date | Sep. 30, 2022 |
Payment Date | Oct. 14, 2022 |
Common Share Distribution Amount | $ 0.47 |
Taxable Ordinary Income | $ 0.47 |
Return of Capital (in Dollars) | $ | |
Section 199A Dividends | $ 0.47 |
Total cash dividend [Member] | |
Dividends and Distributions (Details) - Schedule of dividends declared [Line Items] | |
Common Share Distribution Amount | 1.34 |
Taxable Ordinary Income | $ 1.34 |
Return of Capital (in Dollars) | $ | |
Section 199A Dividends | $ 1.34 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) $ in Millions | Nov. 09, 2022 | Nov. 07, 2022 | Oct. 27, 2022 |
Subsequent Events (Details) [Line Items] | |||
Outstanding principal | $ 30 | ||
Aggregate commitment | $ 27.5 | ||
Revolving loan | $ 34.5 | ||
Minimum [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Aggregate commitment | 65 | ||
Maximum [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Aggregate commitment | $ 92.5 |