Second Quarter 2022 Highlights
- Net income of
$11.4 million in Q2 2022, or$0.58 per basic weighted average share of common stock - Distributable earnings1 of
$13.6 million in Q2 2022, or$0.69 per basic weighted average share of common stock - Paid a dividend of
$0.56 per common share onJuly 15, 2022 for Q2 2022, representing a 47% increase from Q2 2021 - Distributable earnings exceeded the declared dividend for the fifth consecutive quarter
- Book value of
$17.03 per share as ofJune 30, 2022 , an increase of$0.42 , or 2.5%, compared toDecember 31, 2021
“Given the current market environment with operators experiencing pricing pressures and longer lead times to raise equity, we continue to act disciplined in our approach towards deploying capital. We are focused on supporting existing operators as well as new operators with strong track-records in the industry,” stated
Portfolio and Investment Activity
- Closed
$154.7 million of new commitments and funded$135.5 million of new and existing commitments year-to-date as ofAugust 1, 2022 , including approximately$32.0 million which was refinanced from existing borrowers - Total loan commitments of
$483.2 million ($423.1 million of which has been funded) across 12 portfolio companies as ofAugust 1, 2022 - The portfolio’s weighted average yield to maturity was approximately 18% as of
June 30, 2022 and 19% as ofDecember 31, 2021 - All loans are current and performing
Results of Operations for the Quarter Ended
- Total net interest income of
$19.9 million , an increase of$11.2 million , or 128%, compared to Q2 2021 - Distributable earnings1 of
$13.6 million , an increase of$7.8 million , or 135%, compared to Q2 2021
Dividend Payments
- On
July 15, 2022 , AFCG paid a regular quarterly cash dividend of$0.56 per share of common stock to its stockholders of record as ofJune 30, 2022 - The aggregate amount of the regular cash dividend payment of
$0.56 per share was approximately$11.1 million , which represents a 47% increase per share compared to the quarter endedJune 30, 2021
Capitalization and Liquidity
- In
April 2022 , AFCG entered into a senior secured revolving credit facility with$60 million of current commitments from twoFDIC -insured banks and the ability to increase the facility to$100 million (subject to available borrowing base and additional commitments)
Additional Information
AFCG issued a presentation of its second quarter 2022 results, titled “Second Quarter 2022 Earnings Presentation,” which can be viewed at www.afcgamma.com under the Investor Resources section. AFCG also filed its Quarterly Report on Form 10-Q for the quarter ended
Conference Call & Discussion of Financial Results
About
Non-GAAP Metrics
In addition to using certain financial metrics prepared in accordance with GAAP to evaluate our performance, we also use Distributable Earnings to evaluate our performance excluding the effects of certain transactions and GAAP adjustments we believe are not necessarily indicative of our current loan activity and operations. Distributable Earnings is a measure that is not prepared in accordance with GAAP. Distributable Earnings and the other capitalized terms not defined in this section have the meanings ascribed to such terms in our most-recently filed quarterly report. We use this non-GAAP financial measure both to explain our results to stockholders and the investment community and in the internal evaluation and management of our businesses. Our management believes that this non-GAAP financial measure and the information they provide are useful to investors since these measures permit investors and stockholders to assess the overall performance of our business using the same tools that our management uses to evaluate our past performance and prospects for future performance.
The determination of Distributable Earnings is substantially similar to the determination of Core Earnings under our Management Agreement, provided that Core Earnings is a component of the calculation of any Incentive Fees earned under the Management Agreement for the applicable time period, and thus Core Earnings is calculated prior to Incentive Fee expense, while the calculation of Distributable Earnings account for any Incentive Fees earned for such time period. We define Distributable Earnings as, for a specified period, the net income (loss) computed in accordance with GAAP, excluding (i) stock-based compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss); provided that Distributable Earnings does not exclude, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash, (iv) provision for current expected credit losses (“CECL”), (v) taxable REIT (as defined below) subsidiary (“TRS”) (income) loss and (vi) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between our Manager and our independent directors and after approval by a majority of such independent directors.
We believe providing Distributable Earnings on a supplemental basis to our net income as determined in accordance with GAAP is helpful to stockholders in assessing the overall performance of our business. As a real estate investment trust (“REIT”), we are required to distribute at least 90% of our annual REIT taxable income and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of such taxable income. Given these requirements and our belief that dividends are generally one of the principal reasons that stockholders invest in our common stock, we generally intend to attempt to pay dividends to our stockholders in an amount equal to our net taxable income, if and to the extent authorized by our Board. Distributable Earnings is one of many factors considered by our Board in declaring dividends and, while not a direct measure of net taxable income, over time, the measure can be considered a useful indicator of our dividends.
Distributable Earnings are non-GAAP measures and should not be considered as substitutes for GAAP net income. We caution readers that our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our reported Distributable Earnings may not be comparable to similar measures presented by other REITs.
The following table provides a reconciliation of GAAP Net Income to Distributable Earnings:
Three months ended | Six months ended | ||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
Net Income | $ | 11,351,673 | $ | 4,627,787 | $ | 21,513,793 | $ | 6,028,542 | |||||
Adjustments to net income | |||||||||||||
Stock-based compensation expense | 117,397 | 11,457 | 1,107,420 | 1,610,572 | |||||||||
Depreciation and amortization | - | - | - | - | |||||||||
Unrealized losses (gains) or other non-cash items | 1,005,454 | 483,159 | 924,611 | 627,561 | |||||||||
Provision for current expected credit losses | 1,593,048 | 645,786 | 2,498,177 | 711,886 | |||||||||
TRS (income) loss | (487,474 | ) | - | (548,545 | ) | - | |||||||
One-time events pursuant to changes in GAAP and certain non-cash charges | - | - | - | - | |||||||||
Distributable Earnings | $ | 13,580,098 | $ | 5,768,189 | $ | 25,495,456 | $ | 8,978,561 | |||||
Basic weighted average shares of common stock outstanding (in shares) | 19,715,749 | 13,457,536 | 19,518,964 | 10,318,542 | |||||||||
Adjusted Distributable Earnings per Weighted Average Share | $ | 0.69 | $ | 0.43 | $ | 1.31 | $ | 0.87 |
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views and projections with respect to, among other things, future events and financial performance. Words such as “believes,” “expects,” “will,” “intends,” “plans,” “guidance,” “estimates,” “projects,” “anticipates,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements, including statements about our future growth and strategies for such growth, are subject to the inherent uncertainties in predicting future results and conditions and are not guarantees of future performance, conditions or results. Certain factors, including the ability of our manager to locate suitable loan opportunities for us, monitor and actively manage our loan portfolio and implement our investment strategy; the demand for cannabis cultivation and processing facilities; management’s current estimate of expected credit losses and current expected credit loss reserve and other factors could cause actual results and performance to differ materially from those projected in these forward-looking statements. More information on these risks and other potential factors that could affect our business and financial results is included in the AFC Gamma’s filings with the
AFC GAMMA INVESTOR CONTACT:
(561) 510-2293
ir@advancedflowercapital.com
AFC GAMMA MEDIA CONTACT:
mark@mattio.com
1 See “Non-GAAP Metrics” section of this release for a reconciliation of GAAP Net Income to Distributable Earnings.
Source:
2022 GlobeNewswire, Inc., source