WEST PALM BEACH, Fla. - AFC Gamma, Inc. (NASDAQ:AFCG), a commercial mortgage real estate investment trust, has finalized a senior secured credit facility of $11 million to fund the expansion of a new borrower in Georgia, and has also increased its investments in two existing borrowers to support their growth.
The Georgia-based Private Company Q, which holds a Class 2 cannabis license, has been granted $11 million, with an initial disbursement of $4.3 million at closing. This financing is earmarked for the development of a new cultivation and processing facility, as well as the establishment of two dispensaries in the state. The investment is intended to enable Private Company Q to expand its reach in Georgia's medical cannabis market.
Additionally, AFC Gamma has increased its credit facilities for BeLeaf Medical, LLC and Sunburn Cannabis, with additional commitments of $5.5 million and $1.8 million, respectively. BeLeaf's total credit facility now stands at $26.1 million, which will partially finance the acquisition of two dispensaries in Missouri. Sunburn's credit facility has reached $36.5 million, which will assist in the buildout of two new dispensaries and additional cultivation capacity in Florida.
The credit facilities for all three companies are structured as first-lien term loans secured by the borrowers' assets. AFC Gamma holds the entire credit facility for each borrower and acted as the agent for these transactions.
Daniel Neville, CEO of AFC Gamma, emphasized the company's commitment to fostering lasting relationships with its borrowers and supporting their business growth. The investments in Private Company Q, BeLeaf, and Sunburn reflect AFC Gamma's strategic approach to investing in restricted license states with favorable supply-demand dynamics.
AFC Gamma specializes in providing institutional loans to U.S. cannabis operators that comply with state laws, with loan sizes ranging from $10 million to over $100 million. The company's management team leverages its significant credit and cannabis industry expertise to originate, structure, and underwrite loans.
These financial moves are based on a press release statement and are part of AFC Gamma's broader strategy to support the expanding cannabis industry by offering tailored financing solutions to its clients.
In other recent news, AFC Gamma reported strong Q2 results, marking a successful transition to a dedicated cannabis lender. The company's financial performance was robust, with distributable earnings of $0.56 per share and a consistent dividend payout. AFC Gamma is managing a loan portfolio with a target of $100 million in origination for the year and maintains a strong cannabis pipeline valued at $346 million.
In addition to this, AFC Gamma's portfolio holds $287.1 million across 12 loans and total assets of $458 million. The company also repaid a $35 million line of credit and holds cash and cash equivalents of $170.3 million. Shareholder equity stands at $314.3 million, with a book value per share of $15.21.
These recent developments suggest AFC Gamma's strategic shift and financial health position it to continue delivering value to its shareholders. As a dedicated cannabis sector lender, the company is confident in its ability to deliver strong financial performance. Despite a lack of specific pro forma financial details post-spin-off of the commercial real estate portfolio, AFC Gamma remains a key player in the cannabis lending market.
InvestingPro Insights
AFC Gamma, Inc. (NASDAQ:AFCG) continues to make strategic investments in the cannabis sector, and its recent financial activities are complemented by several positive indicators in its financial profile. An InvestingPro Tip highlights the company's ability to pay a significant dividend to shareholders, with a noteworthy dividend yield of 19.43% as of the latest data. This generous yield is a strong signal for income-focused investors, especially when considering the company's commitment to fostering growth within the burgeoning cannabis market.
In addition to the attractive dividend, AFC Gamma's liquid assets have been reported to exceed its short-term obligations, providing the company with a level of financial stability that is crucial for its ongoing operations and expansion efforts. This is particularly relevant as the company extends credit facilities and invests in growth opportunities across restricted license states.
From a performance standpoint, AFC Gamma has seen a large price uptick over the last six months, with a 34.73% price total return, underscoring a robust investor confidence in the company's market position and future prospects. This is further substantiated by the company trading near its 52-week high, at 98.8% of this benchmark, suggesting that market sentiment remains positive.
For those looking into deeper financial metrics, AFC Gamma's market capitalization currently stands at $204.19M, with an adjusted P/E ratio for the last twelve months as of Q2 2024 at 11.84. These figures, alongside a solid operating income margin of 59.03%, paint a picture of a company that is not only growing but also maintaining profitability and efficiency in its operations.
For investors and analysts seeking a more comprehensive analysis, there are additional InvestingPro Tips available, offering insights into AFC Gamma's performance, analyst predictions, and potential profitability for the current year. To explore these further, one can visit the dedicated page for AFC Gamma on InvestingPro at https://www.investing.com/pro/AFCG.
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