The core business is deteriorating: net interest income, net income, and distributable earnings all declined YoY while leverage increased. The Koach transaction adds $62.5M in second-lien assets but dilutes existing holders by 16.8% and increases risk (subordinated to $39M senior debt). The pending LIEN merger creates a combined BDC but execution risk remains. Monitor Q3 for further earnings erosion and merger vote timing.
Price Chart
Executive Summary
Chicago Atlantic Real Estate Finance (REFI) reported Q2 2026 results showing a YoY decline in net interest income ($12.8M vs $14.4M) and net income ($7.5M vs $8.9M), with distributable earnings per share falling to $0.43 from $0.51. The company highlighted $59.2M in gross originations and a pending merger with Chicago Atlantic BDC (LIEN) expected to close in Q4 2026, alongside a post-quarter $62.5M private placement (Koach transaction) that issued 16.8% new shares. The filing is a DEFA14A soliciting proxies for the merger, but the underlying earnings release shows a clear operational decline.
Key Financial Metrics
Key Facts
- Net interest income fell to $12.8M in Q2 2026 from $14.4M in Q2 2025 (-11%)
- Net income dropped to $7.5M from $8.9M YoY (-16%)
- Diluted distributable earnings per share declined to $0.43 from $0.51 YoY
- Book value per share fell to $14.15 from $14.71 YoY
- Debt/equity ratio increased to 46.6% from 38.8% YoY
- Gross unlevered yield to maturity declined to 15.8% from 16.8% YoY
- Post-quarter Koach transaction: 4.3M shares issued (16.8% dilution) for $62.5M in second-lien notes
- Pending merger with LIEN expected to close Q4 2026; REFI stockholders would own ~50.5% of combined entity
- Dividend maintained at $0.47/share quarterly
- Credit loss reserve increased to $9.4M from $5.1M at year-end 2025
Financial Impact
Net interest income down ~11% YoY; net income down ~16% YoY; distributable earnings per share down ~16% YoY; 16.8% dilution from Koach transaction
Risk Factors
- Continued earnings decline from deployment timing mismatch
- 16.8% dilution from Koach transaction weighs on per-share metrics
- Merger with LIEN may not close on terms or timing
- Credit loss reserve growing ($9.4M vs $5.1M) signals potential portfolio stress
- High leverage (46.6% debt/equity) limits financial flexibility
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| DEFA14A Filing (Primary) | 0001213900-26-087490 |
| Document: ea030117601ex99-2.htm | 0001213900-26-087490 |
| Document: ea0301176-8k425_chicago.htm | 0001213900-26-087490 |
| Document: 0001213900-26-087490-index-headers.html | 0001213900-26-087490 |
| Document: 0001213900-26-087490-index.html | 0001213900-26-087490 |
| Document: 0001213900-26-087490.txt | 0001213900-26-087490 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Sep 16, 2026 5w ago | Press Release | $11.01 $10.69 | ▼ −2.91% | ▼ −4.73% | $9.20 (−16.44%) |
Aug 28, 2026 8w ago | Insider Buy | $10.68 $10.95 | ▲ +2.53% | ▲ +2.42% | $9.20 (−13.86%) |
Aug 28, 2026 8w ago | Insider Cluster | $10.68 $10.95 | ▲ +2.53% | ▲ +2.42% | $9.20 (−13.86%) |
Aug 25, 2026 9w ago | Insider Cluster | $10.68 $10.88 | ▲ +1.87% | ▲ +1.99% | $9.20 (−13.86%) |
Aug 21, 2026 9w ago | Insider Cluster | $10.78 $10.68 | ▼ −0.93% | ▼ −1.40% | $9.20 (−14.66%) |
Aug 19, 2026 9w ago | Insider Cluster | $10.61 $10.67 | ▲ +0.57% | ▼ −0.55% | $9.20 (−13.29%) |
Aug 11, 2026 11w ago | DEFA14A | $10.24 $10.37 | ▼ −1.32% | ▼ −1.72% | $9.20 (+10.11%) |
Aug 11, 2026 11w ago | 425 | $10.24 $10.37 | ▼ −1.32% | ▼ −1.72% | $9.20 (+10.11%) |
Aug 11, 2026 11w ago | 8-K | $10.24 $10.37 | ▼ −1.32% | ▼ −1.72% | $9.20 (+10.11%) |
Jul 21, 2026 14w ago | Press Release | $10.38 | awaiting T+5 | awaiting T+5 | $9.20 (−11.37%) |
US Market Status
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