Chicago Atlantic BDC (NASDAQ:LIEN) reported record first-quarter 2026 net investment income as management pointed to strong loan deployments, a senior secured portfolio and limited exposure to interest-rate declines as key drivers of performance.
Chief Executive Officer Peter Sack said the company’s net investment income reached a record $10 million, or $0.44 per share, for the quarter. The company also announced a $0.34 dividend, marking the seventh consecutive quarter at that level.
Portfolio Reaches Record Size
During the quarter, Chicago Atlantic BDC funded a record $93.9 million across seven portfolio companies, including three new borrowers. Sack said the company used additional capacity on its credit facility to grow the portfolio to its largest level in company history.
Interim Chief Financial Officer Thomas Geoffroy said the company had 40 portfolio company investments as of quarter-end, with 24% of the portfolio invested in non-cannabis companies across multiple sectors. The average credit investment size was approximately 2.3% of the debt portfolio at fair value.
Geoffroy said the gross weighted average yield of the company’s debt investment portfolio was approximately 15.8%, in line with the prior quarter. He also said none of the company’s loans were on non-accrual status.
Sack compared the company’s metrics with broader public business development company averages, citing third-party industry reports. He said Chicago Atlantic BDC’s 15.8% weighted average yield on debt investments compared with 10.8% for the average public BDC. He also said 100% of the debt portfolio is senior secured, while 1.3% of the total investment portfolio has exposure to subordinated debt, equity or joint venture investments.
Earnings Increase From Prior Quarter
Gross investment income rose to $16.7 million in the first quarter from $14.2 million in the fourth quarter of 2025, primarily due to higher interest income, Geoffroy said. Net expenses increased to $6.7 million from $5.9 million, driven by higher interest expense from greater use of the credit facility to fund new originations.
Net investment income of $10 million, or $0.44 per share, increased from $8.3 million, or $0.36 per share, in the prior quarter. Geoffroy attributed the increase to higher interest income and fee income from strong deployments, partially offset by expense changes.
The company recognized a net unrealized loss of $1.4 million in the investment portfolio during the quarter. Geoffroy said the loss reflected widening spreads rather than underlying credit performance.
Net assets reached $304.2 million at quarter-end, while net asset value per share was $13.33, compared with $13.30 in the fourth quarter of 2025. The company had 22.8 million common shares outstanding on a basic and fully diluted basis.
Liquidity and Leverage Remain in Focus
As of March 31, Chicago Atlantic BDC had $54.5 million of debt outstanding, all drawn from its revolving line of credit. Geoffroy said that as of May 13, the company had approximately $51.5 million of liquidity, consisting of $50 million of borrowing capacity under its $100 million credit facility, subject to restrictions, and approximately $1.5 million of cash.
Geoffroy also said the company filed a shelf registration statement with the Securities and Exchange Commission after quarter-end that would allow it to issue up to $500 million in securities, including debt securities. He said the filing was intended to increase available liquidity beyond the credit facility and provide additional financial flexibility.
In response to an analyst question, Sack said the shelf registration was filed primarily with a focus on being able to raise debt in the future, but said it was too early to discuss potential rates or timing. Asked about leverage targets, Sack said the company expects to stay “well below” the broader BDC industry average, which he earlier cited as 1.3 times debt-to-equity. Chicago Atlantic BDC’s debt-to-equity ratio was 0.18 times at quarter-end.
Origination Activity Accelerates
In prepared remarks on origination, President Dino Colonna said the first quarter was the company’s most active origination period to date from both a gross and net deployment perspective. The $93.9 million in new debt investments included a $38.3 million refinancing to the company’s largest borrower, which management said remained an attractive investment with extended duration.
Of the new debt investments, 100% were senior secured, and 83% were fixed-rate loans or floating-rate loans at their respective floors at quarter-end. Net investment activity totaled $32 million. The company also had loan repayments and amortization of approximately $63.4 million, including $42.1 million of refinancings and $21.3 million of paydowns and amortization.
At quarter-end, the portfolio had approximately $13.7 million in total unfunded commitments. Since quarter-end, one borrower fully repaid a $7 million loan.
The company said the broader Chicago Atlantic platform’s pipeline at quarter-end totaled approximately $810 million in potential debt transactions, including approximately $402 million in cannabis opportunities and approximately $328 million in non-cannabis opportunities. Colonna said the non-cannabis pipeline expanded meaningfully during the quarter as companies reengaged in strategic activity despite macroeconomic uncertainty.
In the question-and-answer session, management said the non-cannabis lending portfolio is expected to represent 20% to 30% of the overall portfolio and to consist of smaller positions than the cannabis portfolio.
Cannabis Policy Developments Seen as Potential Tailwind
Sack said federal cannabis policy momentum accelerated in April, citing a Department of Justice step to move state-licensed medical cannabis products from Schedule I to Schedule III. He said the change would eliminate the 280E tax burden for medical cannabis, allowing operators to be taxed like normal businesses on pre-tax income rather than gross profit.
Sack said medical cannabis operators should benefit from increased cash flow and stronger balance sheets over time, which he said could favorably affect borrower credit quality depending on each company’s medical market exposure.
The company is also awaiting an administrative hearing scheduled for June 29 regarding the potential rescheduling of recreational cannabis, with an outcome expected by July 15, according to Sack. He said that could affect the economics of the broader U.S. cannabis industry, including capital markets and mergers and acquisitions activity.
Management said it is already seeing more M&A-driven opportunities in its pipeline. Sack said not all of the activity is large enough or involves public companies in a way that would be publicly announced, but added that interest and sentiment have increased.
Despite the regulatory developments, Sack said Chicago Atlantic BDC will continue underwriting based on the current regulatory framework rather than potential future reforms.
About Chicago Atlantic BDC (NASDAQ:LIEN)
Chicago Atlantic BDC (NASDAQ:LIEN) is a closed-end management investment company organized as a business development company (BDC). It focuses on providing debt and equity financing solutions to U.S. middle-market companies that demonstrate strong growth potential. Through its public listing, the company offers investors exposure to a diversified portfolio of private credit and equity investments aimed at delivering attractive risk-adjusted returns.
The company’s investment strategy centers on structuring customized credit facilities, including senior secured loans, unitranche loans, mezzanine debt and equity co-investments.
