Prime Cannabis REITs for Long-Term Investors in 2024
As we approach the end of 2023, the spotlight turns to the top Cannabis Real Estate Investment Trusts (REITs), a niche but burgeoning sector in the investment world. With long-term investing gaining momentum, these high-yielding dividend stocks are increasingly attractive. The allure lies in their stable income streams. This is particularly significant in the volatile cannabis market.
The cannabis industry is experiencing unprecedented growth, making these REITs a focal point for savvy investors. Statistics forecast a compound annual growth rate (CAGR) of approximately 15% over the next five years. This projection underscores the robust future growth prospects of the industry. As such, investing in Cannabis REITs not only offers immediate dividend benefits but also long-term capital appreciation potential.
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Cultivating Wealth: Top Cannabis REITs for Strategic Long-Term Gains in 2024
- Innovative Industrial Properties, Inc. (NYSE: IIPR)
- AFC Gamma, Inc. (NASDAQ: AFCG)
- Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI)
Innovative Industrial Properties, Inc.
Innovative Industrial Properties, Inc. is an expert in cannabis-related real estate investments in the United States. The company will soon have 8.7 million square feet of lettable space after acquiring an extra 2.5 million square feet. Additionally, with an average lease duration of 16.4 years, the vast majority of these properties are fully leased. The group is currently spread across 111 venues and 19 states. In addition to the estimated $227.1 million in rent, IIP had already spent $2.4 billion on property repairs by April. The business expects that its continuous real estate investments in Massachusetts and Pennsylvania will result in a large increase in the size of its portfolio in 2022.
Third Quarter 2023 and Subsequent Events
Financial Results
- Generated total revenues of approximately $77.8 million in the quarter, representing a 10% increase from the prior year’s quarter.
- Recorded net income attributable to common stockholders of approximately $41.3 million for the quarter, or $1.45 per share (all per share amounts in this press release are reported on a diluted basis unless otherwise noted).
- Recorded adjusted funds from operations (AFFO) of approximately $64.8 million, or $2.29 per share, increases of 7.8% and 7.5% from the prior year’s quarter, respectively.
- Paid a quarterly dividend of $1.80 per common share on October 13, 2023, to stockholders of record as of September 29, 2023. The common stock dividends declared for the twelve months ended September 30, 2023, of $7.20 per common share represent an increase of $0.40, or 6%, over dividends declared for the twelve months ended September 30, 2022.
IIPR Stock Performance
On December 18th, IIPR stock closed at $98.50, up 25.14% in the last month of trading. The stock is currently trading in a 52-week price range of $63.36-$115.55, down 2.81% year to date.
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AFC Gamma, Inc.
Prominent cannabis ancillary AFC Gamma, Inc. skillfully handles both its cash flow and capacity. The company was founded in 2020 and specializes in supply and demand theories, collateral markets, and real estate security markets. First-lien loans, mortgage loans, construction loans, bridge financings, and other unusual kinds of financing are some of AFCG’s areas of expertise. AFC Gamma has recently concentrated its marketing efforts on the rapidly expanding cannabis market. The company granted a $250 million credit line and a $100 million option to Verano Holdings Inc. On October 30, the firm announced that Daniel Neville will take over as CEO, effective November 13, 2023. Most recently, Mr. Neville served as the Chief Financial Officer for Ascend Wellness Holdings, Inc. (“AWH”), a leading multi-state, vertically integrated cannabis operator.
Third Quarter 2023 Financial Highlights
AFC Gamma reported generally accepted accounting principles (“GAAP”) net income of $8.0 million or $0.39 per basic weighted average common share and Distributable Earnings of $9.9 million or $0.49 per basic weighted average common share for the third quarter of 2023.
Common Stock Dividend
On October 13, 2023, the Company paid a regular cash dividend of $0.48 per common share for the third quarter of 2023. For the third quarter of 2023, AFC Gamma distributed $9.8 million in dividends, or $0.48 per common share, compared to Distributable Earnings of $0.49 per basic weighted average common share for such period.
AFCG Stock Performance
On December 18th, AFCG shares closed at $12.29, a 10.32% increase from the previous month of trading. The stock, which has a price range of $9.91 to $16.92, is down 21.87% year to date.
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Chicago Atlantic Real Estate Finance, Inc. (REFI)
Leading commercial mortgage REIT Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI) mostly arranges senior secured loans for state-licensed cannabis operators in states with limited licenses in the US. As a member of the Chicago Atlantic platform, REFI has disbursed more than $1.8 billion in loans and employs over 50 people.
Third Quarter 2023 Financial Results
- Net interest income of approximately $13.7 million, which is consistent with the second quarter of 2023. Interest income included approximately $0.7 million of interest income from prepayment fees acceleration of original issue discounts and the effect of the 25-basis-point prime rate increase in July 2023. These increases were offset by an increase in weighted average borrowings on the revolving credit facility contributing to an increase in interest expense of approximately $0.5 million.
- Total expenses of approximately $3.9 million before provision for current expected credit losses, which is consistent with the second quarter of 2023; primarily attributable to the $0.2 million decrease in net management and incentive fees offset by a $0.3 million increase in stock-based compensation.
- The total reserve for current expected credit losses of $5.1 million decreased sequentially by $0.1 million and amounts to approximately 1.5% of the portfolio principal balance of $341.8 million as of September 30, 2023.
- Distributable Earnings of approximately $10.5 million, or $0.57 per weighted average diluted common share, representing a sequential increase of 3.6%.
- Book value per common share increased sequentially by 0.7% to $15.17 as of September 30, 2023, compared with $15.06 as of June 30, 2023, primarily due to third quarter distributable earnings in excess of the regular quarterly dividend of $0.47.
- As of September 30, 2023, the Company had $63.0 million outstanding on its $100.0 million secured credit facility, resulting in a leverage ratio (debt to book equity) of approximately 23%.
2023 Outlook
Chicago Atlantic offered the following outlook for the full year 2023:
- The Company expects to maintain a dividend payout ratio (based on Distributable Earnings per weighted average diluted share) of approximately 90% to 100% on a full-year basis.
- The regular quarterly common dividend is expected to be a minimum of $0.47 per weighted average diluted share.
- If its Net Income requires additional dividends over and above the regular quarterly dividend amount to meet its 2023 taxable income distribution requirements, the Company expects to meet that requirement with a special dividend in the fourth quarter of 2023.
REFI Stock Performance
On December 18th, REFI stock closed at $16.21, up 7.85% in the last month of trading. The stock is currently trading in a 52-week price range of $12.91-$16.23, up 7.56% year to date.
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Pioneering Cannabis REITs to Add to Your 2024 Portfolio
As 2024 approaches, the cannabis sector presents a unique opportunity for investors. Cannabis REITs stand out as a lucrative option. These trusts offer stability and growth potential in a rapidly expanding industry. Investors seeking long-term gains should pay close attention to these REITs. They provide a rare blend of steady dividends and growth prospects.
Overall, the future of cannabis REITs looks promising, given the industry’s expected growth. With their focus on high-yield dividends, these REITs are especially appealing for long-term portfolios. They represent a smart choice for those looking to diversify. In conclusion, cannabis REITs in 2024 are not just about current returns. They are about investing in the future of a booming industry.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
