Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Distributable earnings of $0.44 per share fell below the dividend primarily due to the timing of capital redeployment following $16.3 million in early loan prepayments.
Management emphasized that while the portfolio principal balance grew by $40 million, the income growth was dampened by the gap between receiving prepayments and funding new originations. The proposed merger with Chicago Atlantic BDC (LIEN) is designed to unlock scale and liquidity that management believes would be unattainable for REFI as an independent mortgage REIT. The Koach Capital transaction provides strategic exposure to the cannabis retail sale-leaseback market, capturing yield through a structure that avoids direct property ownership prohibited by current listing rules.
Management attributes the lack of new debt market entrants, despite regulatory progress, to the complex 'financial plumbing' requirements like rating agencies and Big Four audits that act as barriers to entry. Strategic underwriting continues to prioritize retail-heavy portfolios, which management believes are better insulated from potential risks associated with future interstate commerce transitions. The merger with LIEN is currently expected to close in the fourth quarter of 2026, pending shareholder and regulatory approvals.
Management intends to maintain a dividend payout ratio of 90% to 100% of basic distributable earnings for the 2026 tax year. The Koach transaction includes an exit fee mechanism designed to capture 'convexity' in value if cap rates compress as the cannabis industry gains broader capital market acceptance. The pipeline of cannabis opportunities stands at $649 million, though only $204 million is currently backed by real estate collateral as of June 30, 2026.
Management anticipates that the rescheduling of cannabis will eventually lead to a broader range of equity analysts and debt providers, improving market efficiency and valuation. The Koach notes will be presented as a reduction of stockholders' equity rather than loans held for investment due to GAAP requirements for stock-for-debt exchanges. Approximately 3.6% of the loan principal remains exposed to further interest rate declines, as 100% of prime rate loans have already hit their floors.
Non-accrual status decreased to 3.7% of the portfolio from 4.8% in the prior quarter, following the full repayment of a specific non-performing loan. Management treats IRS tax debt as a primary credit risk in their underwriting process, noting the lack of clear guidance on 280E debt relief timing. Nvidia-level potential. 30M+ investors trust Moby to find it first.
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