Investment Memo: Chicago Atlantic Real Estate Finance (REFI)
August 5, 2025 – Recorded 9:15 AM
At DiMauro Partnership, LTD., the bulk of our capital is invested in high-quality companies we expect to compound over time. Still, as Buffett described in his Partnership letters, I reserve a portion of the portfolio for “generals” and “work-outs” - special situations where mispricing creates an unusually attractive opportunity.
REFI (Chicago Atlantic Real Estate Finance) falls into this category.
The Business
REFI is a mortgage REIT that lends to cannabis operators. While the industry may raise eyebrows, this isn’t a speculation on legalization or hype. Instead, REFI is a senior secured lender, originating loans in the 15–18% range, backed by tangible assets: warehouses, cultivation facilities, and equipment.
Typical loan-to-value is 50–60%. Nearly all loans carry blanket liens (UCC-1) that give REFI first claim on borrower assets. This means they’re not lending against brands or goodwill - they’re lending against hard collateral.
The Numbers
Market cap: ~$270M vs. book equity >$300M (a ~13% discount).
Dividend: ~14%, consistently covered by distributable earnings.
Leverage: conservative, with debt-to-equity around 0.3x (far lower than peers).
Credit record: only one non-performing loan, with collateral protection in place.
At today’s price ($13.08/Share), investors earn a 14% yield ($1.88 annual dividend paid quarterly) while patiently waiting for the market to close the discount to book. If that gap narrows, that’s ~15% upside on top of the 14% income. Together, the total return potential is ~30% in under a year - without requiring legalization or multiple expansion.
Why It’s Mispriced
Investors hear “cannabis” and assume volatility. But REFI isn’t taking equity risk - it’s providing senior secured loans with real assets as collateral. The business is misunderstood, underfollowed, and too small for large institutions. That stigma, not fundamentals, explains the discount.
The Opportunity
REFI exemplifies the kind of situation that doesn’t fit neatly into Wall Street’s playbook:
Too small and unconventional for institutions.
Too easily dismissed by generalists who stop at “cannabis.”
Yet simple math shows high yield, collateral protection, low leverage, and a discount to book.
This is a mispriced security with tangible downside protection and the potential for attractive short-term returns.
Category: General / Work-Out
Position: Small, opportunistic allocation within the Partnership.
Conclusion: REFI offers investors a rare chance at ~30% total return, supported by hard collateral and prudent management.
👉 All memos like this will be archived under the “Investment Memos” section. My goal is to create a clear record of how we invest, why we invest, and what lessons emerge along the way.
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