Chicago Atlantic BDC (NASDAQ:LIEN) reported fourth-quarter 2025 net investment income (NII) of $0.36 per share and full-year NII of $1.45 per share, results management said demonstrate the company’s ability to generate attractive returns while emphasizing downside protection through senior secured lending. The business development company focuses primarily on direct loans to privately held companies in niche markets, with a significant emphasis on lending to U.S. cannabis operators and other lower middle-market segments that management described as underserved by traditional capital providers.
Quarterly performance and dividend
Interim Chief Financial Officer Thomas Geoffroy said gross investment income for the fourth quarter totaled $14.2 million, down from $15.1 million in the third quarter. Geoffroy attributed the $0.9 million decline primarily to approximately $2 million of one-time fees from unscheduled repayments that were recognized in the third quarter, partially offset by about $0.7 million of higher amendment and origination fees and a $0.4 million increase in interest income during the fourth quarter.
Net asset value (NAV) per share increased to $13.30 at Dec. 31, 2025, from $13.27 at the end of the third quarter. Net assets totaled $303.4 million, and the company reported 22.8 million common shares outstanding on a basic and fully diluted basis.
Chief Executive Officer Peter Sack also announced a quarterly dividend of $0.34 per share, the sixth consecutive quarter at that rate. Total dividends paid for 2025 were $1.36 per share.
Portfolio positioning and credit profile
Sack said the broader BDC market was pressured in late 2025 by negative investor sentiment, with concerns centered on potential dividend cuts, credit losses, and the possibility that “froth” in private credit markets could lead to looser underwriting and higher defaults. He added that the December decline in the Fed funds rate also raised fears about pressure on earnings and dividends across the sector.
Against that backdrop, Sack emphasized what he called Chicago Atlantic BDC’s differentiated exposure and underwriting approach, arguing that the drivers of current pressure in private credit markets “simply are not relevant” to the company’s strategy. He said the portfolio has limited exposure to software and receivables factoring and no exposure to “recent examples of fraud in some large syndicated facilities.”
Management highlighted several portfolio metrics as of Dec. 31, 2025, including comparisons to public BDC industry averages cited from third-party research:
- Weighted average yield on debt investments: 15.8% versus an average public BDC yield of 10.8%, Sack said.
- Seniority: 99.5% of the portfolio is senior secured, compared with an average 24.9% exposure among other BDCs to subordinated debt, equity, and joint venture investments, according to Sack.
- Interest rate protection: 73% of the portfolio at par is fixed rate or floating rate at a floor, with 27% impacted by further interest rate declines. Sack said the company estimates a 100 basis point drop in rates would reduce NII by approximately 1%.
- Leverage: $25 million of debt outstanding at quarter-end and a 0.08x debt-to-equity ratio, compared with an average 1.2x for BDCs, Sack said.
- Credit quality: No loans on non-accrual status; Sack compared this with an industry average of 3.3% of cost.
Geoffroy added that the company had 39 portfolio company investments, with 25% of the portfolio invested in non-cannabis companies across multiple sectors. The average credit investment size was approximately 2.4% of the debt portfolio at fair value. The company uses a third-party valuation provider to value every position each quarter, management said, contrasting that approach with some BDC managers that use third-party valuations only once per year and rely on internal valuations during the remainder of the year.
Originations, repayments, and liquidity
President Dino Colonna said the company funded $31.7 million in new debt investments during the fourth quarter across seven portfolio companies, including four new borrowers. Management said 100% of those new investments were senior secured, and 89% were floating-rate loans at their floor at quarter-end.
Colonna reported loan repayments and amortization of approximately $11 million during the quarter, including paydowns of $8.1 million. Unfunded commitments totaled about $25 million at quarter-end.
In a post-quarter update, Colonna said the company funded $93.9 million in new investments in the first quarter of 2026 through the date of the call across seven borrowers, including three new borrowers. That activity included a $38.3 million refinance for the company’s largest borrower. Colonna described the refinancing as a “bespoke solution,” and Sack later characterized the structure as a first-out/last-out financing completed in partnership with a large financial institution, reflecting what management described as increasing opportunities to collaborate with bank partners as the cannabis industry matures.
Management also disclosed $55.7 million of payoffs from borrowers quarter-to-date in the first quarter, resulting in approximately $40 million in net originations so far in 2026. In response to an analyst question about repayments, management said fourth-quarter payoffs were “idiosyncratic” across a fairly large number of borrowers and relatively small positions, but also reflective of broader transaction activity in the market. Management added that in the first quarter, a large origination and a large paydown were connected to the same borrower.
On liquidity, Geoffroy said that as of March 18, 2026, the company had approximately $47.5 million of liquidity, including $45.5 million of borrowing capacity under its $100 million credit facility (subject to borrowing base and other restrictions) and about $2 million of cash. All $25 million of debt outstanding at Dec. 31, 2025 was drawn from the revolving line of credit. Sack said the company could consider other financing options available to BDCs, including unsecured financings, while noting that issuing equity would not be attractive given the stock’s discount to NAV.
Cannabis policy, M&A activity, and pipeline
Management pointed to what it described as improving momentum in cannabis policy and deal activity as supportive of new lending opportunities. Sack said the current administration committed in December 2025 to pursuing reclassification of cannabis from Schedule I to Schedule III. While he emphasized that rescheduling would not equate to federal legalization, he said such a change could “dramatically increase cash flow after taxes” for borrowers, potentially lifting equity valuations, increasing M&A activity, and driving higher capital expenditures. Sack also cautioned that uncertainty would likely persist until regulators establish a Schedule III framework, which could continue to constrain public listings and access to debt markets—conditions management suggested could improve industry economics without necessarily increasing lending competition.
Colonna said the pipeline across the broader Chicago Atlantic platform totaled approximately $732 million in potential debt transactions as of quarter-end, including roughly $616 million in cannabis opportunities and $116 million in non-cannabis opportunities. In the Q&A, Sack clarified that the pipeline figure reflects the entire platform rather than the BDC alone, and he said the company had previously reported an approximately $600 million pipeline, implying growth to the current level.
Discussing market activity, Sack said rescheduling discussions have contributed to a “breath of fresh air” in the industry, including increased eagerness to pursue consolidation and a greater willingness from some operators to consider exits after staying on the sidelines amid low valuations. He also said the company was seeing consolidation activity in states including Ohio, Missouri, and, to some extent, Maryland, as well as in more mature markets such as Colorado and California. When asked about disclosure of state-by-state exposure for portfolio companies, management said it would explore providing that in a future quarter.
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.
