REIT - This Cannabis Lender Is Sitting On A Stack Of Capital: 100% Dividends Meet Equity-Like Returns | Benzinga
In a recent webinar hosted by Pablo Zuanic from Zuanic & Associates, AFC Gamma's top executives discussed the company's strategic direction, focusing on the spin-off of its commercial real estate business, the current state of its cannabis loan book, and its competitive positioning in the industry.
Spin-Off Rationale And Structure
Dan Neville, CEO of AFC Gamma, Inc. (NASDAQ: AFCG), detailed the strategic decision to spin off the company's commercial real estate business into a separate entity, Sunrise Realty Trust (NASDAQ: SONS).
Neville explained, "We identified a void in the industry for traditional institutional lending to the cannabis sector. However, investors wanted pure-play exposure."
The spin-off was structured as a dividend, resulting in the creation of Sunrise Realty Trust with an initial portfolio of $50 million in deals and $65 million in cash.
Dividends And Tax Advantage
This separation allows each entity to focus on its core competencies and target investor bases more effectively. Neville highlighted that AFC Gamma, as a real estate investment trust (REIT), continues to pay out 90-100% of its earnings as dividends, maintaining a tax advantage for its investors.
The newly formed ...