Advanced Flower Capital Inc. (AFCG) reported its third‑quarter 2025 financial results, posting a GAAP net loss of $12.5 million, or $0.57 per basic weighted‑average share, and distributable earnings of $3.5 million, or $0.16 per share. The loss is largely attributable to a sharp increase in the CECL reserve, which rose to $51.17 million at September 30 2025 from $30.42 million at December 31 2024, reflecting heightened credit risk in the legacy loan portfolio.
Revenue for the quarter was $6.53 million, down from $7.12 million in the same period last year. The decline is driven by a slowdown in the cannabis‑real‑estate loan segment and the impact of three non‑accrual loans totaling $104.2 million that remain on the books. Despite the revenue dip, the company’s core cash‑generating operations continue to produce distributable earnings.
Management highlighted that the three non‑accrual loans represent a significant portion of the legacy portfolio and that the CECL reserve increase signals ongoing credit deterioration. CEO Dan Neville said the firm is actively working to resolve these positions and drive loan repayments, which will help reduce the reserve in future periods.
Shareholders approved the conversion from a real‑estate investment trust to a business development company, a strategic shift that broadens AFCG’s investment universe beyond cannabis‑related real‑estate loans. The conversion is expected to unlock new capital‑raising opportunities and enable the firm to deploy capital into higher‑yielding senior secured loans across the cannabis market.
AFCG paid a regular cash dividend of $0.15 per share on October 15 2025, maintaining the dividend level from the prior quarter. The board continues to evaluate distributable earnings each quarter to determine dividend levels, especially given the uncertainty around repayments on non‑accrual loans.
The company will host a conference call at 10:00 am Eastern Time on Wednesday to discuss the results in more detail, including portfolio performance, resolution of legacy credits, and outlook for future earnings.
Investors responded positively to the announcement, citing the strategic shift to a BDC as a key driver. The miss on distributable earnings relative to the consensus estimate of $4.69 million and the GAAP net loss highlighted concerns about the legacy portfolio, but the broader investment opportunities offered by the BDC structure were viewed as a potential long‑term growth catalyst.
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