WEST PALM BEACH, Fla. — Advanced Flower Capital Inc. (AFC) reported its results for the quarter ended June 30, 2025.
AFC reported generally accepted accounting principles (“GAAP”) net loss of $(13.2) million or $(0.60) per basic weighted average common share and Distributable Earnings of $3.4 million or $0.15 per basic weighted average common share for the second quarter of 2025.
“During the quarter, we focused on working through our non-accrual credits with the goal to achieve resolution, paydowns and paybacks of our loans. More broadly, there continues to be a lack of capital entering the cannabis market and we are selectively evaluating opportunities with established operators of scale in attractive markets,” said Dan Neville, AFC’s Chief Executive Officer.
Expansion of Investment Mandate
The Company’s Board of Directors, including its independent directors and external manager approved an amendment to the management agreement, expanding the Company’s investment mandate to include secured loans to companies ancillary to the cannabis industry as well as public and private middle market companies operating outside of the cannabis industry, all in accordance with the Company’s REIT and related regulatory obligations.
Proposed Conversion to BDC
AFC also intends to seek to convert from a commercial mortgage real estate investment trust (“REIT”) to a business development company (“BDC”), subject to shareholder approval of certain related matters. If approved, the conversion will enable the Company to pursue a broader array of investment opportunities, including both real estate- and non-real estate-related assets.
“The proposed conversion to a BDC marks an important milestone in AFC’s trajectory,” said Dan Neville, CEO, adding “Given the capital-intensive nature of the cannabis industry, combined with the high cost of capital, many operators do not own real estate, which significantly limits the universe of cannabis operators AFC can lend to as a mortgage REIT. Converting to a BDC would significantly expand our investable universe, allowing us to lend to ancillary cannabis businesses with high growth potential, as well as non-real estate covered, vertically integrated operators.”
AFC has historically targeted lending to vertically integrated cannabis companies with significant real estate holdings. Following the proposed conversion to a BDC, the Company would continue to operate under its recently expanded investment mandate that now includes direct lending opportunities outside of the cannabis industry. The Company believes there are attractive lending opportunities in other private and public middle-market companies that could generate attractive risk-adjusted returns. By expanding the investable universe, the Company will be positioned to diversify its exposure across industries and credit risk profiles, while maintaining its deal selectivity. The AFC investment team has over 30 years of experience in direct lending outside of the cannabis industry, 20 years operating BDCs and has completed over $10 billion of direct lending transactions.
The proposed conversion is subject to, among other things, approval by the Company’s shareholders of a new investment advisory agreement with its Manager that complies with the requirements of the Investment Company Act of 1940.
Common Stock Dividend
On July 15, 2025, the Company paid a regular cash dividend of $0.15 per common share for the second quarter of 2025 to shareholders of record as of June 30, 2025.
About Advanced Flower Capital
Advanced Flower Capital Inc. (Nasdaq: AFCG) is a leading commercial mortgage real estate investment trust (“REIT”) that primarily originates, structures, underwrites, invests in and manages senior secured mortgage loans and other types of loans and debt securities, with a specialization in loans to cannabis industry operators in states that have legalized medical and/or adult-use cannabis. AFC originates, structures, underwrites and manages loans ranging from $10 million to over $100 million, typically secured by quality real estate assets, license value (where applicable) and cash flows. It is based in West Palm Beach, Florida.
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