Loans Held For Investment, Net

3 Months Ended

Mar. 31, 2025

Loans Held For Investment, Net [Abstract]

LOANS HELD FOR INVESTMENT, NET

3. LOANS HELD FOR INVESTMENT, NET

The Company primarily originates senior secured loans that it has the intent and ability to hold until maturity or payoff. Such loans are classified as held for investment and are reported on the consolidated balance sheets at amortized cost. The following tables present summarized information regarding our loans held for investment by interest rate type as of March 31, 2025 and December 31, 2024:

	As of March 31, 2025
		Total Principal		Original Issue Discount			Carrying Value		Percentage of loans held for investment
Fixed-rate loans		$	163,307,742	$	(591,962	)	$	162,715,780		40.7	%
Floating-rate loans			238,204,074		(1,464,375	)		236,739,699		59.3	%
Total		$	401,511,816	$	(2,056,337	)	$	399,455,479		100.0	%

	As of December 31, 2024
		Total Principal		Original Issue Discount			Carrying Value		Percentage of loans held for investment
Fixed-rate loans		$	149,771,871	$	(545,081	)	$	149,226,790		37.0	%
Floating-rate loans			254,949,683		(1,699,427	)		253,250,256		63.0	%
Total		$	404,721,554	$	(2,244,508	)	$	402,477,046		100.0	%

The following tables summarize the Company’s aggregate portfolio of loans held for investment, net of the current expected credit loss reserve as of March 31, 2025 and December 31, 2024:

	As of March 31, 2025
	Outstanding Principal		Original Issue Discount			Carrying Value			Weighted Average Remaining Life (Years) (1)
Senior Term Loans	$	401,511,816	$	(2,056,337	)	$	399,455,479			2.1
Current expected credit loss reserve		-		-			(3,274,058	)
Total loans held at carrying value, net	$	401,511,816	$	(2,056,337	)	$	396,181,421

	As of December 31, 2024
	Outstanding Principal		Original Issue Discount			Carrying Value			Weighted Average Remaining Life (Years) (1)
Senior Term Loans	$	404,721,554	$	(2,244,508	)	$	402,477,046			2.2
Current expected credit loss reserve		-		-			(4,346,869	)
Total loans held at carrying value, net	$	404,721,554	$	(2,244,508	)	$	398,130,177

(1)Weighted average remaining life is calculated based on the carrying value of the loans as of March 31, 2025 and December 31, 2024, respectively.

The following tables present changes in loans held at carrying value as of and for the three months ended March 31, 2025 and 2024.

	Principal			Original Issue Discount			Current Expected Credit Loss Reserve			Carrying Value
Balance at December 31, 2024	$	404,721,554		$	(2,244,508	)	$	(4,346,869	)	$	398,130,177
New fundings		4,365,832			(181,800	)		-			4,184,032
Principal repayment of loans		(9,170,628	)		-			-			(9,170,628	)
Accretion of original issue discount		-			369,971			-			369,971
PIK Interest		1,595,058			-			-			1,595,058
Decrease in provision for current expected credit losses		-			-			1,072,811			1,072,811
Balance at March 31, 2025	$	401,511,816		$	(2,056,337	)	$	(3,274,058	)	$	396,181,421

	Principal			Original Issue Discount			Current Expected Credit Loss Reserve			Carrying Value
Balance at December 31, 2023	$	355,745,305		$	(2,104,695	)	$	(4,972,647	)	$	348,667,963
New fundings		22,485,888			(105,081	)		-			22,380,807
Principal repayment of loans		(3,663,452	)		-			-			(3,663,452	)
Accretion of original issue discount		-			477,756			-			477,756
PIK Interest		3,008,593			-			-			3,008,593
Increase in provision for current expected credit losses		-			-			(383,371	)		(383,371	)
Balance at March 31, 2024	$	377,576,334		$	(1,732,020	)	$	(5,356,018	)	$	370,488,296

A more detailed listing of the Company’s loans held at carrying value based on information available as of March 31, 2025, is as follows:

Loan (1)	Location(s)	Initial Funding Date (1)	Maturity Date (2)	Principal Balance		Original Issue Discount			Carrying Value		Percentage of Loans Held for Investment			Future Fundings		Interest Rate (3)	Periodic Payment (4)	YTM IRR (5)
1	Various	10/27/2022	10/30/2026	$	19,255,716	$	(271,789	)	$	18,983,927		4.8	%		-	P+6.5% Cash (8)	P&I	17.1%
2	Michigan	12/31/2021	12/31/2025		27,110,506		-			27,110,506		6.8	%		-	P+3% Cash (13)	I/O	17.3%
3	Various	11/18/2021	1/29/2027		21,384,473		(461,592	)		20,922,881		5.2	%		-	P+10.375% Cash, 2.75% PIK (11)(14)(15)	P&I	22.6%
4	Arizona	4/19/2021	6/17/2026		6,626,809		-			6,626,809		1.7	%		-	11.91% Cash	I/O	17.0%
6	Michigan	8/20/2021	1/30/2026		4,958,672		-			4,958,672		1.2	%		-	P+6.5% Cash (13)	P&I	17.2%
7	Illinois, Arizona	8/24/2021	6/30/2025		23,573,222		(27,357	)		23,545,865		5.9	%		-	P+6% Cash, 2% PIK (9)	I/O	19.3%
8	West Virginia	9/1/2021	12/31/2025		8,491,943		-			8,491,943		2.1	%		-	10% Cash	I/O	15.0%
9	Pennsylvania	3/31/2025	3/31/2028		16,576,987		(108,037	)		16,468,950		4.1	%		-	9.0% Cash (16)	I/O	9.5%
12	Various	11/8/2021	10/31/2027		13,285,201		(52,847	)		13,232,354		3.3	%		-	P+7% Cash, 2% PIK (10)	P&I	19.3%
16	Florida	12/30/2021	8/29/2025		6,557,500		(15,812	)		6,541,688		1.6	%		-	16.75% Cash	I/O	31.2%
18	Ohio	2/3/2022	12/31/2025		45,589,764		(326,924	)		45,262,840		11.3	%		-	P+1.75% Cash, 5% PIK (9)(17)	I/O	16.5%
19	Florida	3/11/2022	12/31/2025		18,378,759		(17,969	)		18,360,790		4.6	%		-	11% Cash, 5% PIK	I/O	16.5%
20	Missouri	5/9/2022	11/28/2025		21,675,015		(48,086	)		21,626,929		5.4	%		-	11% Cash, 2% PIK	P&I	14.7%
21	Illinois	7/1/2022	7/29/2026		6,453,187		(29,315	)		6,423,872		1.6	%		-	P+7% Cash, 2% PIK (9)	P&I	23.3%
23	Arizona	3/27/2023	3/31/2026		1,560,000		(16,591	)		1,543,409		0.4	%		-	P+7.5% Cash (12)	P&I	18.7%
24	Oregon	3/31/2023	9/27/2026		520,000		-			520,000		0.1	%		-	P+10.5% Cash (7)	P&I	21.7%
25	New York	8/1/2023	6/29/2036		24,337,297		-			24,337,297		6.1	%		-	15% Cash	P&I	16.6%
27	Nebraska	8/15/2023	6/30/2027		17,400,000		-			17,400,000		4.4	%		-	P+6.5% Cash (18)	P&I	15.7%
29	Illinois	10/11/2023	10/9/2026		1,920,477		-			1,920,477		0.5	%		-	11.4% Cash, 1.5% PIK	I/O	14.7%
30	Missouri, Arizona	12/19/2023	12/31/2026		18,400,000		(122,131	)		18,277,869		4.6	%		-	P+7.75% Cash (13)	I/O	18.7%
31	California, Illinois	5/3/2023	5/3/2026		6,680,000		-			6,680,000		1.7	%		-	P+8.75% Cash (10)	P&I	18.3%
32	Nevada	4/15/2024	8/15/2027		5,900,000		(25,351	)		5,874,649		1.5	%		-	P+6.5% Cash (12)	P&I	16.1%
33	Minnesota	5/20/2024	5/28/2027		1,080,000		(4,286	)		1,075,714		0.3	%		-	12% Cash (14)	I/O	12.9%
34	Arizona	6/17/2024	5/29/2026		10,000,000		-			10,000,000		2.5	%		-	11.91% Cash	I/O	12.8%
35	California	8/23/2024	8/23/2027		24,438,420		-			24,438,420		6.1	%		-	12% Cash, 3% PIK	P&I	16.3%
36	Illinois	10/28/2024	1/1/2027		25,900,000		(107,202	)		25,792,798		6.5	%		1,700,000	P+6.25% Cash (10)	I/O	15.4%
37	Various	11/26/2024	11/24/2028		20,069,535		(365,730	)		19,703,805		4.9	%		10,000,000	12% Cash, 1% PIK (19)	I/O	15.2%
38	Various	12/13/2024	7/14/2025		2,905,000		(24,676	)		2,880,324		0.7	%		2,095,000	10% Cash (19)	I/O	16.1%
40	Various	3/28/2025	7/28/2028		233,333		(23,276	)		210,057		0.1	%		-	SOFR +10.25% Cash (6)	I/O	19.4%
41	Ohio	3/1/2025	3/13/2027		250,000		(7,366	)		242,634		0.1	%		-	14.5% Cash	I/O	16.4%
			Total	$	401,511,816	$	(2,056,337	)	$	399,455,479		100	%	$	13,795,000		Wtd Average	16.9%

(1)Loan numbering in the table above is maintained from origination for purposes of comparability and may not be sequential due to maturities, payoffs, or refinancings.

(2)Certain loans are subject to contractual extension options as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein and certain borrowers may have the right to prepay with or without a contractual prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.

(3)"P" = prime rate; "SOFR"= Secured Overnight Financing Rate. "P" and "SOFR" represent floating rate loans that pay interest at the designed benchmark rate plus an applicable spread; "PIK" = paid-in-kind interest.

(4)P&I = principal and interest. I/O = interest only. P&I loans may include interest only periods for a portion of the loan term. The frequency of loan payments may be monthly or quarterly as required by the respective credit agreement governing such loan.

(5)Estimated YTM, calculated on a weighted average principal basis, includes a variety of fees and features that affect the total yield, which may include, but is not limited to, OID, exit fees, prepayment fees, unused fees and contingent features. OID is recognized as a discount to the funded loan principal and is accreted to income over the term of the loan. The estimated YTM calculations require management to make estimates and assumptions, including, but not limited to, the timing and amounts of loan draws on delayed draw loans, the timing and collectability of exit fees, the probability and timing of prepayments and the probability of contingent features occurring. For example, certain credit agreements contain provisions pursuant to which certain PIK interest rates and fees earned by us under such credit agreements will decrease upon the satisfaction of certain specified criteria which we believe may improve the risk profile of the applicable borrower. To be conservative, we have not assumed any prepayment penalties or early payoffs in our estimated YTM calculation. Estimated YTM is based on current management estimates and assumptions, which may change. Actual results could differ from those estimates and assumptions.

(6)This Loan is subject to a SOFR floor of 4.00%

(7)This Loan is subject to a prime rate floor of 5.50%

(8)This Loan is subject to a prime rate floor of 6.25%

(9)This Loan is subject to a prime rate floor of 7.00%

(10)This Loan is subject to a prime rate floor of 7.50%

(11)This Loan is subject to a prime rate floor of 7.75%

(12)This Loan is subject to a prime rate floor of 8.00%

(13)This Loan is subject to a prime rate floor of 8.50%

(14)The borrowers of Loan #3 and Loan #33 are affiliates of Vireo Growth, Inc., a related party. The aggregate principal balance of these loans is included on the consolidated balance sheet as loans held for investment - related party. See Note 8 for further details.

(15)The aggregate principal balance outstanding of Loan #3 is comprised of two tranches. The first tranche has a principal balance of approximately $16.9 million, bears a floating interest rate of prime plus 10.375% cash and 2.75% PIK and has a maturity date of January 29, 2027. The second tranche has a principal balance of approximately $4.4 million, bears an interest rate of 15.00% cash and 2.00% PIK, and a maturity date of May 29, 2026. The statistics presented reflect the weighted average of the rate terms under both tranches for the total aggregate loan principal, however only the maturity date for the first tranche has been presented in the table above.

(16)Loan #9, is comprised of two tranches, a $14.5 million first lien judgment loan (the "Judgment Loan") and a $2.0 million second lien term loan (the "Term Loan"). The Judgment Loan and the Term Loan bear interest at a rate of 9.0%. The Judgment Loan has no contractual maturity and will remain outstanding until paid by the obligor and the Term Loan has a maturity of March 31, 2028. For comparability to previously issued financial statements, management will continue to reference the Judgment Loan and the Term Loan, collectively, as Loan #9, and the maturity date presented represents the maturity date of the Term Loan. See Note 8 for additional information.

(17)An affiliate under common control holds a controlling equity investment in this portfolio company (Note 8).

(18)This loan has floating grid pricing based on the Prime Rate plus a spread of 5.00% to 8.75% based on monthly annualized EBITDA performance. As of March 31, 2025, applied interest rate is Prime Rate + 6.50%.

(19)Loan #37 and Loan #38 bear unused fees on the unfunded commitment of 0.75% and 1.50% per annum, respectively.

The following table presents aging analyses of past due loans by amortized cost, excluding the CECL reserve, as of March 31, 2025 and December 31, 2024.

	As of March 31, 2025
	Current Loans (1)		31-60 Days Past Due		61-90 Days Past Due		90+ Days Past Due		Total Past Due		Total Loans		Non- Accrual(2)
Senior Term Loans	$	399,455,479	$	-	$	-	$	-	$	-	$	399,455,479	$	16,468,950
Total	$	399,455,479	$	-	$	-	$	-	$	-	$	399,455,479	$	16,468,950

	As of December 31, 2024
	Current Loans (1)		31-60 Days Past Due		61-90 Days Past Due		90+ Days Past Due (2)		Total Past Due		Total Loans		Non- Accrual(2)
Senior Term Loans	$	386,074,558	$	-	$	-	$	16,402,488	$	16,402,488	$	402,477,046	$	16,402,488
Total	$	386,074,558	$	-	$	-	$	16,402,488	$	16,402,488	$	402,477,046	$	16,402,488

(1)Loans 1-30 days past due are included in the current loans.

(2)On May 1, 2023, Loan #9 was placed on non-accrual status. On June 20, 2023, the Administrative Agent to Loan #9 issued an acceleration notice requesting immediate payment of all amounts outstanding and therefore is 90 days past due as of December 31, 2024. See Note 8 for further details.

Non-Accrual Loans

As of both March 31, 2025 and December 31, 2024, there was one loan placed on non-accrual status.

As more fully described in Note 8, Loan #9 was placed on non-accrual status as of May 1, 2023 and has a carrying value of approximately $16.4 million as of both March 31, 2025 and December 31, 2024. Loan #9 carried a reserve for current expected credit losses of approximately $0.1 million and $1.2 million as of March 31, 2025 and December 31, 2024, respectively. The Company ceased accruing interest on the first date of delinquency, based on expectation of its ability to collect all amounts then due from the borrower. As a result, there was no accrued interest to write-off when the loan was placed on non-accrual.

Credit Quality Indicators

The Company assesses the risk factors of each loan, and assigns a risk rating based on a variety of factors, including, without limitation, payment history, real estate collateral coverage, property type, geographic and local market dynamics, financial performance, loan to enterprise value and fixed charge coverage ratios, loan structure and exit strategy, and project sponsorship. This review is performed quarterly. Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows:

Rating	Definition
1	Very low risk
2	Low risk
3	Moderate/average risk
4	High risk/potential for loss: a loan that has a risk of realizing a principal loss
5	Impaired/loss likely: a loan that has a high risk of realizing principal loss, has incurred principal loss or an impairment has been recorded

The risk ratings are primarily determined based on current and historical performance metrics specific to each portfolio company, as well as consideration of future economic conditions and each borrower’s estimated ability to meet debt service requirements. The risk ratings shown in the following table as of March 31, 2025 and December 31, 2024 consider borrower specific credit history and performance and reflect a quarterly re-evaluation of overall current macroeconomic conditions affecting the Company’s borrowers, specifically those designated as held for investment.

As of March 31, 2025 and December 31, 2024, the carrying value, excluding the current expected credit loss reserve (the “CECL Reserve”), of the Company’s loans within each risk rating category by year of origination is as follows:

	As of March 31, 2025(1)
Risk Rating	2025		2024		2023		2022		2021		Total
1	$	-	$	1,075,713	$	520,000	$	21,626,930	$	-	$	23,222,643
2		1,040,870		64,835,378		63,479,052		64,691,470		23,545,865		217,592,635
3		242,634		34,737,436		-		72,373,346		29,701,304		137,054,720
4		-		10,000,000		-		-		11,585,481		21,585,481
5		-		-		-		-		-		-
Total	$	1,283,504	$	110,648,527	$	63,999,052	$	158,691,746	$	64,832,650	$	399,455,479

	As of December 31, 2024(1)
Risk Rating	2024		2023		2022		2021		Total
1		1,111,224	$	580,000	$	41,045,793	$	-	$	42,737,017
2		63,823,279		64,896,824		90,874,764		24,239,380		243,834,247
3		34,653,247		2,466,705		27,110,506		13,687,904		77,918,362
4		10,000,000		-		-		27,987,420		37,987,420
5		-		-		-		-		-
Total	$	109,587,750	$	67,943,529	$	159,031,063	$	65,914,704	$	402,477,046

(1)Amounts are presented by loan origination year with subsequent advances on delayed draw facilities shown in the initial year of origination.

Real estate collateral coverage is also a significant credit quality indicator, and real estate collateral coverage, excluding the CECL Reserve, was as follows as of March 31, 2025 and December 31, 2024:

As of March 31, 2025(1)
	< 1.0x		1.0x – 1.25x		1.25x – 1.5x		1.50x – 1.75x		1.75x – 2.0x		> 2.0x		Total
Fixed-rate	$	66,475,847	$	40,907,370	$	43,844,431	$	9,567,657	$	-	$	1,920,475	$	162,715,780
Floating-rate		130,777,929		23,545,865		6,633,930		-		25,792,798		49,989,177		236,739,699
	$	197,253,776	$	64,453,235	$	50,478,361	$	9,567,657	$	25,792,798	$	51,909,652	$	399,455,479

As of December 31, 2024(1)
	< 1.0x		1.0x – 1.25x		1.25x – 1.5x		1.50x – 1.75x		1.75x – 2.0x		> 2.0x		Total
Fixed-rate	$	45,029,665	$	48,900,184	$	43,750,558	$	9,603,167	$	-	$	1,943,216	$	149,226,790
Floating-rate		155,364,941		16,402,488		6,549,135		—		24,885,063		50,048,629		253,250,256
	$	200,394,606	$	65,302,672	$	50,299,693	$	9,603,167	$	24,885,063	$	51,991,845	$	402,477,046

(1)Real estate collateral coverage is calculated based upon most recent third-party appraised values. The Company generally obtains new appraisal of all material real estate collateral at least once annually.

Geography concentration of our loans held for investment is also a significant credit quality indicator. As of March 31, 2025 and December 31, 2024, our borrowers have operations in the jurisdictions in the table below:

As of March 31, 2025						As of December 31, 2024
Jurisdiction	Outstanding Principal (1)		Percentage of Our Loan Portfolio			Jurisdiction	Outstanding Principal (1)		Percentage of Our Loan Portfolio
Illinois	$	61,370,819		15	%	Illinois	$	55,958,079		14	%
Ohio		61,364,965		15	%	Ohio		60,065,707		15	%
Florida		42,242,026		11	%	Florida		42,712,285		11	%
Pennsylvania		35,832,703		9	%	Pennsylvania		35,727,045		9	%
Missouri		32,082,102		8	%	Missouri		38,208,259		9	%
Michigan		32,069,178		8	%	Michigan		32,068,629		8	%
Arizona		28,914,569		7	%	Arizona		28,023,340		7	%
California		24,859,640		6	%	California		26,057,479		6	%
New York		24,337,297		6	%	New York		25,093,595		6	%
Maryland		22,049,473		5	%	Maryland		21,835,901		5	%
Nebraska		17,400,000		4	%	Nebraska		17,400,000		4	%
West Virginia		8,491,943		2	%	West Virginia		8,491,943		2	%
Nevada		5,900,000		1	%	Nevada		6,000,000		1	%
Texas		2,763,768		1	%	Texas		2,756,870		1	%
Minnesota		1,160,460		0	%	Minnesota		1,116,000		0	%
Oregon		672,873		0	%	Oregon		580,000		0	%
Massachusetts		—		-	%	Massachusetts		2,626,423		1	%
Total	$	401,511,816		100	%	Total	$	404,721,554		100	%

(1)The principal balance of the loans not secured by real estate collateral are included in the jurisdiction representing the borrower's principal place of business.

CECL Reserve

The Company records an allowance for current expected credit losses for its loans held for investment. The allowances are deducted from the gross carrying amount of the assets to present the net carrying value of the amounts expected to be collected on such assets. The Company estimates its CECL Reserve using among other inputs, third-party valuations, and a third-party probability-weighted model that considers the likelihood of default and expected loss given default for each individual loan based on the risk profile for approximately three years after which we immediately revert to use of historical loss data.

ASC 326 requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment. The Company considers multiple datapoints and methodologies that may include likelihood of default and expected loss given default for each individual loan, valuations derived from discount cash flows (“DCF”), and other inputs including the risk rating of the loan, how recently the loan was originated compared to the measurement date, and expected prepayment, if applicable. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, and off-balance sheet credit exposures such as unfunded loan commitments.

The Company evaluates its loans on a collective (pool) basis by aggregating on the basis of similar risk characteristics as explained above. We make the judgment that loans to cannabis-related borrowers that are fully collateralized by real estate exhibit similar risk characteristics and are evaluated as a pool. Further, loans that have no real estate collateral, but are secured by other forms of collateral, including equity pledges of the borrower, and otherwise have similar characteristics as those collateralized by real estate are evaluated as a pool. All other loans are analyzed individually, either because they operate in a different industry, may have a different risk profile, or maturities that extend beyond the forecast horizon for which we are able to derive reasonable and supportable forecasts.

Estimating the CECL Reserve also requires significant judgment with respect to various factors, including (i) the appropriate historical loan loss reference data, (ii) the expected timing of loan repayments, (iii) calibration of the likelihood of default to reflect the risk characteristics of the Company’s loan portfolio, and (iv) the Company’s current and future view of the macroeconomic environment. From time to time, the Company may consider loan-specific qualitative factors on certain loans to estimate its CECL Reserve, which may include (i) whether cash from the borrower’s operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan, and (iii) the liquidation value of collateral. For loans where we have deemed the borrower/sponsor to be experiencing financial difficulty, we may elect to apply a practical expedient, in which the fair value of the underlying collateral is compared to the amortized cost of the loan in determining a CECL Reserve.

To estimate the historic loan losses relevant to the Company’s portfolio, the Company evaluates its historical loan performance, which includes zero realized loan losses since the inception of its operations. Additionally, the Company analyzed its repayment history, noting it has limited “true” operating history, since the incorporation date of March 30, 2021. However, the Company’s Sponsor and its affiliates have had operations for the past five fiscal years and have made investments in similar loans that have similar characteristics including interest rate, collateral coverage, guarantees, and prepayment/make whole provisions, which fall into the pools identified above, and may be considered by management in determining the extent to which a CECL Reserve shall be recorded.

In addition, the Company reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest and principal, if required, as well as the loan-to-value (LTV) ratio. When evaluating qualitative factors that may indicate the need for a CECL Reserve, the Company forecasts losses considering a variety of factors. In considering the potential current expected credit loss, the Manager primarily considers significant inputs to the Company’s forecasting methods, which include (i) key loan-specific inputs such as the value of the real estate collateral, liens on equity (including the equity in the entity that holds the state-issued license to cultivate, process, distribute, or retail cannabis), presence of personal or corporate guarantees, among other credit enhancements, LTV ratio, rate type (fixed or floating) and IRR, loan-term, geographic location, and expected timing and amount of future loan fundings, (ii) performance against the underwritten business plan and the Company’s internal loan risk rating, and (iii) a macro-economic forecast. Estimating the enterprise value of our borrowers in order to calculate LTV ratios is often a significant estimate. The Manager utilizes a third-party valuation appraiser to assist with the Company’s valuation process primarily using comparable transactions to estimate enterprise value of its portfolio companies and supplement such analysis with a multiple-based approach to enterprise value to revenue multiples of publicly-traded comparable companies obtained from S&P Capital IQ as of March 31, 2025, to which the Manager may apply a private company discount based on the Company’s current borrower profile.

During the three month period ended March 31, 2025, the Company reversed approximately $1.2 million of the CECL Reserve relating to Loan #9, which was restructured during the period as a result of the foreclosure proceedings more fully described in Note 8. Additionally, the credit profile of our portfolio of loans held for investment improved during the comparative period, with the portion of the portfolio risk rated "4" decreased from approximately $38.0 million or 9.4% as of December 31, 2024 to $21.6 million or 5.4% as of March 31, 2025. The portfolio weighted average loan to enterprise value ratio (calculated as outstanding principal balance divided by total value of collateral on a weighted average basis) remained relatively consistent at 47.5% compared to 47.0% as of December 31, 2024.

Regarding real estate collateral, the Company generally cannot take the position of mortgagee-in-possession as long as the property is used by a cannabis operator, but it can request that the court appoint a receiver to manage and operate the subject real property until the foreclosure proceedings are completed. Additionally, while the Company cannot foreclose under state Uniform Commercial Code (“UCC”) and take title or sell equity in a licensed cannabis business, a potential purchaser of a delinquent or defaulted loan could.

In order to estimate the future expected loan losses relevant to the Company’s portfolio, the Company utilizes historical market loan loss data obtained from a third-party database for commercial real estate loans, which the Company believes is a reasonably comparable and available data set to use as an input for its type of loans. The Company believes this dataset to be representative for future credit losses whilst considering that the cannabis industry is maturing, and consumer adoption, demand for production, and retail capacity are increasing akin to commercial real estate over time. For periods beyond the reasonable and supportable forecast period, the Company reverts back to historical loss data.

All of the above assumptions, although made with the most available information at the time of the estimate, are subjective and actual activity may not follow the estimated schedule. These assumptions impact the future balances that the loss rate will be applied to and as such impact the Company’s CECL Reserve. As the Company acquires new loans and the Manager monitors loan and borrower performance, these estimates will be revised each period.

Activity related to the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value and loans receivable at carrying value as of and for the three months ended March 31, 2025 and 2024 is presented in the table below.

	Funded			Unfunded			Total
Balance at December 31, 2024	$	4,346,869		$	45,572		$	4,392,441
Benefit for current expected credit losses		(1,072,811	)		(465	)		(1,073,276	)
Balance at March 31, 2025	$	3,274,058		$	45,107		$	3,319,165

	Funded		Unfunded			Total
Balance at December 31, 2023	$	4,972,647	$	3,092		$	4,975,739
Provision for current expected credit losses		383,371		(3,092	)		380,279
Balance at March 31, 2024	$	5,356,018	$	—		$	5,356,018

The Company has made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of the related loans held for investment in determining the CECL Reserve, as any uncollectible accrued interest receivable is written off in a timely manner. To date, the Company has had zero write-offs related to uncollectible interest receivable, but will discontinue accrual of interest on loans if deemed to be uncollectible, with any previously accrued uncollected interest on the loan charged to interest income in the same period. For the loan placed on non-accrual, the Company ceased accruing interest on the first date of delinquency, based on expectation of its ability to collect all amounts then due from the borrower. As a result, there was no accrued interest to write-off when the loan was placed on non-accrual status.