Advanced Flower Capital Group (NASDAQ:AFCG), a NASDAQ-listed commercial mortgage REIT, has positioned itself as one of the leading lenders in the cannabis sector.
As one of two major externally managed REITs focusing on the U.S. cannabis industry, AFCG benefits from a capital supply-demand imbalance.
This imbalance allows the company to generate high yield-to-maturity (YTM) rates, with a reported YTM of 19% as of August 1, 2024, on a loan portfolio valued at $287 million.
Capitalizing On Supply-Demand Imbalance
In a Wednesday note, senior analyst Pablo Zuanic of Zuanic & Associates explains how AFCG secures favorable lending terms due to limited capital access for cannabis operators, driven by federal illegality. With 24 states legalizing adult use and 38 legalizing medical cannabis, AFCG has become a key lender, benefiting from the capital imbalance to maintain high YTM rates while keeping funding costs in the mid to high-single digits.
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