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United States securities and exchange commission logo
October 25, 2021
Anthony Cappell
Chief Executive Officer
Chicago Atlantic Real Estate Finance, Inc.
420 North Wabash Avenue
Suite 500
Chicago, IL 60611
Re: Chicago Atlantic
Real Estate Finance, Inc.
Amendment No. 2 to
Draft Registration Statement on Form S-11
Submitted October
8, 2021
CIK No. 0001867949
Dear Mr. Cappell:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Amendment No. 2 to Draft Registration Statement on Form S-1
General
1. We note your response
to comment 1. To the extent that you do not believe that your
sponsor or its
affiliates have sponsored prior programs, please tell us and clarify whether
your manager and/or its
affiliates have sponsored any investment funds or other vehicles
that primarily have
invested in real estate or real estate-related investments.
Overview, page 5
2. We your disclosure that
loans to 13 borrowers comprise your portfolio. We also note your
disclosure on page 2
that indicates the members of your Investment Committee had
Anthony Cappell
FirstName LastNameAnthony CappellInc.
Chicago Atlantic Real Estate Finance,
Comapany
October 25,NameChicago
2021 Atlantic Real Estate Finance, Inc.
October
Page 2 25, 2021 Page 2
FirstName LastName
reviewed over 500 cannabis loan opportunities, of which 24 loans have
been funded.
Please clarify if any of the remaining 11 loans were funded on your
behalf and will be
transferred to the company.
Our Loan Origination Pipeline, page 7
3. We note that you are currently completing your underwriting process
and negotiating
definitive loan documents for two of the potential loan investments
related to the fully-
executed, non-binding term sheets and that, for the other two
potential loans for which the
Investment Committee has provided preliminary approval, you are in the
process of
completing your diligence and underwriting process and negotiating
definitive loan
documents. We also note that in the forepart of this section you refer
to five executed,
non-binding term sheets comprising $90M of anticipated loan
commitments that you will
extend. Please revise the discussion here to disclose the status of
the fifth loan for which
you have executed a non-binding term sheet or to clarify,
specifically, to which four loans
your current disclosure refers.
4. Please revise here and throughout the document to clarify the
reference to your Investment
Committee, which appears to reference the Manager's Investment
Committee.
Our Initial Portfolio
Collateral Overview, page 102
5. We note your response to comment 8 and that you have removed the
disclosure related to
your additional collateral. Please explain to us why you believe the
detailed disclosure
regarding the real estate collateral is relevant information to
provide to investors, but that
similar disclosure regarding the additional collateral is not. In this
respect, we note that
your response indicates that the company would likely attempt to sell
the loan to a third
party rather than to attempt to foreclose on any of the collateral.
Please revise your
prospectus to prominently discuss this aspect of your business plan in
greater detail. For
example, we note that you highlight the "strong collateral" of your
loan portfolio as a
competitive strength of your business, but do not highlight that you
likely would not seek
to liquidate or foreclose on the collateral in order to satisfy a loan
default. Please also
disclose the limitations and risks surrounding your ability to sell
the delinquent loan to a
third party. Additionally, please expand your disclosure, including
your risk factors, to
clarify with greater specificity the limitations on your ability to
foreclose under applicable
state law. In particular, please discuss and identify the material
regulatory and legal risks
associated with the jurisdictions (e.g., Arizona, Arkansas,
California, Florida, Maryland,
Massachusetts, Michigan, Nevada, New Jersey, Ohio and Pennsylvania) in
which your
borrowers operate as it relates to collateralization. Finally, please
discuss the provisions
of the loan that would allow you to force the borrower to sell the
collateral without taking
title to the collateral and highlight any limitations and risks
associated with a forced sale.
Anthony Cappell
Chicago Atlantic Real Estate Finance, Inc.
October 25, 2021
Page 3
You may contact Paul Cline at 202-551-3851 or Shannon Menjivar at
202-551-3856 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Stacie Gorman at 202-551-3585 or Erin E. Martin at 202-551-3391 with
any other
questions.
Sincerely,
FirstName LastNameAnthony Cappell
Division of Corporation
Finance
Comapany NameChicago Atlantic Real Estate Finance, Inc.
Office of Real Estate &
Construction
October 25, 2021 Page 3
cc: Owen J. Pinkerton, Esq.
FirstName LastName