Company overview
Understand the business
REFI originates and holds primarily senior secured loans. It earns interest income and loan-related fees from borrowers, then pays operating expenses, financing costs, and other obligations. The remaining cash-oriented earnings are measured through distributable earnings, the company-specific measure most relevant to assessing its distribution. Its lending focus can offer comparatively high contractual loan yields, but it also creates concentrated exposure to borrower credit quality, property values, cannabis-industry conditions, and the legal and banking framework affecting that industry.
Primary earnings measures
Distributable earnings per share is the key recurring earnings measure for REFI. It is intended to provide a more useful view than generally accepted accounting principles net income of the earnings available for shareholder distributions from the mortgage lending business. Distribution coverage should therefore be assessed against distributable earnings per share, not generic accounting earnings or the share-price earnings yield.
How the company supports its distribution
REFI’s distribution capacity begins with cash interest and fee income from its secured lending portfolio. Net interest income is affected by the size and yield of the loan book, borrower repayments and originations, credit performance, non-accruals, funding costs, operating expenses, and realized credit losses. Portfolio growth can add income, while repayments, loan resolutions, lower loan yields, higher borrowing costs, or credit impairments can reduce distributable earnings available for distributions.