Analyst Predicts Success For Cannabis Finance Company Amidst Industry Struggles, Reiterates Overweight Rating

Silver Spike Financial investment Corp. SSIC is a specialty finance firm fashioned to make investments across the cannabis ecosystem via investments in the type of direct financial loans to hashish organizations.

The organization allotted a whole of $21 million to the Verano Holdings Corp. VRNOF $350 million senior secured credit rating facility in November and documented net investment money of $550,415 for the Q2 2023, when compared to net expense decline of $128,186 in Q2 2022.

On January 18th, hashish REIT, Progressive Industrial Properties, Inc. IIPR, announced that 3 of its tenants are in default:

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    SH Dad or mum, Inc. (Parallel) was in default on its obligations to pay rent at just one of IIP’s Pennsylvania qualities (close to 2.9% of invested / committed funds). Lease was paid out in whole by means of January 31, 2023 on all other IIPR attributes leased by Parallel.

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    Environmentally friendly Peak Industries, Inc. (Skymint) was in default on its obligations to pay hire at a single of IIPR’s Michigan attributes under development (somewhere around 2.7% of invested / dedicated funds). Lease was compensated in comprehensive by means of January 31, 2023 on all other IIPR attributes leased by Skymint.

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    Affiliate marketers of Health care Trader Holdings, LLC (Vertical) had been in default on their obligations to shell out rent at IIPR’s California properties (somewhere around .7% of invested / fully commited money).

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IIPR share price fell from $110.78 to $91.9 (at the time of creating Friday morning), next the announcement.

The Analyst

As a response to IIPR’s announcement, Cantor Fizgerald’s analyst Pablo Zuanic, taken care of an ‘Overweight’ ranking on Silver Spike Investment’s inventory, with a 12-thirty day period price focus on of $15.30 (like a dividend).

The Thesis

The analyst preserved the cost focus on for Silver Spike Financial commitment, as the business composition enables obtain to a much larger addressable (personal debt) industry prospect relative to those focused only on real estate-backed lending.

“Congress’ failure to go the Safe Banking Act, combined with macro worries and point out-precise troubles, will pressure the U.S. cannabis marketplace, and especially those people providers with stretched equilibrium sheets,” Zuanic reported, incorporating that Silver Spike is BDC with a blue-chip credit portfolio and 40% of its cash nonetheless still left to deploy, but investing at far more than a 30% low cost to net asset benefit.

At $9.55 (1/19), Silver Spike trades at far more than a 30% price reduction to internet asset worth, and the business valie is hardly over zero.

Zuanic believes that amplified deployment of the capital foundation, leveraged at some position, and the announcement of a recurring dividend payment will each aid the inventory return to web asset valuation.

“Also, we would assume traders (and future lender loan providers to Silver Spike) to develop into extra appreciative of the company’s mortgage portfolio as predicted sector worries commence to harm other providers,” the analyst concluded.

The Price Motion

Silver Spike Expenditure shares had been buying and selling flat at $9.51 for each share at the time of producing Friday morning.

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Associated Information

Silver Spike Investment Corp. Reviews Next Quarter Fiscal 2023 Monetary Effects

Silver Spike Investment Expands Bank loan Portfolio With Senior Secured Credit history Facility To Verano