Pelorus Fund Achieves 41.98% YoY Growth with $345M in Assets Under Management in 2022; Outperforms Benchmark Cannabis ETF by 84.58%; Generates 61.3% Total Returns Since Inception without Reinvestment and 83.5% Total Returns Since Inception with Reinvestment
Fund Records Two New Originations in Q4, for a Total Value of $63M, Taking the Total
Portfolio of Loan Commitments from $301M to $372M, for 23.6% Growth for the Quarter
NEWPORT BEACH, Calif., March 02, 2023 (GLOBE NEWSWIRE) -- Pelorus Equity Group (“Pelorus”), the leading provider of value-add bridge and fully stabilized commercial real estate loans for cannabis businesses and owners with cannabis-related real estate, announced its financial results for the fourth quarter 2022 (“Q4 2022”) and full year, ending December 31, 2022 (“FY 2021”). All financial information is provided in U.S. dollars unless otherwise indicated.
Financial Highlights Q4 2022
The Pelorus Fund (the “Pelorus Fund” or “the Fund”), a privately held mortgage real estate investment trust (“mREIT”) with specialty lending to cannabis-use and cannabis-related properties, recorded two new originations in Q4, for a total value of $63M, taking the total portfolio of loan commitments from $301M to $372M, for 23.6% growth for the quarter. One of the new originations was for a loan amount of $45.5M with TerrAscend, a publicly traded multistate operator (“MSO”). The fully stabilized variable interest rate loan is collateralized by three properties, two cultivation facilities in Maryland and New Jersey, and a dispensary in Phillipsburg, New Jersey. The sponsor had spent $64M in cost basis developing the properties, and Pelorus lent $46M, for a combined 71% loan-to-cost ratio and 61% loan-to-value ratio.
In Q4 2022, newly originated note rates were with a floor of 12% for the fully stabilized loan products, and 15% for the hybrid/construction loan products. Fund equity increased $10M – 3.7% – to $278M, and Assets Under Management (“AUM”) increased $28M – 8.8% – to $345M.
Financial Highlights FY 2022
The Pelorus Fund ended 2022 with $377M in loan commitments and $345M in AUM, marking 41.98% year-over-year growth. The Fund also announced it generated 61.3% total returns to investors who have opted to receive monthly distributions since the Fund’s inception. For Pelorus Fund investors who chose to compound their returns monthly – 40% of the Fund’s investors – that rate climbed to 83.5%, enabling the Fund to increase the cumulative return over time by reinvesting interest along with the principle. In addition, the Pelorus Fund completed 2022 with a 10.52% net annualized internal rate of return (“IRR”), a 11.9% year-to-date (“YTD”) return, a 14.15% life-to-date (“LTD”) return, and a 13.12% cash yield to date.
Rate Increases and Going Forward Rate Policy The Federal Open Market Committee (“FOMC”)
The Federal Open Market Committee has continued with interest rate increases. Pelorus expects two to three more interest rate hikes for 2023, and the current outlook is for those increases to be less severe than the previous rate increases. Pelorus continues to believe that demand for all its loan products is sufficiently elastic to withstand increases in line with prevailing rates.
Pelorus Fund Pipeline
The Pelorus Fund continues to have a robust pipeline of bridge, hybrid and fully stabilized transactions for 2023. The larger transactions are blanket loans consisting of a portfolio of properties. All of the loans in the pipeline have been quoted with a floating interest rate over the one (“1”) month Secured Overnight Financing Rate (“SOFR”), which means the Fund would benefit from the current trend of higher interest rates in 2023.
Pelorus Equity Group Management Commentary
“Even in a volatile market, we outperformed the benchmark U.S. cannabis ETF by 84.58%, and drove significant double-digit growth for our investors, while continuing to see an acceleration of institutional interest in our core strategy,” said Dan Leimel, CEO of Pelorus Equity Group and manager of the Pelorus Fund. “As per previous guidance, we were successful in further reducing our cash position in Q4 and have addressed the cash drag issue, and are working to offset some remaining balance of lower yield fixed rate stabilized loans, which was another contributing factor to the lower yield of 2022. In this process, the portfolio has transitioned from 100% fixed rate at the beginning of 2022, to 73% fixed rate and 27% floating rate loans.”
Leimel added, “In stark contrast to what we saw shake many cannabis businesses in 2022, we capitalized on our informational edge and deep understanding of the cannabis space to make high-impact investments that delivered value to clients and investors alike. Looking ahead in 2023, the Fund expects to achieve a target yield of 12% to 15%. We remain steadfast in our commitment to leverage our deep industry experience and proprietary data to grow our AUM and roll out additional innovative financing solutions that help increase available capital to best-in-class cannabis operators in the space.”
About Pelorus Equity Group
Pelorus Equity Group (“Pelorus”), the leading provider of commercial real estate loans for the cannabis sector, and its Pelorus Fund, a private mortgage real estate investment trust (“mREIT”), are changing the commercial real estate lending landscape in the cannabis sector.
Pelorus Fund offers a range of innovative transactional solutions to address the diverse needs of real estate investors and portfolio managers, and its flexible acquisition and bridge lending programs are the direct result of the firm’s involvement in more than 5,000 transactions of varying size and complexity. Since 1991, Pelorus’ principals quickly understand an opportunity, structure a logical solution, execute a timely close and have participated in more than $5B of real estate investment transactions using both debt and equity solutions. To date, Pelorus has completed 73 commercial real-estate loan transactions and deployed $537 million to cannabis businesses and real estate owners, comprising nearly 4,473,000 sq. ft. in 10 states across the U.S. With the ability to fund approved construction draws for reimbursement in an average of one to three days and a single agreement covering the financing of the entire project, the Pelorus Fund helps to stabilize cash flow for its clients, so they are able to remain focused on their core business goals and objectives. For more information, visit https://pelorusequitygroup.com/.
For further information, please contact:
Pelorus Equity Borrower/Broker Inquires:
info@pelorusequitygroup.com
Pelorus Fund Inquires:
investorrelations@pelorusequitygroup.com
Pelorus Equity Group Media Contact:
Henry Robertson
pelorus@mattio.com
914-417-8184
Ellen Mellody
570-209-2947
pelorus@mattio.com
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