NewLake Capital Partners (NLCP) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $12.5 million, up 9.5% year-over-year, with net income attributable to common stockholders of $6.8 million and AFFO of $11.0 million, both increasing over 11% year-over-year.

• Dividend per share increased to $0.43 in Q2 2024, marking the third consecutive quarterly increase and an 80% growth since IPO, with an annualized yield of 8.7%.

• Portfolio consists of 32 properties (17 dispensaries, 15 cultivation facilities) across 12 states, all leased on long-term, triple-net basis, with 100% occupancy and a diversified tenant base.

• NewLake is the second largest owner of cannabis real estate in the U.S., with a 14-year weighted average remaining lease term and strong tenant relationships.

• Balance sheet remains strong with $428 million in gross real estate assets, $8 million in debt, and $103 million in liquidity.

Financial highlights

• Q2 2024 revenue was $12.5 million, up from $11.4 million in Q2 2023, driven by acquisitions, rent escalators, and improved tenant payments.

• Net income attributable to common shareholders was $6.8 million ($0.33 per share); AFFO was $11.0 million ($0.53 per share), both up over 11% year-over-year.

• Six-month 2024 net income was $13.7 million, up from $11.7 million for the same period in 2023.

• AFFO payout ratio was 82% in Q2 2024.

• Cash and cash equivalents at June 30, 2024 were $20.7 million, with $82.4 million available on the $90 million revolving credit facility.

Outlook and guidance

• Management expects continued growth in AFFO and dividends, supported by a strong balance sheet, ample liquidity, and industry tailwinds.

• $15.8 million in unfunded commitments remain for development and improvements at cultivation facilities in Arizona, Connecticut, Missouri, and Pennsylvania.

• Guidance reflects assumptions on acquisitions, rental rates, occupancy, and interest rates, with risks from market and regulatory changes.

• Uplisting to a major exchange and a potential Toronto Stock Exchange listing remain priorities.

• Management anticipates positive catalysts for the cannabis sector and plans to continue investing in cannabis real estate.