NewLake Capital Partners (NLCP) Q3 2024 earnings summary

Executive summary

• Portfolio consists of 32 properties across 12 states, totaling 1.7 million sq ft, leased to 13 tenants under long-term triple-net leases as of September 30, 2024.

• Q3 2024 revenue rose 9.3% year-over-year to $12.6 million, driven by portfolio quality, new acquisitions, and rent escalations.

• Net income attributable to common shareholders was $6.4 million ($0.31 per share), and AFFO was $10.8 million ($0.51 per share), both up 6.7% year-over-year.

• Dividend per share declared at $0.43 for Q3 2024, annualized at $1.72, with an 84% AFFO payout ratio.

• Tenant payment issues persisted with Revolutionary Clinics and Calypso, with partial or missed rent payments managed via escrow and lease amendments.

Financial highlights

• Q3 2024 revenue was $12.6 million, up from $11.5 million in Q3 2023.

• Net income for Q3 2024 was $6.4 million; AFFO was $10.8 million, both up from Q3 2023.

• Dividend of $0.43 per share declared, fully covered by earnings and supported by an 84% payout ratio.

• Debt outstanding was $7.6–$8 million, with a debt-to-EBITDA ratio below 0.2x.

• Liquidity stood at $102 million, including $19.8 million in cash and $82.4–$82.6 million in credit facility capacity.

Outlook and guidance

• Management expects continued growth in medical cannabis, with adult use expansion slower in conservative states.

• DEA rescheduling to Schedule III anticipated to benefit tenants by eliminating IRS Section 280E, potentially saving $500 million in taxes.

• Federal reform catalysts include potential rescheduling, banking access, and decriminalization, supporting industry growth.

• $12.2 million in unfunded commitments remain for development and improvement of cultivation facilities in Arizona and Connecticut.

• Management expects cash flow and reserves to be sufficient to fund operations, dividends, and debt service over the next twelve months.