NewLake Capital Partners (NLCP) Sidoti Small-Cap Virtual Conference summary

Business overview and financial performance

• Focuses on providing real estate capital to the cannabis industry, operating as a REIT since 2019 with an IPO in 2021.

• Portfolio includes 33 properties, mainly large-scale indoor cultivation facilities, representing 92% of capital deployed.

• Achieved significant free cash flow and has raised its dividend by nearly 80% since IPO, currently yielding over 10%.

• Maintains a low leverage profile with 0.2x debt to EBITDA and $7.6 million debt on $440 million in assets.

• Pays out 83% of free cash flow as dividends, retaining 17% for growth.

Industry trends and growth drivers

• Cannabis industry expected to grow at a 7% CAGR through 2029, driven by state legalization and conversion from illicit to legal sales.

• Nearly half of the U.S. population now resides in states with recreational cannabis access.

• Younger consumers are shifting from alcohol to cannabis, supporting long-term demand.

• Federal and state-level reforms, including potential rescheduling and legal challenges, could accelerate industry growth.

• State-level catalysts include recent and upcoming legalization efforts in Florida, Missouri, Kentucky, Pennsylvania, and Minnesota.

Portfolio strategy and underwriting approach

• Focuses on limited-license jurisdictions to ensure higher margins and lower competition.

• Underwriting emphasizes tenant quality, market structure, and real estate value both within and outside cannabis use.

• Vertically integrated operators, such as Trulieve, are preferred for their superior margins.

• Maintains long-term leases averaging over 13 years, supporting stable cash flows.

• Pipeline for new deals is smaller than previous years but expected to grow as new state programs launch.