DocumentExhibit 99-1
NewLake Capital Partners Reports Third Quarter 2023 Financial Results
Third Quarter 2023 Revenue Totaled $11.5 Million
Third Quarter 2023 Net Income Attributable to Common Stockholders Totaled $6.0 Million, Funds from Operations Totaled $9.6 Million, and Adjusted Funds from Operations Totaled $10.1 Million
The Company Repurchased 608,152 Shares of Common Stock During the Third Quarter 2023. Bringing Total Shares Repurchased to 713,831 for the First Nine Months of 2023
Conference Call and Webcast Scheduled for November 9, 2023, at 11 a.m. Eastern Time
New Canaan, CT, November 09, 2023 /GLOBE NEWSWIRE/ — NewLake Capital Partners, Inc. (OCTQX: NLCP) (the “Company” or “NewLake”), a leading provider of real estate capital to state-licensed cannabis operators, today announced its financial results for the third quarter ended September 30, 2023.
Anthony Coniglio, President and Chief Executive Officer, said, “Our financial results quarter-over-quarter were consistent and in line with our expectations. Through the first nine months of 2023, we have maintained our quarterly dividend of $0.39 per share and repurchased 713,831 shares in the open market. Our team has worked hard to create value for shareholders by executing on our share repurchase program, amending our lease with Revolutionary Clinics and working with a tenant to dispose of a Massachusetts property at our original cost.”
Third Quarter 2023 Financial Highlights
Quarter-over-quarter revenue, net income, Funds from Operations (“FFO”), and Adjusted Funds from Operations (“AFFO”) were relatively flat. As a result, presented below are only the third quarter financial highlights.
◦Revenue totaled $11.5 million.
◦Net income attributable to common stockholders totaled $6.0 million.
◦FFO(1) totaled $9.6 million.
◦AFFO(1) totaled $10.1 million.
◦Cash and cash equivalents as of September 30, 2023, were $31.1 million, with $20.2 million committed to fund Tenant Improvements (“TIs”).
Comparison to the third quarter ended September 30, 2022:
Quarterly-year-over year financial results were impacted by the non-payment of contractual rent from one tenant in 2023.
◦Revenue totaled $11.5 million as compared to $12.1 million, a decrease of 4.9% year-over-year.
◦Net income attributable to common stockholders totaled $6.0 million, as compared to $6.5 million.
◦FFO totaled $9.6 million, as compared to $10.3 million, a decrease of 6.0% year-over-year.
◦AFFO totaled $10.1 million compared to $10.6 million, a decrease of 5.1% year-over-year.
Nine Months Ended September 30, 2023 Financial Highlights
Comparison to the nine months ended September 30, 2022:
◦Revenue totaled $34.3 million as compared to $32.8 million, an increase of 4.7% year-over-year.
◦Net income attributable to common stockholders totaled $17.6 million, as compared to $15.3 million.
◦FFO totaled $28.6 million, as compared to $24.7 million, an increase of 15.8% year-over-year.
◦AFFO totaled $29.9 million compared to $27.8 million, an increase of 7.7% year-over-year.
Third Quarter 2023 Operational Highlights and Recent Developments
◦For the three months ended September 30, 2023, the Company acquired, pursuant to its repurchase program, 608,152 shares of its common stock at an average price, including commissions, of $13.02.
◦Declared a third quarter dividend of $0.39 per common share, equivalent to an annualized dividend of $1.56 per common share, paid on October 13, 2023 to stockholders of record on the close of business on September 29, 2023.
◦For the three months ended September 30, 2023, the Company funded approximately $2.6 million of TIs across three properties.
◦In October 2023, the Company entered into a lease amendment and forbearance agreement with Revolutionary Clinics for the Company’s cultivation facility in Massachusetts.
◦In October 2023, the Company closed on the sale of its cultivation facility located in Palmer, Massachusetts.
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(1) FFO and AFFO is presented on a dilutive basis.
Investment Activity
The following tables present the Company's investment activity for nine months ended September 30, 2023 (dollars in thousands).
Acquisitions
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Tenant | | Market | | Site Type | | Closing Date | | Acquisitions | |
| Bloom Medicinal | | Missouri | | Cultivation | | March 3, 2023 | | $ | 350 | | (1) |
Total | | | | | | | | $ | 350 | | |
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(1) The Company exercised its option to purchase the adjacent parcel of land to expand its cultivation facility in Missouri and has committed to fund $16.2 million for the expansion. | |
Tenant Improvements Funded
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Tenant | | Market | | Site Type | | Closing Date | | TI Funded | | Unfunded Commitments | |
| Mint | | Arizona | | Cultivation | | June 24, 2021 | | $ | 2,366 | | | $ | 5,703 | | |
| Organic Remedies | | Missouri | | Cultivation | | December 20, 2021 | | 282 | | | — | | |
| Bloom Medicinal | | Missouri | | Cultivation | | April 1, 2022 | | 2,961 | | | 13,722 | | |
| Ayr Wellness, Inc. | | Pennsylvania | | Cultivation | | June 30, 2022 | | — | | | 750 | | |
Total | | $ | 5,609 | | | $ | 20,175 | | |
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Financing Activity
Revolving Credit Facility
As of September 30, 2023, the Company had approximately $1.0 million in borrowings under the Revolving Credit Facility and $89.0 million in funds available to be drawn, subject to sufficient collateral in the borrowing base. The facility bears a fixed rate of 5.65% for the first three years and thereafter a variable rate based upon the greater of (a) the Prime Rate quoted in the Wall Street Journal (Western Edition) (“Base Rate”) plus an applicable margin of 1.0% or (b) 4.75%.
The facility is subject to certain liquidity and operating covenants and includes customary representations and warranties, affirmative and negative covenants, and events of default. As of September 30, 2023, the Company is compliant with the covenants in the facility.
Seller Financing
In January 2023, the Company made its annual principal payment of $1.0 million. The loan’s outstanding principal balance as of September 30, 2023 was $1.0 million. The loan bears interest at a rate of 4.00% per annum with annual principal payments. The remaining principal payment of $1.0 million is due in January 2024.
Stock Repurchase Program
On September 15, 2023, the board of directors authorized an amendment to the stock repurchase program for the repurchase of up to an additional $10.0 million of the Company’s outstanding common stock and extended the program through December 31, 2024. For the nine months ended September 30, 2023, pursuant to the repurchase
plan, the Company acquired 713,831 shares of common stock at an average price, including commissions, of $12.96, totaling approximately $9.3 million. The remaining availability under the program as of September 30, 2023, was approximately $10.7 million.
Dividend
On September 15, 2023, the Company declared a third quarter 2023 cash dividend of $0.39 per share of common stock, equivalent to an annualized dividend of $1.56 per share of common stock. The dividend was paid on October 13, 2023, to stockholders of record at the close of business on September 29, 2023 and represents an AFFO payout ratio of 81.6%.
Recent Developments
Leases
Revolutionary Clinics
In October 2023, the Company entered into a lease amendment and forbearance agreement (the “Agreements”) for its existing lease agreement with Revolutionary Clinics on its cultivation facility in Massachusetts, where Revolutionary Clinics is the sole tenant. Under the terms of the Agreements, the lease term was extended by five years. The Company received $480 thousand of unpaid rent and applied the remaining $315 thousand of security deposit; these amounts will be recognized as income in the fourth quarter of 2023. Additionally, the Company has received October and November contractual rent payments pursuant to the amended lease. The new reduced rental payments will represent approximately 6.1% of estimated fourth quarter portfolio contractual rental income. The rental payments may escalate as the tenant’s business achieves certain gross revenue metrics. Under the forbearance agreement, the Company provided forbearance for approximately $2.0 million of back rental income. Lastly, the Company received 9.95% of equity in Revolutionary Clinics in the form of warrants.
Calypso
Calypso did not make its weekly October rent payments. However, it has resumed its weekly rent payments in November. Calypso continues to work towards a sale of its business.
Disposition of Real Estate
In October 2023, the Company closed on the sale of its cultivation facility in Palmer, Massachusetts, for $2.0 million, which was leased to Mint. The Company's investment in the property was $1.9 million. Upon closing, Mint's lease agreement was terminated, and they paid a portion of the closing costs, resulting in a break-even sale of the property.
Outlook for 2023
NewLake Capital is reaffirming AFFO guidance for full year 2023 of $39.8 to $40.8 million, an increase of 4.1% over AFFO for the same period the prior year, assuming the midpoint of that range.
Conference Call and Webcast Details:
Management will host a conference call and webcast at 11:00 a.m. Eastern Time on November 9, 2023, to discuss its quarterly financial results and answer questions about the Company's operational and financial highlights for the third quarter ended September 30, 2023.
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Event: | NewLake Capital Partners Inc. Third Quarter 2023 Earnings Call |
Date: | Thursday, November 9, 2023 |
Time: | 11:00 a.m. Eastern Time |
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Live Call: | 1-877-407-3982 (U.S. Toll-Free) or +1-201-493-6780 (International) |
Webcast: | https://viavid.webcasts.com/starthere.jsp?ei=1638874&tp_key=b6e61aa824 |
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until November 23, 2023, and can be accessed by dialing +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International) and entering replay pin number: 13742020.
About NewLake Capital Partners, Inc.
NewLake Capital Partners, Inc. is an internally-managed real estate investment trust that provides real estate capital to state-licensed cannabis operators through sale-leaseback transactions and third-party purchases and funding for build-to-suit projects. NewLake owns a portfolio of 31 cultivation facilities and dispensaries that are leased to single tenants on a triple-net basis. For more information, please visit www.newlake.com.
Forward-Looking Statements
This press release contains “forward-looking statements.” Forward-looking statements can be identified by words like “may,” “will,” “likely,” “should,” “expect,” “anticipate,” “future,” “plan,” “believe,” “intend,” “goal,” “project,” “continue” and similar expressions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs and expectations. Forward-looking statements are based on the Company’s current expectations and assumptions regarding capital market conditions, the Company’s business, the economy and other future conditions. All of our statements regarding anticipated growth in our funds from operations, adjusted funds from operations, anticipated market conditions, and results of operations are forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.
Use of Non-GAAP Financial Information
FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income attributable to common stockholders to FFO and AFFO and definitions of terms are included at the end of this release.
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Contact Information:
Lisa Meyer
Chief Financial Officer, Treasurer and Secretary
NewLake Capital Partners, Inc.
lmeyer@newlake.com
Investor Contact:
Valter Pinto, Managing Director
KCSA Strategic Communications
Valter@KCSA.com
PH: (212) 896-1254
Media Contact:
McKenna Miller
KCSA Strategic Communications
MMiller@KCSA.com
PH: (212) 896-1254
NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
| | | | | | | | | | | |
| September 30, 2023 | | December 31, 2022 |
| Assets: | (Unaudited) | | |
| Real Estate | | | |
| Land | $ | 21,397 | | | $ | 21,427 | |
| Building and Improvements | 382,087 | | | 378,047 | |
| Total Real Estate | 403,484 | | | 399,474 | |
| Less Accumulated Depreciation | (28,931) | | | (19,736) | |
| Net Real Estate | 374,553 | | | 379,738 | |
| Cash and Cash Equivalents | 31,065 | | | 45,192 | |
| In-Place Lease Intangible Assets, net | 20,275 | | | 21,765 | |
| Loan Receivable | 5,000 | | | 5,000 | |
| Property Held for Sale | 1,949 | | | — | |
| Other Assets | 2,300 | | | 2,554 | |
| Total Assets | $ | 435,142 | | | $ | 454,249 | |
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| Liabilities and Equity: | | | |
| | | |
| Liabilities: | | | |
| Accounts Payable and Accrued Expenses | $ | 1,000 | | | $ | 1,659 | |
| Revolving Credit Facility | 1,000 | | | 1,000 | |
| Loan Payable, net | 997 | | | 1,986 | |
| Dividends and Distributions Payable | 8,231 | | | 8,512 | |
| Security Deposits | 7,338 | | | 7,774 | |
| Rent Received in Advance | 907 | | | 1,375 | |
| Other Liabilities | 199 | | | 1,005 | |
| Total Liabilities | 19,672 | | | 23,311 | |
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| Commitments and Contingencies | | | |
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| Equity: | | | |
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| Preferred Stock, $0.01 Par Value, 100,000,000 Shares Authorized, 0 and 0 Shares Issued and Outstanding, Respectively | — | | | — | |
| Common Stock, $0.01 Par Value, 400,000,000 Shares Authorized, 20,694,363 and 21,408,194 Shares Issued and Outstanding, Respectively | 207 | | | 214 | |
| Additional Paid-In Capital | 447,531 | | | 455,822 | |
| Accumulated Deficit | (39,635) | | | (32,487) | |
| Total Stockholders' Equity | 408,103 | | | 423,549 | |
| | | |
| Noncontrolling Interests | 7,367 | | | 7,389 | |
| Total Equity | 415,470 | | | 430,938 | |
| | | |
| Total Liabilities and Equity | $ | 435,142 | | | $ | 454,249 | |
NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Revenue: | | | | | | | |
| Rental Income | $ | 11,297 | | | $ | 11,595 | | | $ | 33,637 | | | $ | 30,217 | |
| Interest Income from Loans | 131 | | | 434 | | | 390 | | | 2,301 | |
| Fees and Reimbursables | 63 | | | 49 | | | 256 | | | 239 | |
| Total Revenue | 11,491 | | | 12,078 | | | 34,283 | | | 32,757 | |
| | | | | | | |
| Expenses: | | | | | | | |
| Depreciation and Amortization Expense | 3,568 | | | 3,630 | | | 10,698 | | | 9,113 | |
| General and Administrative Expenses: | | | | | | | |
| Compensation expense | 1,173 | | | 1,040 | | | 3,450 | | | 5,100 | |
| Professional fees | 300 | | | 279 | | | 986 | | | 1,486 | |
| Other general and administrative expenses | 467 | | | 419 | | | 1,537 | | | 1,387 | |
| Total general and administrative expenses | 1,940 | | | 1,738 | | | 5,973 | | | 7,973 | |
| Total Expenses | 5,508 | | | 5,368 | | | 16,671 | | | 17,086 | |
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| Loss on Sale of Real Estate | — | | | — | | | — | | | (60) | |
| | | | | | | |
| Income From Operations | 5,983 | | | 6,710 | | | 17,612 | | | 15,611 | |
| | | | | | | |
| Other Income (Expenses): | | | | | | | |
| Interest Income | 178 | | | 7 | | | 607 | | | 103 | |
| Interest Expense | (95) | | | (94) | | | (284) | | | (167) | |
| Total Other Income (Expense) | 83 | | | (87) | | | 323 | | | (64) | |
| | | | | | | |
| Net Income | 6,066 | | | 6,623 | | | 17,935 | | | 15,547 | |
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| | | | | | | |
| Net Income Attributable to Noncontrolling Interests | (108) | | | (113) | | | (312) | | | (262) | |
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| Net Income Attributable to Common Stockholders | $ | 5,958 | | | $ | 6,510 | | | $ | 17,623 | | | $ | 15,285 | |
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| Net Income Attributable to Common Stockholders Per Share - Basic | $ | 0.28 | | | $ | 0.30 | | | $ | 0.83 | | | $ | 0.71 | |
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| Net Income Attributable to Common Stockholders Per Share - Diluted | $ | 0.28 | | | $ | 0.30 | | | $ | 0.83 | | | $ | 0.71 | |
| | | | | | | |
| Weighted Average Shares of Common Stock Outstanding - Basic | 21,199,638 | | 21,428,905 | | 21,330,046 | | 21,417,149 |
| | | | | | | |
| Weighted Average Shares of Common Stock Outstanding - Diluted | 21,582,314 | | 21,802,487 | | 21,710,101 | | 21,815,763 |
Non-GAAP Financial Information
Funds From Operations
The Company calculates FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. NAREIT currently defines FFO as follows: net income (loss) (computed in accordance with GAAP) excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by an entity. Other REITs may not define FFO in accordance with the NAREIT definition or may interpret the current NAREIT definition differently and therefore the Company’s computation of FFO may not be comparable to such other REITs.
Adjusted Funds From Operations
The Company calculates AFFO by starting with FFO and adding back non-cash and certain non-recurring transactions, including non-cash components of compensation expense. Other REITs may not define AFFO in the same manner and therefore the Company’s calculation of AFFO may not be comparable to such other REITs. You should not consider FFO and AFFO to be alternatives to net income as a reliable measure of our operating performance; nor should you consider FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity.
The table below is a reconciliation of net income attributable to common stockholders to FFO and AFFO for the three and three months ended September 30, 2023 and 2022 (in thousands, except share and per share amounts):
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| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | | | | | | | |
| Net Income Attributable to Common Stockholders | | $ | 5,958 | | | $ | 6,510 | | | $ | 17,623 | | | $ | 15,285 | |
| Net Income Attributable to Noncontrolling Interests | | 108 | | | 113 | | | 312 | | | 262 | |
| Net Income | | 6,066 | | | 6,623 | | | 17,935 | | | 15,547 | |
| | | | | | | | |
| Adjustments: | | | | | | | | |
| Real Estate Depreciation and Amortization | | 3,568 | | | 3,630 | | | 10,698 | | | 9,113 | |
| Loss on Sale of Real Estate | | — | | | — | | | — | | | 60 | |
FFO Attributable to Common Stockholders - Diluted (1) | | 9,634 | | | 10,253 | | | 28,633 | | | 24,720 | |
| Severance | | — | | | 25 | | | — | | | 1,752 | |
| Stock-Based Compensation | | 379 | | | 280 | | | 1,060 | | | 1,201 | |
| Non-cash Interest Expense | | 71 | | | 59 | | | 211 | | | 92 | |
| Amortization of Straight-line Rent Expense | | — | | | 6 | | | — | | | 12 | |
AFFO Attributable to Common Stockholders - Diluted | | $ | 10,084 | | | $ | 10,623 | | | $ | 29,904 | | | $ | 27,777 | |
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| FFO per share – Diluted | | $ | 0.45 | | | $ | 0.47 | | | $ | 1.32 | | | $ | 1.13 | |
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| AFFO per share – Diluted | | $ | 0.47 | | | $ | 0.49 | | | $ | 1.38 | | | $ | 1.27 | |
