DocumentExhibit 99-1
NewLake Capital Partners Reports Fourth Quarter and Full-Year 2023 Financial Results;
Raises First Quarter 2024 Common Stock Dividend to $0.41 per Share
Fourth Quarter 2023 Revenue totaled $13.0 Million, an increase of 6.4% Year-Over-Year
Full Year 2023 Revenue totaled $47.3 Million, an increase of 5.1% Year-Over-Year
Fourth Quarter 2023 Net Income Attributable to Common Stockholders totaled $7.0 Million, Funds From Operations totaled $10.7 Million, and Adjusted Funds From Operations totaled $10.8 Million
Full Year 2023 Net Income Attributable to Common Stockholders totaled $24.6 Million, Funds From Operations totaled $39.3 Million, and Adjusted Funds From Operations totaled $40.7 Million
The Company Repurchased 194,563 Shares of Common Stock During the Fourth Quarter 2023, Bringing Total Shares Repurchased to 908,394 for the Twelve Months of 2023
Conference Call and Webcast Scheduled for March 11, 2024 at 11 a.m. Eastern Time
New Canaan, CT, March 11, 2024 /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 fourth quarter and full year ended December 31, 2023, and declared its first quarter of 2024 dividend.
Anthony Coniglio, President and Chief Executive Officer, said, “We are pleased to deliver solid fourth quarter and full year financial results. In 2023, we generated record revenue of $47.3 million, record AFFO of $40.7 million, and paid out $33.0 million or $1.57 per share in dividends to shareholders. During a very challenging environment for the cannabis industry, we were able to grow our dividend distributions by 9.0% year-over-year and for the first quarter of 2024 raised our quarterly dividend from $0.40 to $0.41 per share. We believe we have a portfolio of high-quality assets, strong operating results and cash flow, an unencumbered balance sheet and a growing pipeline of opportunities to invest in. There is a lot to be proud of and build upon as we look forward to the future.”
Fourth Quarter 2023 Financial Highlights
Comparison to the fourth quarter ended December 31, 2022:
◦Revenue totaled $13.0 million, as compared to $12.2 million, an increase of 6.4% year-over-year.
◦Net income attributable to common stockholders totaled $7.0 million, as compared to $6.7 million.
◦Funds from operations-diluted (“FFO”)(1) totaled $10.7 million, as compared to $10.5 million, an increase of 1.3% year-over-year.
◦Adjusted funds from operations-diluted (“AFFO”)(1) totaled $10.8 million, as compared to $10.9 million, a decrease of 1.2% year-over-year.
◦Declared a fourth quarter dividend of $0.40 per share of common stock, an increase of 2.6% year-over-year.
Full Year 2023 Financial Highlights
Comparison to the twelve months ended December 31, 2022:
◦Revenue totaled $47.3, million as compared to $45.0 million, an increase of 5.1% year-over-year.
◦Net income attributable to common stockholders totaled $24.6 million, as compared to $22.0 million.
◦FFO totaled $39.3 million, as compared to $35.2 million, an increase of 11.5% year-over-year.
◦AFFO totaled $40.7 million, as compared to $38.7 million, an increase of 5.2% year-over-year.
◦Cash and cash equivalents as of December 31, 2023, were $25.8 million, with $14.4 million committed to fund tenant improvements.
◦For the twelve months ended December 31, 2023, the Company declared dividends of $1.57 per share of common stock, an increase of 9.0% year-over-year.
Operational Highlights and Recent Developments
◦Collected 100% of contractual rent during the fourth quarter.
◦On September 15, 2023, the Company’s board of directors authorized an amendment to the stock repurchase program for the repurchase of up to an additional $10.0 million of outstanding common stock and extended the program through December 31, 2024.
◦During the year ended December 31, 2023, pursuant to the stock repurchase program, the Company acquired 908,394 shares of common stock with an average purchase price, including commissions of $13.00 per share.
◦For the twelve months ended December 31, 2023, the Company acquired an adjacent parcel of land for approximately $350 thousand to expand its cultivation facility in Missouri. The Company also funded approximately $14.4 million of tenant improvements (“TI”) across four 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 November 2023, the Company entered into a lease amendment on its cultivation facility located in Pennsylvania, which provided $3 million in tenant improvements and an option to purchase the property.
◦On March 8, 2024, the Company’s board of directors declared an increase in the first quarter of 2024 dividend to $0.41 per share of common stock, an increase of 2.5% sequentially and 5.1% year over year.
_________________________________________________________________________________
(1) FFO and AFFO is presented on a dilutive basis.
Investment Activity
During the twelve months ended December 31, 2023, the Company exercised its option and invested approximately $350 thousand to acquire an adjacent parcel of land at an existing cultivation facility in Missouri. In connection with exercising our option, the Company committed to fund approximately $16.2 million to expand the existing cultivation facility (refer to the Tenant Improvements (“TI”) table below).
The following tables present the Company's investment activity for the twelve months ended December 31, 2023 (dollars in thousands):
Acquisitions
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tenant | | Market | | Site Type | | Closing Date | | Acquisitions | |
| Bloom Medicinal | | Missouri | | Cultivation | | March 3, 2023 | | $ | 350 | | |
| | | | | | | | | |
| | | | | | | | | |
| Total | | | | | | | | $ | 350 | | |
Tenant Improvements Funded
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tenant | | Market | | Site Type | | Closing Date | | TI Funded | | Unfunded Commitments | |
| Mint | | Arizona | | Cultivation | | June 24, 2021 | | $ | 4,281 | | | $ | 3,788 | | (1) |
| Organic Remedies | | Missouri | | Cultivation | | December 20, 2021 | | 282 | | | — | | |
| Bloom Medicinal | | Missouri | | Cultivation | | April 1, 2022 | | 7,858 | | | 8,826 | | |
| Ayr Wellness, Inc. | | Pennsylvania | | Cultivation | | June 30, 2022 | | — | | | 750 | | |
| Calypso | | Pennsylvania | | Cultivation | | August 5, 2022 | | 2,013 | | | 987 | | |
| Total | | $ | 14,434 | | | $ | 14,351 | | |
| | | | | | | | | | | |
(1) Effective June 1, 2023, the lease agreement was amended to include an additional TI commitment of approximately $6.5 million.
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 Mint paid a portion of the closing costs, resulting in a break-even sale of the property.
Leases
Revolutionary Clinics
On October 27, 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. Under the terms of the Agreements: (i) the lease term was extended by 5 years, (ii) $315 thousand security deposit and a $480 thousand payment were applied to past due rent for periods prior to the fourth quarter, (iii) forbearance of the remaining unpaid rent, and (iv) received warrants which if exercised will entitle the Company to receive 26,058 of common units in Revolutionary Clinics.
Calypso Enterprises
On November 15, 2023, the Company’s tenant Calypso Enterprises (“Calypso”) was sold by its parent Hero Diversified Associates, Inc (“HDAI”) to Canvas Acquisition Corporation, LLC (“Canvas”) an independent third party, whose parent replaced HDAI as the lease guarantor. In connection with the sale, the Company and Canvas agreed to certain revised terms through a lease amendment. Under the terms of the amendment, the Company reduced the rent payments, provided up to $3.0 million in tenant improvements allowance, provided an option to purchase the property at the Company’s cost basis, (inclusive of funding the $3.0 million of tenant improvements), and received six-months of rent escrow, among other provisions. The purchase option is exercisable from December 1, 2024 through December 31, 2025, with notice to be delivered no later than December 31, 2024. In the event the purchase option is exercised prior to December 31, 2025, the Company would receive a make-whole rent payment for rent through December 31, 2025. As compensation for providing such lease modifications, HDAI agreed to pay the Company approximately $1.5 million of additional rent to be paid in five installments over 18 months from November 15, 2023.
Financing Activity
Revolving Credit Facility
As of December 31, 2023, the Company had $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 1.00% 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 December 31, 2023, the Company is compliant with the covenants under the agreement.
Loan Payable
On January 3, 2024, the Company paid approximately $1.0 million of principal and interest on its loan payable to the seller of a cultivation facility in Chaffee, Missouri. This represents the final installment payment on the loan.
Stock Repurchase Program
On September 15, 2023, the Company’s board of directors authorized an amendment to the stock repurchase program approving the Company’s repurchase of up to an additional $10.0 million of its outstanding common stock and extending the program through December 31, 2024. During the year ended December 31, 2023, the Company acquired 908,394 shares of common stock with an average purchase price, including commissions of $13.00 totaling approximately $11.8 million. The remaining availability under the stock repurchase program as of December 31, 2023 was approximately $8.2 million.
Dividend
On December 14, 2023, the Company’s board of directors declared a fourth quarter 2023 cash dividend of $0.40 per share of common stock, equivalent to an annualized dividend of $1.60 per share of common stock. The dividend was paid on January 12, 2024 to stockholders of record at the close of business on December 29, 2023.
On March 8, 2024, the Company’s Board of Directors declared a first quarter 2024 cash dividend of $0.41 per share of common stock, equivalent to an annualized dividend of $1.64 per share of common stock. The dividend is payable on April 15, 2024 to stockholders of record at the close of business on March 29, 2024.
Conference Call and Webcast Details:
Management will host a conference call and webcast at 11:00 a.m. Eastern Time on March 11, 2024 to discuss its fourth quarter and full year 2023 financial results and answer questions about the Company's operational and financial highlights.
| | | | | |
| Event: | NewLake Capital Partners Inc. Fourth Quarter and Full Year 2023 Earnings Call |
| Date: | Monday, March 11, 2024 |
| Time: | 11:00 a.m. Eastern Time |
| Live Call: | 1-877-407-3982 (U.S. Toll-Free) or +1-201-493-6780 (International) |
| Webcast: | https://ir.newlake.com/news-events/ir-calendar |
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until March 25, 2024 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: 13744342.
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 properties comprised of 14 cultivation facilities and 17 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. 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:
Ellen Mellody
KCSA Strategic Communications
EMellody@KCSA.com
PH: (570) 209-2947
NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
| | | | | | | | | | | |
| December 31,
2023 | | December 31,
2022 |
| Assets: | | | |
| | | |
| Real Estate | | | |
| Land | $ | 21,397 | | | $ | 21,427 | |
| Building and Improvements | 390,911 | | | 378,047 | |
| Total Real Estate | 412,308 | | | 399,474 | |
| Less Accumulated Depreciation | (31,999) | | | (19,736) | |
| Net Real Estate | 380,309 | | | 379,738 | |
| Cash and Cash Equivalents | 25,843 | | | 45,192 | |
| In-Place Lease Intangible Assets, net | 19,779 | | | 21,765 | |
Loan Receivable, net (current expected credit loss 2023: $167; 2022: $0) | 4,833 | | | 5,000 | |
| | | |
| Other Assets | 2,528 | | | 2,554 | |
| Total Assets | $ | 433,292 | | | $ | 454,249 | |
| | | |
| Liabilities and Equity: | | | |
| | | |
| Liabilities: | | | |
| | | |
| Accounts Payable and Accrued Expenses | $ | 1,117 | | | $ | 1,659 | |
| Revolving Credit Facility | 1,000 | | | 1,000 | |
| Loan Payable, net | 1,000 | | | 1,986 | |
| Dividends and Distributions Payable | 8,385 | | | 8,512 | |
| Security Deposits | 8,616 | | | 7,774 | |
| Rent Received in Advance | 990 | | | 1,375 | |
| Other Liabilities | 227 | | | 1,005 | |
| Total Liabilities | 21,335 | | | 23,311 | |
| | | |
| Commitments and Contingencies (Note 15) | | | |
| | | |
| Equity: | | | |
| | | |
Preferred Stock, $0.01 Par Value, 100,000,000 Shares Authorized, 0 Shares Issued and Outstanding, respectively | - | | | - | |
Common Stock, $0.01 Par Value, 400,000,000 Shares Authorized, 20,503,520 and 21,408,194 Shares Issued and Outstanding, respectively | 205 | | | 214 | |
| Additional Paid-In Capital | 445,289 | | | 455,822 | |
| Accumulated Deficit | (40,909) | | | (32,487) | |
| | | |
| Total Stockholders' Equity | 404,585 | | | 423,549 | |
| | | |
| Noncontrolling Interests | 7,372 | | | 7,389 | |
| | | |
| Total Equity | 411,957 | | | 430,938 | |
| | | |
| Total Liabilities and Equity | $ | 433,292 | | | $ | 454,249 | |
NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended | | For the Twelve Months Ended |
| December 31, | | December 31, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Revenue: | | | | | | | |
| Rental Income | $ | 12,704 | | | $ | 12,000 | | | $ | 46,341 | | | $ | 42,216 | |
| Interest Income from Loans | 131 | | | 128 | | | 521 | | | 2,429 | |
| Fees and Reimbursables | 186 | | | 115 | | | 442 | | | 355 | |
| Total Revenue | 13,021 | | | 12,243 | | | 47,304 | | | 45,000 | |
| | | | | | | |
| Expenses: | | | | | | | |
| Property Expenses | 429 | | | 70 | | | 657 | | | 219 | |
| Depreciation and Amortization Expense | 3,568 | | | 3,712 | | | 14,266 | | | 12,825 | |
| General and Administrative Expenses: | | | | | | | |
| Compensation Expense | 1,027 | | | 970 | | | 4,477 | | | 6,069 | |
| Professional Fees | 376 | | | 89 | | | 1,361 | | | 1,575 | |
| Other General and Administrative Expenses | 412 | | | 498 | | | 1,721 | | | 1,736 | |
| Total General and Administrative Expenses | 1,815 | | | 1,557 | | | 7,559 | | | 9,380 | |
| Total Expenses | 5,812 | | | 5,339 | | | 22,482 | | | 22,424 | |
| | | | | | | |
| Loss on Sale of Real Estate | — | | | — | | | — | | | (60) | |
| | | | | | | |
| Provision for Current Expected Credit Loss | (167) | | | — | | | (167) | | | — | |
| | | | | | | |
| Income From Operations | 7,042 | | | 6,904 | | | 24,655 | | | 22,516 | |
| | | | | | | |
| Other Income (Expense): | | | | | | | |
| Other Income | 141 | | | 10 | | | 747 | | | 113 | |
| Interest Expense | (95) | | | (106) | | | (379) | | | (273) | |
| Total Other Income (Expense) | 46 | | | (96) | | | 368 | | | (160) | |
| | | | | | | |
| Net Income | 7,088 | | | 6,808 | | | 25,023 | | | 22,356 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Net Income Attributable to Noncontrolling Interests | (126) | | | (118) | | | (438) | | | (380) | |
| | | | | | | |
| Net Income Attributable to Common Stockholders | $ | 6,962 | | | $ | 6,690 | | | $ | 24,585 | | | $ | 21,976 | |
| | | | | | | |
| Net Income Attributable to Common Stockholders Per Share - Basic | $ | 0.34 | | | $ | 0.31 | | | $ | 1.16 | | | $ | 1.03 | |
| | | | | | | |
| Net Income Attributable to Common Stockholders Per Share - Diluted | $ | 0.34 | | | $ | 0.31 | | | $ | 1.16 | | | $ | 1.03 | |
| | | | | | | |
| Weighted Average Shares of Common Stock Outstanding - Basic | 20,691,155 | | 21,422,446 | | 21,169,010 | | 21,418,484 |
| | | | | | | |
| Weighted Average Shares of Common Stock Outstanding - Diluted | 21,080,913 | | 21,796,028 | | 21,548,976 | | 21,810,789 |
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 adjusting for non-cash and certain non-recurring transactions, including non-cash components of compensation expense and the effect of provisions for credit losses. 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 twelve months ended December 31, 2023 and 2022 (in thousands, except share and per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Twelve Months Ended December 31, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | | | | | |
| Net income attributable to common stockholders | $ | 6,962 | | | $ | 6,690 | | | $ | 24,585 | | | $ | 21,976 | |
| Net income attributable to noncontrolling interests | 126 | | | 118 | | | 438 | | | 380 | |
| Net income attributable to common stockholders - diluted | 7,088 | | | 6,808 | | | 25,023 | | | 22,356 | |
| Adjustments: | | | | | | | |
| Real estate depreciation and amortization | 3,568 | | | 3,712 | | | 14,266 | | | 12,825 | |
| Loss on sale of real estate | — | | | — | | | — | | | 60 | |
FFO attributable to common stockholders - diluted | 10,656 | | | 10,520 | | | 39,289 | | | 35,241 | |
| Severance | — | | | — | | | — | | | 1,752 | |
| Non-cash rental income - other | (522) | | | — | | | (522) | | | — | |
| Provision for current expected credit loss | 167 | | | — | | | 167 | | | — | |
| Stock- based compensation | 379 | | | 292 | | | 1,439 | | | 1,493 | |
| Non-cash interest expense | 71 | | | 70 | | | 282 | | | 163 | |
| Amortization of straight-line rent expense | — | | | — | | | (1) | | | 12 | |
AFFO attributable to common stockholders - diluted | $ | 10,751 | | | $ | 10,882 | | | $ | 40,654 | | | $ | 38,661 | |
| | | | | | | |
| FFO per share - diluted | $ | 0.51 | | | $ | 0.48 | | | $ | 1.82 | | | $ | 1.62 | |
| | | | | | | |
| AFFO per share - diluted | $ | 0.51 | | | $ | 0.50 | | | $ | 1.89 | | | $ | 1.77 | |
