NewLake Capital delivers solid quarter

NewLake Capital Partners, Inc. (OCTQX: NLCP)  announced its financial results for the fourth quarter and full year ended December 31, 2023. Revenue in the fourth quarter increased 6.4 % to $13 million versus last year’s $12.2 million for the same period.

NewLake reported net income increased to $7 million versus last year’s $6.7 million. Funds from operations-diluted or FFO totaled $10.7 million, as compared to $10.5 million, an increase of 1.3% year-over-year.

For the full year 2023, the company announced revenue increased 5.1% to $47.3 versus $45 million in 2022. Also, net income for 2023 was $24.6 million versus 2022’s $22 million. FFO totaled $39.3 million, compared to $35.2 million, an increase of 11.5% year-over-year.

NewLake declared a fourth-quarter dividend of $0.40 per share of common stock, an increase of 2.6% 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.

“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,’ said Anthony Coniglio, President and Chief Executive Officer. “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.”

NewLake has 31 properties in 12 states. In October 2023, NewLake said it closed on the sale of its cultivation facility in Palmer, Massachusetts, for $2 million, which was leased to Mint. The company’s investment in the property was $1.9 million and since Mint paid a portion of the closing costs, the sale resulted in a break-even deal.

NewLake said it collected 100% of contractual rent during the fourth quarter. However, it seems it had to give some of its tenants a helping hand. NewLake said in October it entered into a lease amendment and forbearance agreement for its existing lease agreement with Revolutionary Clinics in Massachusetts. The lease was extended by five years and it received $315,000 as a security deposit. There was also a $480,000 payment applied to past due rent for periods before the fourth quarter, forbearance of the remaining unpaid rent, and the company received warrants which if exercised would give NewLake 26,058 of common units in Revolutionary Clinics.

Another tenant,  Calypso Enterprises was sold by its parent Hero Diversified Associates, Inc. to Canvas Acquisition Corporation. NewLake amended the lease with Canvas by cutting the rent payments and providing up to $3.0 million in tenant improvements allowance, providing 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. As compensation for providing such lease modifications, HDAI agreed to pay NewLake roughly $1.5 million of additional rent to be paid in five installments over 18 months from November 15, 2023.

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