NewLake Capital Partners Inc (NLCP, Financial) released its 8-K filing on November 13, 2024, showcasing a robust performance for the third quarter of 2024. The company, a real estate investment trust (REIT) specializing in providing capital to state-licensed cannabis operators, reported a revenue of $12.6 million, exceeding the analyst estimate of $12.41 million. This marks a 9.3% increase compared to the same period last year.
Company Overview
NewLake Capital Partners Inc is an internally-managed REIT that offers real estate capital to cannabis operators through sale-leaseback transactions, third-party purchases, and build-to-suit project funding. The company boasts a geographically diversified portfolio of 31 properties across 12 states, including 17 dispensaries and 14 cultivation facilities.
Financial Performance and Challenges
The third quarter of 2024 saw NewLake Capital Partners Inc achieving a net income attributable to common stockholders of $6.4 million, aligning with the previous year's $6.0 million. Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) were reported at $10.3 million and $10.8 million, respectively, reflecting year-over-year increases of 6.5% and 6.7%.
Despite these positive results, the company faces challenges, particularly with tenant payment issues. Revolutionary Clinics and Calypso Enterprises have struggled with rent payments, impacting the company's revenue collection. Revolutionary Clinics paid only 50% of its contractual rent, while Calypso Enterprises failed to pay its September and October rents, prompting NewLake to utilize escrow deposits to cover the shortfall.
Key Financial Achievements
NewLake Capital Partners Inc's financial achievements are significant for a REIT in the cannabis sector, which is undergoing transformative changes. The company's ability to maintain a high dividend payout ratio of 84% and declare a third-quarter dividend of $0.43 per share underscores its commitment to returning value to shareholders.
Income Statement and Balance Sheet Highlights
For the nine months ended September 30, 2024, NewLake reported a revenue of $37.6 million, a 9.7% increase from the previous year. Net income attributable to common stockholders was $20.1 million, up from $17.6 million. The company's balance sheet remains strong, with cash and cash equivalents of $19.8 million and a revolving credit facility with $82.4 million available for drawdown.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenue | $12.6 million | $11.5 million | +9.3% |
| Net Income | $6.4 million | $6.0 million | +6.7% |
| FFO | $10.3 million | $9.6 million | +7.3% |
| AFFO | $10.8 million | $10.1 million | +6.9% |
Analysis and Outlook
NewLake Capital Partners Inc's performance in Q3 2024 highlights its resilience and strategic positioning in the cannabis real estate sector. The company's ability to grow revenue and maintain profitability amidst tenant challenges is commendable. However, the ongoing payment issues with certain tenants could pose risks to future cash flows and profitability.
The cannabis industry continues to move through a transformative period, and we are pleased to have delivered another solid quarter of results," said Anthony Coniglio, NewLake’s President and Chief Executive Officer.
Overall, NewLake Capital Partners Inc's financial results for the third quarter of 2024 demonstrate its strong operational capabilities and strategic foresight in navigating the evolving cannabis market landscape.
Explore the complete 8-K earnings release (here) from NewLake Capital Partners Inc for further details.
