Cannabis REIT NewLake Capital Up 60% Last Year

The cannabis REIT is investing in buying and improving real estate for clients.

NewLake Capital Partners Inc. (OCTQX: NLCP) recorded a profit for 2022, even as it tries to navigate the patchy cannabis industry lending landscape.

The company reported its financial results for the fourth quarter and full year ending Dec. 31, 2022, and declared a first-quarter 2023 dividend.

NewLake helps companies that are licensed by the government to grow and sell cannabis by lending money needed to buy or rent real estate for operations, typically through sale-leaseback deals.

The cannabis REIT experienced some notable wins across various financial metrics last year, bringing in $12.2 million in revenue during the fourth quarter, up from the $9 million it made during the same period in 2021.

The company also saw an increase in their net income, which rose from $4.3 million to $6.7 million.

Two other important numbers the company shared that measure how well the company is doing financially were funds from operations-diluted (FFO) and adjusted funds from operations-diluted (AFFO). Both of these numbers increased more than 50% compared to the same period in 2021.

Looking at the full year of 2022, NewLake made $44.8 million in revenue, up nearly 60% from the previous year. It also saw an increase in net income, which went up from $11.2 million in 2021 to $22 million in 2022.

The company has been investing a lot of money in buying and improving real estate for clients. During 2022, it invested $67 million to buy four cultivation facilities and a dispensary while spending $45.2 million on improving seven other properties for their clients.

In addition, the company made a loan for $5 million during this time period. It also exercised an option to buy some land next to one of their properties in Missouri, which will allow it to expand the cultivation facility there.

The company also inked a deal with The Mint Cannabis to provide up to $7.5 million to help improve a cultivation and processing facility that is being built in Arizona.

However, not everything is sunshine for NewLake.

The company has not received rent from one of their tenants, Revolutionary Clinics, during the first quarter of 2023 and expects that rent collection for the entire portfolio of properties will be around 90%-93% during the time period.

NewLake said in an email that it is taking some of Revolutionary’s security deposit to apply as rent, but it’s not clear if it will be enough to cover all the missed payments.

The company declared a dividend for their investors for the first quarter of 2023 and authorized a share repurchase program. This means it will buy back some of its own stock, which is usually a sign that the company thinks its stock is undervalued.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.


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