NewLake Capital Partners Inc. (OTCQX: NLCP) posted a $6 million profit for the third quarter this year, along with $10.1 million in adjusted funds from operations, on revenue of $11.5 million.
The cannabis landlord’s revenue and other financial metrics were “relatively flat” from Q2, when NewLake pulled down $5.8 million in net income from its 31 cultivation and retail properties, the company reported.
“Our financial results quarter-over-quarter were consistent and in line with our expectations,” CEO Anthony Coniglio said in a statement. “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.”
Just as with the second quarter, NewLake had one stubborn tenant, Calypso, still behind on rent, it reported, while Calypso’s owners try to find a purchaser for the business.
Year-over-year financial metrics improved for the first nine months of 2023. Revenue was up 4.7% to $34.3 million from $32.8 million, net income has increased to $17.6 million from $15.3 million, funds from operations were up 15.8% to $28.6 million from $24.7 million, and adjusted funds from operations were also up 7.7% to $29.9 million from $27.8 million.
The quarterly year-over-year comparisons, however, all saw decreases for NewLake in the same metrics. Revenue was down 4.9% to $11.5 million, net income fell to $6 million from $6.5 million, funds from operations declined 6% to $9.6 million, and adjusted funds from operations decreased by 5.1% to $10.1 million. That’s all due to the nonpaying tenant, NewLake reported.
Also in the third quarter, NewLake spent $2.6 million on tenant improvement projects across three of its properties. Then in October, it leased one of its cultivation properties in Massachusetts to Revolution Clinics for $480,000 plus a $315,000 security deposit, and sold another grow in the town of Palmer for $2 million to Mint in a “break-even sale.”
At the end of September, NewLake still had a revolving credit facility of $89 million available to use, with only $1 million borrowed thus far.
The company, through a stock share buyback program, purchased 713,831 shares worth $9.3 million through the first nine months of 2023. The company board of directors in September authorized another $10 million for the buyback program.
NewLake offered a projection of adjusted funds from operations for 2023 to be between “$39.8 to $40.8 million, an increase of 4.1% over AFFO for the same period the prior year.”
At the close of Q3, NewLake had $435 million in total assets, including $31 million in cash, and $19.6 million in total liabilities.