NewLake Capital Partners Inc. (OTCQX: NLCP), a provider of real estate capital to state-licensed cannabis operators, reported its financial results Tuesday for the first quarter ended March 31, revealing a slight sequential decrease in revenue but an increase year-over-year.
The Connecticut-based company disclosed first-quarter revenue of $11.4 million, a decrease of 6.8% from the $12.2 million reported in the fourth quarter of 2022. The primary cause of the fall was nonpayment of contractual rent from one tenant.
Despite the quarterly decrease, the first-quarter revenue reflects a 12.3% increase from the $10.2 million posted in the first quarter of 2022.
NewLake’s net income attributable to common stockholders was $5.9 million, compared to $6.7 million in the previous quarter and $5 million in the first quarter of 2022. The company’s funds and adjusted funds from operations for the first quarter were $9.5 million and $9.9 million, respectively, indicating decreases from the previous quarter but increases year-over-year.
Anthony Coniglio, NewLake’s president and chief executive officer, said in a statement that the company’s first-quarter results were in line with their revenue guidance. The company also maintained its quarterly dividend of 39 cents per share of common stock, marking a conservative adjusted funds from operations payout ratio of 86%.
NewLake took active steps to enhance shareholder value in the first quarter, repurchasing nearly 50,000 shares of its common stock at a favorable valuation. Additionally, the company invested about $350,000 to acquire an adjacent parcel of land to expand its cultivation facility in Missouri.
One tenant failed to pay rent, which NewLake said it is working toward a resolution that might include rent deferrals or other concessions. As of March 31, the company held cash and cash equivalents worth $41.5 million, with $17.9 million committed to fund tenant improvements.
The company also reported its financing activities, including $1 million in borrowings under the revolving credit facility, leaving $89 million available to be drawn. The facility bears a fixed rate of 5.65% for the first three years, followed by a variable rate.
NewLake made an annual principal payment of $1 million in January 2023. The remaining principal payment of $1 million is due in January 2024. As of March 31, 2023, the company was in compliance with the covenants of the agreement.