NewLake Capital Partners Reports Fourth Quarter and Full-Year 2022 Financial Results; Declares First Quarter 2023 Common Stock Dividend of $0.39 per Share

Fourth Quarter 2022 Revenue Totaled $12.2 Million, an increase of 35.7% Year-Over-Year

Full Year 2022 Revenue Totaled $44.8 Million, an increase of 59.6% Year-Over-Year

Fourth Quarter 2022 Net Income Attributable to Common Stockholders totaled $6.7 Million, Funds From Operations totaled $10.5 Million, and Adjusted Funds From Operations totaled $10.9 Million
Full Year 2022 Net Income Attributable to Common Stockholders totaled $22.0 Million, Funds From Operations totaled $35.2 Million, and Adjusted Funds From Operations totaled $38.7 Million

Conference Call and Webcast Scheduled for March 9, 2023 at 10 a.m. Eastern Time

NEW CANAAN, Conn., March 08, 2023 (GLOBE NEWSWIRE) -- NewLake Capital Partners, Inc. (OCTQX: NLCP) (the “Company” or “NewLake”), a leading provider of real estate capital to state-licensed cannabis operators, today announced its financial results for the fourth quarter and full year ended December 31, 2022 and declared its first quarter of 2023 dividend.

Fourth Quarter 2022 Financial Highlights
Comparison to the fourth quarter ended December 31, 2021:

• Revenue totaled $12.2 million, as compared to $9.0 million, an increase of 35.7%.
• Net income attributable to common stockholders totaled $6.7 million, as compared to $4.3 million.
• Funds from operations-diluted (“FFO”)⁽¹⁾ totaled $10.5 million, as compared to $7.0 million, an increase of 51.3%.
• Adjusted funds from operations-diluted (“AFFO”)⁽¹⁾ totaled $10.9 million, as compared to $7.2 million, an increase of 52.0%.

Full Year 2022 Financial Highlights
Comparison to the twelve months ended December 31, 2021:

• Revenue totaled $44.8 million, as compared to $28.1 million, an increase of 59.6% year-over-year.
• Net income attributable to common stockholders totaled $22.0 million, as compared to $11.2 million.
• FFO totaled $35.2 million, as compared to $19.7 million, an increase of 79.1%.
• AFFO totaled $38.7 million, as compared to $21.7 million, an increase of 77.8%.
• Cash and cash equivalents as of December 31, 2022, were $45.2 million, with $3.1 million committed⁽²⁾ to fund tenant improvements.
• For the twelve months ended December 31, 2022, the Company declared dividends of $1.44 per share, an increase of 41.2% over the prior year.

Operational Highlights and Subsequent Events

• On November 7, 2022, the Company’s Board of Directors authorized a share repurchase program of up to $10.0 million of its common stock through December 31, 2023.
• For the twelve months ended December 31, 2022, the Company invested $67.0 million⁽³⁾ to acquire four cultivation facilities and one dispensary. The Company also funded $45.2 million of tenant improvements (“TI”) across seven properties and originated a 4-year $5.0 million loan.
• For the twelve months ended December 31, 2022, the Company declared dividends of $1.44 per share, an increase of 41.2% over the prior year.
• In March 2023, the Company exercised its option and acquired a parcel of land adjacent to its Missouri property, rented to a subsidiary of C3 industries, for $350 thousand. The option includes an expansion to the existing cultivation facility and the Company will provide up to $16.2 million to fund the expansion.
• In March 2023, the Company entered into a non-binding Letter of Intent with The Mint Cannabis to provide up to approximately $7.5 million for improvements to the cultivation and processing facility under construction in Phoenix, Arizona.
• The Company has not received rent during Q1 2023 from tenant Revolutionary Clinics, and projects portfolio rent collection to be approximately 90-93% during Q1 2023, which may include a portion of the security deposit applied as rent.
• On March 8, 2023, the Company declared its first quarter of 2023 dividend of $0.39 per share.
  

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(1) A reconciliation of certain non-GAAP financial measures, including FFO and AFFO, to the most directly comparable financial measure under U.S. generally accepted accounting principles (“GAAP”) can be found at the end of this release.
(2) Does not include the option to purchase an adjacent parcel for $16.5 million since there is no obligation for the Company to fund the additional purchase.
(3) Includes the $30 million mortgage note that was converted to a real estate property from a sale-leaseback transaction on August 5, 2022.

Investment Activity

During the fourth quarter of 2022, the Company acquired a dispensary located in Ohio for approximately $1.6 million and invested $1.7 million to fund tenant improvements across two properties.

The following tables present the Company's investment activity for three months ended December 31, 2022 (dollars in thousands).

Acquisitions

Tenant Improvements Funded

Financing Activity

Revolving Credit Facility

As of December 31, 2022 the aggregate commitment under the Revolving Credit Facility was $90.0 million with three lenders. The Company, subject to certain conditions, has the ability to request additional revolving loan commitments which may increase the total aggregate principal amount of the Revolving Credit Facility to up to $100.0 million. Borrowings under the Revolving Credit Facility may be voluntarily prepaid and re-borrowed and bear a fixed rate of 5.65% for the first three years and thereafter a variable rate based upon the greater of (a) the Prime Rate quoted in the Wall Street Journal (Western Edition) plus an applicable margin of 1.00% or (b) 4.75%. The outstanding borrowings under the Revolving Credit Facility were $1.0 million as of December 31, 2022.

The facility is subject to certain liquidity and operating covenants and includes customary representations and warranties, affirmative and negative covenants and events of default. As of December 31, 2022, the Company is compliant with the covenants of the agreement.

Seller Financing

In connection with the purchase and leaseback of a cultivation facility in Chaffee, Missouri on December 20, 2021, the Company entered into a $3.8 million loan payable to the seller, which is an independent third party from the tenant. The loan bears interest at a rate of 4.00% per annum. Principal payments on the loan are payable in annual installments of which $1.8 million was paid in January 2022. The remaining principal payments are due in annual installments of $1.0 million in January 2023 and 2024. The loan's outstanding principal balance of the seller financing as of December 31, 2022 was $2.0 million.

The Company made the annual principal installment of $1.0 million in January 2023 and the outstanding balance after the January 2023 principal payment was $1.0 million.

Stock Repurchase Program

On November 7, 2022, the Company’s Board of Directors authorized a stock repurchase program of up to $10.0 million of the Company’s common stock through December 31, 2023. Purchases made pursuant to the stock repurchase program will be made in the open market, in privately negotiated transactions, or pursuant to any trading plan that may be adopted in accordance with Rule 10b-18 of the Securities and Exchange Act of 1934, as amended. The authorization of the stock repurchase program does not obligate the Company to acquire any particular amount of common stock. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The stock repurchase program may be suspended or discontinued by us at any time and without prior notice.

As of December 31, 2022, the Company had not repurchased any shares of its common stock under the stock repurchase program.

Dividend

On December 15, 2022, the Company’s Board of Directors declared a fourth quarter 2022 cash dividend of $0.39 per share of common stock, equivalent to an annualized dividend of $1.56 per share of common stock. The dividend was paid on January 13, 2023 to stockholders of record at the close of business on December 30, 2022.

On March 8, 2023, the Company’s Board of Directors declared a first quarter 2023 cash dividend of $0.39 per share of common stock, equivalent to an annualized dividend of $1.56 per share of common stock. The dividend is payable on April 14, 2023 to stockholders of record at the close of business on March 31, 2023.

Conference Call and Webcast Details:

Management will host a conference call and webcast at 10:00 a.m. Eastern Time on March 9, 2023 to discuss its fourth quarter and full year 2022 financial results and answer questions about the Company's operational and financial highlights.

For interested individuals unable to join the conference call, a dial-in replay of the call will be available until March 23, 2023 and can be accessed by dialing +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International) and entering replay pin number: 3325614.

About NewLake Capital Partners, Inc.

NewLake Capital Partners, Inc. is an internally-managed real estate investment trust that provides real estate capital to state-licensed cannabis operators through sale-leaseback transactions and third-party purchases and funding for build-to-suit projects. NewLake owns a portfolio of 32 cultivation facilities and dispensaries that are leased to single tenants on a triple-net basis. For more information, please visit www.newlake.com.

Forward-Looking Statements

This press release contains “forward-looking statements.” Forward-looking statements can be identified by words like “may,” “will,” “likely,” “should,” “expect,” “anticipate,” “future,” “plan,” “believe,” “intend,” “goal,” “project,” “continue” and similar expressions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs and expectations. Forward-looking statements are based on the Company’s current expectations and assumptions regarding capital market conditions, the Company’s business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.

Use of Non-GAAP Financial Information

FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income attributable to common stockholders to FFO and AFFO and definitions of terms are included at the end of this release.

Contact Information:
Lisa Meyer
Chief Financial Officer, Treasurer and Secretary
NewLake Capital Partners, Inc.
lmeyer@newlake.com

Investor Contact:
Valter Pinto, Managing Director
KCSA Strategic Communications
Valter@KCSA.com
PH: (212) 896-1254

Media Contact:
McKenna Miller
KCSA Strategic Communications
MMiller@KCSA.com
PH: (212) 896-1254

NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)

Non-GAAP Financial Information

Funds From Operations

The Company calculates FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. NAREIT currently defines FFO as follows: net income (loss) (computed in accordance with GAAP) excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by an entity. Other REITs may not define FFO in accordance with the NAREIT definition or may interpret the current NAREIT definition differently and therefore the Company’s computation of FFO may not be comparable to such other REITs.

Adjusted Funds From Operations

The Company calculates AFFO by starting with FFO and adding back non-cash and certain non-recurring transactions, including non-cash components of compensation expense. Other REITs may not define AFFO in the same manner and therefore the Company’s calculation of AFFO may not be comparable to such other REITs. You should not consider FFO and AFFO to be alternatives to net income as a reliable measure of our operating performance; nor should you consider FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity.

The table below is a reconciliation of net income attributable to common stockholders to FFO and AFFO for the three and twelve months ended December 31, 2022 and 2021 (in thousands, except share and per share amounts):

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(1) For the three and twelve months ended December 31, 2022 FFO diluted and AFFO diluted is calculated and presented on a fully diluted basis. The comparative prior period balances for FFO and AFFO were calculated to conform to the fourth quarter presentation.

Released March 8, 2023