Exhibit 99-1
NewLake Capital Partners Reports Third Quarter 2022 Financial Results
Third Quarter 2022 Revenue Totaled $12.1 Million, an Increase of 50% Year-Over-Year
Third Quarter 2022 Net Income Attributable to Common Stockholders and Participating Securities totaled $6.5 Million FFO totaled $10.3 Million, and AFFO totaled $10.6 Million
Conference Call and Webcast Scheduled for November 10, 2022, at 10a.m. Eastern Time
New Canaan, CT, November 9, 2022 /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 third quarter ended September 30, 2022.
Anthony Coniglio, President and Chief Executive Officer, said, “We are very pleased with our third quarter results and the strength of our business. We announced our sixth straight quarterly dividend increase and delivered significant year-over-year growth with AFFO up 75% from Q3 2021. While our pipeline of quality cannabis properties remains robust, we can no longer ignore the compelling investment opportunity with our stock trading at such a discount. We have initiated a stock repurchase program demonstrating our strong conviction in the quality of our portfolio and the long term value of our Company.”
Third Quarter 2022 Financial Highlights
Comparison to the second quarter ended June 30, 2022:
◦Revenue totaled $12.1 million as compared to $10.5 million, an increase of 15.0% from the prior quarter.
◦Net income attributable to common stockholders and participating securities totaled $6.5 million, as compared to $3.8 million(1).
◦Funds from operations-diluted(2) (“FFO”) totaled $10.3 million, as compared to $6.6 million(1).
◦Adjusted funds from operations-diluted(2) (“AFFO”) totaled $10.6 million compared to $8.8 million, an increase of 21.4% from the prior quarter.
◦Cash and cash equivalents as of September 30, 2022, were $45.0 million, with $4.8 million committed(3) to fund tenant improvements.
Comparison to the third quarter ended September 30, 2021:
◦Revenue totaled $12.1 million as compared to $8.0 million, an increase of 50.0% year-over-year.
◦Net income attributable to common stockholders and participating securities totaled $6.5 million, as compared to $2.7 million.
◦FFO totaled $10.3 million, as compared to $5.2 million.
◦AFFO totaled $10.6 million compared to $6.1 million, an increase of 75.3% year-over-year.
Nine Months Ended September 30, 2022 Financial Highlights
Comparison to the nine months ended September 30, 2021
◦Revenue totaled $32.6 as compared to $19.1 million, an increase of 70.9% year over year.
◦Net income attributable to common stockholders and participating securities totaled $15.3 million, as compared to $6.9 million.
◦FFO totaled $24.7 million, as compared to $12.7 million.
◦AFFO totaled $27.8 million compared to $14.6 million, an increase of 90.9% year-over-year.
Operational Highlights and Subsequent Events
◦For the nine months ended September 30, 2022, the Company invested $65.4 million to acquire four cultivation facilities and funded $43.5 million of tenant improvements (“TI”) across seven properties.
◦On November 3, 2022, the Company purchased a $1.6 million dispensary in Ohio.
◦On November 7, 2022, the Board of Directors of the Company authorized a share repurchase program of its common stock up to $10 million through December 31, 2023. _________________________________________________________________________________
(1) Net income and FFO for the second quarter of 2022 were impacted by one-time severance costs of $1.6 million in connection with certain executive officer separation agreements, which were contemplated as part of a succession plan at the time of the Company merger.
(2) In the third quarter FFO diluted and AFFO diluted aqre calculated and presented on a fully diluted basis and comparative prior period balances for FFO and AFFO were calculated to conform to the third quarters presentation.
(3) 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 or $2.7 million of commitments because the company was released from its' obligation to fund the TI subsequent to September 30, 2022.
.
Investment Activity
On a sequential basis, total revenue increased 15.0% from the second quarter of 2022 as the Company invested $4.7 million to fund tenant improvements during the third quarter. Also, the Company recognized a full quarter of revenue from the $20.1 million Curaleaf expansion funded in mid-June and the two AYR Strategies cultivation facilities acquired on June 30, 2022.
The following tables present the Company's investment activity for three months ended September 30, 2022 (dollars in thousands).
Acquisitions
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Tenant | | Market | | Site Type | | Closing Date | | Acquisitions | |
| Calypso Enterprises | | Pennsylvania | | Cultivation | | August 5, 2022 | | $ | 30,000 | | (1) |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Total | | | | | | | | $ | 30,000 | | |
| | | | | | | | | |
(1) Converted from a mortgage loan to a 20-year sale-leaseback on August 5, 2022, in accordance with the loan agreement. | | | |
Tenant Improvements Funded
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Tenant | | Market | | Site Type | | Closing Date | | TI Funded | | Unfunded Commitments (1) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Mint | | Arizona | | Cultivation | | June 24, 2021 | | 3,400 | | | 3,063 | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Organic Remedies | | Missouri | | Cultivation | | December 20, 2021 | | 475 | | | 282 | | |
| Bloom Medicinal | | Missouri | | Cultivation | | April 1, 2022 | | 852 | | | 752 | | |
| Ayr Wellness, Inc. | | Pennsylvania | | Cultivation | | June 30, 2022 | | — | | | 750 | | |
Total | | $ | 4,727 | | | $ | 4,847 | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| (1) Does not include a $16.5 million option to acquire an adjacent property from an existing tenant since there is no obligation to fund the purchase or $2.7 million of commitments because the company was released from its' obligation to fund the TI subsequent to September 30, 2022. |
Financing Activity
Revolving Credit Facility
On May 6, 2022 the Company's Operating Partnership entered into a loan and security agreement (the "Loan and Security Agreement") with a commercial federally regulated bank, as a lender and as agent for lenders that become party thereto from time to time. The Loan and Security Agreement matures on May 6, 2027. The Revolving Credit Facility had an initial commitment of $30.0 million which is secured by a borrowing base consisting of fee simple owned real properties that satisfy eligibility criteria specified in the loan agreement. On July 29, 2022, the Operating Partnership entered into an amendment to the Loan and Security Agreement which increased the aggregate commitment under the Revolving Credit Facility to $90.0 million and added two additional 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 bears 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) (“Base Rate”) plus an applicable margin of 1.00% or (b) 4.75%. The outstanding borrowings under the Revolving Credit Facility was $1.0 million as of September 30, 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 September 30, 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 and $1.0 million in January 2023 and 2024, respectively. The loan's outstanding balance as of September 30, 2022 was $2.0 million.
Stock Repurchase Program
On November 7, 2022, the Board of Directors of the Company authorized a stock repurchase program of its common stock up to $10 million 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. The Company has not, as of the date hereof, repurchased any shares of common stock under the the stock repurchase program.
Dividend
On September 15, 2022, the Company declared a third quarter 2022 cash dividend of $0.37 per share of common stock, equivalent to an annualized dividend of $1.48 per share of common stock. The dividend was paid on October 14, 2022 to stockholders of record at the close of business on September 30, 2022.
Conference Call and Webcast Details:
Management will host a conference call and webcast at 10:00 a.m. Eastern Time on November 10, 2022 to discuss its quarterly financial results and answer questions about the Company's operational and financial highlights for the third quarter ended September 30, 2022.
| | | | | |
Event: | NewLake Capital Partners Inc. Third Quarter 2022 Earnings Call |
Date: | Thursday, November 10, 2022 |
Time: | 10:00 a.m. Eastern Time |
Live Call: | 1-888-254-3590 (U.S. Toll-Free) or +1-929-477-0448 (International) |
Webcast: | https://viavid.webcasts.com/starthere.jsp?ei=1577693&tp_key=2c833cb7a9 |
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until November 24, 2022 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)
| | | | | | | | | | | |
| September 30, 2022 | | December 31, 2021 |
| Assets: | (Unaudited) | | (Audited) |
| | | |
| Real Estate | | | |
| Land | $ | 21,146 | | | $ | 15,649 | |
| Building and Improvements | 375,051 | | | 272,432 | |
| Total Real Estate | 396,197 | | | 288,081 | |
| Less Accumulated Depreciation | (16,757) | | | (9,155) | |
| Net Real Estate | 379,440 | | | 278,926 | |
| Cash and Cash Equivalents | 45,023 | | | 127,097 | |
| Loans Receivable | 5,000 | | | 30,000 | |
| In-Place Lease Intangible Assets, net | 22,492 | | | 24,002 | |
| Other Assets | 2,667 | | | 858 | |
| | | |
| Total Assets | $ | 454,622 | | | $ | 460,883 | |
| | | |
| Liabilities and Equity: | | | |
| | | |
| Liabilities: | | | |
| | | |
| Accounts Payable and Accrued Expenses | $ | 1,967 | | | $ | 1,404 | |
| Revolving Credit Facility | 1,000 | | | — | |
| Loan Payable, net | 1,980 | | | 3,759 | |
| Dividends and Distributions Payable | 8,064 | | | 6,765 | |
| Security Deposits Payable | 7,310 | | | 6,047 | |
| Interest Reserve | — | | | 2,144 | |
| Rent Received in Advance | 862 | | | 1,429 | |
| Other Liabilities | 276 | | | — | |
| | | |
| Total Liabilities | 21,459 | | | 21,548 | |
| | | |
| Commitments and Contingencies | | | |
| | | |
| Equity: | | | |
| | | |
| Preferred Stock, $0.01 Par Value, 100,000,000 Shares Authorized, 0 and 0 Shares Issued and Outstanding, Respectively | — | | | — | |
Common Stock, $0.01 Par Value, 400,000,000 Shares Authorized, 21,403,817 and 21,235,914 Shares Issued and Outstanding, Respectively | 214 | | | 213 | |
| Additional Paid-In Capital | 456,352 | | | 450,916 | |
| Accumulated Deficit | (30,811) | | | (23,574) | |
| | | |
| Total Stockholders' Equity | 425,755 | | | 427,555 | |
| | | |
| Noncontrolling Interests | 7,408 | | | 11,780 | |
| | | |
| Total Equity | 433,163 | | | 439,335 | |
| | | |
| Total Liabilities and Equity | $ | 454,622 | | | $ | 460,883 | |
NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended | | For the Nine Months Ended |
| September 30, | | September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Revenue: | | | | | | | |
| | | | | | | |
| Rental Income | $ | 11,639 | | | $ | 8,048 | | | $ | 30,317 | | | $ | 19,083 | |
| Interest Income from Loans | 434 | | | — | | | 2,301 | | | — | |
| | | | | | | |
| Total Revenue | 12,073 | | | 8,048 | | | 32,618 | | | 19,083 | |
| | | | | | | |
| Expenses: | | | | | | | |
| | | | | | | |
| Depreciation and Amortization Expense | 3,630 | | | 2,464 | | | 9,113 | | | 5,601 | |
| General and Administrative Expenses: | | | | | | | |
| Compensation expense | 760 | | | 805 | | | 3,898 | | | 2,209 | |
| Stock-Based Compensation | 280 | | | 816 | | | 1,201 | | | 1,820 | |
| Professional fees | 279 | | | 574 | | | 1,486 | | | 1,351 | |
| Other general and administrative expenses | 414 | | | 631 | | | 1,249 | | | 1,009 | |
| Total general and administrative expenses | 1,733 | | | 2,826 | | | 7,834 | | | 6,389 | |
| | | | | | | |
| Total Expenses | 5,363 | | | 5,290 | | | 16,947 | | | 11,990 | |
| | | | | | | |
| Loss on Sale of Real Estate | — | | | — | | | (60) | | | — | |
| | | | | | | |
| Income From Operations | 6,710 | | | 2,758 | | | 15,611 | | | 7,093 | |
| | | | | | | |
| Other Income (Expenses): | | | | | | | |
| Interest Income | 7 | | | 21 | | | 103 | | | 40 | |
| Interest Expense | (94) | | | — | | | (167) | | | — | |
| | | | | | | |
| Total Other Income (Expense) | (87) | | | 21 | | | (64) | | | 40 | |
| | | | | | | |
| Net Income | 6,623 | | | 2,779 | | | 15,547 | | | 7,133 | |
| | | | | | | |
| Preferred Stock Dividends | — | | | — | | | — | | | (4) | |
| | | | | | | |
| Net Income Attributable to Noncontrolling Interests | (113) | | | (82) | | | (262) | | | (236) | |
| | | | | | | |
| Net Income Attributable to Common Stockholders and Participating Securities | $ | 6,510 | | | $ | 2,697 | | | $ | 15,285 | | | $ | 6,893 | |
| | | | | | | |
| Net Income per Common Share - Basic | $ | 0.30 | | | $ | 0.14 | | | $ | 0.71 | | | $ | 0.44 | |
| | | | | | | |
| Net Income per Common Share - Diluted | $ | 0.30 | | | $ | 0.14 | | | $ | 0.71 | | | $ | 0.44 | |
| | | | | | | |
| Weighted Average Shares of Common Stock Outstanding - Basic | 21,428,905 | | 19,410,307 | | 21,417,149 | | 15,588,544 |
| | | | | | | |
| Weighted Average Shares of Common Stock Outstanding - Diluted | 21,802,487 | | 19,555,867 | | 21,815,763 | | 15,637,064 |
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 nine months ended September 30, 2022 and 2021 (in thousands, except share and per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2022 | | Nine Months Ended September 30, 2022 |
| 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | |
| Net income attributable to common stockholders and participating securities | $ | 6,510 | | | $ | 2,697 | | | $ | 15,285 | | | $ | 6,893 | |
| Net income attributable to noncontrolling interests | 113 | | | 82 | | | 262 | | | 236 | |
| Net income attributable to common stockholders - diluted | 6,623 | | | 2,779 | | | 15,547 | | | 7,129 | |
| Adjustments: | | | | | | | |
| Real estate depreciation and amortization | 3,630 | | | 2,464 | | | 9,113 | | | 5,601 | |
| Loss on sale of real estate | — | | | — | | | 60 | | | — | |
FFO attributable to common stockholders - diluted (1) | 10,253 | | | 5,243 | | | 24,720 | | | 12,730 | |
| Severance | 25 | | | — | | | 1,752 | | | — | |
| Stock- based compensation | 280 | | | 816 | | | 1,201 | | | 1,820 | |
| Non-cash interest expense | 59 | | | — | | | 92 | | | — | |
| Amortization of straight-line rent expense | 6 | | | — | | | 12 | | | — | |
AFFO attributable to common stockholders - diluted(2) | $ | 10,623 | | | $ | 6,059 | | | $ | 27,777 | | | $ | 14,550 | |
| | | | | | | |
| FFO per share - diluted | $ | 0.47 | | | $ | 0.27 | | | $ | 1.13 | | | $ | 0.81 | |
| AFFO per share - diluted | $ | 0.49 | | | $ | 0.31 | | | $ | 1.27 | | | $ | 0.93 | |
| | | | | | | |
(1) In the third quarter FFO diluted and AFFO diluted are calculated and presented on a fully diluted basis and comparative prior period balances for FFO and AFFO were calculated to conform to the third quarters presentation.
