nlcp-20220930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to ________

Commission file number 000-56327

NewLake Capital Partners, Inc.

(Exact name of registrant as specified in its charter)


Maryland			83-4400045
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

50 Locust Avenue, First Floor, New Canaan CT 06840			203-594-1402
(Address of principal executive offices)			(Registrants Telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

Securities registered pursuant to section 12(g) of the Act:

Common Stock, par value $0.01 per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o	Accelerated filer o	Non-accelerated filer x	Smaller reporting company x
Emerging Growth Company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes o No x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No x

The number of shares of the registrant’s Common Stock, par value $0.01 per share, outstanding as of November 8, 2022 was 21,403,817.

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NewLake Capital Partners, Inc.

FORM 10-Q

September 30, 2022

TABLE OF CONTENTS


		Page No.

Part I Financial Information:
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Equity	3
	Consolidated Statements of Cash Flows	6
	Notes to the Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	Special Note Regarding Forward Looking Information
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
Part II Other Information:
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
Signatures		42

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

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

The accompanying notes are an integral part of the consolidated financial statements

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NEWLAKE CAPITAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended September 30,				Nine Months Ended 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

The accompanying notes are an integral part of the consolidated financial statements

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NEWLAKE CAPITAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(In thousands, except share amounts)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Noncontrolling Interest		Total Equity
	Shares	Par

Balance as of December 31, 2021	21,235,914	$	213	$	450,916	$	(23,574)	$	11,780	$	439,335

Conversion of Vested RSUs to Common Stock	88,182	1		125		—		(126)		—

Conversion of OP Units to Common Stock	79,721	—		1,586		—		(1,586)		—

Stock-Based Compensation	—	—		1,201		—		—		1,201

Dividends to Common Stock	—	—		—		(22,410)		—		(22,410)

Dividend Equivalents to Restricted Stock Units	—	—		—		(112)		—		(112)

Distributions to OP Unit Holders	—	—		—		—		(398)		(398)

Adjustment for Noncontrolling Interest Ownership in Operating Partnership	—	—		2,524		—		(2,524)		—

Net Income	—	—		—		15,285		262		15,547

Balance as of September 30, 2022	21,403,817	$	214	$	456,352	$	(30,811)	$	7,408	$	433,163

The accompanying notes are an integral part of the consolidated financial statements

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NEWLAKE CAPITAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(In thousands, except share amounts)


	Series A Preferred Stock		Common Stock			Additional Paid-in Capital		Accumulated Deficit		Noncontrolling Interest		Total Equity
			Shares	Par

Balance as of December 31, 2020	$	61	7,758,145	$	78	$	151,778	$	(17,154)	$	6,266	$	141,029

Net Proceeds from the Issuance of Common Stock	—		5,777,882	58		133,027		—		—		133,085

Issuance of Common Stock for Merger Transaction	—		7,699,887	77		162,776		—		—		162,853

Issuance of Warrants for Merger Transaction	—		—	—		4,820		—		—		4,820

Redemption of Series A Preferred Stock	(61)		—	—		—		(64)		—		(125)

Issuance of 88,200 OP Units for Property Acquisition	—		—	—		—		—		2,205		2,205

Stock-Based Compensation	—		—	—		1,820		—		—		1,820

Dividends to Preferred Stock	—		—	—		—		(4)		—		(4)

Dividends to Common Stock	—		—	—		—		(11,002)		—		(11,002)

Dividend Equivalents to Restricted Stock Units	—		—	—		—		—		(90)		(90)

Distributions to OP Unit Holders	—		—	—		—		—		(281)		(281)

Adjustment for Noncontrolling Interest Ownership in Operating Partnership	—		—	—		(3,399)		—		3,399		—

Net Income	—		—	—		—		6,897		236		7,133

Balance as of September 30, 2021	$	—	21,235,914	$	213	$	450,822	$	(21,327)	$	11,735	$	441,443

The accompanying notes are an integral part of the consolidated financial statements

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NEWLAKE CAPITAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(In thousands, except share amounts)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Noncontrolling Interest		Total Equity
	Shares	Par

Balance as of June 30, 2022	21,318,637	$	213	$	456,083	$	(29,395)	$	7,422	$	434,323

Conversion of Vested RSUs to Common Stock	85,180	1		(1)		—		—		—

Stock-Based Compensation	—	—		280		—		—		280

Dividends to Common Stock	—	—		—		(7,919)		—		(7,919)

Dividend Equivalents to Restricted Stock Units	—	—		—		(7)		—		(7)

Distributions to OP Unit Holders	—	—		—		—		(137)		(137)

Adjustment for Noncontrolling Interest Ownership in Operating Partnership	—	—		(10)		—		10		—

Net Income	—	—		—		6,510		113		6,623

Balance as of September 30, 2022	21,403,817	$	214	$	456,352	$	(30,811)	$	7,408	$	433,163


	Series A Preferred Stock		Common Stock			Additional Paid-in Capital		Accumulated Deficit		Noncontrolling Interest		Total Equity
			Shares	Par

Balance as of June 30, 2021	$	—	17,329,964	$	173	$	359,514	$	(19,455)	$	8,877	$	349,109

Net Proceeds from the Issuance of Common Stock	—		3,905,950	40		93,467		—		—		93,507



Stock-Based Compensation	—		—	—		816		—		—		816

Dividends to Common Stock	—		—	—		—		(4,628)		—		(4,628)

Dividend Equivalents to Restricted Stock Units	—		—	—		—		59		(90)		(31)

Distributions to OP Unit Holders	—		—	—		—		—		(109)		(109)

Adjustment for Noncontrolling Interest Ownership in Operating Partnership	—		—	—		(2,975)		—		2,975		—

Net Income	—		—	—		—		2,697		82		2,779

Balance as of September 30, 2021	$	—	21,235,914	$	213	$	450,822	$	(21,327)	$	11,735	$	441,443

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NEWLAKE CAPITAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	For the Nine Months Ended
	September 30, 2022		September 30, 2021
Cash Flows from Operating Activities:
Net Income	$	15,547	$	7,133
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Stock-Based Compensation	1,201		1,820
Loss on Sale of Real Estate	60		—
Depreciation and Amortization Expense	9,113		5,601
Amortization of debt issuance costs	72		—
Non-cash financing expense	20		—
Changes in Assets and Liabilities
Prepaid Expenses and Other Assets	(1,618)		232
Accounts Payable and Accrued Expenses	577		(1,814)
Security Deposits Payable	1,263		2,179
Interest Reserve	(2,144)		—
Rent Received in Advance	(567)		623
Net Cash Provided by Operating Activities	23,524		15,774

Cash Flows from Investing Activities:
Cash Acquired from Merger Transaction	—		64,355
Payment of Merger Related Transaction Costs	—		(2,144)
Reimbursements of Tenant Improvements	(43,518)		(8,449)
Investment in Loans Receivable	(5,000)		—
Acquisition of Real Estate	(35,419)		(44,650)
Disposition of Real Estate	761		—
Net Cash (Used in) Provided by Investing Activities	(83,176)		9,112

Cash Flows from Financing Activities:
Proceeds from Issuance of Common Stock, Net of Offering Costs	—		133,085
Preferred Stock Dividends Paid	—		(4)
Common Stock Dividends Paid	(21,074)		(9,298)
Restricted Stock Units Dividend Equivalents Paid	(147)		(84)
Distributions to OP Unit Holders	(401)		(266)
Redemption of Preferred Stock	—		(125)
Borrowings from revolving line of credit	1,000		—
Payment of Loan Payable	(1,800)		—
Net Cash (Used in) Provided by Financing Activities	(22,422)		123,308

Net Increase (Decrease) in Cash and Cash Equivalents	(82,074)		148,194

Cash and Cash Equivalents - Beginning of Period	127,097		19,617

Cash and Cash Equivalents - End of Period	$	45,023	$	167,811

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Accrual for Dividends and Distributions Payable	$	8,064	$	268

Real Estate Assets, In-Place Leases, Other Assets and Liabilities Acquired through the Issuance of Common Stock and Warrants	$	—	$	103,319
Issuance of 88,200 OP Units for Property Acquisition	$	—	$	2,205
Operating lease liability for obtaining right of use asset	$	277	$	—
Conversion of Mortgage Loan Receivable to Real Estate	$	30,000	$	—

The accompanying notes are an integral part of the consolidated financial statements

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NEWLAKE CAPITAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

Note 1 - Organization

NewLake Capital Partners, Inc. (the “Company”), a Maryland corporation, was formed on April 9, 2019, under the Maryland General Corporation Law, as GreenAcreage Real Estate Corp. (“GARE”). The Company is an internally managed Real Estate Investment Trust (“REIT”) focused on providing long-term, single-tenant, triple-net sale-leaseback and build-to-suit transactions for the cannabis industry. The Company’s year-end is December 31. On March 17, 2021, GARE completed a merger (the “Merger”) with another company (the “Target”) that owned a portfolio of cultivation facilities and dispensaries utilized in the cannabis industry, and renamed itself “NewLake Capital Partners, Inc.” The Merger was completed through the issuance of 7,699,887 shares of common stock valued at $21.15 per share and warrants to purchase up to 602,392 shares of the Company’s common stock valued at approximately $4.8 million. The Company also incurred approximately $2.1 million in merger-related transaction costs. The consideration issued was based upon the relative value of the two entities, such that the shareholders of the Company and the Target, immediately prior to the Merger, owned 56.79% and 43.21%, respectively, of the outstanding post-merger common stock of the Company. The Company issued warrants to Target shareholders based on the pre-merger options outstanding, using the equivalent proportion described in the previous sentence. Upon completion of the Merger, the Company owned 24 properties across nine states. The Merger was treated as an asset acquisition, and the Company was treated as the accounting acquirer. In connection with the Merger, the Company also entered into various arrangements and agreements with certain of our significant stockholders, including director nomination rights.

The Company conducts its business through its subsidiary, NLCP Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership” or “OP”). The Company holds an equity interest in the Operating Partnership and is the sole general partner. Subsequent to the Merger, the name of the Operating Partnership was changed from GreenAcreage Operating Partnership LP to NLCP Operating Partnership LP.

On August 13, 2021, the Company completed its initial public offering ("IPO") of 3,905,950 shares of common stock, with a par value $0.01 per share. The public offering price was $26.00 per share for gross proceeds of approximately $102.0 million, before deducting placement agent fees and offering expenses. Net proceeds were approximately $93.5 million. The Company's common stock trades on the OTCQX® Best Market operated by the OTC Markets Group, Inc., under the symbol “NLCP”.

Note 2 - Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of the Company, the Operating Partnership, as well as wholly owned subsidiaries of the Operating Partnership’s and variable interest entities ("VIEs") in which the Company is considered the primary beneficiary. The accompanying unaudited financial statements and related notes have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. In managements opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been made. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the operating results for the full year or any future period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and filed with the Securities and Exchange Commission (“SEC”) on March 18, 2022.

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NEWLAKE CAPITAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

Note 2 - Basis of Presentation and Summary of Significant Accounting Policies (continued)

Substantially all of the Company's asset are held by and all of its' operations are conducted through the Operating Partnership. The Company is the sole managing general partner of the Operating Partnership. Noncontrolling investors in the Operating Partnership are included in Noncontrolling Interest in the Company's consolidated financial statements. Refer to Note 7 for details. The Operating Partnership is a variable interest entity (“VIE”) because the holders of limited partnership interests do not have substantive kick-out rights or participating rights. Furthermore, the Company is the primary beneficiary of the Operating Partnership because it has the obligation to absorb losses and the right to receive benefits from the Operating Partnership and the exclusive power to direct the activities of the Operating Partnership. As of September 30, 2022 and December 31, 2021, the assets and liabilities of the Company and the Operating Partnership are substantially the same, as the Company does not have any significant assets other than its investment in the Operating Partnership.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management will adjust such estimates when facts and circumstances dictate. Such estimates include, but are not limited to, useful lives for depreciation of property, the fair value of property and in-place lease intangibles acquired, and the fair value of stock-based compensation. Actual results could differ from those estimates.

Reclassification

Certain prior year balances have been reclassified to conform to our current year presentation.

Significant Accounting Policies

There have been no significant changes to our accounting polices included in Note 2 to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2021.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses, which changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, companies will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, which among other updates, clarifies that receivables arising from operating leases are not within the scope of this guidance and should be evaluated in accordance with Topic 842. This standard will be effective for the Company as of January 1, 2023. The Company does not anticipate this standard will have a material impact on our consolidated financial statements due to the limited nature of financial assets held by the Company subject to ASU 2016-13.

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NEWLAKE CAPITAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

Note 3 - Real Estate

As of September 30, 2022, the Company owned 31 properties located in 12 states. The following table presents the Company's real estate portfolio as of September 30, 2022 (dollars in thousands):


Tenant		Market	Site Type	Land		Building and Improvements		Total Real Estate		Accumulated Depreciation		Net Real Estate
Acreage		Connecticut	Dispensary	$	395	$	534	$	929	$	(53)	$	876
Acreage		Massachusetts	Cultivation	481		9,310		9,791		(816)		8,975
Acreage		Pennsylvania	Cultivation	952		9,209		10,161		(778)		9,383
Ayr Wellness, Inc.		Nevada	Cultivation	1,002		12,577		13,579		(109)		13,470
Ayr Wellness, Inc.		Pennsylvania	Cultivation	2,964		11,565		14,529		(116)		14,413
Bloom Medicinal		Missouri	Cultivation	598		11,167		11,765		(50)		11,715
Calypso Enterprises		Pennsylvania	Cultivation	1,486		28,514		30,000		(167)		29,833
Columbia Care		California	Dispensary	1,082		2,692		3,774		(133)		3,641
Columbia Care		Illinois	Dispensary	162		1,053		1,215		(50)		1,165
Columbia Care		Illinois	Cultivation	801		10,560		11,361		(508)		10,853
Columbia Care		Massachusetts	Dispensary	108		2,212		2,320		(118)		2,202
Columbia Care		Massachusetts	Cultivation	1,136		12,690		13,826		(809)		13,017
Cresco Labs		Illinois	Cultivation	276		50,456		50,732		(3,921)		46,811
Curaleaf		Connecticut	Dispensary	184		2,748		2,932		(141)		2,791
Curaleaf		Florida	Cultivation	388		75,595		75,983		(3,626)		72,357
Curaleaf		Illinois	Dispensary	69		525		594		(28)		566
Curaleaf		Illinois	Dispensary	65		959		1,024		(53)		971
Curaleaf		Illinois	Dispensary	606		1,128		1,734		(61)		1,673
Curaleaf		Illinois	Dispensary	281		3,072		3,353		(161)		3,192
Curaleaf		North Dakota	Dispensary	779		1,395		2,174		(80)		2,094
Curaleaf		Ohio	Dispensary	574		2,788		3,362		(170)		3,192
Curaleaf		Pennsylvania	Dispensary	877		1,041		1,918		(71)		1,847
Curaleaf		Pennsylvania	Dispensary	216		2,011		2,227		(105)		2,122
Greenlight	'(1)	Arkansas	Dispensary	238		1,919		2,157		(101)		2,056
Mint		Arizona	Cultivation	2,400		9,032		11,432		—		11,432
Mint		Massachusetts	Cultivation	380		1,569		1,949		—		1,949
Organic Remedies		Missouri	Cultivation	204		20,615		20,819		(825)		19,994
PharmaCann		Massachusetts	Dispensary	411		1,701		2,112		(158)		1,954
PharmaCann		Pennsylvania	Dispensary	44		1,271		1,315		(61)		1,254
Revolutionary Clinics		Massachusetts	Cultivation	926		41,934		42,860		(1,559)		41,301
Trulieve		Pennsylvania	Cultivation	1,061		43,209		44,270		(1,929)		42,341

Total Real Estate				$	21,146	$	375,051	$	396,197	$	(16,757)	$	379,440

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NEWLAKE CAPITAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

Note 3 – Real Estate (continued)

(1) GL Partners, Inc. (Greenlight) took over as tenant however Curaleaf remains the guarantor subject to certain conditions in the lease agreement.

Real Estate Acquisitions

During the nine months ended September 30, 2022, the Company invested approximately $65.4 million to acquire four cultivation facilities. The following table presents the real estate acquisitions for the nine months ended September 30, 2022 (in thousands):

Tenant

Market

Site Type

Closing Date

Real Estate Acquisitions

Bloom Medicinal

Missouri

Cultivation

April 1, 2022

7,301

(1)

Ayr Wellness, Inc.

Pennsylvania

Cultivation

June 30, 2022

14,529

Ayr Wellness, Inc.

Nevada

Cultivation

June 30, 2022

13,579

Calypso Enterprises

Pennsylvania

Cultivation

August 5, 2022

30,000

(2)

Total

65,409

(1)Includes $5.0 million of TI funded at closing of the property.

(2)The Company entered into a $30.0 million mortgage loan on October 29, 2021, which converted to a 20-year sale-leaseback on August 5, 2022.

Tenant Improvements Funded

During the nine months ended September 30, 2022, the Company funded approximately $43.5 million of tenant improvements. The following table presents the tenant improvements funded for the nine months ended September 30, 2022 (in thousands):


Tenant	Market	Site Type	Closing Date	TI Funded			Unfunded Commitments
Curaleaf	Florida	Cultivation	August 4, 2020	$	20,983	(1)	$	—
Mint	Massachusetts	Cultivation	April 1, 2021	349			—		(4)
Mint	Arizona	Cultivation	June 24, 2021	5,906		(2)	3,063
PharmaCann	Massachusetts	Dispensary	March 17, 2021	25			—
Trulieve	Pennsylvania	Cultivation	March 17, 2021	7,046		(3)	—
Organic Remedies	Missouri	Cultivation	December 20, 2021	4,745			282
Bloom Medicinal	Missouri	Cultivation	April 1, 2022	4,464			752		(5)
Ayr Wellness, Inc.	Pennsylvania	Cultivation	June 30, 2022	—			750
				$	43,518		$	4,847

(1)On June 16, 2022, the Company funded the expansion of an existing property.

(2)The tenant has been paying rent on the remaining commitment since July 2022 in accordance with the lease agreement.

(3)The tenant had been paying rent on the TI since December 2021 in accordance with the lease agreement. As of May 2022, the TI had been fully funded.

(4)Does not include approximately $2.7 million of commitments that the Company was released from its' commitment to fund subsequent to September 30, 2022.

(5)The $0.8 million of unfunded commitments does not include a $16.5 million option but not obligation to acquire an adjacent property from an existing tenant.

Disposal of Real Estate

On March 21, 2022, the Company sold one of our PharmaCann Massachusetts properties for approximately $0.8 million. The Company recognized a loss on sale of the property of $60 thousand. The Company continues to collect the rent that would have been received from the PharmaCann Massachusetts property through increased lease payments from each of the remaining properties operated by PharmaCann in our portfolio.

Table of Contents

NEWLAKE CAPITAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

Note 3 – Real Estate (continued)

Construction in Progress

Construction in progress was $10.6 million and $13.1 million on September 30, 2022 and December 31, 2021, respectively, and is included in "Buildings and Improvements" in the accompanying consolidated balance sheet.

Depreciation and Amortization

Depreciation expense for the three months ended September 30, 2022 and 2021, was $3.1 million and $2.0 million, respectively and for the nine months ended September 30, 2022 and 2021 it was $7.6 million and $4.5 million, respectively.

Amortization of the Company’s acquired in-place lease intangible assets for the three months ended September 30, 2022 and 2021 was approximately $0.5 million and $0.5 million, respectively and was approximately $1.5 million and $1.1 million, respectively, for the nine months ended September 30, 2022 and 2021. The acquired in-place lease intangible assets have a weighted average remaining amortization period of 11.4 years.

Depreciation and Amortization

The following table presents the future amortization of the Company’s acquired in-place leases as of September 30, 2022 (in thousands):


Year	Expense
2022 (three months ending December 31, 2022)	$	503
2023	2,013
2024	2,013
2025	2,013
2026	2,013
Thereafter	13,937
Total	$	22,492

The following table presents the future contractual minimum rent under the Company’s operating leases as of September 30, 2022 (in thousands):


Year	Rent
2022 (three months ending December 31, 2022)	$	12,014
2023	48,858
2024	50,153
2025