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Table of Contents
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 March 31, 2023
or
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_Logo_Vertical_FullColor.jpg
NewLake Capital Partners, Inc.
(Exact name of registrant as specified in its charter)
Maryland83-4400045
(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
NoneNoneNone
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 May 9, 2023 was 21,358,887.


Table of Contents
NewLake Capital Partners, Inc.
FORM 10-Q
March 31, 2023
TABLE OF CONTENTS
Page No.
i

Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
March 31, 2023December 31, 2022
Assets: (Unaudited)(Audited)
Real Estate
Land$21,397 $21,427 
Building and Improvements377,880 378,047 
Total Real Estate399,277 399,474 
Less Accumulated Depreciation(22,796)(19,736)
Net Real Estate376,481 379,738 
Cash and Cash Equivalents41,498 45,192 
In-Place Lease Intangible Assets, net21,268 21,765 
Loan Receivable5,000 5,000 
Property Held for Sale1,949  
Other Assets2,260 2,554 
Total Assets$448,456 $454,249 
Liabilities and Equity:
Liabilities:
Accounts Payable and Accrued Expenses$1,274 $1,659 
Revolving Credit Facility1,000 1,000 
Loan Payable, net990 1,986 
Dividends and Distributions Payable8,483 8,512 
Security Deposits7,469 7,774 
Rent Received in Advance651 1,375 
Other Liabilities478 1,005 
Total Liabilities 20,345 23,311 
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, 21,358,887 and 21,408,194 Shares Issued and Outstanding, Respectively
214 214 
Additional Paid-In Capital455,470 455,822 
Accumulated Deficit(34,956)(32,487)
Total Stockholders' Equity420,728 423,549 
Noncontrolling Interests7,383 7,389 
Total Equity428,111 430,938 
Total Liabilities and Equity$448,456 $454,249 
The accompanying notes are an integral part of the consolidated financial statements
1

Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
Three Months Ended March 31,
20232022
Revenue:
Rental Income$11,157 $9,097 
Interest Income from Loans128 919 
Fees and Reimbursables131 150 
Total Revenue11,416 10,166 
Expenses:  
Depreciation and Amortization Expense3,561 2,679 
General and Administrative Expenses:  
Compensation Expense819 836 
Stock-Based Compensation308 405 
Professional fees322 541 
Other General and Administrative Expenses564 532 
Total General and Administrative Expenses2,013 2,314 
Total Expenses5,574 4,993 
Loss on Sale of Real Estate (60)
Income From Operations5,842 5,113 
Other Income (Expenses):
Interest Income220 48 
Interest Expense(92)(27)
Total Other Income (Expense)128 21 
Net Income5,970 5,134 
Net Income Attributable to Noncontrolling Interests(102)(117)
Net Income Attributable to Common Stockholders$5,868 $5,017 
Net Income Attributable to Common Stockholders Per Share - Basic$0.27 $0.24 
Net Income Attributable to Common Stockholders Per Share - Diluted$0.27 $0.23 
Weighted Average Shares of Common Stock Outstanding - Basic21,423,47021,382,069
Weighted Average Shares of Common Stock Outstanding - Diluted21,797,31621,931,352
The accompanying notes are an integral part of the consolidated financial statements
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NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands, except share amounts)
Three Months Ended March 31, 2023
Common StockAdditional Paid-in CapitalAccumulated DeficitNoncontrolling InterestTotal Equity
SharesPar
Balance as of December 31, 202221,408,194$214 $455,822 $(32,487)$7,389 $430,938 
Repurchase of Common Stock(49,307)— (622)— — (622)
Stock-Based Compensation— 308 — — 308 
Dividends to Common Stock— — (8,330)— (8,330)
Dividend Equivalents to Restricted Stock Units— — (7)— (7)
Distributions to OP Unit Holders— — — (146)(146)
Adjustment for Noncontrolling Interest Ownership in Operating Partnership— (38)— 38  
Net Income— — 5,868 102 5,970 
Balance as of March 31, 202321,358,887$214 $455,470 $(34,956)$7,383 $428,111 

Three Months Ended March 31, 2022
Common StockAdditional Paid-in CapitalAccumulated DeficitNoncontrolling InterestTotal Equity
SharesPar
Balance as of December 31, 202121,235,914$213 $450,916 $(23,574)$11,780 $439,335 
Conversion of Vested RSUs to Common Stock 3,002— 126 — (126) 
Conversion of OP Units to Common Stock 61,494— 1,104 — (1,104) 
Stock-Based Compensation— 405 — — 405 
Dividends to Common Stock— — (7,029)— (7,029)
Dividend Equivalents to Restricted Stock Units— — — (42)(42)
Distributions to OP Unit Holders— — — (129)(129)
Adjustment for Noncontrolling Interest Ownership in Operating Partnership— 139 — (139) 
Net Income— — 5,017 117 5,134 
Balance as of March 31, 202221,300,410$213 $452,690 $(25,586)$10,357 $437,674 
The accompanying notes are an integral part of the consolidated financial statements
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NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the Three Months Ended
March 31. 2023March 31, 2022
Cash Flows from Operating Activities:
Net Income$5,970 $5,134 
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Stock-Based Compensation308 405 
Loss on Sale of Real Estate 60 
Depreciation and Amortization Expense3,557 2,679 
Amortization of Debt Issuance Costs64  
Amortization of Debt Discount3 7 
Changes in Assets and Liabilities  
Other Assets259 (121)
Accounts Payable and Accrued Expenses(383)(685)
Security Deposits(305) 
Interest Reserve (919)
Rent Received in Advance(724)(323)
Other Liabilities(512) 
Net Cash Provided by Operating Activities8,237 6,237 
Cash Flows from Investing Activities:  
Escrow Deposits (7,300)
Reimbursements of Tenant Improvements(1,402)(3,443)
Acquisition of Real Estate(350) 
Disposition of Real Estate 761 
Net Cash Used in Investing Activities(1,752)(9,982)
Cash Flows from Financing Activities:  
Repurchase of Common Stock(622) 
Common Stock Dividends Paid(8,349)(6,593)
Restricted Stock Units Dividend Equivalents Paid(17)(42)
Distributions to OP Unit Holders(146)(129)
Principal Repayment on Loan Payable(1,000)(1,800)
Deferred Financing Costs(45) 
Net Cash Used in Financing Activities(10,179)(8,564)
Net Increase (Decrease) in Cash and Cash Equivalents(3,694)(12,309)
Cash and Cash Equivalents - Beginning of Period45,192 127,097 
Cash and Cash Equivalents - End of Period$41,498 $114,788 
Supplemental Disclosure of Cash Flow Information:
Interest Paid$94 $5 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:  
Dividends and Distributions Declared, Not Paid$8,483 $7,200 
The accompanying notes are an integral part of the consolidated financial statements
4

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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(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. Upon completion of the Merger, the Company owned 24 properties across nine states. In connection with the Merger, the Company also entered into various arrangements and agreements with certain of the Company's 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 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 months ended March 31, 2023 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, 2022, and filed with the Securities and Exchange Commission (“SEC”) on March 9, 2023.
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 8 for details. The Operating Partnership is a 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 March 31, 2023 and December 31, 2022, the assets and liabilities of
5

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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Note 2 - Basis of Presentation and Summary of Significant Accounting Policies (continued)
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 and impairment 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 the Company's current year presentation.
Significant Accounting Policies
There have been no significant changes to the Company's accounting polices included in Note 2 to the Consolidated Financial Statements of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.
Recent Accounting Pronouncements
Description Adoption Date Effect on Financial Statements
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. January 1, 2023The adoption of this standard did not have a material impact on the Company’s 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
March 31, 2023
(Unaudited)
Note 3 - Real Estate
As of March 31, 2023, the Company owned 32 properties, including one that is classified as held for sale, located in 12 states. The following table presents the Company's held for investment real estate portfolio as of March 31, 2023 (dollars in thousands):
TenantMarketSite TypeLandBuilding and ImprovementsTotal Real EstateAccumulated DepreciationNet Real Estate
AcreageConnecticutDispensary$395 $534 $929 $(62)$867 
AcreageMassachusetts Cultivation481 9,310 9,791 (953)8,838 
AcreagePennsylvaniaCultivation952 9,209 10,161 (910)9,251 
Ayr Wellness, Inc.NevadaCultivation1,002 12,577 13,579 (297)13,282 
Ayr Wellness, Inc.PennsylvaniaCultivation2,964 11,565 14,529 (314)14,215 
Bloom MedicinalMissouriCultivation948 11,919 12,867 (232)12,635 
Calypso EnterprisesPennsylvaniaCultivation1,486 28,514 30,000 (668)29,332 
Columbia CareCaliforniaDispensary1,082 2,692 3,774 (176)3,598 
Columbia CareIllinoisDispensary162 1,053 1,215 (66)1,149 
Columbia CareIllinoisCultivation801 10,560 11,361 (673)10,688 
Columbia CareMassachusettsDispensary108 2,212 2,320 (156)2,164 
Columbia CareMassachusettsCultivation1,136 12,690 13,826 (1,079)12,747 
Cresco LabsIllinoisCultivation276 50,456 50,732 (4,643)46,089 
CuraleafConnecticutDispensary184 2,748 2,932 (187)2,745 
CuraleafFloridaCultivation388 75,595 75,983 (4,649)71,334 
CuraleafIllinoisDispensary69 525 594 (37)557 
CuraleafIllinoisDispensary65 959 1,024 (70)954 
CuraleafIllinoisDispensary606 1,128 1,734 (81)1,653 
CuraleafIllinoisDispensary281 3,072 3,353 (214)3,139 
CuraleafNorth DakotaDispensary779 1,395 2,174 (102)2,072 
CuraleafOhioDispensary574 2,788 3,362 (226)3,136 
CuraleafPennsylvaniaDispensary877 1,041 1,918 (95)1,823 
CuraleafPennsylvaniaDispensary216 2,011 2,227 (140)2,087 
Greenlight(1)ArkansasDispensary238 1,919 2,157 (134)2,023 
Mint(2)ArizonaCultivation2,400 11,293 13,693  13,693 
Organic RemediesMissouriCultivation204 20,731 20,935 (1,369)19,566 
PharmaCannMassachusettsDispensary411 1,701 2,112 (209)1,903 
PharmaCannOhioDispensary281 1,269 1,550 (15)1,535 
PharmaCannPennsylvaniaDispensary44 1,271 1,315 (81)1,234 
Revolutionary ClinicsMassachusetts Cultivation926 41,934 42,860 (2,164)40,696 
TrulievePennsylvaniaCultivation1,061 43,209 44,270 (2,794)41,476 
Total Real Estate(3)
$21,397 $377,880 $399,277 $(22,796)$376,481 
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(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.
(2) This property is under development. Once completed and placed in service, the Company will start depreciating this property.
(3) The table does not include one property held for sale.
Real Estate Acquisitions
During the three months ended March 31, 2023, the Company invested approximately $350 thousand to acquire one parcel of land and committed to fund $16.2 million to expand a cultivation facility in Missouri . The following table presents the real estate acquisition for the three months ended March 31, 2023 (in thousands):
TenantMarketSite TypeClosing DateReal Estate Acquisition Costs
Bloom MedicinalMissouriCultivationMarch 3, 2023$350 
(1)
Total$350 
(1)The Company exercised its option to purchase the adjacent parcel of land to expand its cultivation facility in Missouri and has committed to fund $16.2 million for the expansion.
During the year ended December 31, 2022, the Company invested approximately $67.0 million to acquire four cultivation facilities and one dispensary. The following table presents the real estate acquisitions for the year ended December 31, 2022 (in thousands):
TenantMarketSite TypeClosing Date
Real Estate Acquisition Costs(1)
Bloom MedicinalMissouriCultivationApril 01, 20227,301 (2)
Ayr Wellness, Inc.PennsylvaniaCultivationJune 30, 202214,529 
Ayr Wellness, Inc.NevadaCultivationJune 30, 202213,579 
Calypso EnterprisesPennsylvaniaCultivationAugust 05, 202230,000 (3)
PharmaCannOhioDispensaryNovember 03, 20221,550 
Total$66,959 
(1)     Includes the purchase price (and in some cases, transaction costs that have been capitalized into the purchase price) and TI commitments funded at closing, if any, as of December 31, 2022. Excludes TI commitments not funded as of December 31, 2022. Excludes approximately $11.0 thousand of capitalized transaction costs on properties purchased prior to January 1, 2022.
(2)      Includes approximately $5.0 million of TI funded at closing of the property.
(3)     The Company entered into a $30.0 million mortgage loan on October 29, 2021 which converted to a sale-leaseback on August 5, 2022.
Conversion of Mortgage Loan
The Company funded a $30.0 million mortgage loan to Hero Diversified Associates, Inc. (“HDAI" or "Calypso") on October 29, 2021. On August 5, 2022 the mortgage loan converted to a twenty year sale-leaseback and the Company recorded land and building and improvements which have been included in "Total Real Estate" on the consolidated balance sheets.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)

Note 3 - Real Estate (continued)
Tenant Improvements Funded
During the three months ended March 31, 2023, the Company funded approximately $1.4 million of tenant improvements. The following table presents the tenant improvements funded for the three months ended March 31, 2023 (in thousands):
TenantMarketSite TypeClosing DateTI FundedUnfunded Commitments
MintArizonaCultivationJune 24, 2021$752 $802 
(1)
Organic RemediesMissouriCultivationDecember 20, 2021116 166 
Bloom MedicinalMissouriCultivationApril 1, 2022534 16,150 
Ayr Wellness, Inc.PennsylvaniaCultivationJune 30, 2022 750 
Total$1,402 $17,868 
(1)The tenant has been paying rent for the remaining commitment since July 2022 in accordance with the lease agreement.
During the year ended December 31, 2022, the Company funded approximately $45.2 million of tenant improvements. The following table presents the tenant improvements funded for the year ended December 31, 2022 (in thousands):
TenantMarketSite TypeClosing DateTI FundedUnfunded Commitments
CuraleafFloridaCultivationAugust 4, 2020$20,983 
'(1)
$ 
MintMassachusetts CultivationApril 1, 2021349  
MintArizonaCultivationJune 24, 20217,415 1,554 
'(2)
PharmaCannMassachusettsDispensaryMarch 17, 202125  
TrulievePennsylvaniaCultivationMarch 17, 20217,046 
'(3)
 
Organic RemediesMissouriCultivationDecember 20, 20214,745 282 
Bloom MedicinalMissouriCultivationApril 1, 20224,682 534 
'(4)
Ayr Wellness, Inc.PennsylvaniaCultivationJune 30, 2022 750 
Total $45,245 $3,120 
(1) On June 16, 2022, the Company funded the expansion of an existing property.
(2) The tenant has been paying rent for the remaining commitment since July 2022 in accordance with the lease agreement.
(3) The tenant had been paying rent for the TI since December 2021 in accordance with the lease agreement. As of May 2022, the TI had been fully funded.
(4) The unfunded commitment does not include a $16.5 million option but not obligation to acquire an adjacent property from an existing tenant.
Disposal of Real Estate
There were no sales of real estate during the three months ended March 31, 2023.
On March 21, 2022, the Company sold one of its Massachusetts properties for approximately $0.8 million, which was leased to PharmaCann. The Company recognized a loss on sale of the property of $60 thousand. The Company continued to collect the rent that would have been received from the Massachusetts property through increased lease payments from each of the remaining two properties leased by PharmaCann until the acquisition of a third property that was leased to PharmaCann in November 2022.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)

Note 3 - Real Estate (continued)
Real Estate Held for Sale
As of March 31, 2023, the Company is under contract with a broker to sell a property with a carrying amount $1.9 million located in Massachusetts. The property is available for immediate sale in its present condition and management expects the property will sell within one year. A property that is held for sale is required to be recorded at the lower of carrying amount or fair value less cost to sell with a loss recognized if the carrying amount of the property exceeds its fair value less cost to sell. As of March 31, 2023, the property was recorded at its carry value as a result of a make whole provision in the lease agreement.
At March 31, 2023, the property's initial recording amount was $1.9 million and it is classified in "Property Held for Sale" in the accompanying consolidated balance sheet.
Construction in Progress
Construction in progress was $12.9 million and $12.1 million on March 31, 2023 and December 31, 2022, respectively, and is included in "Buildings and Improvements" in the accompanying consolidated balance sheets.
Depreciation and Amortization
Depreciation expense for the three months ended March 31, 2023 and 2022, was $3.1 million and $2.2 million, respectively.
Amortization of the Company’s acquired in-place lease intangible assets was approximately $0.5 million for both the three months ended March 31, 2023 and 2022. The acquired in-place lease intangible assets have a weighted average remaining amortization period of 10.9 years.
In-place Leases
The following table presents the future amortization of the Company’s acquired in-place leases as of March 31, 2023 (in thousands):
YearExpense
2023 (nine months ending December 31, 2023)$1,489 
20241,985 
20251,985 
20261,985 
20271,985 
Thereafter11,839 
Total$21,268 

Impairment
The Company reviewed tenant activities and changes in the business condition of all of its properties and reviewed the existence of potential triggering events or impairment indicators to determine if there is impairment. Based on its review, as of March 31, 2023 and March 31, 2022 no impairment losses were recognized.

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Table of Contents
NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)

Note 4 - Leases
As Lessor
The Company's properties are leased to single tenants on a long-term, triple-net basis, which obligates the tenant to be responsible for the ongoing expenses of a property, in addition to its rent obligations. The Company's tenants operate in the fast-growing cannabis industry. All of the Company's leases generally contain annual increases in rent (typically between 2% and 3%) over the expiring rental rate at the time of expiration. Certain of the Company's leases also contain a Tenant Improvement Allowance (“TIA”). TIA is generally available to be funded between 12 and 18 months. In some leases, the tenant becomes liable to pay rent as if the full TIA has been funded, even if there are still unfunded commitments. TIA also contains annual increases which generally increase at the same rate as base rent, per the lease agreement. Certain of the Company's leases provide the lessee with a right of first refusal or right of first offer in the event the Company markets the leased property for sale. Two of the Company’s leases that were entered into in December 2020 provide the lessee with a purchase option to purchase the leased property at the end of the initial lease term in December 2029, subject to the satisfaction of certain conditions. The purchase option provision allows the lessee to purchase the leased property for an amount based on the fair market value of the Company's investment. As of March 31, 2023, the Company's gross investment in these two properties was approximately $6.3 million.
The following table presents the future contractual minimum rent under the Company’s operating leases as of March 31, 2023 (in thousands):
YearContractual Minimum Rent
2023 (nine months ending December 31, 2023)$36,889 
202451,211 
202553,405 
202654,777 
202756,186 
Thereafter593,151 
Total$845,619 
Concentration of Credit Risk
The ability of any of the Company's tenants to honor the terms of its lease are dependent upon the economic, regulatory, competitive, natural and social factors affecting the community in which that tenant operates.

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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)

Note 4 - Leases (continued)
The following table presents the five tenants in the Company's portfolio that represented the largest percentage of the Company's total rental income for each of the periods presented:
For the Three Months Ended March 31,
20232022
TenantNumber of Leases
Percentage of Rental Income(1)
TenantNumber of Leases
Percentage of Rental Income(1)
Curaleaf1025%Curaleaf1126%
Cresco Labs115%Cresco Labs117%
Trulieve 112%Trulieve 114%
Columbia Care59%Revolutionary Clinics
'(3)
114%
Calypso1
'(2)
8%Columbia Care511%

(1) Calculated based on rental income received during the period. This amount excludes revenue from fees and reimbursements.
(2) This tenant held a mortgage loan as of the three months ended March 31, 2022, therefore the Company received interest income rather than rental income during that period. In August 2022, the mortgage loan converted to a twenty year sale-leaseback.
(3) This tenant failed to pay rental income during the three months ended March 31, 2023. A security deposit of approximately $315 thousand was applied.
Non-Performing Tenant
Through March 31, 2023, Revolutionary Clinics failed to pay contractual rent, under one lease agreement. The Company is currently in discussion with the tenant to negotiate a resolution, which could include rent deferrals, or other concessions. The Company held a security deposit of approximately three months of contractual rent, of which we applied $315 thousand towards the outstanding rent during the three months ended March 31, 2023.
As Lessee

As of March 31, 2023, the Company was the lessee under one office lease that qualifies under the right-of-use ("ROU") model. The Company recorded a ROU asset of $273 thousand which is classified in “Other Assets” on the Company's consolidated balance sheets through a ROU model, in which the Company recorded a ROU asset and a lease liability. The ROU asset is amortized over the remaining lease term. The amortization is made up of the principal amortization under the lease liability plus or minus the straight-line adjustment of the operating lease rent. The lease liability is included in “Other Liabilities” the Company's consolidated balance sheets.

The following table presents the future contractual rent obligations as lessee as of March 31, 2023 (in thousands):

YearContractual Base Rent
2023$59 
202475
202577
202652
Total Minimum Lease Payments$263 
Less Amount Discounted Using Incremental Borrowing Rate48
Total Lease Liability$215 


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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)

Note 4 - Leases (continued)
As of March 31, 2023, the weighted-average discount rate used to calculate the lease liability was 5.65% and the remaining lease term was 3.4 years.

Note 5 – Loan Receivable
The Company funded a $5.0 million unsecured loan to Bloom Medicinals on June 10, 2022. The loan initially bore interest at a rate of 10.25% and is structured to increase annually in April by the product of 1.0225 times the rate in effect immediately prior to the anniversary date. The loan can be prepaid at any time without penalty and matures on June 30, 2026. The loan is cross defaulted with their lease agreement with the Company. As of March 31, 2023, the aggregate principal amount outstanding on the unsecured loan receivable was $5.0 million.
Note 6 – Financings
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 4.0% per annum. Principal on the loan is payable in annual installments of which $1.8 million and $1.0 million were paid in January 2022 and January 2023, respectively. The remaining principal of $1.0 million is payable in January 2024. The loan's outstanding balance as of March 31, 2023 was $1.0 million and the remaining unamortized discount was $10.2 thousand.
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 “Agent”). The Loan and Security Agreement matures on May 6, 2027. The Loan and Security Agreement provides, subject to the Accordion Feature described below, $30.0 million in aggregate commitments for secured revolving loans (“Revolving Credit Facility”), the availability of which is based on a borrowing base consisting of fee simple owned real properties that satisfy eligibility criteria specified in the Loan and Security Agreement and the lease income thereunder which are owned by certain subsidiaries of the Operating Partnership.
On July 29, 2022, the Operating Partnership, entered into an amendment to the Revolving Credit Facility, amending the Loan and Security Agreement, to increase the aggregate commitment under the Revolving Credit Facility from $30.0 million to $90.0 million and added two additional lenders. The Loan and Security Agreement also allows the Company, subject to certain conditions, to request additional revolving incremental loan commitments such that the Revolving Credit Facility may be increased to a total aggregate principal amount of up to $100.0 million. Borrowings under the Revolving Credit Facility may be voluntarily prepaid and re-borrowed, subject to certain fees.
The Revolving Credit Facility 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 1.0% or (b) 4.75%.
As of March 31, 2023, the Company had approximately $1.0 million in borrowings under the Revolving Credit Facility and $89.0 million in funds available to be drawn, subject to sufficient collateral in the borrowing base.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Note 5 – Financings (continued)
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 March 31, 2023, the Company complied with the terms of such covenants.
Note 7 - Related Party Transactions
Merger Agreement
In connection with the Merger, the Company entered into an Investor Rights Agreement (the "Investor Rights Agreement"). The Investor Rights Agreement provides the stockholders party thereto with certain rights with respect to the nomination of members to the Company's board of directors. Prior to the completion of the Company's IPO, pursuant to the Investor Rights Agreement, HG Vora Capital Management, LLC (“HG Vora”) had the right to nominate four directors to our board of directors. Following the completion of our IPO, for so long as HG Vora owns (i) at least 9% of our issued and outstanding common stock for 60 consecutive days, HG Vora may nominate two of the members of our board of directors, and (ii) at least 5% of our issued and outstanding common stock for 60 consecutive days, HG Vora may nominate one member of our board of directors. If HG Vora owns less than 5% of our issued and outstanding common stock for 60 consecutive days, then HG Vora may not nominate any members of our board of directors pursuant to the Investor Rights Agreement.
Prior to the completion of our IPO, NLCP Holdings, LLC had the right to designate three directors to our board of directors. Subsequent to our IPO, NLCP Holdings, LLC no longer has these rights.
Prior to the completion of our IPO, West Investment Holdings, LLC, West CRT Heavy, LLC, Gary and Mary West 2012 Gift Trust, Gary and Mary West Charitable Trust and WFI Co-Investments acting unanimously, collectively referred to as the “West Stockholders,” did not have a director nomination right. Following the completion of our IPO, the West Stockholders may nominate one member of our board of directors for so long as the West Stockholders own in the aggregate at least 5% of the issued and outstanding shares of our common stock. If the West Stockholders own in the aggregate less than 5% of our issued and outstanding common stock for 60 consecutive days, then the West Stockholders may not nominate any members of our board of directors pursuant to the Investor Rights Agreement.
Prior to the completion of our IPO, NL Ventures, LLC (“Pangea”) did not have a director nomination right. Following the completion of our IPO, Pangea may nominate one member of our board of directors for so long as Pangea owns at least 4% of our issued and outstanding common stock for 60 consecutive days. If Pangea owns less than 4% of our issued and outstanding common stock for 60 consecutive days, then Pangea may not nominate any members of our board of directors pursuant to the Investor Rights Agreement.
Note 8 - Noncontrolling Interests
The Company's noncontrolling interests represent limited partnership interest in the Operating Partnership not held by the Company. Noncontrolling interests represented 1.7% and 1.8% ownership in the Operating Partnership at March 31, 2023 and March 31, 2022, respectively.
The following table presents the activity for the Company’s noncontrolling interests issued by the Operating Partnership;
Three Months Ended March 31, 2023Three Months Ended March 31, 2022
OP UnitsNoncontrolling
Interests %
OP UnitsNoncontrolling
Interests %
Balance at January 1,373,5821.7%453,3032.1 %
OP Units Converted(61,494)
Balance at March 31,373,5821.7%391,8091.8 %
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Note 9 - Stock Based Compensation
The Company's board of directors adopted the 2021 Equity Incentive Plan (the “Plan”), to provide employees of the Company and its subsidiaries, certain consultants and advisors who perform services for the Company or its subsidiaries, and non-employee members of the board of directors of the Company with the opportunity to receive grants of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, stock units, other stock-based awards, and cash awards to enable us to motivate, attract and retain the services of directors, officers and employees considered essential to the long term success of the Company. Under the terms of the Plan, the aggregate number of shares of awards will be no more than 2,275,727 shares. If and to the extent shares of awards granted under the Plan, expire or are canceled, forfeited, exchanged or surrendered without having been exercised, or if any stock awards, stock units or other stock-based awards are forfeited, terminated or otherwise not paid in full, the shares subject to such grants shall again be available for issuance or transfer under the Plan. The Plan has a term of ten years until August 12, 2031. As of March 31, 2023, there were approximately 1,943,936 shares available for issuance under the Plan.
Restricted Stock Units
During the three months ended March 31, 2023, the Company granted 27,630 RSUs to certain officers and employees of the Company. Total outstanding RSUs as of March 31, 2023 were 75,419. Of the 75,419 outstanding RSUs, 18,534 RSUs were fully vested and 56,885 RSUs were unvested. There were no RSUs that vested or were forfeited during the three months ended March 31, 2023. During the three months ended March 31, 2022, 1,044 RSUs were granted and 4,102 RSUs were forfeited. Total outstanding RSUs as of March 31, 2022 were 169,136. Of the 169,136 outstanding RSUs, 127,176 RSUs were fully vested and 41,960 RSUs were unvested. RSUs are subject to restrictions on transfer and may be subject to a risk of forfeiture if the award recipient ceases to be an employee or director of the Company prior to vesting of the award.
Each RSU represents the right to receive one share of common stock upon vesting. Each RSU is also entitled to receive a dividend equivalent payment equal to the dividend paid on one share of common stock upon vesting. Unearned dividend equivalents on unvested RSUs as of March 31, 2023 and 2022 were $60,760 and $26,854, respectively.
The amortization of compensation costs for the awards of RSUs are included in "Stock-Based Compensation" in the accompanying consolidated statements of operations and amounted to approximately $0.1 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively. The remaining unrecognized compensation cost of approximately $0.7 million for RSU awards is expected to be recognized over a weighted average amortization period of 1.6 years as of March 31, 2023.
The following table sets forth the Company's unvested restricted stock units activity for the three months ended March 31,:
20232022
Number of
Unvested
Shares of RSUs
Weighted Average
Grant Date Fair Value
Per Share
Number of
Unvested
Shares of RSUs
Weighted Average
Grant Date Fair Value
Per Share
Balance at January 1,29,255$22.89 45,018$27.49 
Granted27,630$13.38 1,044$27.49 
Forfeited$ (4,102)27.49 
Balance at March 31,56,885$18.27 41,960$27.49 
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Note 9 - Stock Based Compensation (continued)
Performance Stock Units
During the three months ended March 31, 2023, the Company granted 55,017 Performance Stock Units (“PSUs”) to officers and certain employees of the Company. Total outstanding PSUs as of March 31, 2023 and 2022 were 121,858 and 77,742, respectively. During the three months ended March 31, 2023 and 2022, no PSUs vested or were forfeited. PSUs vest subject to the achievement of relative total shareholder return as measured against a peer group of companies and absolute compounded annual growth in stock price during each performance period. The actual number of shares of common stock issued will range from 0 to 243,716 depending upon performance. The performance periods are August 13, 2021 through December 31, 2023, January 1, 2022 through December 31, 2024, and January 1, 2023 through December 31, 2025 and 18,858, 47,983 and 55,017 PSUs are scheduled to vest at the end of each performance period, respectively.
PSUs are recorded at fair value which involved using a Monte Carlo simulation for the future stock prices of the Company and its corresponding peer group. A fair value of $24.15, $24.00 and $11.23 were used for PSUs with performance periods ending December 31, 2023, 2024 and 2025, respectively. PSUs are subject to restrictions on transfer and may be subject to a risk of forfeiture if the award recipient ceases to be an employee of the Company prior to vesting of the award.
Each PSU is entitled to receive a dividend equivalent payment equal to the dividend paid on the number of shares of common stock issued per PSU vesting. Unearned dividend equivalents on unvested PSUs as of March 31, 2023 and 2022 were $164,496 and $49,755, respectively.
The amortization of compensation costs for the awards of PSUs are included in "Stock-Based Compensation" in the accompanying consolidated statements of operations and amounted to $0.2 million for the three months ended March 31, 2023 and 2022. The remaining unrecognized compensation cost of approximately $1.4 million for PSU awards is expected to be recognized over a weighted average amortization period of 2.1 years as of March 31, 2023.
The following table sets forth the Company's unvested performance stock activity for the three months ended March 31,:
20232022
Number of Unvested Shares of
PSUs
Weighted Average Grant
Date Fair Value Per Share
Number of Unvested Shares of
PSUs
Weighted Average Grant
Date Fair Value Per Share
Balance at January 1,66,841$24.04 77,742$24.04 
Granted55,017$11.23 $