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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, 2024
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 8, 2024 was 20,509,883.


Table of Contents
NewLake Capital Partners, Inc.
FORM 10-Q
March 31, 2024
TABLE OF CONTENTS
Page No.
Unregistered Sales of Equity Securities and Issuer Purchases of Equity Securities
i

Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
March 31, 2024December 31, 2023
Assets:
Real Estate
Land$21,397 $21,397 
Building and Improvements398,805 390,911 
Total Real Estate420,202 412,308 
Less Accumulated Depreciation(35,066)(31,999)
Net Real Estate385,136 380,309 
Cash and Cash Equivalents21,546 25,843 
In-Place Lease Intangible Assets, net19,283 19,779 
Loan Receivable, net (Current Expected Credit Loss of $152 and $167, Respectively)
4,848 4,833 
Other Assets2,304 2,528 
Total Assets$433,117 $433,292 
Liabilities and Equity:
Liabilities:
Accounts Payable and Accrued Expenses$697 $1,117 
Revolving Credit Facility4,000 1,000 
Loan Payable, net 1,000 
Dividends and Distributions Payable8,577 8,385 
Security Deposits8,342 8,616 
Rent Received in Advance668 990 
Other Liabilities170 227 
Total Liabilities 22,454 21,335 
Commitments and Contingencies
Equity:
Preferred Stock, $0.01 Par Value, 100,000,000 Shares Authorized, 0 Shares Issued and Outstanding, respectively
  
Common Stock, $0.01 Par Value, 400,000,000 Shares Authorized, 20,509,883 and 20,503,520 Shares Issued and Outstanding, respectively
205 205 
Additional Paid-In Capital445,590 445,289 
Accumulated Deficit(42,479)(40,909)
Total Stockholders' Equity403,316 404,585 
Noncontrolling Interests7,347 7,372 
Total Equity410,663 411,957 
Total Liabilities and Equity$433,117 $433,292 
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,
20242023
Revenue:
Rental Income$12,127 $11,157 
Interest Income from Loans131 128 
Fees and Reimbursables350 131 
Total Revenue12,608 11,416 
Expenses:  
Property Expenses22 94 
Depreciation and Amortization Expense3,568 3,561 
General and Administrative Expenses:  
Compensation Expense1,235 1,127 
Professional Fees402 322 
Other General and Administrative Expenses418 470 
Total General and Administrative Expenses2,055 1,919 
Total Expenses5,645 5,574 
Provision for Current Expected Credit Loss14  
Income From Operations6,977 5,842 
Other Income (Expense):
Other Income100 220 
Interest Expense(83)(92)
Total Other Income (Expense)17 128 
Net Income6,994 5,970 
Net Income Attributable to Noncontrolling Interests(125)(102)
Net Income Attributable to Common Stockholders$6,869 $5,868 
Net Income Attributable to Common Stockholders Per Share - Basic$0.33 $0.27 
Net Income Attributable to Common Stockholders Per Share - Diluted$0.33 $0.27 
Weighted Average Shares of Common Stock Outstanding - Basic20,541,84021,423,470
Weighted Average Shares of Common Stock Outstanding - Diluted20,942,25421,797,316
The accompanying notes are an integral part of the consolidated financial statements
2

Table of Contents
NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands, except share amounts)
Three Months Ended March 31, 2024
Common Stock
SharesParAdditional Paid-in CapitalAccumulated DeficitNoncontrolling InterestTotal Equity
Balance as of December 31, 202320,503,520 $205 $445,289 $(40,909)$7,372 $411,957 
Conversion of Vested RSUs to Common Stock 6,363 — — — —  
Cash Paid for Taxes in Lieu of Issuance of Common Stock— — (46)— — (46)
Stock-Based Compensation— — 350 — — 350 
Dividends to Common Stock— — — (8,409)— (8,409)
Dividends on Restricted Stock Units— — — (30)— (30)
Distributions to OP Unit Holders— — — — (153)(153)
Adjustment for Noncontrolling Interest Ownership in Operating Partnership— — (3)— 3  
Net Income— — — 6,869 125 6,994 
Balance as of March 31, 202420,509,883 $205 $445,590 $(42,479)$7,347 $410,663 
Three Months Ended March 31, 2023
Common Stock
SharesParAdditional Paid-in CapitalAccumulated DeficitNoncontrolling InterestTotal Equity
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 
The accompanying notes are an integral part of the consolidated financial statements
3

Table of Contents
NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the Three Months Ended
March 31, 2024March 31, 2023
Cash Flows from Operating Activities:
Net Income$6,994 $5,970 
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Stock-Based Compensation350 308 
Depreciation and Amortization Expense3,568 3,557 
Amortization of Debt Issuance Costs67 64 
Amortization of Debt Discount 3 
Provision for Credit Loss(14) 
Non-Cash Lease Expense(1) 
Non-Cash Application of Rent Escrow(274) 
Changes in Assets and Liabilities  
Other Assets151 259 
Accounts Payable and Accrued Expenses(420)(383)
Security Deposits (305)
Rent Received in Advance(322)(724)
Other Liabilities(57)(512)
Net Cash Provided by Operating Activities10,042 8,237 
Cash Flows from Investing Activities:  
Funding of Tenant Improvements(7,894)(1,402)
Acquisition of Real Estate (350)
Net Cash Used in Investing Activities(7,894)(1,752)
Cash Flows from Financing Activities:  
Repurchase of Common Stock (622)
Cash Paid for Taxes in Lieu of Issuance of Common Stock(46) 
Common Stock Dividends Paid(8,201)(8,349)
Restricted Stock Unit Dividends Paid(49)(17)
Distributions to OP Unit Holders(149)(146)
Borrowings from Revolving Credit Facility3,000  
Principal Repayment on Loan Payable(1,000)(1,000)
Deferred Financing Costs (45)
Net Cash Used in Financing Activities(6,445)(10,179)
Net (Decrease) in Cash and Cash Equivalents(4,297)(3,694)
Cash and Cash Equivalents - Beginning of Period25,843 45,192 
Cash and Cash Equivalents - End of Period$21,546 $41,498 
Supplemental Disclosure of Cash Flow Information:
Interest Paid$54 $94 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:  
Dividends and Distributions Declared, Not Paid$8,577 $8,483 
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, 2024
(Unaudited)
Note 1 - Organization
NewLake Capital Partners, Inc. (the “Company”), a Maryland corporation, was formed on April 9, 2019, originally 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 conducts its operations through its subsidiary, NLCP Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership” or “OP”). The Company is the sole managing general partner of the Operating Partnership. 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 accompanying unaudited consolidated 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. The consolidated financial statements include the accounts of the Company, the Operating Partnership, as well as wholly owned subsidiaries of the Operating Partnership and variable interest entities (“VIEs”) in which the Company is considered the primary beneficiary. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. The results of operations for the three months ended March 31, 2024 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, 2023, and filed with the Securities and Exchange Commission (“SEC”) on March 11, 2024. In management's opinion, all adjustments (which include normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been made.
Variable Interest Entities
The Company consolidates a VIE in which it is considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance; and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.
NLCP Operating Partnership LP
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, 2024 and December 31, 2023, 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
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)
Note 2 - Basis of Presentation and Summary of Significant Accounting Policies (continued)
estimates include, but are not limited to, useful lives for depreciation of property and corporate assets, the fair value of acquired real estate and in-place lease intangibles acquired, and the valuation 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 changes to the Company's accounting policies 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, 2023.
Recently Issued Accounting Pronouncements
Description
Effective DateEffect on Financial Statements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. The update also requires disclosure regarding the chief operating decision maker and expands the interim segment disclosure requirements.
For fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.
The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires entities to disclose additional information with respect to the effective tax rate reconciliation and to disclose the disaggregation by jurisdiction of income tax expense and income taxes paid.
For fiscal years beginning after December 15, 2024, with early adoption permitted.
The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements.

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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)
Note 3 - Real Estate
As of March 31, 2024, the Company owned 31 properties, located in 12 states. The following table presents the Company's real estate portfolio as of March 31, 2024 (dollars in thousands):
TenantMarketSite TypeLand
Building and Improvements(1)
Total Real EstateAccumulated DepreciationNet Real Estate
AcreageConnecticutDispensary$395 $534 $929 $(80)$849 
AcreageMassachusetts Cultivation481 9,310 9,791 (1,229)8,562 
AcreagePennsylvaniaCultivation952 9,209 10,161 (1,173)8,988 
Ayr Wellness, Inc.NevadaCultivation1,002 12,577 13,579 (672)12,907 
Ayr Wellness, Inc.PennsylvaniaCultivation2,964 11,565 14,529 (710)13,819 
Bloom MedicinalMissouriCultivation948 24,775 25,723 (606)(2)25,117 
Calypso EnterprisesPennsylvaniaCultivation1,486 30,527 32,013 (1,669)(2)30,344 
Columbia CareCaliforniaDispensary1,082 2,692 3,774 (262)3,512 
Columbia CareIllinoisDispensary162 1,053 1,215 (99)1,116 
Columbia CareIllinoisCultivation801 10,560 11,361 (1,002)10,359 
Columbia CareMassachusettsDispensary108 2,212 2,320 (232)2,088 
Columbia CareMassachusettsCultivation1,136 12,690 13,826 (1,618)12,208 
Cresco LabsIllinoisCultivation276 50,456 50,732 (6,091)44,641 
CuraleafConnecticutDispensary184 2,748 2,932 (278)2,654 
CuraleafFloridaCultivation388 75,595 75,983 (6,879)69,104 
CuraleafIllinoisDispensary69 525 594 (55)539 
CuraleafIllinoisDispensary65 959 1,024 (104)920 
CuraleafIllinoisDispensary606 1,128 1,734 (120)1,614 
CuraleafIllinoisDispensary281 3,072 3,353 (318)3,035 
CuraleafNorth DakotaDispensary779 1,395 2,174 (146)2,028 
CuraleafOhioDispensary574 2,788 3,362 (337)3,025 
CuraleafPennsylvaniaDispensary877 1,041 1,918 (141)1,777 
CuraleafPennsylvaniaDispensary216 2,011 2,227 (208)2,019 
Greenlight(3)ArkansasDispensary238 1,919 2,157 (199)1,958 
MintArizonaCultivation2,400 17,183 19,583  (2)19,583 
Organic RemediesMissouriCultivation204 20,897 21,101 (2,452)18,649 
PharmaCannMassachusettsDispensary411 1,701 2,112 (313)1,799 
PharmaCannOhioDispensary281 1,269 1,550 (51)1,499 
PharmaCannPennsylvaniaDispensary44 1,271 1,315 (120)1,195 
Revolutionary ClinicsMassachusetts Cultivation926 41,934 42,860 (3,373)39,487 
TrulievePennsylvaniaCultivation1,061 43,209 44,270 (4,529)39,741 
Total Real Estate
$21,397 $398,805 $420,202 $(35,066)$385,136 
(1) Includes construction in progress in the amount of $32.1 million that had been funded as of March 31, 2024.
(2) A portion of this investment is currently under development or undergoing building improvements. Once the development or improvements are completed and placed-in service, the Company will begin depreciating the applicable part of the property.
(3) GL Partners, Inc. (Greenlight) acquired the tenant and was added as a guarantor, however Curaleaf remains an additional guarantor subject to certain conditions in the lease agreement.


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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)

Note 3 - Real Estate (continued)
Real Estate Acquisitions
2024 Acquisitions
The Company did not acquire any properties during the three months ended March 31, 2024.
2023 Acquisitions
During the year ended December 31, 2023, the Company exercised its option to acquire an adjacent parcel of land to expand its cultivation facility in Missouri and invested approximately $350 thousand and committed to fund $16.2 million to expand the facility (refer to the Tenant Improvements ("TI") table below for details).
The following table presents the real estate acquisitions for the year ended December 31, 2023 (in thousands):
TenantMarketSite TypeClosing Date
Real Estate Acquisition Costs
Bloom MedicinalMissouriCultivationMarch 3, 2023$350 
Total$350 
Tenant Improvements Funded
2024 Tenant Improvements
During the three months ended March 31, 2024, the Company funded approximately $7.9 million of tenant improvements. The following table presents the tenant improvements funded and the remaining unfunded commitments for the three months ended March 31, 2024 (in thousands):
TenantMarketSite TypeClosing DateTI FundedUnfunded Commitments
MintArizonaCultivationJune 24, 2021$2,361 $1,427 
Bloom MedicinalMissouriCultivationApril 1, 20225,533 3,294 
Ayr Wellness, Inc.PennsylvaniaCultivationJune 30, 2022 750 
CalypsoPennsylvaniaCultivationAugust 5, 2022 987 
Total$7,894 $6,458 
.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)

Note 3 - Real Estate (continued)
2023 Tenant Improvements
During the year ended December 31, 2023, the Company funded approximately $14.4 million of tenant improvements. The following table presents the tenant improvements funded and the remaining unfunded commitments for the year ended December 31, 2023 (in thousands):
TenantMarketSite TypeClosing DateTI Funded Unfunded Commitments
MintArizonaCultivationJune 24, 2021$4,281 $3,788 
(1)
Organic RemediesMissouriCultivationDecember 20, 2021282  
Bloom MedicinalMissouriCultivationApril 1, 20227,858 8,826 
Ayr Wellness, Inc.PennsylvaniaCultivationJune 30, 2022 750 
CalypsoPennsylvaniaCultivationAugust 5, 20222,013 987 
Total $14,434 $14,351 
(1) Effective June 1, 2023, the lease agreement was amended to include an additional TI commitment of approximately $6.5 million.
Disposal of Real Estate
2024 Dispositions
There were no sales of real estate during the three months ended March 31, 2024.
2023 Dispositions
On October 27, 2023, the Company closed on the sale of its property in Palmer, Massachusetts, for $2.0 million, which was leased to Mint. The Company's investment in the property was $1.9 million. Upon closing, Mint's lease agreement was terminated and they paid a portion of the closing costs, resulting in a break-even sale of the property. Therefore, the Company did not recognize a gain or loss on sale of the property.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)

Note 3 - Real Estate (continued)
Construction in Progress
2024 Construction in Progress
As of March 31, 2024 and December 31, 2023, construction in progress was $32.1 million and $24.2 million, respectively, and is classified in "Buildings and Improvements" in the accompanying consolidated balance sheets.
TenantSite TypeBeginning BalanceFundingsPlaced-in-Service
Ending Balance(1)
MintCultivation$14,822 $2,361 $ $17,183 
Bloom MedicinalsCultivation7,324 5,533  12,857 
CalypsoCultivation2,013   2,013 
Total
$24,159 $7,894 $ $32,053 
(1) These properties were under development as of March 31, 2024. Once the development is completed and placed-in-service, the Company will begin depreciating this asset.
2023 Construction in Progress
TenantSite Type
Beginning Balance(1)
Fundings(1)
Placed-in-Service
Ending Balance(2)
MintCultivation$10,541 4,281  $14,822 
Bloom MedicinalsCultivation 7,324  7,324 
CalypsoCultivation 2,013  2,013 
Total
$10,541 $13,618 $ $24,159 
(1) The table does not include approximately $1.6 million of tenant improvements that had been funded as of January 1, 2023 for the development of a cultivation facility in Massachusetts. These tenant improvements were never placed in service and the property was sold on October 27, 2023.
(2) These properties were under development as of December 31, 2023. Once the development is completed and placed-in-service, the Company will begin depreciating this asset.
Depreciation and Amortization
For both the three months ended March 31, 2024 and 2023, depreciation expense on the Company's real estate assets was approximately $3.1 million.
Amortization of the Company’s acquired in-place lease intangible assets was approximately $0.5 million for both the three months ended March 31, 2024 and 2023. The acquired in-place lease intangible assets have a weighted average remaining amortization period of approximately 9.96 years.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)

Note 3 - Real Estate (continued)
In-place Leases
The following table presents the future amortization of the Company’s acquired in-place leases as of March 31, 2024 (in thousands):
YearAmortization Expense
2024 (nine months ending December 31, 2024)$1,490 
20251,985 
20261,985 
20271,985 
20281,985 
Thereafter9,853 
Total$19,283 
Impairment
The Company did not identify any situations in its review of tenant activities and changes in the business condition of all of its properties that would require the recognition of an impairment loss. Accordingly, the Company did not record an impairment loss for the three months ended March 31, 2024 and March 31, 2023, respectively.
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. Under certain circumstances the Company will pay for certain expenses on behalf of the tenant and the tenant is required to reimburse the Company. The presentation in the statements of operations for these expenses are gross where the Company records revenue and a corresponding reimbursable expense. Expenses paid directly by a tenant are not reimbursable and therefore not reflected in the statement of operations. The expense and reimbursable amounts may differ due to timing. The revenues associated with the reimbursable expenses were classified in "Fees and Reimbursables" in the accompanying consolidated statements of operations. For the three months ended March 31, 2024 and 2023, the reimbursable revenues were $299.8 thousand and $83.1 thousand, respectively. Reimbursable expenses are classified as "Property Expenses" in the accompanying consolidated statements of operations.
The Company's tenants operate in the 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 leases of the Company 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. During the fourth quarter of 2023, the Company granted Calypso a purchase option to purchase the leased property and during the quarter ended March 31, 2024, the tenant was out of compliance with certain provisions of the lease
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)

Note 4 - Leases (continued)
and as a result the purchase option was terminated. As of March 31, 2024, the Company had two leases that provided 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, 2024, the Company's gross investment in these two properties was approximately $6.3 million.
Lease Income
The following table presents the future contractual minimum rent under the Company’s operating leases as of March 31, 2024 (in thousands):
YearContractual Minimum Rent
2024 (nine months ending December 31, 2024)$37,428 
202551,421 
202652,965 
202754,344 
202855,759 
Thereafter544,828 
Total$796,745 
Credit Risk and Geographic Concentration
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. As of March 31, 2024 and December 31, 2023, the Company owned 31 properties leased to 13 tenants across 12 states including Arizona, Arkansas, California, Connecticut, Florida, Illinois, Massachusetts, Missouri, Nevada, North Dakota, Ohio, and Pennsylvania.
The following table presents the tenants in the Company's portfolio that represented the largest percentage of the Company's total rental income and fees, excluding reimbursable revenues, for each of the periods presented:
For the Three Months Ended March 31,
20242023
TenantNumber of Leases
Percentage of Rental Income(1)
TenantNumber of Leases
Percentage of Rental Income(1)
Curaleaf1023%Curaleaf1025%
Cresco Labs114%Cresco Labs115%
Trulieve111%Trulieve112%
Columbia Care59%Columbia Care59%
Calypso18%Calypso18%
(1) Calculated based on rental income received during the period. This amount includes fees and excludes revenue reimbursements.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)

Note 4 - Leases (continued)
The following table presents the states in the Company’s portfolio that represented the largest percentage of the Company’s total rental income and fees, excluding reimbursable revenues, for each of the periods presented:
For the Three Months Ended March 31,
20242023
StateNumber of Properties
Percentage of Rental Income(1)
StateNumber of Properties
Percentage of Rental Income(1)
Pennsylvania726 %Pennsylvania729 %
Florida119 %Massachusetts6
(2)
20 %
Illinois718 %Illinois720 %
Massachusetts514 %Florida112 %
Missouri210 %Missouri28 %
(1) Calculated based on rental income received during the period. This amount includes fees and excludes revenue reimbursables.
(2) Included in the number of properties and revenue is one Massachusetts property sold in October 2023.
As Lessee
As of March 31, 2024, the Company was the lessee under one office lease for a term of four years, subject to annual escalations. The annual rent payments range from approximately $72.0 thousand in year one to approximately $85.0 thousand in year four. The office lease qualifies under the right-of-use ("ROU") model. Upon entering into the lease in June 2022, the Company recorded a ROU asset of $273 thousand which was classified in “Other Assets” and a lease liability, which is classified in "Other Liabilities" in the accompanying consolidated balance sheets. The ROU balance as of March 31, 2024 and December 31, 2023, were approximately $161.2 thousand and $177.4 thousand, respectively. 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 following table presents the future contractual rent obligations as lessee as of March 31, 2024 (in thousands):

YearContractual Base Rent
2024 (nine months ended December 31, 2024)$57 
202577
202652
Total Minimum Lease Payments$186 
Less: Amount Discounted Using Incremental Borrowing Rate$(17)
Total Lease Liability$169 
As of March 31, 2024, the weighted-average discount rate used to calculate the lease liability was 5.65% and the remaining lease term was 2.42 years.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)
Note 5 – Loan Receivable, net
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 interest rate in effect immediately prior to the anniversary date. The loan is interest only for the first four years and can be prepaid at any time without penalty. If full principal payment on the loan is not made on June 30, 2026, the loan will begin amortizing principal and interest over the next five years, with a final maturity of June 30, 2031. The loan is cross defaulted with their lease agreement with the Company. As of March 31, 2024 and December 31, 2023, the loan earned interest at a rate of 10.48%, and the aggregate principal amount outstanding on the unsecured loan receivable as of March 31, 2024 and December 31, 2023 was $5.0 million.
CECL Reserve
The Company recorded a provision for current expected credit loss on the $5.0 million unsecured loan (discussed above). Estimating the CECL allowance for credit loss requires significant judgement. The Company used a discounted cash flow analysis to determine the expected credit loss. The following table presents the CECL reserve for the three months ended March 31, 2024:
Period
Expected Credit Loss
CECL reserve as of December 31, 2023
$166,650 
Adjustment to expected credit loss
$(14,322)
CECL reserve as of March 31, 2024(1)
$152,328 
(1) Included in "Loan Receivable, net" on the consolidated balance sheets.
Note 6 – Financings
Loan Payable
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 was an independent third party from the tenant. The loan bore interest at a rate of 4.0% per annum. Principal on the loan was payable in annual installments of which $1.8 million and $1.0 million were paid in January 2022 and January 2023, respectively. On January 3, 2024, the Company made its final annual principal and interest payment of approximately $1.0 million on its loan payable.
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.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)
Note 6 – Financings (continued)
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, 2024 and December 31, 2023, the Company had approximately $4.0 million and $1.0 million, respectively, outstanding under the Revolving Credit Facility. As of March 31, 2024, there was $86.0 million in funds available to be drawn, subject to sufficient collateral in the borrowing base.
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, 2024, the Company was in compliance with the terms of such covenants under the agreement.
Note 7 - Related Party Transactions
Investor Rights Agreement
Pursuant to our Investor Rights Agreement (the "Investor Rights Agreement"), HG Vora Capital Management, LLC (“HG Vora”), West Investment Holdings, LLC, West CRT Heavy, LLC, Gary and Mary West Foundation, Gary and Mary West Health Endowment, Inc., Gary and Mary West 2012 Gift Trust and WFI Co-Investments acting unanimously, collectively referred to as the “West Stockholders" and NL Ventures LLC ("Pangea") hold certain nomination rights with respect to members of our board of directors so long as they individually own in the aggregate certain percentages of the Company’s issued and outstanding common stock for 60 days consecutively.
Note 8 - Noncontrolling Interests
The Company's noncontrolling interests represent limited partnership interests in the Operating Partnership not held by the Company. Noncontrolling interests represented approximately 1.8% ownership interest in the Operating Partnership at March 31, 2024 and December 31, 2023.
Note 9 - Stock Based Compensation
The Company's board of directors adopted our 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 the Company 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, 2024, there were approximately
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)
Note 9 - Stock Based Compensation (continued)
1,809,193 shares available for issuance under the Plan, which assumes maximum performance is achieved with respect to Performance Stock Units (“PSUs”) .
Restricted Stock Units
Restricted Stock Units ("RSUs") are granted to certain directors, officers and employees of the Company. Per the terms of the agreements, certain director RSUs that vest cannot be converted until the director separates from the Company. Total outstanding RSUs as of March 31, 2024 and 2023 were 119,239 and 75,419, respectively.

Unvested Restricted Stock Units
The following table sets forth the Company's unvested RSU activity for the three months ended March 31,:
20242023
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 1,63,582$13.92 29,255$22.89 
Granted28,754$16.10 27,630$13.38 
Forfeited(740)$15.19  $ 
Vested(9,209)
(1)
$13.38 $ 
Balance at March 31,82,387$14.73 56,885$18.27 
(1) Vested shares do not include 2,846 shares withheld to satisfy tax and other compensation related withholdings associated with the vested RSUs issued under the 2021 Equity Incentive Plan.

Vested Restricted Stock Units
The following table sets forth the Company's vested RSU activity for the three months ended March 31,:
20242023
Number of Vested Shares of
RSUs
Weighted Average Grant
Date Fair Value Per Share
Number of Vested Shares of
RSUs
Weighted Average Grant
Date Fair Value Per Share
Balance at January 1, 36,852 $22.05 18,534 $23.93 
Vested9,209 
(1)
$13.38  $ 
Converted(6,363)$13.38  $ 
Shares Withheld(2)
(2,846)$13.38  $ 
Balance at March 31 36,852 $22.05 18,534 $23.93 
(1) Represents the gross number of RSUs vested, which includes 2,846 shares withheld for taxes and not converted to common stock.
(2) Represents shares withheld to satisfy tax and other compensation related withholdings associated with the vested RSUs issued under the 2021 Equity Incentive Plan.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)
Note 9 - Stock Based Compensation (continued)
Each restricted stock unit represents the right to receive one share of common stock upon vesting. The vested RSUs are also entitled to receive an accumulated dividend payment equal to the dividend paid on each share of common stock during the vesting period. During the three months ended March 31, 2024 and 2023, the Company paid $33.1 thousand and $8.7 thousand respectively, of accumulated dividends that became earned upon vesting of RSUs. Accrued unearned dividends on unvested RSUs as of March 31, 2024 and 2023 were $114,473 and $60,760, respectively.
The amortization of compensation costs for the awards of RSUs are classified in "Compensation Expense" in the accompanying consolidated statements of operations and amounted to approximately $0.2 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively. The remaining unrecognized compensation cost of approximately $0.8 million for RSU awards is expected to be recognized over a weighted average amortization period of 1.5 years as of March 31, 2024.
Performance Stock Units
PSUs are granted to officers and certain employees of the Company. Total outstanding PSUs as of March 31, 2024 and 2023 were 159,522 and 121,858, respectively.
The following table sets forth the Company's unvested performance stock activity for the three months ended March 31,:
For the Three Months Ended March 31,
20242023
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 1,103,000$17.18 66,841$24.04 
Granted56,522$17.30 55,017$11.23 
Forfeited $  $ 
Balance at March 31,159,522$17.22 121,858$18.26 
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 319,044 depending upon performance. The performance periods are January 1, 2022 through December 31, 2024, January 1, 2023 through December 31, 2025 and January 1, 2024 through December 31, 2026 and 47,983, 55,017 and 56,522 PSUs are scheduled to vest at the end of each performance period, respectively.
The fair value of PSUs is determined using a Monte Carlo simulation for our future stock price and the corresponding peer group. The grant date fair value is an equally weight value comprised of (i) total shareholder return of the Company and a peer group of companies (“rTSR”); and (ii) the Company’s absolute compound annual growth rate (“CAGR”). To derive the value of rTSR, the Company uses a stochastic stock price simulation model using Geometric Brownian Motion (“GBM”) to model the future stock prices of the Company and the peer group companies. The key inputs to the GBM model include the standard deviation of the movement of the share price, also expressed as stock price volatility. Historical volatility is analyzed for the Company and peer group companies based on publicly traded shares of common stock. The model also assists in deriving a value of the Company’s CAGR which is then subjected to the vesting percentages according to the terms of the PSU agreements. The key inputs to calculate CAGR are the ending stock price, initial stock price and vesting period. The GBM simulates the ending stock price that is used in the CAGR model to determine the grant date fair value.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)
Note 9 - Stock Based Compensation (continued)
Using the above methodology, grant date fair values of $24.00, $11.23 and $17.30 were used for PSUs with performance periods ending December 31, 2024, 2025 and 2026, 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 represents the right to receive one share of common stock upon vesting. Upon vesting, each PSU is also entitled to receive an accumulated dividend payment equal to the dividend paid on each share of common stock during the performance period. If PSUs do not meet the performance hurdles and are cancelled, no dividends are paid on the cancelled units. During the three months ended March 31, 2024 and 2023, no PSUs vested and therefore the Company did not pay any dividends. Unearned dividends on unvested PSUs as of March 31, 2024 and 2023 were $311,084 and $164,496, respectively.
The amortization of compensation costs for the awards of PSUs are included in "Compensation Expense" in the accompanying consolidated statements of operations and amounted to approximately $0.2 million for both the three months ended March 31, 2024 and 2023. The remaining unrecognized compensation cost of approximately $1.5 million for PSU awards is expected to be recognized over a weighted average amortization period of 2.1 years as of March 31, 2024.
Stock Options
Prior to the completion of the initial public offering ("IPO"), the Company issued 791,790 nonqualified stock options (the “Options”) to purchase shares of the Company’s common stock, subject to the terms and conditions of the applicable option grant agreements, with an exercise price per share of common stock equal to $24.00 and in such amounts as set forth in the option grant agreements. The Options vested on August 31, 2020. As of March 31, 2024 and 2023, the Options were fully exercisable and expire on July 15, 2027.
Note 10 - Warrants
Warrants Issued
On March 17, 2021, the Company entered into a warrant agreement which granted the holder the right to purchase 602,392 shares of common stock of the Company at a purchase price of $24.00 per share. Warrants were immediately exercisable and expire on July 15, 2027. As of March 31, 2024 and 2023, the warrants were fully exercisable.
Investment in Warrants
On October 27, 2023, the Company entered into a lease amendment and forbearance agreement for its existing lease agreement with Revolutionary Clinics on its cultivation facility in Massachusetts. Under the forbearance agreement, the Company provided forbearance of delinquent rent and received warrants. The warrants are accounted for under ASC 321. The Company elected to use the measurement alternative to value its investment in warrants, since the fair value was not readily determinable. The investment in warrants is classified in “Other Assets” in the consolidated balance sheets at its initial cost value of $522 thousand. The cost value was determined based upon the implied recapitalized equity value of Revolutionary Clinics.
Note 11 - Stockholders' Equity
Preferred Stock
As of March 31, 2024 and December 31, 2023, the Company had 100,000,000 shares of preferred stock authorized and 0 shares of preferred stock outstanding.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)
Note 11 - Stockholders' Equity (continued)
Common Stock
As of March 31, 2024 and December 31, 2023, the Company had 400,000,000 shares of common stock authorized and 20,509,883 and 20,503,520 shares, respectively of common stock issued and outstanding. Common stock is issued at a par value of $0.01 per share.
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 $10.0 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. On September 15, 2023, the board of directors authorized an amendment to the stock repurchase program for the repurchase of up to an additional $10.0 million of outstanding common stock and extended the stock repurchase program through December 31, 2024. The stock repurchase program may be suspended or discontinued by us at any time and without prior notice.
The Company did not acquire any shares of common stock pursuant to the stock repurchase plan during the three months ended March 31, 2024. During the three months ended March 31, 2023, pursuant to the stock repurchase plan, the Company acquired 49,307 shares of common stock with an average purchase price, including commissions, of $12.63 totaling approximately $0.6 million. The remaining availability under the stock repurchase program as of March 31, 2024 was approximately $8.2 million.
Dividends
The following tables describe the cash dividends declared on the Company's common stock and vested RSUs and in the Company's capacity as general partner of the operating partnership, authorized distributions on our OP Units declared by the Company during the three months ended March 31, 2024 and 2023:
Declaration DateRecord DatePeriod CoveredDistributions Paid DateAmount per Share/Unit
March 8, 2024March 29, 2024January 1, 2024 to March 31, 2024April 15, 2024$0.41 
Total$0.41 
Declaration DateRecord DatePeriod CoveredDistributions Paid DateAmount per
Share/Unit
March 7, 2023March 31, 2023January 1, 2023 to March 31, 2023April 14, 2023$0.39 
Total$0.39 

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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)
Note 12 - Earnings Per Share
The following table presents the computation of basic and diluted earnings per share (in thousands, except share and per share data):
 For the Three Months Ended March 31,
20242023
Numerator:
Net Income Attributable to Common Stockholders$6,869 $5,868 
Add: Net Income Attributable to Noncontrolling Interest125 102 
Net Income$6,994 $5,970 
Denominator:
Weighted Average Shares of Common Stock Outstanding - Basic20,541,84021,423,470
Dilutive Effect of OP Units373,582373,582
Dilutive Effect of Unvested Restricted Stock Units26,832264
Weighted Average Shares of Common Stock - Diluted20,942,25421,797,316
Earnings Per Share - Basic
Net Income Attributable to Common Stockholders$0.33 $0.27 
Earnings Per Share - Diluted
Net Income Attributable to Common Stockholders$0.33 $0.27 
During the three months ended March 31, 2024 and 2023, the effect of including OP Units and unvested RSUs were included in the Company's calculation of weighted average shares of common stock outstanding - dilutive. During the three months ended March 31, 2024 and 2023, the effect of 791,790 and 615,838 outstanding stock options and warrants, respectively, were excluded in the Company's calculation of weighted average shares of common stock outstanding – diluted as their inclusion would have been anti-dilutive. During the three months ended March 31, 2024 and 2023, the Company did not include the effect of 159,522 and 121,858 outstanding PSUs, respectively in the calculation of earnings per share. The effect of the outstanding PSUs were not included in the calculation of diluted earnings per share as the market condition for the PSUs have not been met as of March 31, 2024.
Note 13 – Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Accounting guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standards describe three levels of inputs that may be used to measure fair value:
Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – Includes other inputs that are directly or indirectly observable in the marketplace.

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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)

Note 13 – Fair Value Measurements (continued)
Level 3 – Unobservable inputs that are supported by little or no market activities, therefore requiring an entity to develop its own assumptions.
The following table presents the carrying value and estimated fair value of financial instruments at March 31, 2024 and December 31, 2023 (in thousands):
March 31, 2024December 31, 2023
Carrying ValueEstimated Fair ValueCarrying ValueEstimated Fair Value
Note Receivable(1)
$4,848 $4,725 $4,833 $4,748 
Revolving Credit Facility(2)
$4,000 $3,930 $1,000 $968 
Loan Payable(2)(3)
$ $ $1,000 $992 

(1) The fair value measurement of the $5.0 million Note Receivable is based on unobservable inputs, and as such, is classified as Level 3. The carrying value as of March 31, 2024 and December 31, 2023 reflects the provision for current expected credit loss of $152.3 thousand and $166.7 thousand , respectively.
(2) The fair value of the Company's Revolving Credit Facility and Loan Payable are based on observable inputs, and as such, are classified as Level 2.
(3) The Company made its final installment payment on our loan payable on January 3, 2024.

As of March 31, 2024 and December 31, 2023, the Company’s investment in warrants was valued based on the initial investment, less impairment. The Company determined the investment was not impaired as of March 31, 2024 and December 31, 2023. Since these securities are not actively traded, the Company will apply valuation adjustments if and when such indicators become available. As such, these securities are carried at    cost and are classified as Level 3 of the fair value hierarchy.

As of March 31, 2024 and December 31, 2023, the carrying amounts of financial instruments such as cash and cash equivalents, accounts payable and accrued expenses and other liabilities approximate their fair values due to the generally short-term nature and the market rates of interest of these instruments. As such, these financial instruments are classified as Level 1.


Note 14 - Income Taxes

As a REIT, the Company is not subject to federal income tax to the extent that it makes qualifying distributions to its stockholders, and provided it satisfies on a continuing basis, through actual investment and operating results, the REIT requirements including certain asset, income, distribution, and stock ownership tests. The state and local tax jurisdictions for which the Company is subject to tax-filing obligations recognize the Company’s status as a REIT, and therefore, the Company generally does not pay income tax in such jurisdictions. The Company may, however, be subject to certain minimum state and local tax filing fees as well as certain excise, franchise, or business taxes.

Taxable REIT Subsidiaries

In October 2023, the Company elected to treat a domestic subsidiary as a TRS. The TRS is subject to U.S. federal,
state and local corporate income taxes at the current federal statutory rate of 21%. The Company’s effective tax
rate differs from its combined U.S. federal, state and local corporate statutory tax rate primarily due to income earned at the REIT, which is not subject to tax, due to the deduction for qualifying distributions made by the Company. For the three months ended March 31, 2024, the TRS had limited activity and did not generate taxable income.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(Unaudited)
Note 15 - Commitments and Contingencies
As of March 31, 2024, the Company had aggregate unfunded commitments to invest approximately $6.5 million to develop and improve our existing cultivation facilities in Arizona, Missouri, and Pennsylvania. Refer to Note 3 for further details on the Company's commitments. Refer to Note 16- “Subsequent Events” for details on commitments the Company entered into after March 31, 2024.
As of March 31, 2024 the Company is the lessee under one office lease. Refer to Note 4 for further information.
The Company owns a portfolio of properties that it leases to entities which cultivate, harvest, process and distribute cannabis. Cannabis is an illegal substance under the Controlled Substances Act. Although the operations of the Company’s tenants are legalized in the states and local jurisdictions in which they operate, the Company and its tenants are subject to certain risks and uncertainties associated with conducting operations subject to conflicting federal, state and local laws in an industry with a complex regulatory environment which is continuously evolving. These risks and uncertainties include the risk that the strict enforcement of federal laws regarding cannabis would likely result in the Company’s inability, and the inability of its tenants, to execute their respective business plans.
Note 16 - Subsequent Events
In May 2024, the Company purchased a cultivation facility in Connecticut for approximately $4.0 million and committed to fund $12.0 million for tenant improvements. The property is leased to an existing tenant.
Tenant Improvements
Subsequent to March 31, 2024, the Company funded approximately $1.9 million of tenant improvements for its cultivation facilities in Arizona and Missouri.





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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
SPECIAL NOTE REGARDING FORWARD LOOKING INFORMATION
NewLake Capital Partners, Inc. ("the Company," "we," "our," "us,") makes statements in this Quarterly Report on Form 10-Q (“Form 10-Q”) that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In particular, statements pertaining to our capital resources, property performance, leasing rental rates, future dividends and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations, adjusted funds from operations, anticipated market conditions, demographics, and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believe,” “continue,” “could,” “expect,” “may,” “will,” “should,” “would,” “seek,” “approximately,” “intend,” “plan,” “pro forma,” “estimates,” “forecast,” “project,” or “anticipate” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
actions and initiatives of the U.S. or state governments and changes to government policies and the execution and impact of these actions, initiatives and policies, including the fact that cannabis remains illegal under federal law;
reduced liquidity of our common stock resulting from limited availability of clearing firms that will settle our securities and settle our securities in secondary offerings;
general economic conditions;
adverse economic or real estate developments, either nationally or in the markets in which our properties are located;
other factors affecting the real estate industry generally;
increase in interest rates and operating costs;
the impact of inflation;
financial market fluctuations;
the competitive environment in which we operate;
the estimated growth in and evolving market dynamics of the regulated cannabis market;
adverse economic effects on the cannabis market;
the expected medical-use or adult-use cannabis legalization in certain states;
the impacts of the potential rescheduling of cannabis;
shifts in public opinion regarding regulated cannabis;
the additional risks that may be associated with certain of our tenants cultivating adult-use cannabis in our cultivation facilities;
the risks associated with the development of cultivation centers and dispensaries;
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our ability to successfully identify opportunities in target markets;
the lack of tenant security deposits will impact our ability to recover rents should our tenants default under their respective lease agreement;
our status as an emerging growth company and a smaller reporting company;
our lack of an extensive operating history;
the concentration of our tenants in certain geographical areas;
our failure to generate sufficient cash flows to service any outstanding indebtedness;
defaults on, early terminations of or non-renewal of leases by tenants, including significant tenants;
our failure to acquire the properties in our identified pipeline successfully, on the anticipated timeline or at the anticipated costs;
our failure to properly assess employment growth or other trends in target markets and other markets in which we seek to invest;
lack or insufficient amounts of insurance;
bankruptcy or insolvency of a significant tenant or a substantial number of smaller tenants;
our access to certain financial resources, including banks and other financial institutions;
our failure to successfully operate acquired properties;
our ability to operate successfully as a public company;
our dependence on key personnel and ability to identify, hire and retain qualified personnel in the future;
conflicts of interests with our officers and/or directors stemming from their fiduciary duties to other entities, including our operating partnership;
our failure to obtain necessary outside financing on favorable terms or at all;
general volatility of the market price of our common stock;
changes in U.S. generally accepted accounting principles ("GAAP");
environmental uncertainties and risks related to adverse weather conditions and natural disasters;
our failure to maintain our qualification as a REIT for federal income tax purposes; and
changes in governmental regulations or interpretations thereof, such as real estate and zoning laws and increases in real property tax rates and taxation of REITs.
While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes after the date of this report, except as required by applicable law. You should not place undue reliance on any forward-looking statements that are based on information currently available to us or the third parties making the forward-looking statements.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading
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"Management's Discussion and Analysis of Financial Condition and Results of Operations" for the fiscal year ended December 31, 2023 included in our most recent Annual Report on Form 10-K and our subsequent Quarterly Reports on Form 10-Q.
This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Special Note Regarding Forward-Looking Information" in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading "Risk Factors" in our most recent annual report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.
Overview
NewLake Capital Partners, Inc., ("the “Company,” "we," "our," "us,") is an internally managed REIT and a leading provider of real estate capital to state-licensed cannabis operators primarily through sale-leaseback transactions, third-party purchases and funding for build-to-suit projects. Our properties are leased to single tenants on a long-term, triple-net basis, which obligates the tenant for the ongoing expenses of the leased property, in addition to its rent obligations.
We were incorporated in Maryland on April 9, 2019. We conduct our business through a traditional umbrella partnership REIT structure, in which properties are owned by an operating partnership, directly or through subsidiaries. We are the sole general partner of our operating partnership and currently own approximately 98% of the OP Units. We have elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our short taxable year ended December 31, 2019 and intend to operate our business so as to continue to qualify as a REIT.
As of March 31, 2024, we owned a geographically diversified portfolio consisting of 31 properties, across 12 states with 13 tenants, comprised of 17 dispensaries and 14 cultivation facilities.
Emerging Growth Company
We have elected to be an emerging growth company, as defined in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company, among other things:
We are exempt from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act;
We are permitted to provide less extensive disclosure about our executive compensation arrangements; and
We are not required to give our stockholders non-binding advisory votes on executive compensation or golden parachute arrangements.
We have elected to use an extended transition period for complying with new or revised accounting standards.
We may take advantage of the other provisions for up to five years or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company upon the earliest to occur of: (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.2 billion (subject to adjustment for inflation), (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period, or (iv) the last day of the fiscal year following the fifth anniversary of our initial public offering.
Factors Impacting Our Operating Results
Our results of operations are affected by a number of factors and depend on the rental revenue we receive from the properties that we own, interest income we receive from the loans we originate, the timing of lease expirations, general
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market conditions, the regulatory environment in the cannabis industry, and the competitive environment for real estate assets that support the cannabis industry.
Rental Revenues
We generate rental income from our real estate properties that we own and from any real estate properties that we expect to acquire in the future. The amount of rental income depends upon a number of factors, including:
Our ability to enter into new leases at market value rents inclusive of annual rent increases; and
Rent collection, which primarily relates to each of our current and future tenant’s or guarantor’s financial condition and ability to make rent payments to us on time.
For the three months ended March 31, 2024, all of our rental income was derived from triple-net leases to 13 tenants. Our leases include a parent or other affiliate guarantee and obligate the tenant for all the ongoing expenses of a property, including real estate taxes, insurance, maintenance and utilities. Our rental income is, therefore, dependent on our tenants (and related guarantors) ability to meet their respective obligations to us. Our tenants operate in the cannabis industry. Changes in current state or local laws in the cannabis industry may impair our ability to renew or re-lease properties and the ability of our tenants to fulfill their lease obligations and could materially and adversely affect our ability to maintain or increase rental rates for our properties. Further, because the regulated cannabis industry is a relatively new space, some of our existing tenants have limited operating histories and may be more susceptible to payment and other lease defaults. Thus, our operating results will be significantly impacted by the ability of our tenants to achieve and sustain positive financial results.
Financial Performance and Condition of Our Tenants
We have 31 properties, leased to 13 tenants. All of our tenants are performing under their lease agreement as of March 31, 2024.
During the three months ended March 31, 2024, financial markets exhibited remarkable stability, building upon the momentum from the previous year. Despite the prevailing uncertainties, the Federal Reserve maintained its stance by leaving interest rates unchanged. However, the central bank’s forward guidance has been resolute: higher rates are anticipated for an extended period, and any contemplation of rate cuts remains off the table for now. The primary driver behind this cautious approach is the ongoing battle against inflation, which has pushed borrowing costs to their loftiest levels in over two decades. For U.S. corporations, this environment translates into mounting pressure on the cost of capital. As interest rates persistently hover at elevated levels, businesses find themselves grappling with reduced access to capital. The availability and cost of capital for both our Company and our tenants have increased, necessitating prudent financial management strategies.
Regulatory Update
On April 30, 2024, the Justice Department confirmed that the Drug Enforcement Administration ("DEA") plans to move marijuana from Schedule I of the Controlled Substances Act ("CSA"), a list of completely prohibited drugs, to Schedule III, which includes prescription medications such as ketamine, Tylenol with codeine, and anabolic steroids. The change was based on an August 2023 recommendation by the Department of Health and Human Services ("HHS"). We believe this significant shift could result in material tax savings for tenants, potentially leading to increased cash flows for their businesses. Moreover, we believe this pivotal move by the federal government could stimulate additional investment in the sector, potentially enabling operators to strengthen their balance sheets, thus enhancing the industry's credit quality, including our tenant base.

In summary, while we believe the rescheduling announcement represents a significant milestone, it is one step in a lengthy process that will likely take many more months before a final rule is issued. Although moving marijuana to Schedule III should facilitate medical research and should provide a financial boost to the cannabis industry, it will leave federal law essentially untouched.


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Inflation and Supply Chain Constraints
Inflation continues to trend higher than in prior periods, which may be negatively impacting some of our tenants. This inflation has impacted costs for labor and production inputs for regulated cannabis operators, in addition to increasing costs of construction for development and redevelopment projections. Ongoing labor shortages with global supply chain issues and geopolitical issues also continue to adversely impact costs and timing for completion of these development and redevelopment projects, which may result in cost overruns and delays in commencing operations on certain of our tenants' projects.
Competitive Environment
We face competition from a diverse mix of market participants, including but not limited to, other companies with similar business models, independent investors, hedge funds and other real estate investors, mortgage REITs, hard money lenders, as well as would-be tenants and cannabis operators themselves, all of whom may compete with us in our efforts to acquire real estate zoned for cannabis cultivation, production or dispensary operations. Competition from others may diminish our opportunities to acquire a desired property on favorable terms or at all. In addition, this competition may put pressure on us to reduce the rental rates below those that we expect to charge for the properties that we own and expect to acquire, which would adversely affect our financial results.
Critical Accounting Policies and Estimates
In accordance with GAAP, our consolidated financial statements require the use of estimates and assumptions that involve the exercise of judgment and use of assumptions. Our most critical accounting policies will involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. Actual results could differ materially from those estimates and assumptions.
We believe that all of the decisions and assessments upon which our consolidated financial statements have been based were reasonable at the time made and based upon information available to us at that time. There have been no changes to the Company's critical accounting policies 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, 2023.
First Quarter 2024 Highlights
Investment Activity
Tenant Improvements Funded
During the three months ended March 31, 2024, we funded approximately $7.9 million of tenant improvements to our cultivation facilities in Arizona and Missouri.
The following table presents the tenant improvements funded and the unfunded commitments for the three months ended March 31, 2024 (in thousands):
TenantMarketSite TypeAcquisition Closing DateTenant Improvements FundedUnfunded Commitments
MintArizonaCultivationJune 24, 2021$2,361 $1,427 
Bloom MedicinalMissouriCultivationApril 1, 20225,533 3,294 
Ayr Wellness, Inc.PennsylvaniaCultivationJune 30, 2022— 

750 
CalypsoPennsylvaniaCultivationAugust 5, 2022— 987 
Total $7,894 $6,458 

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Financing Activity
Loan Payable
On January 3, 2024, we made our final annual principal and interest payment of approximately $1.0 million on our loan payable to the seller of a cultivation facility in Chaffee, Missouri. As of March 31, 2024, the loan had no outstanding balance.
Revolving Credit Facility
During the three months ended March 31, 2024, the Company borrowed $3.0 million under the Revolving Credit Facility. As of March 31, 2024, we had outstanding borrowings of $4.0 million under our Revolving Credit Facility and $86.0 million in funds available to be drawn, subject to sufficient collateral in the borrowing base. Refer to Note 6 in the Notes to Consolidated Financial Statements in Part I – Item 1 for further information.
Recent Developments
In May 2023, the Company purchased a cultivation facility in Connecticut for approximately $4.0 million and committed to fund $12.0 million for TI. The property is leased to an existing tenant.
Tenant Improvements
Subsequent to March 31, 2024, we funded approximately $1.9 million of tenant improvements to our cultivation facilities located in Arizona and Missouri.
Results of Operations
General
We derive substantially all our revenue from rents received from single tenants at each of our 31 properties under triple-net leases. As of March 31, 2024, we have low leverage on the portfolio with only $4.0 million outstanding under our revolving credit facility and a low general and administrative expense with an annualized ratio of 1.6% of total assets.
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Comparison of the three months ended March 31, 2024 and 2023 (in thousands):
Three Months Ended March 31,Increase/(Decrease)
20242023Q1'24 vs Q1'23
Revenue:
Rental Income$12,127 $11,157 $970 
Interest Income from Loans131 128 
Fees and Reimbursables350 131 219 
Total Revenue12,608 11,416 1,192 
Expenses:
Property Expenses22 94 (72)
Depreciation and Amortization Expense3,568 3,561 
General and Administrative Expenses:
  Compensation Expense1,235 1,127 108 
  Professional Fees402 322 80 
  Other General and Administrative Expenses418 470 (52)
Total General and Administrative Expenses2,055 1,919 136 
Total Expenses5,645 5,574 71 
Provision for Current Expected Credit Loss14 — 14 
Income From Operations6,977 5,842 1,135 
Other Income (Expenses):
Other Income100 220 (120)
Interest Expense(83)(92)
Total Other Income (Expense)17 128 (111)
Net Income6,994 5,970 1,024 
Net Income Attributable to Noncontrolling Interests(125)(102)(23)
Net Income Attributable to Common Stockholders$6,869 $5,868 $1,001 


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Revenues
Rental Income
Rental income for the three months ended March 31, 2024 increased by approximately $1.0 million to approximately $12.1 million, compared to approximately $11.2 million for the three months ended March 31, 2023. The increase in rental income was mainly attributable to:
A full quarter of rental income from exercising our option to acquire the adjacent land parcel to expand one of our existing cultivation facilities in Missouri during the first quarter of 2023, which generated approximately $0.1 million of rental income during the three months ended March 31, 2024.
Funding of tenant improvements at our Arizona, Missouri and Pennsylvania cultivation facilities which generated approximately $0.4 million of additional rental income during the three months ended March 31, 2024.
Annual escalations on our portfolio which generated an increase of approximately $0.2 million of rental revenue during the three months ended March 31, 2024.
A full quarter of rental income from one tenant that did not perform during the first quarter of 2023. We applied $315 thousand of the tenant's security deposit during the first quarter of 2023 and collected full rent for the first quarter of 2024 which generated an increase of $0.4 million of rental income.
These increases were offset by a decrease of a full quarter of rental income of approximately $0.1 million related to the sale of a cultivation facility in Massachusetts in October 2023 and a decrease of a full quarter of rental income of approximately $0.1 million which is a result of a reduction in contractual base rent per lease modifications in the fourth quarter of 2023.
Interest income from loans was relatively flat quarter over quarter.
Fees and Reimbursables
Fees and reimbursables for the three months ended March 31, 2024 increased by approximately $219 thousand to $350 thousand, compared to approximately $131 thousand for the three months ended March 31, 2023. The increase was driven by an increase in fees associated with our leases and the timing of reimbursable expenses related to TI fundings.
Expenses
Property Expenses
The Company will pay for certain expenses on behalf of the tenant and the tenant is required to reimburse the Company. The expense and reimbursable amounts may differ due to timing. Property expenses were relatively flat quarter over quarter.
Depreciation and Amortization Expense
Depreciation and amortization expense was relatively flat quarter over quarter.
General and Administrative Expenses
The increase in general and administrative expense is described below by category.
Compensation Expense
Compensation expense includes compensation to employees and officers of the Company and stock-based compensation awards. Compensation expense increased by approximately $0.1 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase was attributable to stock based compensation expense for 2024 RSU and PSU grants.
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Professional Fees
Professional fees generally include fees paid for audit, tax, legal and consulting services. For the three months ended March 31, 2024, professional fees increased by approximately $0.1 million to approximately $0.4 million compared to approximately $0.3 million for the three months ended March 31, 2023. The increase was primarily related to tax fees paid for the preparation of 2023 entity tax returns and consulting fees paid for officer employment contract and compensation advice.
Other General and Administrative Expenses
For the three months ended March 31, 2024, other general and administrative expense decreased by approximately $0.1 million to approximately $0.4 million compared to approximately $0.5 million for the three months ended March 31, 2023. The decrease was a result of lower state and local taxes and associated fees, director and officer insurance premiums and fees paid for public relations and branding. Other general and administrative expenses is primarily comprised of director and officer insurance, information technology fees, public relations fees, filing and regulatory fees, reporting fees, corporate rent and various other expenses.
Provision for Current Expected Credit Loss
We used a discounted cash flow model to determine an expected credit loss on our loan receivable. For the three months ended March 31, 2024, we recorded a reduction in the provision for current expected credit loss of approximately $14 thousand which resulted in the allowance for credit loss to be $152.3 thousand as of March 31, 2024.
Other Income (Expense)
Other Income
Interest income decreased during the three months ended March 31, 2024 by approximately $120 thousand, to $100 thousand compared to $220 thousand for the three months ended March 31, 2024, primarily due to lower cash balances in our money market accounts as we primarily used cash liquidity to fund TI and pay dividends. Refer to the "Summary of Cash Flows" below for further information.
Interest Expense
Interest expense remained relatively flat quarter over quarter.
Non-GAAP Financial Information and Other Metrics
Funds from Operations and Adjusted Funds from Operations
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO") are non-GAAP financial measures a