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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 September 30, 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 November 12, 2024 was 20,512,156.


Table of Contents
NewLake Capital Partners, Inc.
FORM 10-Q
September 30, 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)
September 30, 2024December 31, 2023
Assets:
Real Estate
Land$21,717 $21,397 
Building and Improvements408,548 390,911 
Total Real Estate430,265 412,308 
Less Accumulated Depreciation(41,417)(31,999)
Net Real Estate388,848 380,309 
Cash and Cash Equivalents19,833 25,843 
In-Place Lease Intangible Assets, net18,290 19,779 
Loan Receivable, net (Current Expected Credit Loss of $128 and $167, respectively)
4,872 4,833 
Other Assets2,736 2,528 
Total Assets$434,579 $433,292 
Liabilities and Equity:
Liabilities:
Accounts Payable and Accrued Expenses$1,253 $1,117 
Revolving Credit Facility7,600 1,000 
Loan Payable, net 1,000 
Dividends and Distributions Payable9,009 8,385 
Security Deposits8,995 8,616 
Rent Received in Advance668 990 
Other Liabilities130 227 
Total Liabilities 27,655 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, 20,511,508 and 20,503,520 Shares Issued and Outstanding, respectively
205 205 
Additional Paid-In Capital446,466 445,289 
Accumulated Deficit(47,008)(40,909)
Total Stockholders' Equity399,663 404,585 
Noncontrolling Interests7,261 7,372 
Total Equity406,924 411,957 
Total Liabilities and Equity$434,579 $433,292 
The accompanying notes are an integral part of the unaudited consolidated financial statements
1

Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
Revenue:
Rental Income$12,276 $11,297 $36,657 $33,637 
Interest Income from Loans134 131 399 390 
Fees and Reimbursables144 63 562 256 
Total Revenue12,554 11,491 37,618 34,283 
Expenses:    
Property Expenses128 78 179 228 
Depreciation and Amortization Expense3,726 3,568 10,920 10,698 
General and Administrative Expenses:    
Compensation Expense1,169 1,173 3,554 3,450 
Professional Fees475 300 1,120 986 
Other General and Administrative Expenses433 389 1,307 1,309 
Total General and Administrative Expenses2,077 1,862 5,981 5,745 
Total Expenses5,931 5,508 17,080 16,671 
Provision for Current Expected Credit Loss12  38  
Income From Operations6,635 5,983 20,576 17,612 
Other Income (Expense):
Other Income80 178 262 607 
Interest Expense(177)(95)(388)(284)
Total Other Income (Expense)(97)83 (126)323 
Net Income6,538 6,066 20,450 17,935 
Net Income Attributable to Noncontrolling Interests(116)(108)(363)(312)
Net Income Attributable to Common Stockholders$6,422 $5,958 $20,087 $17,623 
Net Income Attributable to Common Stockholders Per Share - Basic$0.31 $0.28 $0.98 $0.83 
Net Income Attributable to Common Stockholders Per Share - Diluted$0.31 $0.28 $0.98 $0.83 
Weighted Average Shares of Common Stock Outstanding - Basic20,578,83821,199,63820,558,75421,330,046
Weighted Average Shares of Common Stock Outstanding - Diluted20,975,71821,582,31420,956,51521,710,101
The accompanying notes are an integral part of the unaudited consolidated financial statements
2

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NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands, except share amounts)
Three Months Ended September 30, 2024
Common Stock
SharesParAdditional Paid-in CapitalAccumulated DeficitNoncontrolling InterestTotal Equity
Balance as of June 30, 202420,509,883 $205 $446,006 $(44,581)$7,316 $408,946 
Conversion of OP Units to Common Stock 942 — 19 — (19)— 
Stock-Based Compensation683 — 449 — — 449 
Dividends to Common Stock— — — (8,820)— (8,820)
Dividends on Restricted Stock Units— — — (29)— (29)
Distributions to OP Unitholders— — — — (160)(160)
Adjustment for Noncontrolling Interest Ownership in Operating Partnership— — (8)— 8 — 
Net Income— — — 6,422 116 6,538 
Balance as of September 30, 202420,511,508 $205 $446,466 $(47,008)$7,261 $406,924 
Three Months Ended September 30, 2023
Common Stock
SharesParAdditional Paid-in CapitalAccumulated DeficitNoncontrolling InterestTotal Equity
Balance as of June 30, 202321,302,515 $213 $455,143 $(37,508)$7,328 $425,176 
Repurchase of Common Stock(608,152)(6)(7,914)— — (7,920)
Stock-Based Compensation— — 379 — — 379 
Dividends to Common Stock— — — (8,071)— (8,071)
Dividend Equivalents to Restricted Stock Units— — — (14)— (14)
Distributions to OP Unitholders— — — — (146)(146)
Adjustment for Noncontrolling Interest Ownership in Operating Partnership— — (77)— 77 — 
Net Income— — — 5,958 108 6,066 
Balance as of September 30, 202320,694,363 $207 $447,531 $(39,635)$7,367 $415,470 
The accompanying notes are an integral part of the unaudited consolidated financial statements
3

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NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands, except share amounts)
Nine Months Ended September 30, 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 — — — — — 
Conversion of OP Units to Common Stock 942 — 19 — (19)— 
Cash Paid for Taxes in Lieu of Issuance of Common Stock— — (46)— — (46)
Stock-Based Compensation683 — 1,223 — — 1,223 
Dividends to Common Stock— — — (26,048)— (26,048)
Dividends on Restricted Stock Units— — — (138)— (138)
Distributions to OP Unitholders— — — — (474)(474)
Adjustment for Noncontrolling Interest Ownership in Operating Partnership— — (19)— 19 — 
Net Income— — — 20,087 363 20,450 
Balance as of September 30, 202420,511,508 $205 $446,466 $(47,008)$7,261 $406,924 

Nine Months Ended September 30, 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(713,831)(7)(9,247)— — (9,254)
Stock-Based Compensation— — 1,060 — — 1,060 
Dividends to Common Stock— — — (24,709)— (24,709)
Dividends on Restricted Stock Units— — — (62)— (62)
Distributions to OP Unitholders— — — — (438)(438)
Adjustment for Noncontrolling Interest Ownership in Operating Partnership— — (104)— 104 — 
Net Income— — — 17,623 312 17,935 
Balance as of September 30, 202320,694,363 $207 $447,531 $(39,635)$7,367 $415,470 
The accompanying notes are an integral part of the unaudited consolidated financial statements
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NEWLAKE CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the Nine Months Ended
September 30, 2024September 30, 2023
Cash Flows from Operating Activities:
Net Income$20,450 $17,935 
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Stock-Based Compensation1,223 1,060 
Depreciation and Amortization Expense10,920 10,698 
Amortization of Debt Issuance Costs202 201 
Amortization of Debt Discount 10 
Provision for Credit Loss(38) 
Non-Cash Lease Expense(2) 
Non-Cash Application of Rent Escrow(299) 
Non-Cash Application of Security Deposit (945)
Changes in Assets and Liabilities  
Other Assets(123)22 
Accounts Payable and Accrued Expenses128 (659)
Security Deposits677 510 
Rent Received in Advance(322)(468)
Other Liabilities(96)(761)
Net Cash Provided by Operating Activities32,720 27,603 
Cash Flows from Investing Activities:  
Funding of Building and Tenant Improvements(13,964)(5,609)
Acquisition of Real Estate(3,993)(350)
Net Cash Used in Investing Activities(17,957)(5,959)
Cash Flows from Financing Activities:  
Repurchase of Common Stock (9,254)
Cash Paid for Taxes in Lieu of Issuance of Common Stock(46) 
Common Stock Dividends Paid(25,430)(24,987)
Restricted Stock Unit Dividends Paid(143)(65)
Distributions to OP Unitholders(463)(437)
Borrowings from Revolving Credit Facility6,600  
Principal Repayment on Loan Payable(1,000)(1,000)
Deferred Financing Costs (28)
Deferred Offering Costs(291) 
Net Cash Used in Financing Activities(20,773)(35,771)
Net (Decrease) in Cash and Cash Equivalents(6,010)(14,127)
Cash and Cash Equivalents - Beginning of Period25,843 45,192 
Cash and Cash Equivalents - End of Period$19,833 $31,065 
Supplemental Disclosure of Cash Flow Information:
Interest Paid$195 $123 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:  
Dividends and Distributions Declared, Not Paid$9,009 $8,231 
Accrual for Deferred Offering Costs$7 $ 
Conversion of OP Units to Common Stock$19 $ 
The accompanying notes are an integral part of the unaudited consolidated financial statements
5

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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 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 (the "OTCQX") 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 any 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 and nine months ended September 30, 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 September 30, 2024 and December 31, 2023, the assets and liabilities of the Company and the Operating Partnership were 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
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 2 - Basis of Presentation and Summary of Significant Accounting Policies (continued)
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 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
September 30, 2024
(Unaudited)

Note 3 - Real Estate
As of September 30, 2024, the Company owned 32 properties, located in 12 states. The following table presents the Company's real estate portfolio as of September 30, 2024 (in thousands):
TenantMarketSite TypeLand
Building and Improvements(1)
Total Real EstateAccumulated DepreciationNet Real Estate
AcreageConnecticutDispensary$395 $534 $929 $(88)$841 
AcreageMassachusetts Cultivation481 9,310 9,791 (1,367)8,424 
AcreagePennsylvaniaCultivation952 9,209 10,161 (1,305)8,856 
Ayr Wellness, Inc.NevadaCultivation1,002 12,577 13,579 (859)12,720 
Ayr Wellness, Inc.PennsylvaniaCultivation2,963 12,315 15,278 (916)14,362 
C3 IndustriesConnecticutCultivation321 4,272 4,593 (42)(3)4,551 
C3 IndustriesMissouriCultivation948 28,069 29,017 (958)28,059 
Calypso EnterprisesPennsylvaniaCultivation1,486 30,527 32,013 (2,170)(3)29,843 
Cannabist
(2)
CaliforniaDispensary1,082 2,692 3,774 (305)3,469 
Cannabist
(2)
IllinoisDispensary162 1,053 1,215 (115)1,100 
Cannabist
(2)
IllinoisCultivation801 10,560 11,361 (1,167)10,194 
Cannabist
(2)
MassachusettsDispensary108 2,212 2,320 (270)2,050 
Cannabist
(2)
MassachusettsCultivation1,136 12,690 13,826 (1,887)11,939 
Cresco LabsIllinoisCultivation276 50,456 50,732 (6,815)43,917 
CuraleafConnecticutDispensary184 2,748 2,932 (324)2,608 
CuraleafFloridaCultivation388 75,595 75,983 (7,992)67,991 
CuraleafIllinoisDispensary69 525 594 (65)529 
CuraleafIllinoisDispensary65 959 1,024 (122)902 
CuraleafIllinoisDispensary606 1,128 1,734 (140)1,594 
CuraleafIllinoisDispensary281 3,072 3,353 (371)2,982 
CuraleafNorth DakotaDispensary779 1,395 2,174 (168)2,006 
CuraleafOhioDispensary574 2,788 3,362 (393)2,969 
CuraleafPennsylvaniaDispensary877 1,041 1,918 (164)1,754 
CuraleafPennsylvaniaDispensary216 2,011 2,227 (242)1,985 
GreenlightArkansasDispensary238 1,919 2,157 (232)1,925 
MintArizonaCultivation2,400 18,610 21,010  (3)21,010 
Organic RemediesMissouriCultivation204 20,897 21,101 (2,993)18,108 
PharmaCannMassachusettsDispensary411 1,701 2,112 (364)1,748 
PharmaCannOhioDispensary281 1,269 1,550 (70)1,480 
PharmaCannPennsylvaniaDispensary44 1,271 1,315 (140)1,175 
Revolutionary ClinicsMassachusetts Cultivation926 41,934 42,860 (3,977)38,883 
TrulievePennsylvaniaCultivation1,061 43,209 44,270 (5,396)38,874 
Total Real Estate(4)
$21,717 $408,548 $430,265 $(41,417)$388,848 
(1) Includes construction in progress in the amount of $21.2 million that had been funded as of September 30, 2024.
(2) This tenant was formerly known as Columbia Care.
(3) A portion of this investment is currently under development or undergoing building or tenant improvements. Once the development or improvements are completed and placed-in service, the Company will begin depreciating the applicable part of the property.
(4) At times, numbers in this table may differ due to rounding.


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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 3 - Real Estate (continued)

Real Estate Acquisitions
2024 Acquisitions
In May 2024, the Company purchased a cultivation facility in Connecticut for approximately $4.0 million and committed to fund approximately $12.0 million in building and tenant improvements (refer to the Building and Tenant Improvements table below for details). The property was simultaneously leased to a related entity of an existing tenant.
The following table presents the real estate acquisition for the nine months ended September 30, 2024 (in thousands):
TenantMarketSite TypeClosing DateReal Estate Acquisition Costs
C3 IndustriesConnecticutCultivationMay 7, 2024$3,993 
Total$3,993 
2023 Acquisitions
In March 2023, the Company exercised its option to acquire an adjacent parcel of land to expand its cultivation facility in Missouri and invested $350 thousand and committed to fund approximately $16.2 million to expand the facility (refer to the Building and Tenant Improvements table below for details).
The following table presents the real estate acquisition for the year ended December 31, 2023 (in thousands):
TenantMarketSite TypeClosing Date
Real Estate Acquisition Costs
C3 IndustriesMissouriCultivationMarch 3, 2023$350 
Total$350 
Real Estate Commitments
2024 Improvement Allowances
For the nine months ended September 30, 2024, the Company funded approximately $14.0 million towards its' committed improvement allowances across four tenants. The following table presents the funded commitments and the remaining unfunded commitments for the nine months ended September 30, 2024 (in thousands):
TenantMarketSite TypeClosing Date
Funded Commitments
Unfunded Commitments
Ayr Wellness, Inc.PennsylvaniaCultivationJune 30, 2022$750 $ 
C3 IndustriesConnecticutCultivationMay 7, 2024600 11,424 
C3 IndustriesMissouriCultivationMarch 3, 2023
(1)
8,826  
MintArizonaCultivationJune 24, 20213,788 800 
(2)
Total$13,964 $12,224 
(1) Funded commitments and unfunded commitments relate to the Missouri cultivation facility expansion project.
(2) Effective June 6, 2024, the lease agreement was amended to include an additional commitment of approximately $800 thousand.

9

Table of Contents
NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 3 - Real Estate (continued)

2023 Improvement Allowances
For the year ended December 31, 2023, the Company funded approximately $14.4 million towards its' committed improvement allowances across four tenants. The following table presents the funded commitments and the remaining unfunded commitments for the year ended December 31, 2023 (in thousands):
TenantMarketSite TypeClosing Date
Funded Commitments
Unfunded Commitments
Ayr Wellness, Inc.PennsylvaniaCultivationJune 30, 2022$ $750 
C3 IndustriesMissouriCultivationApril 1, 20227,858 8,826 
CalypsoPennsylvaniaCultivationAugust 5, 20222,013 987 
(1)
MintArizonaCultivationJune 24, 20214,281 3,788 
(2)
Organic RemediesMissouriCultivationDecember 20, 2021282  
Total $14,434 $14,351 
(1) As of September 30, 2024, the Company's obligation to fund the remaining improvement allowance was suspended until all outstanding rent is paid and the escrow deposit is replenished.
(2) Effective June 1, 2023, the lease agreement was amended to include an additional commitment of approximately $6.5 million.
Construction in Progress
As of September 30, 2024 and December 31, 2023, funded commitments recorded in Construction in Progress ("CIP") were $21.2 million and $24.2 million, respectively, and are classified in "Buildings and Improvements" in the accompanying consolidated balance sheets.
2024 Construction in Progress

The following table presents the CIP balance as of September 30, 2024 (in thousands):

TenantStateSite Type
CIP Balance(1)
C3 IndustriesConnecticutCultivation$600 
CalypsoPennsylvaniaCultivation2,013 
MintArizonaCultivation18,610 
Total
$21,223 
(1) These properties were under development or undergoing building or tenant improvements as of September 30, 2024. Once the development or the improvements are completed for its intended use, the assets will be placed-in-service and the Company will begin depreciation.
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Table of Contents
NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 3 - Real Estate (continued)
2023 Construction in Progress
The following table presents the CIP balance as of December 31, 2023 (in thousands):
TenantStateSite Type
CIP Balance(1)
C3 IndustriesMissouriCultivation$7,324 
CalypsoPennsylvaniaCultivation2,013 
MintArizonaCultivation14,822 
Total
$24,159 
(1) These properties were under development or improvement as of December 31, 2023. Once the development or the improvements are completed for its intended use, the assets will be placed-in-service and the Company will begin depreciation.
Disposal of Real Estate
2024 Dispositions
There were no sales of real estate property investments during the nine months ended September 30, 2024.
2023 Dispositions
During the year ended December 31, 2023, there was one real estate property sold. 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.
In-place Leases
The following table presents the future amortization of the Company’s acquired in-place leases as of September 30, 2024 (in thousands):
YearAmortization Expense
2024 (three months ending December 31, 2024)$497 
20251,985 
20261,985 
20271,985 
20281,985 
Thereafter9,853 
Total$18,290 
Depreciation and Amortization
For the three months ended September 30, 2024 and 2023, depreciation expense on the Company's real estate assets was approximately $3.2 million and $3.1 million, respectively. Depreciation expense on the Company's real
11

Table of Contents
NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 3 - Real Estate (continued)
estate assets for the nine months ended September 30, 2024 and 2023, was approximately $9.4 million and $9.2 million, respectively.
Amortization of the Company’s acquired in-place lease intangible assets was approximately $0.5 million for both the three months ended September 30, 2024 and 2023. Amortization of the Company’s acquired in-place lease intangible assets was approximately $1.5 million for both the nine months ended September 30, 2024 and 2023. The acquired in-place lease intangible assets have a weighted average remaining amortization period of approximately 9.48 years.
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 September 30, 2024 and September 30, 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 are not reflected in the statements of operations. The expense and reimbursable amounts may differ due to timing, since the revenue is recorded on a cash basis. 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 September 30, 2024 and 2023, the reimbursable revenues were $93.7 thousand and $14.5 thousand, respectively. For the nine months ended September 30, 2024, and 2023 the reimbursable revenues were $411.9 thousand, and $111.9 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 an improvement allowance, which is generally available to be funded between 12 and 18 months. In some leases, the tenant becomes liable to pay rent as if all the improvement allowance has been funded, even if there are still unfunded commitments. Improvement allowances 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 first quarter of 2024, the tenant was out of compliance with certain provisions of the lease and as a result the purchase option was terminated. As of September 30, 2024, the Company had two leases that granted the lessee an option to purchase the leased property at its fair market value at the end of the initial lease term in December 2029, provided certain conditions. As of September 30, 2024, the Company's gross investment in these two properties was approximately $6.3 million.
12


NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 4 - Leases (continued)
Lease Income
The following table presents the future contractual minimum rent under the Company’s operating leases as of September 30, 2024 (in thousands):
Year
Contractual Minimum Rent(1)
2024 (three months ending December 31, 2024)$12,807 
202552,649 
202655,044 
202756,475 
202857,944 
Thereafter577,041 
Total$811,960 
(1) The table includes future contractual minimum rent from two non-performing tenants since their lease's remained in effect and had not been modified or terminated as of September 30, 2024.
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 September 30, 2024 and December 31, 2023, the Company owned 32 and 31 properties, respectively, 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 revenue reimbursables, for each of the periods presented:
For the Three Months Ended September 30,
20242023
TenantNumber of Leases
Percentage of Rental Income(1)
TenantNumber of Leases
Percentage of Rental Income(1)(2)
Curaleaf1023%Curaleaf1025%
Cresco Labs114%Cresco Labs114%
Trulieve 111%Trulieve 112%
Cannabist
(3)
59%Cannabist
(3)
59%
C3 Industries28%Calypso18%
(1) Calculated based on rental income received during the period. This amount includes fees, applied escrow/security deposits, if any, and excludes revenue reimbursables.
(2) Prior year presentation has been recalculated to exclude revenue reimburseables to conform to current year presentation.
(3) This tenant was formerly known as Columbia Care.


13


NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 4 - Leases (continued)
For the Nine Months Ended September 30,
20242023
TenantNumber of Leases
Percentage of Rental Income(1)
TenantNumber of Leases
Percentage of Rental Income(1)(2)
Curaleaf1023%Curaleaf1025%
Cresco Labs114%Cresco Labs114%
Trulieve111%Trulieve112%
Cannabist
(3)
59%Cannabist
(3)
59%
Calypso17%Calypso18%
(1) Calculated based on rental income received during the period. This amount includes fees, applied escrow/security deposits, if any, and excludes revenue reimbursables.
(2) Prior year presentation has been recalculated to exclude revenue reimbursables to conform to current year presentation.
(3) This tenant was formerly know as Columbia Care.
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 September 30,
20242023
StateNumber of Properties
Percentage of Rental Income(1)
StateNumber of Properties
Percentage of Rental Income(1)
Pennsylvania726%Pennsylvania728%
Florida119%Florida120%
Illinois718%Illinois719%
Missouri211%Massachusetts
(2)
612%
Massachusetts 511%Missouri29%
(1) Calculated based on rental income received during the period. This amount includes fees, applied escrow/security deposits, if any, and excludes revenue reimbursables.
(2) Included in the number of properties and revenue is one Massachusetts property sold in October 2023.
For the Nine Months Ended September 30,
20242023
StateNumber of Properties
Percentage of Rental Income(1)
StateNumber of Properties
Percentage of Rental Income(1)
Pennsylvania726%Pennsylvania728%
Florida119%Florida120%
Illinois718%Illinois719%
Massachusetts512%Massachusetts
(2)
612%
Missouri211%Missouri28%
(1) Calculated based on rental income received during the period. This amount includes fees, applied escrow/security deposits, if any, and excludes revenue reimbursables.
(2) Included in the number of properties and revenue is one Massachusetts property sold in October 2023.
Condition of Our Tenants
During the fourth quarter of 2023, the Company amended its leases with: a) Revolutionary Clinics as part of a restructuring of their business, their receipt of new third-party capital and new management, and b) Calypso in connection with their sale to Canvas Acquisition Corporation. Both tenants experienced recent operating
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 4 - Leases (continued)
challenges impacting their ability to pay rent as described below. The Company is currently in discussion with these tenants and have reserved all rights under the lease agreements.
Revolutionary Clinics
Revolutionary Clinics did not pay approximately 50% of the contractual rent from June 2024 through September 2024.
Calypso Enterprises
Calypso Enterprises did not pay its September 2024 contractual rent due under its lease agreement. The Company held an escrow deposit amounting to approximately six months of contractual rent payments. The Company applied approximately $299 thousand from this escrow deposit to cover the outstanding September 2024 rent. Additionally, in accordance with the lease agreement, the Company suspended its obligation to fund the remaining improvement allowance of approximately $987 thousand until all outstanding rent is paid and the escrow deposit is replenished.
As Lessee
Commencing on June 1, 2022, the Company entered into a four year lease agreement, subject to annual escalations, which includes the option to extend the lease for a single three year period. The annual rent payments range from approximately $72.0 thousand in year one to approximately $85.0 thousand in year four. The one 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 is 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 September 30, 2024 and December 31, 2023, were approximately $127.5 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 September 30, 2024 (in thousands):

YearContractual Base Rent
2024 (three months ended December 31, 2024)$19 
202577
202652
Total Minimum Lease Payments$148 
Less: Amount Discounted Using Incremental Borrowing Rate$(13)
Total Lease Liability$135 
As of September 30, 2024, the weighted-average discount rate used to calculate the lease liability was 5.65% and the remaining lease term was 1.92 years.
Note 5 – Loan Receivable, net
Loan Receivable
The Company funded a $5.0 million unsecured loan to C3 Industries 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
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 5 – Loans Receivable (continued)
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 September 30, 2024 and December 31, 2023, the loan earned interest at a rate of 10.72% and 10.48%, respectively, and the aggregate principal amount outstanding on the unsecured loan receivable as of September 30, 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 September 30, 2024 (in thousands):
Period
Expected Credit Loss
CECL reserve as of June 30, 2024
$140.6 
Adjustment to expected credit loss
(12.2)
CECL reserve as of September 30, 2024(1)
$128.4 
(1) Included in "Loan Receivable, net" on the accompanying consolidated balance sheets.
The following table presents the CECL reserve for the nine months ended September 30, 2024 (in thousands):
PeriodExpected Credit Loss
CECL reserve as of December 31, 2023
$166.7 
Adjustment to expected credit loss(38.3)
CECL reserve as of September 30, 2024(1)
$128.4 
(1) Included in "Loan Receivable, net" on the accompanying 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.
Revolving Credit Facility
On May 6, 2022, the Operating Partnership entered into a loan and security agreement (the “Loan and Security Agreement”) with a commercial federally regulated bank, as a lender and as agent for lenders that become party thereto from time to time. The Loan and Security Agreement matures on May 6, 2027. The 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
September 30, 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) plus an applicable margin of 1.0% or (b) 4.75%.
As of September 30, 2024 and December 31, 2023, the Company had approximately $7.6 million and $1.0 million, respectively, outstanding under the Revolving Credit Facility. As of September 30, 2024, there was $82.4 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 September 30, 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 Charitable Trust, 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
Noncontrolling interests represent the limited partnership interest ("LPI Units") in the Operating Partnership not held by the Company. Net income is allocated to noncontrolling interest is based on LPI Unitholders' ownership percentage in the Operating Partnership. As of September 30, 2024 and December 31, 2023 noncontrolling interests represented approximately 372,640 and 373,582 LPI Units, respectively, or 1.8% ownership interest in the Operating Partnership. Net income allocated to the Operating Partnership non-controlling interest for the three months ended September 30, 2024 and 2023 was $116 thousand and $108 thousand, respectively. Net income allocated to the Operating Partnership non-controlling interest for the nine months ended September 30, 2024 and 2023 was $363 thousand and $312 thousand million, respectively.
During the nine months ended September 30, 2024 and 2023 there were 942 and no LPI Units converted to common stock, respectively.
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,
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 9 - Stock Based Compensation (continued)
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 Plan, the total 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.
Additionally, the Plan provides for the issuance of unrestricted common stock to directors who elect to receive their compensation in common stock rather than cash. During the nine months ended September 30, 2024, 683 shares of common stock were issued related to director compensation, As of September 30, 2024, there were approximately 1,788,250 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 September 30, 2024 and 2023 were 139,499 and 106,820, respectively.
Unvested Restricted Stock Units
The following table sets forth the Company's unvested RSU activity for the nine months ended September 30,:
20242023
Number of Unvested Shares of RSUsWeighted Average Grant Date Fair Value Per ShareNumber of Unvested Shares of RSUsWeighted Average Grant Date Fair Value Per Share
Balance at January 1,63,582$13.92 29,255$22.89 
Granted49,014$17.40 59,031$12.87 
Forfeited(740)$15.19  $ 
Vested(40,610)
(1)
$12.64 (18,318)$20.14 
Balance at September 30,71,246$17.03 69,968$15.15 
(1) Vested shares are reported gross and 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.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 9 - Stock Based Compensation (continued)
Vested Restricted Stock Units
The following table sets forth the Company's vested RSU activity for the nine months ended September 30,:
20242023
Number of Vested Shares of RSUsWeighted Average Grant Date Fair Value Per ShareNumber of Vested Shares of RSUsWeighted Average Grant Date Fair Value Per Share
Balance at January 1, 36,852 $22.05 18,534 $23.93 
Vested40,610 
(1)
$12.64 18,318 $20.14 
Converted(6,363)$13.38  $ 
Shares Withheld(2)
(2,846)$13.38  $ 
Balance at September 30,68,253 $17.62 36,852 $22.05 
(1) Vested shares are reported gross and 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.
(2) Represents shares withheld to satisfy tax and other compensation related withholdings associated with the vested RSUs issued under the 2021 Equity Incentive Plan.
Each RSU represents the right to receive one share of common stock upon vesting. Upon vesting, each RSU is 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 nine months ended September 30, 2024 and 2023, the Company paid $83.0 thousand and $35.3 thousand respectively, of accumulated dividends that became earned upon vesting of RSUs. Accrued unearned dividends on unvested RSUs as of September 30, 2024 and 2023, were $125,817 and $88,756, respectively.
The amortization of compensation costs for the RSU awards are classified in "Compensation Expense" in the accompanying consolidated statements of operations and amounted to approximately $0.2 million for both the three months ended September 30, 2024 and 2023, respectively. The amortization of compensation costs for the RSU awards amounted to approximately $0.6 million and $0.5 million for the nine months ended September 30, 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 1.2 years as of September 30, 2024.
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 9 - Stock Based Compensation (continued)
Performance Stock Units
PSUs are granted to officers and certain employees of the Company. Total outstanding PSUs as of September 30, 2024 and 2023, were 159,522 and 121,858, respectively.
The following table sets forth the Company's unvested PSU activity for the nine months ended September 30,:
20242023
Number of Unvested Shares of PSUsWeighted Average Grant Date Fair Value Per ShareNumber of Unvested Shares of PSUsWeighted 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 
Balance at September 30,159,522$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 future stock price of a 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.
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 nine months ended September 30, 2024 and 2023, no PSUs vested and therefore the Company did not pay any dividends. Unearned dividends on unvested PSUs as of September 30, 2024 and 2023, were $448,273 and $259,546, respectively.
The amortization of compensation costs for the PSU awards 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 September 30, 2024 and 2023. The amortization of compensation costs for the PSU awards
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NEWLAKE CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
Note 9 - Stock Based Compensation (continued)
amounted to approximately $0.7 million and $0.6 million for the nine months ended September 30, 2024 and 2023, respectively. The remaining unrecognized compensation cost of approximately $1.1 million for PSU awards is expected to be recognized over a weighted average amortization period of 1.8 years as of September 30, 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 September 30, 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 September 30, 2024 and 2023, 602,392 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 September 30, 2024 and December 31, 2023, the Company had 100,000,000 shares of preferred stock authorized and 0 shares of preferred stock outstanding.
Common Stock
As of September 30, 2024 and December 31, 2023, the Company had 400,000,000 shares of common stock authorized and 20,511,508 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 dete