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Newlake Capital Partners, Inc. (NLCP) SEC Filing 8-K Material Event for the period ending Wednesday, August 10, 2022

Newlake Capital Partners, Inc.

CIK: 1854964 Ticker: NLCP

Exhibit 99.1

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NewLake Capital Partners Reports Second Quarter 2022 Financial Results

 

 

Second Quarter 2022 Revenue Totaled $10.5 Million, an Increase of 59% Year-Over-Year

Second Quarter 2022 Net Income Attributable to Common Stockholders totaled $3.8 Million, FFO totaled $6.5 Million, and AFFO totaled $8.7 Million

 

Conference Call and Webcast Scheduled for Today, Wednesday, August 10, 2022, at 10a.m. Eastern Time

 

 

 

New Canaan, CT, August 10, 2022 /GLOBE NEWSWIRE/

— NewLake Capital Partners, Inc. (OCTQX: NLCP) (the “Company” or “NewLake”), a leading provider of real estate capital to state-licensed cannabis operators, today announced its financial results for the second quarter ended June 30, 2022.

 

Anthony Coniglio, President and Chief Executive Officer, said, “We continue to be pleased with our AFFO growth, which has allowed us to increase our dividend for the fifth consecutive quarter. While our pipeline is as robust as we have seen in our company history, we remain disciplined in our underwriting approach and focus on quality over quantity. Subsequent to the quarter, we successfully increased our credit facility from $30 million to $90 million, which will allow us to continue investing in high quality assets. We believe our ability to consistently evaluate high quality transactions with the best operators in the space and have access to capital from banking partners that believe in our ability to execute is a testament to our team, model and disciplined approach.”

 

Second Quarter 2022 Financial Highlights

Comparison to the quarter ended March 31, 2022:

 

Revenue totaled $10.5 million as compared to $10.2 million, an increase of 3% from the prior quarter.

 

Net income attributable to common stockholders totaled $3.8 million, as compared to $5.0 million.

 

Funds from operations (“FFO”) totaled $6.5 million, as compared to $7.7 million.

 

Adjusted funds from operations (“AFFO”) totaled $8.7 million, as compared to $8.1 million.

  Net income and FFO were impacted by one-time severance costs of $1.6 million in connection with certain executive separation agreements. Such agreements were contemplated as part of the of the succession plan at the time of the Company merger in March 2021.
 

Cash and cash equivalents as of June 30, 2022, was $49.6 million. As of June 30, 2022, $12.2 million (1) was committed to funding tenant improvements.

 

Comparison to the quarter ended June 30, 2021:

 

Revenue totaled $10.5 million as compared to $6.6 million, a 59% increase year-over-year.

 

Net income attributable to common stockholders totaled $3.8 million, as compared to $2.7 million.

 

FFO totaled $6.5 million, as compared to FFO of $4.8 million.

 

AFFO totaled $8.7 million, as compared to AFFO of $4.9 million.

 

Six Months Ended June 30, 2022 Financial Highlights

 

Comparison to six months ended June 30, 2021:
 

Revenue totaled $20.5 million as compared to $11.1 million, an 86% increase year-over-year.

 

Net income attributable to common stockholders totaled $8.8 million, as compared to $4.2 million.

 

FFO totaled $14.1 million, as compared to FFO of $7.3 million.

 

AFFO totaled $16.8 million, as compared to AFFO of $8.3 million.

 

Second Quarter 2022 Operational Highlights and Subsequent Events:

 

Declared second quarter 2022 dividend of $0.35 per share of common stock, an increase of $0.02 per common share from the prior quarter.

  In April 2022, signed a $34 million aggregate three-part commitment for a cultivation property in Missouri consisting of $7.3 million to purchase a 40,000 square foot cultivation facility, a commitment to fund additional $5.2 million to finish construction, $16.5 million(1) to expand the facility by purchasing an adjacent parcel of land and fund construction (subject to normal and customary closing conditions and regulatory approvals) and part three an interest-only four-year $5 million loan that can be drawn over the next year. Once fully built, the combined property will be a state-of-the-art 105,000 square foot cultivation facility.
  Entered into a revolving credit facility in May 2022 with a $30.0 million initial commitment, which was expanded to $90.0 million in July 2022, maturing in May 2027 with a fixed interest rate of 5.65% for the first three years and a floating rate thereafter.
  On June 30, 2022, invested $28 million in two cultivation facilities a from leading publicly-traded U.S. multi-state cannabis operator.
  Invested $21.0 million and amended an existing lease for a property expansion with another leading publicly-traded U.S. multi state cannabis operator.
  Appointed Anthony Coniglio as Chief Executive Officer and Lisa Meyer as Chief Financial Officer.

 

_______________________________________________________________________________________________________________

(1) As part of the April 2022 $34 million commitment, the Company received an option to purchase an adjacent parcel for $16.5 million. There is no obligation for the Company to fund the additional purchase; therefore, is not included in the Company's June 30, 2022, unfunded commitments of $12.2 million. 

 

 
 
 
 
 

 

Investment Activity

 

Investment activity in the second quarter of 2022, which included acquisitions and funded tenant improvements ("TI"), drove the 3% increase in revenue compared to the three months ended March 31, 2022. Since two of the three acquired cultivation facilities closed on June 30, 2022, the full impact of these acquisitions  on revenue will be reflected in the third quarter of 2022.

 

The following table presents the Company's investment activity for the three months ended June 30, 2022 (dollars in thousands).   

 

Acquisitions

 

           

Tenant

Market

Site Type

Closing Date

Real Estate Acquisitions

 

Bloom Medicinal

Missouri

Cultivation

April 1, 2022

  7,301 (1)

Ayr Wellness, Inc.

Pennsylvania

Cultivation

June 30, 2022

  14,529  

Ayr Wellness, Inc.

Nevada

Cultivation

June 30, 2022

  13,579  

Total

$ 35,409  
       
(1) Includes $5.0 million of tenant improvements funded at closing of the property.      

 

Tenant Improvements Funded

 

                 

Tenant

Market

Site Type

Closing Date

TI Funded for The Three Months

Ended June 30, 2022 

 

 

Unfunded Commitments(1)

 

Curaleaf

Florida

Cultivation

August 4, 2020

  20,983 (2)   -  

Mint

Massachusetts

Cultivation

April 1, 2021

  128     2,651  

Mint

Arizona

Cultivation

June 24, 2021

  2,505     6,462  

PharmaCann

Massachusetts

Dispensary

March 17, 2021

  25     -  

Trulieve

Pennsylvania

Cultivation

March 17, 2021

  7,046     -  

Organic Remedies

Missouri

Cultivation

December 20, 2021

  1,049     757  

Bloom Medicinal

Missouri Cultivation April 1, 2022   3,613     1,603  
Ayr Wellness, Inc. Pennsylvania Cultivation June 30, 2022   -     750  

Total

$ 35,349   $ 12,223  
                   

(1)  As part of the April 2022 $34 million commitment, the Company received an option to purchase an adjacent parcel for $16.5 million. There is no obligation for the Company to fund the additional purchase; therefore, is not included in the Company's June 30, 2022, unfunded commitments of $12.2 million.

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

 

Financing Activity

 

Revolving Credit Facility

 

On May 6, 2022, the Company's Operating Partnership entered into a loan and security agreement (the "Loan and Security Agreement") with a commercial federally regulated bank, as a lender and as agent for lenders that become party thereto from time to time.  The Loan and Security Agreement matures on May 6, 2027. The Revolving Credit Facility had an initial commitment of $30.0 million which is secured by a borrowing base consisting of fee simple owned real properties that satisfy eligibility criteria specified in the loan agreement. The Company, subject to certain conditions, has the ability to request additional revolving loan commitments which may increase the total aggregate principal amount of Revolving Credit Facility to up to $100.0 million, subject to the payment of an upfront fee of seventy-five (75) basis points of the amount of the commitment increase. Borrowings under the Revolving Credit Facility may be voluntarily prepaid and re-borrowed and bears a fixed rate of 5.65% for the first three years and thereafter a variable rate based upon the greater of (a) the Prime Rate quoted in the Wall Street Journal (Western Edition) (“Base Rate”) plus an applicable margin of 1% and (b) 4.75%. The outstanding borrowings under the Revolving Credit Facility was $1.0 million as of June 30, 2022.

 

The facility is subject to certain liquidity and operating covenants and includes customary representations and warranties, affirmative and negative covenants and events of default. As of June 30, 2022, the Company is compliant with the covenants of the agreement.

 

On July 29, 2022, the Operating Partnership entered into an amendment to the Loan and Security Agreement which increased the aggregate commitment under the Revolving Credit Facility from $30.0 million to $90.0 million and added two additional lenders.

 

Seller Financing

 

In connection with the purchase and leaseback of a cultivation facility in Chaffee, Missouri on December 20, 2021, the Company entered into a $3.8 million loan payable to the seller, which is an independent third party from the tenant. The loan bears interest at a rate of 4.0% per annum. Principal payments on the loan are payable in annual installments of which $1.8 million was paid in January 2022. The remaining principal payments are due in annual installments of $1 million and $1 million in January 2023 and 2024, respectively. The loan's outstanding balance as June 30, 2022 was $2.0 million. 

 

Dividend

 

On June 15, 2022, the Company declared a second quarter 2022 cash dividend of $0.35 per share of common stock, equivalent to an annualized dividend of $1.40 per share of common stock. The dividend was paid on July 15, 2022 to stockholders of record at the close of business on June 30, 2022.

 

 

 

 

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Conference Call and Webcast Details:

Management will host a conference call and webcast at 10:00 a.m. Eastern Time on August 10, 2022 to discuss its quarterly financial results and answer questions about the Company's operational and financial highlights for the second quarter ended June 30, 2022.

 

Event:

NewLake Capital Partners Inc. Second Quarter 2022 Earnings Call

Date:

Wednesday, August 10, 2022

Time:

10:00 a.m. Eastern Time

Live Call:

1-888-220-8474 (U.S. Toll-Free) or +1-646-828-8193 (International)

Webcast:

https://viavid.webcasts.com/starthere.jsp?ei=1560784&tp_key=7ac79e19c6

 

For interested individuals unable to join the conference call, a dial-in replay of the call will be available until August 24, 2022 and can be accessed by dialing +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International) and entering replay pin number: 5371769.

 

About NewLake Capital Partners, Inc.
NewLake Capital Partners, Inc. is an internally-managed real estate investment trust that provides real estate capital to state-licensed cannabis operators through sale-leaseback transactions and third-party purchases and funding for build-to-suit projects. NewLake owns a portfolio of 31 cultivation facilities and dispensaries that are leased to single tenants on a triple-net basis. For more information, please visit www.newlake.com.

 

Forward-Looking Statements

This press release contains “forward-looking statements.” Forward-looking statements can be identified by words like “may,” “will,” “likely,” “should,” “expect,” “anticipate,” “future,” “plan,” “believe,” “intend,” “goal,” “project,” “continue” and similar expressions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs and expectations. Forward-looking statements are based on the Company’s current expectations and assumptions regarding capital market conditions, the Company’s business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.

 

Use of Non-GAAP Financial Information 

 

FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income attributable to common stockholders to FFO and AFFO and definitions of terms are included at the end of this release.

 

--

 

Contact Information:
Lisa Meyer

Chief Financial Officer, Treasurer and Secretary

NewLake Capital Partners, Inc.
lmeyer@newlake.com

 

Investor Contact:

Valter Pinto, Managing Director

KCSA Strategic Communications

Valter@KCSA.com

PH: (212) 896-1254

 

Media Contact:
McKenna Miller

KCSA Strategic Communications
MMiller@kcsa.com

PH: (212) 896-1254 

 

 

 

 

 

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NEWLAKE CAPITAL PARTNERS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

 

   

June 30, 2022

   

December 31, 2021

 

Assets:

               
                 

Real Estate

             

 

Land

  $ 19,788     $ 15,649  

Building and Improvements

    341,685       272,432  

Total Real Estate

    361,473       288,081  

Less Accumulated Depreciation

    (13,630 )     (9,155 )

Net Real Estate

    347,843       278,926  

Cash and Cash Equivalents

    49,602       127,097  

Loans Receivable

    35,000       30,000  

In-Place Lease Intangible Assets, net

    22,995       24,002  

Other Assets

    1,560       858  
                 

Total Assets

  $ 457,000     $ 460,883  
                 

Liabilities and Equity:

               
                 

Liabilities:

               
                 

Accounts Payable and Accrued Expenses

  $ 2,712     $ 1,404  

Revolving Credit Facility

    1,000       -  

Loan Payable, net

    1,973       3,759  

Dividends and Distributions Payable

    7,650       6,765  

Security Deposits Payable

    7,136       6,047  

Interest Reserve

    306       2,144  

Rent Received in Advance

    1,628       1,429  

Other Liabilities

    272       -  
                 

Total Liabilities

    22,677       21,548  
                 

Commitments and Contingencies

               
                 

Equity:

               
                 

Common Stock, $0.01 Par Value, 400,000,000 Shares Authorized, 21,318,637 Shares Issued and Outstanding at June 30, 2022 and 21,235,914 Shares Issued and Outstanding at December 31, 2021

    213       213  

Additional Paid-In Capital

    456,083       450,916  

Accumulated Deficit

    (29,395 )     (23,574 )
                 

Total Stockholders' Equity

    426,901       427,555  
                 

Noncontrolling Interests

    7,422       11,780  
                 

Total Equity

    434,323       439,335  
                 

Total Liabilities and Equity

  $ 457,000     $ 460,883  

 

 

 

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NEWLAKE CAPITAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

   

For the Three Months Ended

   

For the Six Months Ended

 
   

June 30,

   

June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Revenue:

                               
                                 

Rental Income

  $ 9,553     $ 6,616     $ 18,678     $ 11,035  

Interest Income from Loans

    948       -       1,867       -  
                                 

Total Revenue

    10,501       6,616       20,545       11,035  
                                 

Expenses:

                               
                                 

Depreciation and Amortization Expense

    2,804       2,051       5,483       3,137  

General and Administrative Expenses:

                               

Compensation expense

    2,302       1,044       3,138       1,403  

Stock-Based Compensation

    515       97       921       1,004  

Professional fees

    666       391       1,207       777  

Other general and administrative expenses

    426       233       834       378  

Total general and administrative expenses

    3,909       1,765       6,100       3,562  
                                 

Total Expenses

    6,713       3,816       11,583       6,699  
                                 

Loss on Sale of Real Estate

    -       -       (60 )     -  
                                 

Income From Operations

    3,788       2,800       8,902       4,336  
                                 

Other Income (Expenses):

                               

Interest Income

    48       16       96       18  

Interest Expense

    (46 )     -       (73 )     -  
                                 

Total Other Income

    2       16       23       18  
                                 

Net Income

    3,790       2,816       8,925       4,354  
                                 

Preferred Stock Dividends

    -       -       -       (4 )
                                 

Net Income Attributable to Noncontrolling Interests

    (32 )     (78 )     (149 )     (155 )
                                 

Net Income Attributable to Common Stockholders

  $ 3,758     $ 2,738     $ 8,776     $ 4,195  
                                 

Net Income Attributable to Common Stockholders Per Share - Basic

  $ 0.18     $ 0.16     $ 0.41     $ 0.31  
                                 

Net Income Attributable to Common Stockholders Per Share - Diluted

  $ 0.18     $ 0.16     $ 0.41     $ 0.30  
                                 

Weighted Average Shares of Common Stock Outstanding - Basic

    21,307,621       17,329,964       21,279,919       13,645,990  
                                 

Weighted Average Shares of Common Stock Outstanding - Diluted

    21,732,289       17,455,599       21,734,180       13,759,484  

 

 

 

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The table below is a reconciliation of net income attributable to common stockholders to FFO and AFFO for the three and six months ended June 30, 2022 and 2021 (in thousands, except share and per share amounts):

 

   

For the Three Months Ended

   

For the Six Months Ended

 
   

June 30,

   

June 30,

 
   

2022

   

2021

   

2022

   

2021

 
                                 

Net income attributable to common stockholders

  $ 3,758     $ 2,738     $ 8,776     $ 4,195  

Real estate depreciation and amortization

    2,780       2,051       5,391       3,137  

Loss on sale of real estate

    -       -       (59 )     -  

FFO attributable to common stockholders

    6,538       4,789       14,108       7,332  

Severance

    1,597       -       1,698       -  

Stock- based compensation

    511       97       906       1,004  

Non-cash interest expense

    26       -       33       -  

Amortization of straight-line rent expense

    6       -       6       -  

AFFO attributable to common stockholders

  $ 8,678     $ 4,886     $ 16,751     $ 8,336  

FFO per share – basic

  $ 0.31     $ 0.28     $ 0.66     $ 0.54  

FFO per share – diluted

  $ 0.30     $ 0.27     $ 0.65     $ 0.53  

AFFO per share – basic

  $ 0.41     $ 0.28     $ 0.79     $ 0.61  

AFFO per share – diluted

  $ 0.40     $ 0.28     $ 0.77     $ 0.61  

Weighted average shares outstanding – basic

    21,307,621       17,329,964       21,279,919       13,645,990  

Weighted average shares outstanding – diluted

    21,732,289       17,455,599       21,734,180       13,759,484  

 

Funds From Operations

 

We calculate FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. NAREIT currently defines FFO as follows: net income (loss) (computed in accordance with GAAP) excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by an entity. Other REITs may not define FFO in accordance with the NAREIT definition or may interpret the current NAREIT definition differently than we do and therefore our computation of FFO may not be comparable to such other REITs.

 

Adjusted Funds From Operations

 

We calculate AFFO by starting with FFO and adding back non-cash and certain non-recurring transactions, including non-cash components of compensation expense. Other REITs may not define AFFO in the same manner as we do and therefore our calculation of AFFO may not be comparable to such other REITs. You should not consider FFO and AFFO to be alternatives to net income as a reliable measure of our operating performance; nor should you consider FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity.

 

 

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Ticker: NLCP
CIK: 1854964
Form Type: 8-K Corporate News
Accession Number: 0001437749-22-019697
Submitted to the SEC: Wed Aug 10 2022 8:00:33 AM EST
Accepted by the SEC: Wed Aug 10 2022
Period: Wednesday, August 10, 2022
Industry: Real Estate Investment Trusts
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Regulated Disclosure

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