NewLake Capital Partners, Inc. (NLCP)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 was stable operationally: revenue $12.59M, diluted EPS $0.32, AFFO $11.02M ($0.52/share) with an 82% payout ratio; sequential revenue softened vs Q2 on tenant issues but earnings quality held due to security deposit applications and tight G&A control .
• Results beat Wall Street consensus: EPS $0.32 vs $0.29*, revenue $12.59M vs $11.81M*; the EPS beat was significant (+10%+) and revenue modestly ahead, supporting the dividend and reinforcing underwriting credibility .
• Tenant credit events (AYR Wellness non-payments beginning August; Revolutionary Clinics vacancy) were a headwind; management applied ~$505K of AYR deposits and retained ~$408K to mitigate rent gaps, and is actively re-leasing Fitchburg, MA .
• Lease amendments with C3: plan to sell Hartford property with shortfall protections and reallocate rent to Missouri until redeployment—engineered to be de minimis to net income/AFFO per CFO commentary on the call .
• Balance sheet remains conservative and a catalyst: liquidity $106M, gross real estate assets $432M, 1.6% debt-to-assets, no maturities until May 2027—providing flexibility to navigate tenant transitions and opportunistic capital allocation .

What Went Well and What Went Wrong

What Went Well

• Delivered a clean beat on EPS and revenue versus consensus, with AFFO/share at $0.52 and payout ratio at 82% supporting continued dividend stability .
• Effective risk management: applied AYR security deposits (~$505K) to offset non-payments; retained ~$408K deposits at quarter-end to bridge near-term cash impacts .
• Disciplined cost control: G&A ratio at ~10.3% of revenues in Q3, improving vs Q3’24 and Q1’25, bolstering margins despite tenant headwinds .
• CEO tone constructive: “Despite continued cannabis industry headwinds, NewLake is positioned to deliver lasting value for our shareholders.” .

What Went Wrong

• Tenant credit stress: AYR vacated two cultivation properties; no rent received in Aug–Sep; Revolutionary Clinics vacated Fitchburg with rent cessation in July, creating leasing risk and property carrying costs .
• Sequential revenue dip vs Q2 ($12.59M vs $12.93M) reflecting lost tenant payments partially offset by deposit usage and built-in escalators; underscores ongoing industry fragility .
• Property carrying costs emerged ($145K in Q3) tied to vacancies; highlights income drag during transition periods .

Financial Results

Consolidated Financials vs Prior Periods

Note: NLCP’s Q3 investor slide deck shows Q2 2025 diluted EPS $0.36, while the Q2 press release/statement shows $0.35; we anchor on the Q2 press release/statement for EPS and note the slide discrepancy .

Revenue Composition

Key KPIs and Ratios

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “During the third quarter we remained focused on proactive tenant management while maintaining the strength of our balance sheet… NewLake is positioned to deliver lasting value for our shareholders.” .
• CFO on C3 amendment impact: “We structured that transaction so that it would have [de minimis] impact on net income. We do not anticipate seeing any decline in net income or AFFO as a result of that transaction.” .
• CFO on tenant impact pacing: first-quarter headwind estimate “a little over $0.035, maybe $0.036” per share (context: AIR/AYR properties), framing near-term earnings sensitivity to property vacancies .

Q&A Highlights

• Analysts probed vacancy and tenant status; management quantified a ~$0.035–$0.036 per share impact in the first quarter tied to vacant properties, and reiterated deposit protections and re-leasing efforts .
• Clarifications on C3 Hartford/Missouri amendment indicated no expected decline in net income/AFFO from the structure, with rent reallocation bridging until redeployment .
• Tone vs prior quarters: management confident in underwriting and balance sheet, cautious on tenant health but proactive, and open to diversifying into adjacent regulated real estate when accretive .

Estimates Context

Values retrieved from S&P Global*.
Implication: modest revenue beat and a meaningful EPS beat suggest estimates may need upward revision for near-term payout sustainability and AFFO trajectory.

Key Takeaways for Investors

• EPS and revenue beats, with AFFO/share at $0.52 and payout at 82%, reinforce dividend sustainability near current levels; watch for estimate revisions upward post-beat .
• Tenant credit remains the primary risk; deposits and amendments mitigate the near-term cash impact, but leasing timelines drive forward earnings sensitivity (CFO quantified ~$0.035–$0.036/share headwind) .
• Proactive portfolio management (C3 Hartford sale plan, rent reallocation) designed to be earnings-neutral, showcasing NLCP’s underwriting and contractual protections .
• Balance sheet strength (liquidity $106M; 1.6% debt-to-assets; no maturities until 2027) provides optionality to backfill vacancies, fund TIs, or pursue accretive acquisitions .
• Regulatory tailwinds (DEA rescheduling, banking relief) could catalyze tenant health and deal flow; NLCP’s limited-license focus positions it to benefit if access to capital improves .
• Near-term trading: post-beat reaction modestly positive; shares around $12.9 after print (+0.78%), with yield ~13% on $1.72 annualized dividend—income investors may see risk-reward as favorable if re-leasing progresses .
• Medium-term thesis: stable cash flows from triple-net leases, disciplined payout, and strong underwriting; monitor progress on AYR property outcomes and Fitchburg re-lease for trajectory into FY26 .