NewLake Capital Partners, Inc. (NLCP)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue was $12.514M and diluted EPS was $0.29; AFFO was $10.949M and AFFO/share rose 1.8% YoY to $0.52, despite a $0.522M impairment on tenant warrants and rent issues at two tenants. Dividend was maintained at $0.43 with an 83% payout ratio .
• Liquidity remains strong: $102.6M total liquidity ($20.2M cash, $82.4M undrawn revolver), gross real estate assets of $431.4M, debt-to-gross assets 1.6%, and debt service coverage ~32.3x; debt-to-EBITDA is <0.2x, underscoring very low leverage .
• Management reiterated a cautious stance on sector outlook, opted not to pursue a TSX listing near term, and emphasized flexible capital allocation via an $8.2M buyback and a $50M ATM program to opportunistically repurchase or raise capital at accretive prices .
• Tenant updates: Revolutionary Clinics entered receivership and is paying ~50% rent; Calypso missed rent Sep–Dec and rent was covered from escrow ($1.2M applied, $0.446M remaining). NLCP suspended Calypso’s remaining improvement allowance until rent is current .
• Estimate comparison was not possible; S&P Global consensus for Q4 2024 was unavailable, so beats/misses vs Street could not be assessed.

What Went Well and What Went Wrong

• What Went Well

  • AFFO/share increased YoY to $0.52 and AFFO rose to $10.949M despite industry headwinds; payout ratio stayed within target (83%) .
  • Balance sheet strength: debt-to-EBITDA <0.2x, liquidity ~$103M, no maturities until May 2027, enabling disciplined growth and resilience .
  • Management quote: “These results…are a testament to the strength of our underwriting process and the capabilities of our team in proactively managing portfolio risks.” — CEO Anthony Coniglio .

• What Went Wrong

  • Revenue down 3.9% YoY due to prior-year non-cash warrant revenue and a current warrant impairment ($0.522M), which also pressured net income YoY .
  • Tenant stress: Revolutionary Clinics paying ~50% rent and entered receivership; Calypso missed rent and required escrow application; NLCP suspended Calypso’s improvement funding until cured .
  • Sector outlook caution: Management highlighted headwinds (regulatory delays, tenant debt maturities) and chose not to pursue TSX listing now, indicating limited near‑term liquidity enhancements .

Financial Results

Guidance Changes

Note: No formal revenue, margin, OpEx, OI&E, or tax rate guidance was provided in the Q4 materials .

Earnings Call Themes & Trends

Management Commentary

• “We achieved growth in AFFO per share of 10% year-over-year…increased our annual dividends in 2024 to $1.70 per share…with a strong liquidity position, one of the lowest levels of debt in the REIT industry…NewLake is well positioned to continue investing prudently.” — Gordon DuGan .
• “Our underwriting approach works…focus on limited license states and property level cash flows have helped us manage risk and deliver results.” — Anthony Coniglio .
• “EBITDA coverage…was 3.5x for cultivation and 9.0x for dispensaries…stable…demonstrating…our underwriting…has led to a more stable cash flow profile.” — Jarrett Annenberg .
• “Our balance sheet remained strong…$431M in gross real estate assets, only $8M in debt outstanding and a debt-to-EBITDA ratio of less than 0.2x…liquidity is solid with $103M available.” — Lisa Meyer .

Q&A Highlights

• Competitor/IIPR spillover: Management sees no spillover risk; emphasizes ample property-level cash flow coverage and disciplined underwriting .
• Re-tenanting options: Cannabis use is best-use for cultivation properties; alternative non-cannabis uses feasible but with friction costs; PA Calypso asset likely re-tenant within cannabis given market tailwinds .
• Capital allocation flexibility: Rationale for concurrent buyback and ATM — repurchase at accretive prices or raise capital on sector strength; “shareholder-focused flexibility” .
• Growth stance: Continued cautious, “slow and steady” focus on quality growth amid regulatory uncertainty and tenant debt maturities; preference to be surprised to upside .

Estimates Context

• S&P Global consensus for NLCP Q4 2024 (revenue and EPS) was unavailable at time of analysis; therefore, no beat/miss comparison versus Wall Street estimates is provided. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

• Operational resilience: AFFO/share rose YoY and payout ratio remained within target despite warrant impairment and tenant stress — a positive signal for dividend sustainability .
• Balance sheet optionality: Sub-0.2x debt-to-EBITDA, ~$103M liquidity, and no maturities until May 2027 provide significant flexibility for opportunistic growth or shareholder returns .
• Capital deployment discipline: Expect measured deal activity; focus on limited-license markets and property-level coverage should support risk-adjusted returns in an uncertain regulatory backdrop .
• Near-term narrative movers: DEA rescheduling (280E elimination), PA adult-use momentum, and resolution of Calypso/Revolutionary Clinics situations; any federal signal or state legal changes could catalyze sentiment .
• Trading implications: In absence of estimates, monitor policy headlines and tenant developments; low leverage and durable AFFO support defensive positioning with optional upside via buybacks/ATM .
• Medium-term thesis: Consolidation of cannabis operators and sale-leaseback monetizations may expand NLCP’s pipeline when credit conditions normalize; disciplined underwriting should preserve cash flow quality .
• Risk watch: Tenant debt maturities (2026–2027), Massachusetts market challenges, and regulatory timing slippage warrant ongoing monitoring; management is proactively addressing these .

All data and statements above are sourced from NLCP’s Q4 2024 press release, 8-K, investor presentation, and earnings call transcripts with citations: .