Newlake Capital Partners, Inc. ((NLCP)) has held its Q4 earnings call. Read on for the main highlights of the call.
NewLake Capital Partners, Inc. recently held its earnings call, revealing a mixed sentiment. While the company showcased financial growth and a robust liquidity position, it also addressed challenges such as tenant payment issues and delays in federal cannabis reform. The management expressed caution about the industry’s future due to these ongoing uncertainties.
AFFO Per Share Growth
NewLake Capital Partners reported a notable 10% year-over-year growth in AFFO per share for 2024. This achievement underscores the company’s sustained growth trajectory since its inception in 2019, highlighting its ability to generate consistent returns.
Increased Dividends
Reflecting its commitment to shareholder value, NewLake increased its annual dividends to $1.70 per share, marking an 8% rise over the previous year. This move demonstrates the company’s confidence in its financial health and future prospects.
Strong Liquidity Position
The company reported a strong liquidity position, with $103 million available, including $20.2 million in cash and $82.4 million in untapped credit facility capacity. This financial strength provides NewLake with the flexibility to navigate market uncertainties and invest in growth opportunities.
Revenue Growth
NewLake’s total revenue for 2024 reached $50.1 million, a 6% increase from $47.3 million in 2023. This growth reflects the company’s ability to enhance its revenue streams despite industry challenges.
New Board Member
The addition of Dina Rollman to the Board of Directors brings over a decade of cannabis industry experience, particularly in legal and regulatory affairs. Her expertise is expected to strengthen NewLake’s leadership and strategic direction.
Tenant Rent Payment Issues
The company is facing financial stability challenges within its lease portfolio due to rent payment issues from tenants Revolutionary Clinics and Calypso. These issues highlight the risks associated with tenant financial health.
Challenges in Massachusetts and Pennsylvania
Revolutionary Clinics’ entry into receivership and Calypso’s challenges have led to reliance on deposits for rent payments, creating uncertainty in retenanting efforts in these regions.
Revenue Decline in Q4
NewLake experienced a 3.9% year-over-year revenue decline in the fourth quarter, attributed to noncash revenue recorded for Revolutionary Clinics warrants and their subsequent impairment.
Federal Reform Delays
Ongoing delays in DEA rescheduling and federal cannabis reforms continue to pose uncertainty and headwinds for the industry, impacting NewLake’s strategic planning.
Forward-Looking Guidance
Looking ahead, NewLake anticipates continued headwinds in the cannabis industry for 2025, while awaiting developments such as the DEA’s rescheduling decision and potential federal reforms. Despite these challenges, the company plans to maintain its disciplined investment strategy, focusing on high-quality tenants and prudent risk management, supported by one of the lowest leverage levels in the REIT industry.
In summary, NewLake Capital Partners’ earnings call reflected a cautious yet optimistic outlook. The company highlighted its financial growth and strategic initiatives, while also acknowledging the challenges posed by tenant issues and regulatory delays. Investors can expect NewLake to continue its disciplined approach to navigating the evolving cannabis industry landscape.