NLCP - Earnings call transcript Q4 2021 | NewLake Capital Partners, Inc.

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Operator

Good morning. I'll be your conference operator today. At this time, I would like to welcome everyone to the NewLake Capital fourth quarter and full year 2021 earnings conference call. today's call is being recorded. I will now turn the call over to Valter Pinto, Managing Director of KCSA Strategic Communications. ahead. go Please

Valter Pinto

Executive Good and Capital operator. earnings welcome, to Starker, Weinstein, everyone call. Chief President Thank Officer; Annenberg, Investment fourth morning Director quarter NewLake Fred Chief David by Partners joined Financial XXXX Anthony and the Coniglio, I’m and Officer; you, Chief today and Officer; Jarrett full conference Acquisitions. year of

of conference remind the call Private Reform I'm due begin, may risks statements that and of we with the everyone the Harbor and differ variety going statements Safe other to factors. meaning be of Securities may Act during and Before deemed of materially forward-looking today's actual uncertainties a made Litigation to XXXX, results

any business, morning filed you issued the as I press release to detailed that, as filed Form to it’s and of and Weinstein. to the the events other refer go reports periodically and David With new otherwise. intention result please a For company the of company's the call or turn or ahead. to information, this discussion the company's a David, revise XX-K dis update well any my statements, risks X-K, as obligation Mr. with SEC with the on the claims future whether uncertainties forward-looking SEC. of over or pleasure

David Weinstein

transformative Valter, and NewLake. for year a our joining was you, Thank XXXX thank you for again, call. everyone,

raising and million GreenAcreage, we Five initial $XXX gross first the another offering, over months completed XXXX, August quarter our During raising in in on successfully of of NewLake XXXX, in $XXX our proceeds. of that later connection merger public million closed with event. we

estate, to cannabis our source team the our and high tenants. relationships, Over build real quality capital transactions in of has worked invest XXXX, diligently strategic with entirety

exercise quality, our not we While we to on continue success growth, built upon keenly proud are long-term the making quantity. when investment we of our focused we decisions. discipline are

operators cannabis partnerships throughout create is and quality the in limited license located We States with want highest that quite simple. United are to model jurisdictions States. long-term strategically Our the

announce for focus every for to is expect not month long-term a do matter, or the we shareholders. every week, transaction our While of our ROI strategy that

XX, average a built-in ability unfunded has As increase built-in lease our and portfolio allowed escalators. XX.X capital, growth lease weighted tenant each since XX.X% quarter public. December our growth, year had combined term, to yield, improvements average invest through weighted to of and a us our dividend This going continually with

XX fuel dispensaries. totaling continue XXXX. by to business in XX% of strong. Our to $XX to conviction are is comprised across and our billion of X.X portfolio XX% which the go of industry cannabis facilities, in States the XXXX, of is The need innings, access early $XX remains capital from which billion growth expected still to the in will Operators million to square properties Today, cultivation growth. feet, this are XX

include and both Clinics. operators, as tenants Cresco, such cannabis and Remedies, Revolutionary public companies, nine premier Our such companies Columbia Curaleaf, Care, Organic and private Mint as Trulieve,

We by loan facility. collateralized have cultivation also mortgage one a provided

We recently XX%. portfolio. a $X.XX ratio of AFFO performance is or per quality $X.XX announced long-term payout share, target to our and of And our quarter financial the first Our expected strategy XX% reflects dividend annualized.

our Organic reminder, related a $X outstanding aside debt. currently outstanding financing of have from As seller acquisition, million to no Remedies we

additional fund number with pursuing a actively of debt acquisitions. are lenders, We capital to

to given optimistic we will discussions. this raise While ongoing the are guarantee capital, that be there’s current able no we

and more these progress. negotiation in transactions, capital currently any on will situations as are debt and these of details number We a on provide

challenging a as created trade stocks optimal or NASDAQ. I'd on in has ours. do of trade have trading Exchange and cannabis-related either all OTC New like in cannabis-related volume the cannabis-related including that for to this certain to It York traded Finally, has believe stocks, stocks, in than these trading restricted more Stock less dynamics relating stocks. banks address to certain trading secondary become not that liquidity investors We

such list have evaluating as NASDAQ. We a exchange to major been alternatives up to

our Anthony currently regarding our now we Anthony? is up our portfolio much are approach It engaged a issue potential us no certainty to important are like premature receive in investment there issue. this but call is ultimately an for that through will with more I’d we to for than very to We focused for we turn an and this to company is discuss NASDAQ shareholders, working on the that other more, detail. approval. and say list, over understand

Anthony Coniglio

specific to a great to again, Today, portfolio, Day. I'll successfully convert loan Hero a in meet overall to Diversified this and and the million Thanks, commentary some our the leaseback, everybody, thanks David, pipeline. structuring is to closed the fourth provide joining we of call, I XX-year nine-month transaction a This transactions. cover by loan. provided plan our XX to loan is review $XX our the then with Patrick's We unless of transaction really for quarter, the agreement creativity we and in sale a acquisitions. uniquely team around a senior July two happy provision year. client's In In November, satisfied testament St. the needs. secured on QX structured Associates our

million some which to square a commitment December, that convert entered tenant predict upon a $XX.X we with Organic to we part, at which included is this say would triple In $X the will be when the XX,XXX XXXX, improvement leaseback and Missouri, management I partnered foot their lease transaction $XX.X and in year, do Remedies. property Remedies. XX-year now we've net in the date. by fund excited July purchase PurePenn, Trulieve million sale funded has this investment team of vertically partnering allowances, and Organic to of a of $X.X a XX-year we've of closing, with who total be known announced to sold the We're While The we since team on property founders million Organic that we on business. of expiration closing Remedies sale led transaction at to team XX. a into leaseback the Missouri of can't PurePenn, million, to industrial them may with the provided last expect Pennsylvania future, we integrated In recall, facility. on you

that in Turning some happy from to have a of of discussion our cannabis first cannabis our portfolio, large the with outlook portfolio operators Based to and health adjusted XXXX. we’re half one you, to multi-state leading milestone during To EBITDA best-in-class the operators. is that positive, is the operators, remind expected our important on overall industry, of for most and very the tenants. single we the operators reporting, State of one achieve all tenants but the recent of for tenant

underwriting no future provide of been based and deferral quality, inception. a rent on focus the with collecting the decisions. on since market, really licensing, cannabis due solid our and we've the real estate, investment continues XXX% Our abatements tenant us well, foundation served for And has or to approach underwriting

we confidence you performance. As monitor diligently, tenants we our have know, and continue portfolio's in the to

results top recently Let's water have five look period. or reported for tenant fourth the a at most financial quick our

and we we one Our full With of scaling adjusted year sizable of footprint. license of and million, across XX $XXX limited to own $XX positioned EBITDA Curaleaf largest Curaleaf, dispensaries business, XXX $XXX and revenue dispensaries where year States, QX Florida, cultivation million, posted billion, $X.X adjusted of resulting revenue its tenant, XX facility in EBITDA and a wholesale six XXXX million. State is across believe full XXXX continue in

those I to cultivation more in our the use QX facility in in be. the their Illinois, largest year largest see top would and property tenant, own week. the where located, which and sales added upon note build proving of next via third versus earnings the potentially selling XXXX and QX in and their expect record and expansion company is we we as to Cresco Cresco, than Massachusetts, adult expected XXXX, to it scale that quarter continued second use is market analysts margin results, in its growth that all Illinois, Our where report will is in sizable inaugural M&A Pennsylvania Cresco doubled Illinois, sales adult was sales revenue results, be brand, Industry

Revolutionary cultivation integrated dispensaries And Metro with Our area. own platform in Boston three is facility Clinics. vertically in their Fitchburg, third It's a tenant Massachusetts. we the largest

tell scale of is strong Care. preliminary and announced which While tenant. will The Pennsylvania this its facilities. where of of the has we should and competition. Integration that company our the license five revenue, adjusted an we results. market EBIDA with is and bode could their to and large all fourth the at footprint $XX Care report XX% private the cultivation of top fourth million been you We look success. of continue million for we results March, full gross tenants but Florida, their over EBITDA. $XX for has XXXX, a the disclosed out facility, be largest Harvest own forward Trulieve their five three information, two adjusted to dispensaries, diversification own Rounding margin further on their ability Columbia an seen seeing we acquisition, results very should in facilities, comfortable delivered and end we a share while can't of Columbia they've add reports to which results cultivation week, next company increased profile $XXX financial risk expand long-term markets, of of quarter year Trulieve, home credit tenant, QX margin. but million industry-leading in well business, limited our demonstrating their of

reviewed resulting million $XXX Since a over transactions, Lastly, some sale pipeline. in billion we've comments on committed of inception, leaseback capital. our $X

in Our was pipeline quarter the robust. fourth

importance. always as calls. a quarterly quality serving up nicely industry, is indeed transaction a However, business, properly and the timelines regulated highly earnings utmost articulated, with don't is of chunky David line This

attractive opportunities, continue steady on see participants. many while of non-dilutive are flow debt capital, valuations and industry rising a makes environment depressed, as market We rate the equity for raising less to focuses a

be that, our May that months us is our With from our over patient Fred available results capital said our focus CFO, through IPO, we'll that, more period. in quality, Fred, financial transactions. to to which we it Starker, takes confidence nine deploy to within you. in through hand have will to Our over I'll walk Having detail. continue six the and sourcing the we on right to

Fred Starker

Thanks, Anthony. Good morning, everyone.

$X.X XXXX, approximately $X.X to XXXX, income three of increased the shareholders compared as the months by million, a December to three for XX, ended December months million XXXX, compared Our common months our XX, approximately for XXXX, million to XXXX. in net million December to to internalization for months XXXX. ended December rental ended July for shareholders the XX, a was $X.X million the ended loss December three XX XX the December common increased increased months ended the common merger. attributable $X.X $X.X to approximately by connection increased shareholders attributable Net The to XX approximately $XX.X external Rental million period XX, The to million, $XX.X manager common to income ended million in income as significantly $XX.X XXXX. the same income compared increases for net approximately for XXXX. months for in Net attributable impacted million XXXX acquired the for XXXX. income the period to the by to XX, with of net attributable XX same in XX, shareholders in attributable in to of loss were rental March $XX.X properties $XX.X million to compared XXXX income the

increased months to XX, to ended XXXX, Our three XX, million $X.X compared administrative XXXX. $X.X for as December approximately the $XXX,XXX for general and December three by expenses approximately approximately the million, month,

public for For of million, million was G&A note ended $X.X important December approximately XXXX. significantly XX compared the by It's XXXX, the to our $X.X XX, XX, to expenses. as expense months merger by our non-recurring and months approximately increased expense December the ended million increase to impacted XX $X.X that G&A company

recurring anticipate administrative $X year. general around we to expenses million be for forward, Going the

$X For was to quarter the million. attributable shareholders fourth XXXX, common of AFFO approximately

an $X.XX, reconciliation real a industry In supplemental the to Note the $XX of net dividend and March For non-GAAP A in attributed turn a XXXX declared quarter $X.XX. for estate compare as complete estate we annualized terms, per the share, to measures per compared more of dividend AFFO, financial we the David it months share, $X.XX and fourth performance and equivalent declared are from cash XX to million. end I FFO back our of to to was for common cash XXXX release. GAAP that included definitions press approximately shareholders to of annualized mid-December, our XXXX, operating used of remarks. information. release that, $X.XX of quarter $X.XX. are third shareholders common real Please of XX, AFFO and attributable adjustments AFFO over to equivalent that measure On FFO an income closing companies. quarter will With to dividend refer annualized dividend first of press of at to containing dividend

David Weinstein

Fred. I'm has team closing, you morning. Thank all period. proud rather And in accomplished again, for a you, In thank what us this our joining short of

to we Given while the trajectory and questions. and would of industry to I execute our continue continued Operator? a the grow, expect exercising growing cannabis discipline call pipeline, up the open for to now like approach.

Operator

John first comes questions. proceed Massocca [Operator question of Instructions] with Please Ladenburg the with Our Thalmann. your from line

John Massocca

morning. Good

the listing in I just NASDAQ NASDAQ comments mortgage of talk listing, interest even able is too comfortable REITs on properties So, the your up structure the know the on to on might Is you I've clearly to and got much the listing to this it. ownership exchange. though at you be start with time, not on your with barrier portfolio?

being So, in estate? your equity just the it is real really direct by driven position

David Weinstein

the That's primary focus, yes.

John Massocca

nothing in the comfortable There's listing? terms with that of to get be changed of in to the would portfolio order NASDAQ Okay. kind else need

Anthony Coniglio

New qualify Yes, time. that John, we've precludes on ownership the at company the And this only York the that run of or a ownership, for NASDAQ. properties a that thing legal always listing is us to

John Massocca

it IPO raised, of and mean, kind today? take deploy to is deploy just a months was I a Okay. does Are little market about or that to the of still as because switching that you kind little thinking is volatility dynamics, gears the how all look of time macroeconomic more different timeline the nine to going pipeline capital bit, capital? of

Anthony Coniglio

launching we'll I'd to Anthony. - this Yes. feel capital, period. from would to But May the to we made seeing we're Jarrett. hand six macro were as give the perspective, why IPO deployed we remarks, a promise confident I'm our off the be to and us takes raising fulfill flavor in what in That the it going months. Jarrett. is prepared able said investors it that off when fully in be I that that to Jarrett, a From hand we say the nine pipeline? to you we don't I'll for through

Jarrett Annenberg

Thanks, Anthony. absolutely. Yes,

So, with and the country. discussions remains with from we're been robust really since operators inception, as our active in as negotiations the perspective, pipeline it operators, has across

this business chunky capital. tremendous flows noted, David Really with but ebbs As and and the the sales unpredictable. cycle overall, in see market is cannabis it we a our demand for

six Anthony operators think, of the as said, from to be months IPO, our seeking I also that license we'll out maintain we jurisdictions. with as in on we nine focus with but transactions quality diligent to continue guidance need limited

John Massocca

these adult Jersey, TAM a follow the of as of important maybe And some or States, directly, larger is Northeastern even pipeline cetera? maybe up, Connecticut, mean, your rollout I kind the of Okay. New how et York, programs to New to use

David Weinstein

Yes.

conversations of having they're those operators States I about ahead those think long out. as of those markets, do starting are most programs roll programs to the think we're those operator can imagine, get you that to with as online before we new implemented, and those those want markets are like but As in coming Maryland as like turn expect where some we which see States use, in online And markets, Mississippi, thing. as opportunities well. same expect into turned Missouri, then the adult that medical just where well we to Georgia, expansion

John Massocca

any there, you then of one capital. some How an place of position has kind the and what and you you fairly the debt it’s transaction to pricing be things, macro with economic of market. raise out there? own unique one attractive given And maybe kind uncertainty last you Okay. uncertainty your that's But given is would the trended of bespoke, just interest mentioned obviously on still rate for and REIT side in

David Weinstein

have and a would David. we of Yes, would debt all, essentially, also have is say, this John, I - I portfolio. no first great we

not that challenging debt. to So, us get it's for

probably mid-single we'd in up digits. end think I

John Massocca

Okay. all very me. much. you That's for all Thank

Operator

with Point. next proceed with questions. of Please Thank question the Ross instructions]. Merrill line you. Compass [Operator your The from is

Merrill Ross

Thank you. Good morning.

On the on would the loan, loan? the the terms is instrument property. Hero smaller of sale assume terms than what than significantly of kind I of are it But different of that loan the proceeds when yield from the re-spec share the the Diversified converts? is

Anthony Coniglio

Yes, an the transaction not size doesn't It's change. the extension. leaseback. into extension term, It switches of sale a

really been signed doesn't It's that long-term new whole triggering allows as So, and transaction. that and change. it event lease, negotiated It enter - sale already becomes place yield conversion. that the the us and part of then leaseback, a a which to into has but purchase XX-year building in not

David Weinstein

Merrill, a was as, would sale think from form that structured in sale the with a you to it similar it convert of leaseback. should that to anticipation beginning, loan transaction the a leaseback

Merrill Ross

happened a what? conversion occupancy, certificate the So, on completion of occupancy or

Anthony Coniglio

can't but good July occupancy. We to and trigger are will on convert event guarantees, not repaid. the is it feel having a that perhaps going the It's transaction do it - XX. return what to say, sale the can there the get really we what Merrill, that we disclose that repaid, fee, of listen, If with at is, nine-month the then no But the capital on deployed yield for totality about you good does gets feel the there's we're that look exit on transaction period. when leaseback

Merrill Ross

dynamics limited wars in question. in profitability? see lessen California, hear it states. I at you similar cannabis maybe we're And price the from supply - Are you there's tenants the seeing I pricing the any would and an license to retail that on level, unrelated seeing have your if want or product just pressures of know I

Anthony Coniglio

the for seeing why you don't sense at level? a what we're retail sure. Jarrett, For give

Jarrett Annenberg

Yes.

a different market. obviously is that each and I State market very unique a think

a operators Massachusetts, you're online, seeing same pricing. which space in is to down the compression, margins as State But the built models. see level. retail Florida, In obviously starting see in lowering into Trulieve’s additional we on cultivation as cutting like bring particular our Curaleaf you're As in trickles price that by space. bring more Florida cultivation to groups we've into

State always it's conservative states like additional expected think see been in our California, has online. compression the and I brought cultivation limited what you it's underwriting, But we've in an unlimited nothing license in license very really we've been where as

Anthony Coniglio

respect actually fairly are I And with a isn't bid million, a to XXXX that for our say add, see say rate attractive get strong from buyers you just specifically would $X Merrill, that below you retail, to to go willing when that business cap

Merrill Ross

I understand that. Thank you.

Operator

instructions]. [Operator you. floor back Thank the further turn additional no I'll to there time, are management for At this questions. remarks.

David Weinstein

Well, look the right. everyone future. in and I we thank the you business. to growth forward the confident, All said very for of as joining, We're

care, take everyone. So,

Operator

This will conclude today's conference.

You your for participation. you lines time. may disconnect Thank this at your

NewLake Capital Partners (NLCP) 17 Mar 222021 Q4 Earnings call transcript