NLCP - Earnings call transcript Q2 2022 | NewLake Capital Partners, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the NewLake Capital Partners Second Quarter 2022 Earnings Conference Call. Today's conference is being recorded.

For opening remarks, I'd now like to turn the conference over to Valter Pinto, Managing Director at KCSA Strategic Communications. Please go ahead.

Valter Pinto

Thank you, operator. everyone conference NewLake call. welcome, quarter Partners and earnings XXXX afternoon to Capital the second Good and of I'm and Lisa Officer; Chief today Executive Annenberg, joined by Officer; Meyer, Anthony Chief Acquisitions. Coniglio, President Jarrett Director Financial

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

administrative statements, net the For and FFO company business, risks XX-Q and a to revise our well whether compare otherwise. disclaims detailed containing the morning measure discussion risks management's from press U.S. fully The Exchange end and pleasure of it's the market assumptions future or Coniglio. as filed company's for general our forward-looking you and the based the of occupancy and SEC rental financial reports to obligation This the update refer rates, runs, weighted Securities other with call uncertainties some press company's and as with to acquisitions of current on more is at operating over to outstanding and more guidance the With future leasing described dispositions, go estate filed the filings release. outlook issued events current as Anthony refer that, average the my result Commission. to of X-K, SEC. rates. shareholders future subject this a definitions Companies interest on to measures common ahead. industry and uncertainties ongoing the the used operating shares conditions, and of GAAP activity, including and of are The terms estate uncollectible any to reflects or reconciliation expenses, and Mr. and press attributable companies. FFO diluted as real pace with any in the levels, adjustments such information. in company's real to of periodically the or release view of and Please intention new I income in AFFO assumptions the performance and to the non-GAAP release turn supplemental Please included information, AFFO and Form plans

Anthony Coniglio

you a XXXX. made That very environment the share. again more a dividend were our Thank and the slowing growth for The reflects to in dividend We're declare industries, with XXXX we today. you, and to call a thus quarter pleased annualized. far challenging myth thank has team our Valter, and share per all macro $X.XX cannabis joining consecutive of everyone of second achievements increase, our able sector, $X.XX fifth in recently quarterly per across

Directors David Officer, to which Chief We me, behalf our remain $XX very we accomplishments, approach. Meyer With Officer on and million year's and for thank and our -- our on to million facilities recently disciplined is Weinstein, attractive David March we his in investments of And of quarter, NewLake at the the merger made the We're Recently, of would entities a in to credit appointed Lisa Board. industry. IPO. testament we believe them proud experience to transformative and the through we our public from of and model so excuse real will our wish to estate to the the Chief from successful our as $XX our to I excited from rates. transitioned these to company, for the Fred the I last fully now our On in private team various financial $XX and who to and team, And are million extensive of see both want interest increased company. our we Board company joined congratulate our long and proceeds leading $XX and very Weinstein them Financial their best entire Lisa 'XX bringing invested we're Former for contributions like CFO, million I a Executive thank providing Starker IPO. team and retirement. leadership succeeding second The -- career

inflation such time, a as conservative environment we've many opportunities. we of see increasing value level negatively rent due REITs, replacement our in. the all of operating of reversal a certainly apply far the and operators. trends We difficult macro of economy, since term. by for there our catalysts what environment underwriting already will collected consumer the anticipate company. know operating for this our to impacting having continue near elevated continue we're factors costs This is the we while all well the more place consumer properties to approach This We the that and and perspective few in some as our We pipeline particularly to and are for and creating inception creating NewLake impacts environment is for on decisions, a in investment thus Turning positive has evaluate approach particular inflation, cannabis the our served for on was us time impact persistent negative a rents. inflation in more think --

seeing licensed will as net for limited the jurisdictions, not on cannabis decades been on to that properties. we in believe While demand economy, they by record, impacts as what result difficulties strategy arise. in the team are will sector, of those new resolve difficult our cannabis track challenges we has of that net our the we're and the part. where to is across proud from can there work diligently will mitigate in experience to any we're acutely tenant the portfolio environments lease industry, our team Tenant not industry certainly that our immune in this you across lease Part the negative focusing arena, be tell of but operating such

MSOs consists a of in quality limited serve some top We as and properties during will such Curaleaf, Trulieve the of industry. to for operators license industry, high states few. on Our well and us portfolio focus this believe in name this our Cresco, period the volatile

team properties. our at with the and understand tenants, their business, constantly Our dialogues with to particularly works them factors closely our driving

in the we regulated trend in industry long-term illicit shareholders. We'll purchasing and is value and ebbs the volatility firmly by certainly cannabis in market continue headwinds, cannabis cannabis to high adverse cannabis our While have fundamentals a $XX into consumers the its Converting often a long-term deliver will cannabis billion significant economic an growth cannabis, no different. legal in environment of believe estate, industry. the Most real is of encountering we and believe and our flows. But volatile experience services collective long-term is use place. financial times for to industries these conditions, encounter navigate exacerbated market

current of million, $X.X approximately performance, pleased revenue million, for revenue very growth demonstrating operating we're $XX.X to leverage increased our AFFO with XX% second year-over-year QX in year-over-year our the to year-over-year increased and XX% quarter and to Turning model. some XXXX the business AFFO. Total

annualized. our XX%. share or Our expected a payout $X.XX remains XX% AFFO target was long-term ratio $X.XX second And quarter dividend to

publicly and two with traded U.S. to fund U.S. leading completed from already amended an expansion. publicly we a acquired During the properties lease existing another quarter, MSO MSO traded an second leading

also high with private property a MSO. We purchased a quality

of we've a a new As new in our built added added private publicly partner, importantly, MSO transactions, advantage we've tenant new partner, result and our of And to a these a portfolio. in listed portfolio. taken growth MSO we've market

it's I As environment difficult mentioned a operating for operators. earlier, cannabis

properties capacity. particularly such seen monitoring Pennsylvania significant by Massachusetts, We to as non-vertically price vigilantly X% us of in we've our always invested XX% have the X% for performance note benefits information markets that a we on indeed While of approximately closely, tenants integration. highlights identify in and in we time, the financial allowing reduction at in operator or financial consider a level would capital our observe is received emerging financial greater compression of that quarterly pricing integrated meaningful This is volatile our And integrated revenue seen pressures. property received have environment in I vertical state. we're the utilize increase properties, price platforms. we vertically in cannabis declines underwriting and driven where rent production to our

underwriting, observed but been more portfolio. not we we've mitigate As for our also past operators more we risk months, over the a difficult the cannabis nine have operating strategies six on across conservative only to on focusing become environment have to

issue a in well collecting many to arise record As the XXX% address time a previously, time I've comes, track prepared until we're just matter on. to our issues team said since of proud is inception, when of we have may And that while tenant any our portfolio. in rent that on of focus time times it's

I important to and our portfolio, Before NASDAQ, year. for the the the national New or York. on course like to Jarrett onto turn call to such know of topic discuss it uplift We is over to company exchange, we've comment during as pursuit our I'd on a this our an been investors focused

continue started quarter. we ongoing less is than were process first we we pursue optimistic we're in today dialogue to While the uplift, an and obviously the when

legal without Annenberg, you. not to relief over cannabis. of status Jarrett to some through do caution With our to I'll We it portfolio in detail. But in investors continue efforts. walk uplift more our hand we will over to want Acquisitions, change of to occur Director an to our regulatory Jarrett, that, or expect

Jarrett Annenberg

Thanks, Anthony.

X.X committed As XX we states we along have of approximately $XXX.X a square sale million tenants representing a inclusive million the today, feet. with of that XX tenant one a with loan leaseback look we total provided portfolio at across with

As years unfunded of improvements lease through and current growth average approximate remaining June XX.X XX.X% and weighted portfolio had term yield of lease with a tenant escalators. built-in XX, our

us an represent most overview, As approximately had which of recent NewLake's results approximately million that under representing we XX, tenants development. commitments, June $XX.X $XX.X our revenue. XXX,XXX portfolio, from a and million feet look With unfunded the XX% the in into option properties of let five square purchase top of

tenant largest XX% of and adjusted announced $XX sequential earnings company of on Curaleaf stated million QX increase. QX up revenue the where Our EBITDA million sequentially X% Monday, and $XXX

of Trulieve half in has the in sales. Additionally, only second cash million Trulieve million operating of of a XXXX for continue seven of on to first being balance positive licensees and $XXX recreational benefit the should XXXX, to $XX New in Jersey half sheet. for one the open cash of flow

where market, At Our on second million the be EBITDA for largest $XXX the largest the of they balance billion results week. to and they own tenant $XXX $XX.X XX, Cresco cash will was the quarter. of The revenue million, facility. continues next in sheet. company's Illinois their we had QX leader cultivation announce March had QX adjusted a Cresco

Additionally, our the the earlier of announced year, one acquisition another this company of Care. Columbia tenants

third Revolutionary private. largest Clinics tenant The is

in to use open two Boston its pricing the company away boosting So the which with the Clinics cultivation medical diversifying here. in through online. well in year, the area, as absorb The facility pricing by cultivation the and usual, providing a is dispensaries their from retail seen as has additional state with revenues significant to wholesale. adult locations Revolutionary information We compression integrated some we expects has specific can't volatility share Massachusetts, Metro incremental channel. in retail own state end the of further wholesale ability come vertically company financial situated capacity three

up continue QX tenant X% balance cash one million is They XX. of They report Trulieve a and Our million, year, largest Care. as EBITDA next June integrate industry. $XXX is dispensary quarter million Trulieve. our revenue have $XXX QX to harvest fourth of this QX morning. and of Rounding company five week. was tenants from and $XXX the out the during sequentially. footprints largest earnings acquisition reported in earnings the generated a adjusted XX% top The reported the Columbia of last

a 'XX one a the For and We've the recorded being QX, $XXX of of million The from expect EBITDA had adjusted sales on million seven of launch half of sheet recreational results operators company New cash Care also million. in to XX. as to recorded Columbia benefit revenue company the $XXX March balance approved $XX.X second Jersey. of

Cresco. approval. by but As been I approved by acquired state-by-state subject to shareholders, transaction mentioned being regulatory has earlier, Columbia Care is remain The

at level. tracking Now in the to tenants guarantor our addition

cash basis Anthony As level it we tenants property four each important each we individual a use our on generate also is understand most wall to as quarter, mentioned, is or The metric to performance EBITDA from monitor coverage. ability flow property.

operating our dispensary QX, that EBITDA For differently. the report XXx our our cultivation Please coverage was note all and XX level financials approximately across in property XX facilities companies was average average X.Xx. coverage operating EBITDA locations approximately

estimates true in do comparison. use to a make for we our tracking some So

performing While two dispensaries. One own there we expected, of in own coverages seeing well, cultivation excess believe our where incremental there the are well in prices with vertical only This and from year, acreage, state In difficult XXXX stores, operator not prices but only MSOs markets especially number wholesale been the at additional cultivation Pennsylvania. by online July. properties product their X,XXX and the dropped its compression provide has in the unable whose Massachusetts, to pound while inventory, bring down and we XXXX are compression MSOs integrated namely the compression, vertically properties per as sell their pound end reduced online which we past are operating price of we not in not as in cultivation creating capacity has dispensaries caps is other multi-state capacity in pound owned, at products own to dropped for pound Massachusetts state. both therefore from in does of The are end per relationships have to is the integration, leveraging and capacity to X,XXX through came X,XXX operators they're Pennsylvania, per the a In today. have been is many price an price X,XXX Pennsylvania. independent deliver license performing significant

as which expected, has actively their a size a announced attempt a leaseback business. sale been recently reduction The week, headcount company right last Calypso to in other sale an from Calypso, transaction as loan a is process to The converted pursuing well.

over their and our number of have dropping been unlimited past lately pound. California due with been Calypso paid has Michigan. also a There's own wholesale company. industry any lot compression don't We We and is Diego, and the regular for we of a rent in License which been performing Limited underwriting sales allowed million of transaction. are X.X below states months price to-date. in of deterioration property Care one in XXX% own a the XX there EBITDA Care own discussion is the observing Michigan, the California, with consistent and dialog about coverage in people. Dispensary integrated population we jurisdiction a California, at vertically where the when we well also pricing significant and only San Columbia in that Two only in of in is the Columbia licensed with experienced the dispensary have original close property $X,XXX dispensaries

always Anthony our since expected these we of As markets. compression, increase said, competition would in underwriting always assumes level price a

on The thesis market licenses liquidity macroeconomic volatility monitor have this states, through continue potential focus challenging the horizon. ability our access use the mitigate an will A and especially on tenants adult any environment. was to on to progress with capital. part work We serve their of to and and upside severity they to operators work environment for impact our of core for growth where like had demand states limited as the where license of defaults, is in Pennsylvania, will stock

As a expect, you us operator companies. spectrum, pipeline single operators in largest the has state might across multi-state robust this resulted for from to the

financial to over high to hand will this in Lisa? With We conservatively. results through and on focus approach walk quality detail. our investment it very environment that, Meyer Lisa continue I'll operators to more CFO, our

Lisa Meyer

TI million we our the during base through of the CX XXXX three Industries XXXX our the for million first Total the securely Missouri. one-time mid-June sequential million Funding compared $X.X costs the of for AFFO Funding for we XXXX acquisition quarter from severance $XX.X earnings the revenue million quarter or $XX.X million, quarter $XX.X XX% these million, third model million invested of the year-over-year AFFO months for same occurred the revenues which totaled air XXXX. X.X% approximately the and million to $X.X XX capital. in Nevada, prior-year. The quarter $X.X for $XX.X $X.X an in ended of excludes of to of deploy second in TI period as the Therefore, compared you. million, we results. expense impact the last day of of increase the $X.X will increase the in increased second a the second and and Thank in of acquisition on as On Pennsylvania, transactions grow to announced strategy $XX.X business full closed in the of for This quarter. for occur our in impact demonstrates power and of June totaled revenue basis, investors million, leverage quarter

severance and general XXXX. June in June compared primarily of administrative approximately by the administrative time months one-time XX months the of the The the in the of the for end Separation to million of were of the succession due the expenses at part of two approximately Such -- officers. ended merger XX Our plan as increase related three agreements ended contemplated expenses million three executive $X.X costs company Agreement increased to for $X.X XXXX. XXXX to the general was at

XXXX. June did to not shareholders one-time AFFO, did for net million income $X.X to shareholders. income the XX in common net While three Net income attributable common attributable the period for the shareholders common FFO shareholders, attributable attributable severance to to they $X.X costs common same to impact and of XXXX compared to million months impact increased ended

$X.XX of of to quarter XXXX, $X.X cash million declared For prior-year. XX company a million, the of June in annualized the share XX on common common XXXX record second of stockholders $X.X XXXX, to attributable dividend close at quarter per was On of compared $X.XX dividend business on XXXX July The March the XX stock. of dividend to paid the per share FFO approximately XXXX. an second shareholders common was of of to equivalent stock,

full-year -- to exclusive potential would approximate costs million to and to severance one-time to be be of in continues With the $XX of the million costs operator to that, million. will range for questions. company ahead, call restructuring $X Looking turn $XX the G&A the be over I and uplisting to revenues expect million $X.X approximate approximately

Operator

John Thank Please [Operator our ahead. question We'll from take you. go Thalmann. from Ladenburg first Instructions] Massocca

John Massocca

morning. Good

Anthony Coniglio

morning, Good are John. How you?

Jarrett Annenberg

morning, John. Good

John Massocca

here. acquisition environment year, My operating that tenants, tougher sorry cap the But Good, maybe and choppy tighter on 'XX? this in transactions given back out. even capital cut to bit as for maybe little terms seeing what and is connection rates a of half markets maybe to if I is the your how you of look you're environment on flowing front, through

Anthony Coniglio

Cap compared higher. rates going we to are basis up, were ago, we months basis certainly XXX from where points anywhere six points XXX to are

debt think higher. is I were where see you'd the you higher, to trading look inflation trading if for is that at even debt operators, is

And rates increasing. so of on cap risk and impact course, profile that's as the having an as well

John Massocca

outlook Okay. about risk guess the speaking kind necessarily as recovery that of long-term them a kind you outlook I someone have you today? tenant and Calypso, a And then default stands think but mentioned mean, specifically it I not And theoretical what's what profile, similar, of and of for property? the in Calypso, maybe as process you world,

Anthony Coniglio

yes. Yes,

business said, to we lease First, say business. the And With share is parcel market would use. have very we and is a we don't of on its space, we tenant tenant part in never our that company, that adult will sets Calypso. appropriate said license nothing the expected comment attractive, especially the the think operating our said, what that say prepared the The in net sale as facility not Pennsylvania new it's I'd we remarks, for But specifically is that issues. in it's difficulties process. as up to and are that believe is we actually

another And operator. difficulty, to so that all to cannabis of in these look tenant property have going where situations re-tenant always with you we're

that So approach. focused we're on very

John Massocca

changed of provide on the kind just in is can specific Okay. of uplisting? terms kind you're earnings change in that's you seems uplisting, an it then anything last than optimistic sentiment color, why And maybe any of maybe less like call,

Anthony Coniglio

and have have that and traction when we we the It of would And thought make we we it's would where lack to in robust did not been like. prudent quarter we that length today. with to that than we it continue able people slower of comments much are to would when we thus expected this provide do think we're having dialog to, the first would far, process sit to moving much where we today, want was don't farther about we the expectations, want we've have dialog the launched this the that it. given to along We than let been manage

John Massocca

be, maybe kind a been or whoever lawyers, anything tiny like I It's to But indicates taking terms conclusion. couldn't it's come longer? this by guess specific told successful that that process just, you've in of exchanges, may regulators, of

Anthony Coniglio

want don't get us to I particular into dialog exchange. the and between direct any

just likely we're point at not we is investors this Let's to think that where we it to feel occur. the at, to leave signal confident

And moderate while to we continue the we'll wanted so expectations. process,

John Massocca

then a additional here like alternative gives I capacity on future that look attractive And revolver of But runway obviously, revolver, capital Okay. how of versus to And deployment. if is even form growth? for debt the market financing? the what's of amount fund for kind maybe guess the any beyond significant you the

Anthony Coniglio

have incremental we'll to as capacity, in our credit we be capacity facility, we there the so there million add, do see you able that add the future. of capacity we Yes, mentioned of need out with plenty is if to under $XX think banks

think through fund the can the with shareholders interested and value. that we us. more currently side our to we debt. in to we issuing there's capital, indeed of we to Should needs continue bit certainly We a available below intermediate capacity book in we have diluting terms debt. We aren't investing little room some here issuance raising run sit the it we need As today, here additional and stock think on of of think

John Massocca

this of there's a maybe near-term in question. what a today you pricing the bit have place not hypothetical need But obviously, a And to versus on revolver? is guess, I

Anthony Coniglio

closed facility, of have first terms in the The banks years, for three facility. pricing we're as rate when our the in years same then that we floats is fixed and it that's And interest on into at X.XX the come last for May. the the same that two

John Massocca

it, because that Okay, or was relatively from but of imagining months they holdover of agreement kind is I'm of negotiated no, reached a recently couple kind a ago? that

Anthony Coniglio

that was you any the is the there banks a If imply not. the coupon for participated or to was OID compensate ago, fees that while and That the incremental deal deal that we cut is in. that

John Massocca

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

Anthony Coniglio

Thank you.

Operator

additional Instructions] to the back [Operator queue. conference you. any management Thank or for additional closing over No would the questions to like in remarks. I now turn

Anthony Coniglio

you, today. look future great call We appreciate forward earnings we the hear Bye-bye. really And Have to a everybody. taking you time to day. Thank our communications.

Operator

And conference. conclude you. We does all Thank today's that thank for participation. you your

You may disconnect. now

NewLake Capital Partners (NLCP) 10 Aug 222022 Q2 Earnings call transcript