NLCP - Earnings call transcript Q2 2024 | NewLake Capital Partners, Inc.

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Operator

Good morning, and welcome, everyone, to the NewLake Capital Partners Second Quarter 2024 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. Please go ahead.

Valter Pinto

operator. you, Thank welcome, Quarter and the Capital NewLake Good Earnings everyone, Conference Second XXXX Call. Partners morning, to I'm joined Officer; today and by Head Gordon DuGan, Chairman; Officer; Senior President Meyer, of Annenberg, Investments. Chief Anthony Lisa Chief Jarrett Financial and Vice and Executive Coniglio, President

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

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

Gordon DuGan

I to Schedule launching and November. thank vote in Schedule federally are state from today. the this Ohio and adult-use Valter, Florida use you, the at you, for shaping our earlier as be is up cannabis this Thank important week they industry. and sales joining centers, III. catalysts adult such coming XXXX Front to year DEA's for the the proposal call an important level, for to cannabis everyone, reschedule And

While these of today my to on catalysts are NewLake context industry. comments exciting to focus the broader REIT think about, the I'd in like

for years by and the second The from $X.XX, the the past quarter X for ago, into a XXXX. $X.XX has dividend often gets an company our increase its our of this a quarters, has it landscape as X REIT. Since per XX% to NewLake's the recent X most capped how quarter $X.XX over years. lost last this a to broader think grown as share the how share public achieved first dividend what increase has company I XX fits of IPO, much is company raised

AFFO little to profit $XX revenue among REITs, annualized traded about of more roughly NewLake So tier tremendous time. I bit terms dividend progress. publicly than flow approximately and like talk of million annualized would with million. XXX $XX ranks of top in cash period our the increases over in the margin Of a this also of

among margins profit best the of REITs. publicly some traded has NewLake

Our other compare not. very cannabis to highly or gaming profit they're industry or regulated like in margins other any REITs whether favorably

are other our REITs You'll we're superior other and to that margins proud net see And REITs lease very of. that that's in something general.

only a to have our of debt X.Xx of of million EBITDA, we $X.X And have significantly credit AFFO. grow $XX below industry with to only outstanding to revenue ample the with debt average. with sheets balance available capacity, we peer Furthermore, best the and million one group capacity in continue

strategy industry and we're positioned it shovels As the large on and industry. capitalize focus to of demand. In estate forward. we shareholder will summary, very keen be well a operators amount to maintaining model continue cannabis evolve, value going while to real the very liquidity to doing NewLake on dry and a business supplying continues cannabis that to with central the is powder And have picks great a growth

Now it over I Anthony. will turn to

Anthony Coniglio

dividend to raised you, We call quarter our respectively, with second the X.X% of yet of quarter and our increase an We're you, of meaningful dividend Thank XX% had thank up AFFO coverage Gordon, for dividend. ratio X% results joining and per we compared year-over-year payout a our everyone, second and with XX%, during our again the over an of XXXX. quarter, the for with for share, second pleased a today. quarter, AFFO as $X.XX revenue providing

Justice rule away XXXE seen Schedule for is I, and not highlights. its as comment notice period last Gallup milestone a this we the a would allow this national would support credit our final the The to industry which move mirrors meaningful we from to proposed be supportive current provide we've in medical final a would quality level and XX, I of will a had more interestingly which rescheduling a mentioned to May July the for onerous proposed comments, reform entire significant now Now I to the III, only A and shifting we would II tenant past rule of the drug the making important III. expect published. over be a cash XX,XXX over filed Schedule that Schedule of to remove cannabis to improve Schedule had of await from which research. But to Section pay. move of formally taxation, some rule XX% and cannabis would ended from by cannabis years. On Department note position portfolio cannabis Schedule XX, instantly comments effort for than unprecedented move few flow the tailwind quarter, they polls Schedule Research in reducing taxes Pure sector. for for rule rescheduling This as the from I III the

in would this And adults older balance in for for ballot further elimination in tenants November financial stage on recent is a ballot recapitalizing marijuana million XX% pass, XX We suggests to state. is the there Gordon collective be annually. Also, that estimate industry both improve, and to enough go credit that thus of and Additionally, initiative our we'll Florida and to improve, our long the certainly our but a profile those for the sheets, the we results. resulting support that XXXE polling legalize sector watching would adult closely pass the support improvement save expect to setting requires indicated. consider for This valuations an use $XXX their would as tenants the and of portfolio. initiative to way companies

to and in adult-use opportunity XX increase is and another million to profitability. expected over tenant program scale for create people With base Florida our

Dora Curaleaf have this today, also tenants other throughout Ayr, a medical is would tenant state Cresco our terrific most only not Florida but benefit the our notably operations and The As state, Cannabist. Trulieve, Mount that

would which we earlier expect a It's adult-use in also this week response embrace been and sales, great to commenced see Florida. Ohio residents similar

-- me, We use have its on also for X where adult-use excuse Pennsylvania, X programs. of X see adult the surrounding where states horizon

to the his finish Governor included legislature the was get over While it Shapiro line. adult-use budget, not just in able

for is the Pennsylvania session. in optimistic industry adult in a to the become use XXXX legislative However, reality

second During the also or we Market ATM The an At implemented quarter, program.

capital in ample and the we time if facility, keenly ATM sector, will at transactions executing our they program an shareholders. to this play opportunities when on place take we prudent catalysts While to be under it's repurchase credit meaningful approach focused shareholder-oriented for we to arise. in given of Similar share XXXX, with have the to available our advantage executing for in believe have our our accretive

to that our exchange quarterly focus remains like priority. call I'd on a to major a last top Next, uplisting from our reiterate

institutional our will quickly occur all stock requirements We to the increased once the share accepting And operate businesses. at custody lead qualify cannabis-related for explore to a nothing listing time. for know to our this remains for benefits continue of the We on our company this since believe tangible have but fairly begin is uplifting Toronto can to it listing shareholders major that we top Exchange of mind demand. I exchange mind exchanges for the Stock team. unlocking of and top a

are no what However, we I occur lines no providing that it on time that this can caution should certainty could is there occur. and

the we've opportunity company to work been the want past of over presents. Lastly, compelling I doing investor few increase and quarters to our NewLake awareness highlight the

We trading been person have as years. in prior and efforts virtually. conferences one-on-one these both criss-crossed telling helpful We country XXXX seen story in the meetings, have from in and our have believe volume we increase

engage hope or person months and and in and shareholders, some virtually to come. to future of to we our current in We you quarters will either continue the see

call to the over Jarrett. turn now I'll

Jarrett Annenberg

the what provide for Thanks, country. current overview into portfolio, I'll provide across activity an we seeing Anthony. and of operators are our the from quarter insight

covered. our as cultivation June states a X.X dispensaries facilities of portfolio, of XX in representing tenants, $XXX XX and square approximately total feet with Starting across XX XX committed had million we XX, million with

In traded quarter cultivation of X.Xx company Our from the well slight cultivation for property is tenant note these cost XX% the and Both basis. from dispensaries coverage cost today. turn publicly is one previous we a properties available for foot. XXX use each replacement basis a current where in multistate operators, decrease decrease the is rent our was which cultivation the vertically metrics latest per slightly is in integrated reports dispensaries, per X.Xx it's appropriate, retail that foot. a given for XX% Please $XXX XX% square from below from for properties, is in differently state. EBITDA properties square and level are operators quarter. estimates for and on of

full revitalizing rent a new strategy. the market company rent. June Conditions Moving clinics Revolutionary in of and May, April while been implementing XX% Rev garden And pays difficult. the has in only a be to and continue paid to their update. Massachusetts tenant

the is quarter, management company the high-quality lift While as of for to expect XX% constant Rev's to we remainder pay We're to and updates with back team producing in rent provide will the liquidity dialogue appropriate. work and of facility flower, sales.

CX a $X with with facility, $XX to million. dynamics price foot of investment a we environment. This the transaction in closed total will for of Connecticut state for on new with ability markets for deals construction million in with During demonstrates $XX quarter, provide quality transaction existing a allowance tight strong XX,XXX of purchase capital million square partner in up success a even tenants our find regulatory a and set

to million under Phoenix, CX development, companies properties We and Mint Missouri, sector. In one also our their first on went remainder provide which CX, the to of their are the we allowance construction finished deployed expansion. $X.X of of to additional excited they complete agreed partnership in with where $XXX,XXX The construction as in construction regard in we the the an top went facility. to million quarter. our private to grow $X.X

Connecticut As facility. mainly of $XX million million consisting outstanding, $XX.X of had we CX's committed of recently XX, the allowance to June

mature on ground, continue stabilize with Now see to the compressed we markets margins.

open average drop top with new unit revenue greater up, prices see and retail competition. stores store line As we

a instances, retail. demonstrated to for greater who Trulieve, adjusting demand Ayr, products. this volume noted for most from higher Stronger Cannabist, wholesale are and as prices Curaleaf our in on all revenue and higher a offsetting wholesale access consumer in lower QX calls earnings However, and and dynamic easier operators tenants decline

illegal more to as As markets, to its and which regulators see we as recently open channels. continue transition as retail is for as growth new Connecticut, make dispensaries legal progress potential the to show Missouri, down states starting such growth shutting and well newer Maryland York, New

mentioned, launched Tuesday. Ohio Additionally, as adult-use Anthony on

use following in vote million X. tenants all XXXX positive We dispensaries Ohio, PharmaCann, and on in the by our implementation benefit financial Acreage, day licenses but the state. in limited quick X the of regulator are allowing increase Trulieve medical in adult Ayr, in their with operators own due of limited people the performance should and smaller was Cresco, operations state the Curaleaf, to medical to sales XX We to the from nearly encouraged November where have Cannabist, medical conditions. And the program convert

population, same is Ohio, million. the should Pennsylvania, This under a $X.X upside. in has which sold that lot program reference, For versus of sales had XXXX billion approximately have a in $XXX medical which

often also year, products to to red the in note the recent quickly. difficult great state obtain. make hemp a increase product overlooked see by Since XXXX think supported adult-use increasingly Farm data so the become initiative sales last commence made of Bill. it's in intoxicating recent I that Ohio, unregulated, that has sales I possible it's want also sales years, to a of loophole is and the in is

We have product and prevalence nationally the believe for emerging operators. as observed competitive state is increased legal it a

also and consumers entered to in online and sell directly GTI recently way the have cannabis as Curaleaf seen they operators We retail. regular space can

Missouri the effort Washington as we see loophole created product, Given on have the started weeks. of nature this And states some that restrictions was adopt to such few close the in last in to sales unregulated in XXXX. the

continue this will it as to closely trend follow evolves. We

activity. Lastly, on deal

We and M&A restructure start move level increased flow transitions see their up to forward. to picks continue operators as deal state debt,

ample credit have capital to We growth you, while focus high-quality fund our available underwriting we and on Lisa. discipline on capital opportunities. Over facility our to maintain our

Lisa Meyer

growth the Jarrett. million $XX.X this of acquisition also of In of includes cultivation from portfolio. quarter that contributing which million, is portfolio to previous key increase XXXX, fund facility Arizona improvement, XXXX our you, The X.X% of Thank of to quality Missouri revenue tenant total factors Connecticut building clinics, escalators rental $X rent the a a funding revenue. generated in our to year. in second which cultivation the we committed Reflecting revenue. Also, from that the increase increase consistently and in million and of and facilities, our $XX quarter pay additional payments contributed in rent rent improvements our boost not the annual from an base in Revolutionary the the contractual second did

through XX% of expect As quarter they Revolutionary of pay as to clinics rent only their pay them we June Jarrett issues. contractual and work mentioned, third rent, their liquidity XX% the in

with the XXXX, properties months ended XXXX, X XX, million. Net quarter attributable we X for total XX, commitments to and invested shareholders for million unfunded a months During or totaled common share, million the June AFFO ended X across June the $X.XX $XX.X $X.X $X.X the compared X of income XXXX, ended a slight revenue per XXXX. On largely to reimbursables XXXX, months there $XX $X.XX second same an was period in million XX.X% ended the the the sequential June XX, a recorded attributable share, in or in of of basis, to was first increase when quarter decrease in quarter. per

quarter, in to share grew AFFO to investment modestly an driven the annual from income quarter cash However, first by stock and dividend second the equivalent $X.XX increased of -- our increase strong This second dividend rental the sheet. by dividend balance to of per is escalators. We XX%. X.X% our demonstrates our compared our of annualized activity a consistent dividend stock. shareholder of share to $X.XX The maintaining returns by of per supported with commitment fully earnings portfolio a common while payout power delivering ratio common quarter

at sheet with on XXXX. was XX, XXXX, On close of to July and second less only million $XXX quarter gross June strong ratio than assets June record real on debt-to-EBITDA stockholders of a remains X.Xx. business $X estate XX, the with XX, in dividend million outstanding our debt XXXX, The of balance in paid

million cash on position in credit including million liquidity million our facility. available, untapped $XX.X $XX.X with is in Our and solid $XXX capacity

earnings entered to position will program, The to the capital. And turn in to was we with million into to for our to ongoing second common equity of the business to call the an program for up an positioned Q&A. we agreement strengthen Finally, us issue allowing investors prudently our quarter, as operator for at-the-market I implemented $XX company distribution our execute The growth. that, for back grow deploy is strategy strategically stock.

Operator

Instructions] [Operator

with first comes the Zuanic Zuanic Associates. question from Our Pablo line & of

Pablo Zuanic

a CapEx initial color enough Anthony, spirit down questions you estimate want Ohio. know some pipeline, to the if your now, start right I that. provide play if I first in the you few that around was maybe let's capacity. have Investor argument you review to but around making that there don't with Day, want At needed, the

Anthony Coniglio

to I'll provide some commentary, detail. hand over I'll some for it Jarrett and then more high-level

ahead into a what licenses advance Ohio around launch. and build operators judicious of to we markets. launch when out build leading out of that in is versus adult-use what we approach In a you that had in be So previous saw with were more other years, seen in would the more uncertainty granted. We seen lot about those talking the the had launch taking

additional bit commentary some And so was tepid why demand. Jarrett, don't giving more provide color? a little I you about

Jarrett Annenberg

Sure.

are maintains as cautious well growing they which still I had been low supply think Canopy to in that a past that, dynamics as I operators operators states than Pablo, previously prevent Ohio, more here other due level. that certain think being regulatory in

are Ohio, it we be is will in the same when some but we there while So selectivity. i.e., transition, as seeing Illinois, states some other activity don't think

Pablo Zuanic

talk pipeline-related And Can books know would to that but it's right Okay. you refusal, assume having first about they or to them relationship our that existing in with necessarily of staying about first with clients? that then Understood. they on work of other you that may I clients just or that questions. I arrange doesn't the and already Florida have would expand industry way. because come a you need sort places

Anthony Coniglio

basis. with we That's industry developing sector document been in what's you, easier that's of have exactly to -- see organization in for properties much It has you work a existing having it's to the do the fit exactly with tenant lease as a to a familiarity accretive regular see And movers place, certainly coming X relationships transom shareholders, right, our turn with when for but right. those base. the on our and we've important those negotiated from fair do economics about transactions the can credit and our mean we that on you we years. And been one property over early that a Pablo. And has conversations that the doesn't for an those risk profile And all a amount particular or of across you. be us certainly

Pablo Zuanic

peer and on and like be people so REIT for trying different maybe just Okay. a the customer perspective, understand that just not same one I'm and topic, services on states leaseback the are in size the is staying from AFCG between versus trying offer. understand industry But with companies on from who your they operator sell the may that familiar And this refi choose what industry, what the when but like one I to offer mortgage are is perspective, depending other? real cycle and borrower a of the the I'm do they to understand the other investment? the yourself competition

Anthony Coniglio

product me in exist a let good estate. say ultimately times. first both and in to industry recognizes invest macro appropriate product sale-leaseback Yes, of capital hard the the it's use capital a that like that and not a real they stack, that We it mortgage company's their more commercial were certain a can believe at asset

want the time, And real do deploy more capital have recycle organizations capital in into still that we a to on believe when company, sheet, investors capital unburden its because their that balance to use capital the that main I that revenue balance provide business. productive they company will sheet, they believe over those estate that

to management want earnings capital. company that And in with EBITDA be a growing and so growing investors revenues team cannabis that and

have into competitively I'll are sale-leaseback capital. is engaged relative so tell last it that want that they is today, I transaction provides to believe to times, with do enter covenants to that. But a is thinking want about find the teams maximum because to And you under what of that is worry that we strongly sale-leaseback debt, because shorter-term get also can management over transaction. this X process. that need debt find that have the you comes not So part to the companies with the to or this sale-leaseback they many it not they we've and mortgage that share we XX do the structure the where don't for burden dialogue a them year stringent what of sale-leaseback before And a debt choose put only no doing opportunity to proceeds of away only priced greater in about to for due. do get take have they years XX tell a it years, there's will own couple time, refinancing have will proceeds your to capital want about, don't It's industry start over they to usually having

a in And And permanent back evaluating decisions. so different people mortgage more around that for people sale now are past option seen we've make decisions the make leaseback fact, different in coming for and them. as

Pablo Zuanic

one last I an will outside, topic. last And back, where you've every maybe one are it's been know But I look your I perhaps more last at aggressive? play year, on company over other look in morning growing From that understand growth but argument when the over make year too policies, the I And have you cautious could book? you where easy cautious when the different same people someone your to mean have quarterback. too Monday been

Anthony Coniglio

an the difficult our risk-adjusted return for with flow we make months, the margins. is period XX-year would remember, be where that XX- very comfortable cannabis of of shareholders operating undergone in the Pablo, these here that job over to cash know sit right our and and again, industry decisions. to to We are last And capital terms today. good And stewards leases. has say we're XX I XX extremely

the we've And with don't. do the sometimes prolonged you can time. the one we we're best know, very the make decisions made. with for deal we you all of So as that a us decisions stay And very period is comfortable

Pablo Zuanic

but industry one. have high Right. forums. in And you you're about various also profile participate not it's obviously, your mean, in company, the one, last I last a and just

because the in terms risk-scale argument read all part be litigation of minimize thinking it the latest down would conferences, I mind, eyes hear making risk you right play going I don't recent is your hearings can way So that out. right? the on some if will in is that how share you think views all you of we or road, you're If have Ts your and process the the should the you dotting of sure and and crossing

But the if of if not to and know course, the it then we Day, conference get right? latest I by don't we if if of know that don't again, call, But you share will thoughts process happens, it's Anthony. done don't Inauguration your want get delayed, on And answer that. part

Anthony Coniglio

No, share with make I start would is no. haven't I've I'm saying, we all have read the hearing. should that think said one that happy I to I know. What is I speculation. said believe thoughts. ALG request, first don't correction. through I should This they when I

on possible We We business. and to much topic sector as experts gather as experts as this. because our much are to knowledge area, on talk not it's in knowledge in try and to this important this this we

to that get toss-up have approach we And believe by of DOJ speculation. But a or we benefit could know. the whether how unfolded, at our sometime rescheduling think the action, rescheduling January is has what the a the on in ultimately, I will argument you based frame. I I record a the -- a sometime big the category the but and Register all question so posted for happen. hearing, think some with most granted. don't DEA it hope some the that look may with look have final here of reasonable just work process best comments. processes best, defensible over to hearing. the what I you will rule at tossup that for happening read guess it Federal my possible, best it's of is that it having but you talking it's lot all want when the I when. and hearings past plan time to can hearing. and talked just to earlier, get folks of is through not requests know a is I Also for talk happens there's from a XX,XXX look we When if you do have here hope this Again December, experts be to, And had what the the about in that you

period at you guess role this get posted. that best sometime in January our is final point December, So the

Operator

Instructions] [Operator

no Anthony further questions, Coniglio, there Anthony? and hand to Chief now the I Executive closing his over would As are conference President for comments. Officer,

Anthony Coniglio

you, today. for We an hope have our joining sometime hope road everybody, the summer. of the you remainder we see enjoyable on Thank and soon you call to

Operator

of Thank has your NewLake you. Partners The Thank conference Capital concluded. now you for participation.

You disconnect may your lines. now

NewLake Capital Partners (NLCP) 8 Aug 242024 Q2 Earnings call transcript