Breaking Down the Numbers: NewLake Capital’s Q3 2023 Financial Report
NewLake Capital Partners (OTCMKTS: NLCP), a leading real estate capital provider to state-licensed cannabis operators, disclosed its financial results for the third quarter concluding on September 30, 2023. It was yet another quarter of net income solidly in the black.
In the third quarter of 2023, NewLake Capital reported relatively stable quarter-over-quarter figures for revenue, net income, Funds from Operations (FFO), and Adjusted Funds from Operations (AFFO). Key financial highlights for the third quarter include revenue amounting to $11.5 million, net income attributable to common stockholders totaling $6.0 million, FFO at $9.6 million, and AFFO reaching $10.1 million.
Additionally, the company’s cash and cash equivalents as of September 30, 2023, stood at $31.1 million, with $20.2 million committed to fund Tenant Improvements (TIs).
Comparing the third quarter of 2023 to the same period in 2022, quarterly and year-over-year financial results were slightly impacted by the non-payment of contractual rent from one tenant. As a result, revenue dropped by 4.9% to $11.5 million from $12.1 million sequentially, while net income decreased from $6.5 million to $6.0 million, FFO declining from $10.3 million to $9.6 million (-6.0%), and AFFO decreasing from $10.6 million to $10.1 million (-5.1%).
However, on a year-to-date basis over nine months ended September 30, 2023, financial highlights showed positive trends. Revenue increased by 4.7% to $34.3 million from $32.8 million, net income attributable to common stockholders rose to $17.6 million from $15.3 million, FFO increased by 15.8% to $28.6 million from $24.7 million, and AFFO experienced a 7.7% increase to $29.9 million from $27.8 million.
Looking ahead, NewLake Capital reaffirms its AFFO guidance for the full year 2023, anticipating a range of $39.8 to $40.8 million. This outlook reflects a 4.1% increase over AFFO for the same period the prior year, assuming the midpoint of that range.
Operational Highlights
Operational highlights and recent developments for the third quarter of 2023 include the acquisition of 608,152 shares of common stock as part of the repurchase program, a declared third-quarter dividend of $0.39 per common share (equivalent to an annualized dividend of $1.56 per common share), funding of approximately $2.6 million for TIs across three properties, a lease amendment and forbearance agreement with Revolutionary Clinics, and the closure of the sale of the cultivation facility in Palmer, Massachusetts, in October 2023.
Stock Repurchase Program Active
NewLake Capital stock repurchase program saw an amendment on September 15, 2023, authorizing the repurchase of up to an additional $10.0 million of the company’s outstanding common stock, extending the program through December 31, 2024. For the nine months ended September 30, 2023, the company acquired 713,831 shares of common stock at an average price of $12.96, totaling approximately $9.3 million, leaving approximately $10.7 million available under the program as of September 30, 2023.
Dividend
Regarding dividends, on September 15, 2023, the company declared a third quarter 2023 cash dividend of $0.39 per share of common stock (equivalent to an annualized dividend of $1.56 per share). The dividend was paid on October 13, 2023, to stockholders of record at the close of business on September 29, 2023, representing an AFFO payout ratio of 81.6%.
