Summary of NewLake Capital Partners Update Call Company Overview - **Company Name**: NewLake Capital Partners (OTCPK:NLCP) - **Business Model**: Sale-leaseback REIT focused on cannabis real estate - **Market Position**: Second largest owner of cannabis real estate in the U.S. with 34 properties across 12 states - **Lease Structure**: Average remaining lease term of 12 years and a yield of approximately 13% on leased portfolio [5][6] Financial Performance - **Dividend Growth**: 80% growth in dividends since IPO in mid-2021, although growth has leveled off due to market conditions [7][8] - **Tenant Composition**: Top three tenants (Curaleaf, Cresco, Trulieve) account for about 50% of annualized base rent [7] - **Comparison with Non-Cannabis REITs**: Non-cannabis REITs have lower yields (6%-7%) compared to NewLake's 13% [10][12] Market Dynamics - **Cannabis Sector Sentiment**: The sentiment in the cannabis sector has softened, impacting deal-making and growth strategies [8] - **Comparison with Other Financing Options**: Sale-leaseback REITs provide longer duration and potentially higher proceeds compared to BDCs and mortgage REITs, which typically have shorter transaction durations [14][17] Regulatory Environment - **International Opportunities**: Interest in exploring deals outside the U.S., including Canada and Europe, but regulatory uncertainties remain a concern [22][58] - **Impact of Rescheduling**: Anticipated positive effects from potential rescheduling of cannabis, including increased demand for services and improved credit quality for tenants [60][61] Tenant Issues and Portfolio Management - **Recent Tenant Recoveries**: Properties from Ayr and Rev Clinics have been recovered and are being re-tenanted for cannabis purposes [89][92] - **Proactive Tenant Relationships**: NewLake aims to maintain strong relationships with tenants to maximize returns and address issues collaboratively [95] Investor Considerations - **Dividend Yield**: Attractive low to mid-teens dividend yield, but concerns about discount to NAV and market perception of leverage and dividend sustainability [38][44] - **Market Positioning**: NewLake's focus on a diversified portfolio of cannabis real estate may provide lower volatility compared to direct cannabis operators [36][37] Future Outlook - **Potential for Increased Deal Flow**: Positive regulatory changes could lead to more opportunities in 2026 and 2027, although current activity remains cautious [60][61] - **Challenges Ahead**: The company faces challenges in gaining a listing on major exchanges due to federal cannabis laws, despite potential regulatory changes [79][81]

Core Insights - The cannabis sector is evolving as capital markets reopen, leading investors to focus on cannabis real estate investment trusts (REITs) for more predictable revenue during uncertain times [1][17] - January 2026 is a critical month for investors to reassess income opportunities and monitor tenant performance updates [1][8] Group 1: Innovative Industrial Properties (IIPR) - IIPR is the largest cannabis-focused REIT in the U.S., specializing in acquiring industrial cannabis properties and leasing them back to licensed operators [2][4] - The portfolio includes over 100 properties across nearly 20 states, primarily cultivation and processing facilities, with long lease terms supporting recurring revenue visibility [4][6] - IIPR has maintained positive operating cash flow despite tenant liquidity stress, with funds from operations sufficient to support dividends [6][7] Group 2: Chicago Atlantic Real Estate Finance (REFI) - REFI operates as a mortgage-focused cannabis REIT, providing senior secured loans to cannabis operators, generating income primarily through interest payments [8][10] - The company targets operators in limited-license states, which often support stronger pricing and margins, and has shown consistent earnings strength with stable net interest income [10][11] - REFI maintains available lending capacity, allowing continued loan origination, but borrower performance is critical for earnings stability [12] Group 3: NewLake Capital Partners (NLCP) - NLCP is a smaller cannabis property REIT that acquires cannabis-related real estate through sale-leasebacks, with a portfolio that includes both dispensaries and cultivation facilities [13][15] - The company owns over 30 properties across roughly a dozen states, focusing on secondary and emerging cannabis markets, which can create opportunities but also add tenant risk [15][16] - Financially, NLCP has a conservative balance sheet with stable revenue year over year, and funds from operations continue to cover dividends [16][17] Group 4: Overall Market Insights - Cannabis REITs present a different risk profile compared to traditional cannabis stocks, focusing on income generation rather than retail sales growth [17] - Tenant health remains the primary risk across the sector, with IIPR, REFI, and NLCP serving different investor objectives, highlighting the importance of diversification [17]

Summary of NewLake Capital Partners Conference Call Company Overview - **Company**: NewLake Capital Partners (OTCPK:NLCP) - **Type**: Net lease REIT focused exclusively on the cannabis industry - **Founded**: Nearly seven years ago - **Investment**: Deployed almost $500 million into the cannabis sector - **Portfolio**: Owns 34 properties across 12 states with 13 different tenants - **Weighted Average Yield**: 13% [4][5] Financial Position - **Leverage**: Nearly unlevered with only $7 million in credit facility debt - **Cash Position**: Net cash position, unusual for a REIT - **Average Lease Term**: Over 12 years remaining [5] - **Dividend Growth**: Nearly 80% growth since IPO in 2021, consistent dividend of $0.43 per share [5][20] Industry Insights - **Cannabis Market Size**: Estimated to be around $34-$35 billion in 2025 for the state-legal industry; overall cannabis industry (including illicit market) believed to exceed $100 billion [7][9] - **Growth Drivers**: Transition of medical states to adult-use markets, evolving medical programs, and changing consumer preferences, particularly among younger cohorts [8][10] - **Legislative Changes**: Potential rescheduling of cannabis from Schedule I to Schedule III, which would eliminate onerous tax consequences (IRS 280E) and enhance cash flow for operators [11][12] Portfolio Strategy - **Focus on Limited License States**: Targeting states with limited licenses to enhance margins and credit quality [16][17] - **Tenant Quality**: Emphasis on understanding tenant financials and management quality, with a focus on their ability to raise capital [15] - **Top Tenants**: Includes leading companies like Curaleaf, Cresco Labs, and Trulieve, which represent over 50% of the portfolio [19][20] Market Dynamics - **State-Level Growth**: States like Texas and Kentucky are expected to see significant growth in medical marijuana programs, requiring substantial real estate investment [35][36] - **Federal Regulation Impact**: Anticipated changes in federal regulations could lead to increased competition from traditional banks, but NewLake believes its niche focus will protect its market position [31][33] Risk Management - **Tenant Health**: Monitoring tenant performance closely; recent issues with Ayr Wellness led to property turnover, but proactive measures are in place for re-tenanting [25][26] - **Payout Ratio**: Maintains an 82% payout ratio, allowing for absorption of potential vacancies without impacting dividends [22][23] Competitive Landscape - **Comparison with Peers**: NewLake differentiates itself from larger peers like Innovative Industrial Properties by focusing on limited license states and property-level cash flows, which has resulted in better tenant retention [40][41] Future Outlook - **Capital Allocation**: Strong balance sheet allows for continued investment without the need for equity dilution; share buybacks are considered when advantageous [38][39] - **Market Opportunities**: Significant room for growth in the cannabis sector, particularly as more states adopt adult-use legislation and the federal government regulates the market [37] This summary encapsulates the key points discussed during the NewLake Capital Partners conference call, highlighting the company's strategic focus, financial health, industry dynamics, and future growth potential.

Core Viewpoint - NewLake Capital Partners (NLCP) is rated as a Strong Buy by both the Seeking Alpha Quant rating system and analysts, indicating strong market confidence in the REIT's performance [2][3]. Company Overview - NewLake Capital Partners has a market capitalization of $314.91 million and operates within the real estate sector, specifically in the industrial REITs industry [4]. Valuation Metrics - The company has an A+ valuation grade, with a price to AFFO ratio of 7.24, significantly lower than the sector average of 15.46. The total debt-to-equity ratio stands at 1.93%, compared to the sector average of 95.61% [4]. Growth Metrics - The Growth grade is B, with an AFFO growth year-over-year of 10.05%, outperforming the sector's 3.28%. The five-year historical CAGR for revenue growth is 112.17%, compared to the sector's 7.83% [5]. Profitability Metrics - The company holds an A+ profitability grade, with an AFFO to total revenue ratio of 86.30%, compared to the sector's 40.87%. The net income to total debt ratio is 343.47%, significantly higher than the sector's 6.48% [5]. Momentum Metrics - The Momentum grade is B+, with a one-year price performance of -7.24%, while the sector is down only -3%. However, over the last three months, NLCP's price performance has increased by 17.75%, compared to the sector's 2.17% [6]. Revisions Metrics - The company has an A+ revisions grade, with two up revisions and zero down revisions for EPS and revenue over the last three months [6]. Dividend Information - NLCP offers a dividend yield of 11.42% with a payout ratio of 84.31%. The safety grade for dividends is A+, while the dividend growth grade is C-. The company has maintained four consecutive years of dividend payments, outperforming the sector's average yield of 4.82% [7].

Industry Overview - The U.S. cannabis industry is evolving with expanding legalization momentum, leading to growth in both medical and adult-use markets. Analysts predict long-term demand will continue to rise as more states approve regulated programs [1][3] - Ancillary stocks, which do not directly handle cannabis, are gaining investor interest due to regulatory hurdles and difficult banking conditions faced by plant-touching companies. These ancillary companies benefit from industry growth while reducing risk [1][2] Ancillary Stocks Characteristics - Ancillary stocks provide services or capital to licensed operators, including owning real estate for cultivation and retail operations, and offering financing that banks often avoid. This model allows investors to gain exposure to the cannabis sector without directly handling the plant [2] - Many ancillary companies operate as Real Estate Investment Trusts (REITs) or structured lenders, providing reliable income through dividends, making them attractive for long-term portfolios [2] Financial Stability and Future Outlook - As the cannabis market matures, financial strength and stability are increasingly important. Investors are looking for companies with steady revenue and disciplined management, especially those positioned to benefit from potential federal reforms [3] - The year 2026 is anticipated to be significant for ancillary growth, particularly if there are changes in federal regulations regarding cannabis [3] Leading Ancillary Stocks to Watch - **Innovative Industrial Properties (IIPR)**: Focuses on purchasing cultivation and processing facilities and leasing them back to licensed operators. It benefits from industry growth without handling cannabis directly and has shown steady performance with strong rental income [5][8] - **NewLake Capital Partners (NLCP)**: Operates as a REIT with a concentrated portfolio of dispensaries and cultivation facilities. It emphasizes careful tenant selection and has maintained conservative debt levels, appealing to cautious investors [9][11] - **Chicago Atlantic Real Estate Finance (REFI)**: Provides secured loans to licensed operators, focusing on senior secured credit. This model allows it to command attractive interest rates in a market underserved by traditional banks [12][14]

Company Overview - NewLake Capital Partners (NLCP) is a U.S. REIT operating in the highly regulated cannabis industry, focusing on both indoor cultivation assets and dispensaries [1] Investment Focus - The company emphasizes a "Growth at a Reasonable Price" strategy, analyzing fundamentals and identifying catalysts that could drive significant alpha over a medium-term horizon [1] Market Position - NLCP operates in a sector characterized by strict regulations, which may impact its operational flexibility and growth potential [1]

Company Overview - NewLake Capital Partners (NLCP) is a U.S. REIT operating in the highly regulated cannabis industry, focusing on indoor cultivation assets and dispensaries [1] Investment Focus - The company emphasizes a "Growth at a Reasonable Price" strategy, analyzing fundamentals and identifying catalysts for potential medium-term alpha [1] Market Position - NLCP is positioned within a niche market that combines real estate investment with the growing cannabis sector, which is subject to regulatory scrutiny [1]

Core Insights - Cannabis real estate investment trusts (REITs) provide a unique investment opportunity by collecting rent or interest rather than selling cannabis, thus reducing direct operational risk [1] - As December 2025 approaches, Innovative Industrial Properties, NewLake Capital Partners, and Chicago Atlantic Real Estate Finance are highlighted as key investment options, each with distinct risk and income profiles [1] Innovative Industrial Properties (IIPR) - IIPR is one of the earliest cannabis-focused REITs, acquiring specialized industrial facilities leased to licensed cannabis operators, thus avoiding direct exposure to cannabis sales [2] - As of late 2025, IIPR owned over 110 properties covering approximately nine million rentable square feet, with no company-run dispensary locations [2] - Financially, IIPR generated revenue above $60 million in its most recent quarter, with net income remaining positive despite tenant-related challenges, and adjusted funds from operations (FFO) comfortably covering dividends [5] NewLake Capital Partners (NLCP) - NLCP specializes in sale-leaseback transactions with operators, often under triple-net lease terms, which enhances cash flow visibility [6] - As of late 2025, NLCP's portfolio included 34 properties, comprising 19 dispensaries and 15 cultivation facilities, providing clearer retail exposure [6] - NLCP maintained steady financial performance in 2025, with positive AFFO covering dividends, and emphasized liquidity and disciplined underwriting [8] Chicago Atlantic Real Estate Finance (REFI) - REFI operates by providing loans to cannabis operators secured by real estate collateral, earning interest income instead of rent [9] - As of late 2025, REFI worked with over 25 portfolio companies, providing diversification across operators and regions [9] - Financially, REFI delivered strong yield metrics, with net interest income as the primary revenue driver, and distributable earnings comfortably covering dividends [11] Final Thoughts - The cannabis REIT sector continues to evolve, with each structure offering distinct advantages and risks: IIPR for scale and diversification, NLCP for direct dispensary exposure, and REFI for high yields through secured lending [12]

Core Insights - The article discusses the author's transition from a potential career in politics to a focus on value investing, emphasizing a long-term investment strategy and risk management [1] Group 1: Career Transition - The author initially pursued a career in politics but shifted to finance after facing challenges in 2019, seeking a more stable financial path [1] - The decision to study value investing was driven by the desire to grow wealth while managing risks effectively [1] Group 2: Professional Experience - From 2020 to 2022, the author worked in a sales role at a law firm, where they became the top-grossing salesman and managed a team, contributing to sales strategy [1] - The experience gained during this period was instrumental in assessing company prospects based on sales strategies [1] Group 3: Investment Advisory Role - The author worked as an investment advisory representative with Fidelity from 2022 to 2023, focusing on 401K planning [1] - Despite excelling in this role, the author felt constrained by Fidelity's reliance on modern portfolio theory, which conflicted with their value investing approach [1] Group 4: Current Endeavors - In November 2023, the author began writing for Seeking Alpha, sharing investment opportunities and insights with readers [1] - The articles serve as a platform for the author to document their investment journey and strategies [1]

Core Insights - The ancillary cannabis sector is gaining attention as it provides essential services without directly handling the plant, facing fewer regulatory challenges compared to plant-touching companies [1][2] - Despite a slowdown in the U.S. cannabis market growth in 2025, analysts maintain a long-term positive outlook, prompting investors to seek stable investment opportunities [1][2] Industry Overview - The U.S. cannabis market is expanding, with new recreational states emerging, although the growth rate has decelerated in 2025 [1] - Ancillary companies are less affected by retail price fluctuations, providing a more predictable revenue stream, making them attractive to investors [2] Company Profiles Innovative Industrial Properties (IIPR) - IIPR is a leading cannabis real estate investment trust, focusing on cultivation and processing facilities with long-term triple-net lease agreements [5][6] - The company operates primarily in limited-license states, ensuring stable demand and indirect exposure to retail performance [6][8] - Despite industry challenges, IIPR remains profitable, maintaining a conservative balance sheet and steady rental income [8][9] NewLake Capital Partners (NLCP) - NLCP adopts a focused approach, owning both industrial and dispensary properties under triple-net leases, ensuring steady rental income [10][12] - The company emphasizes conservative borrowing and predictable income, making it a lower-risk option in the ancillary sector [12][13] - NLCP has maintained stable financial performance and continues to pay solid dividends, with potential for growth as new recreational states emerge [14][15] Chicago Atlantic Real Estate Finance (REFI) - REFI operates as a commercial mortgage REIT, providing secured loans to cannabis operators rather than owning properties, which reduces operational risk [16][19] - The company focuses on credit quality and capital preservation, generating attractive interest income from its loan portfolio [18][19] - REFI's strategy allows it to participate in cannabis growth while avoiding many risks associated with cultivation or retail operations [19]