NewLake Capital Partners, Inc.

What they do

NewLake is a real estate investment trust focused on providing real estate capital to state-licensed cannabis operators through long-term, triple-net leases, sale-leaseback transactions, third-party purchases, and funding for build-to-suit projects. As of December 31, 2025, it owned 34 properties across 12 states, comprising 19 dispensaries and 15 cultivation facilities, leased to 11 tenants. The company is internally managed and elected to be taxed as a REIT.

Revenue drivers

• Cannabis property leases — Generates nearly all revenue from long-term triple-net leases to cannabis operators; tenants pay property expenses and rent, with annual contractual escalations.
• Dispensaries and cultivation facilities — Revenue is split between 19 dispensaries and 15 cultivation facilities; recent growth has come from acquisitions in Ohio and Kentucky.
• Rental escalations and build-to-suit funding — Rent escalations and funded capital improvements for tenants (e.g., improvement allowances for an Ohio dispensary) contribute incremental rental income.

Recent performance

For Q2 2026, total revenue was $12.1 million, down 6.5% year-over-year from $12.9 million, driven by the loss of rental income from three properties that became available for lease during 2025. Net income attributable to common stockholders was $5.9 million ($0.29 per diluted share), down from $7.3 million ($0.35) in Q2 2025. FFO and AFFO were $9.9 million and $10.3 million, respectively, versus $11.4 million and $11.5 million a year earlier. For the six months ended June 30, 2026, revenue was $24.4 million, down 6.7% from $26.1 million. Quarterly revenue has declined sequentially from $12.6M (Sep-2025) to $12.1M (Jun-2026).

Strategy

NewLake targets limited-license jurisdictions where cannabis properties are in high demand and tied to operating licenses, aiming to reduce tenant credit risk. The company focuses on long-term, single-tenant, triple-net sale-leaseback and build-to-suit transactions. Management emphasizes disciplined capital allocation and risk management, including maintaining a conservative leverage profile. Recent actions include extending its revolving credit facility to May 2029 with a reduced interest rate and deploying capital into a dispensary acquisition in Kentucky. The company anticipates acquisition opportunities to increase as more states legalize medical and adult-use cannabis.

Risks

• Federal illegality of cannabis — Cannabis remains illegal under federal law, which restricts tenant access to banking and traditional financing and creates regulatory uncertainty.
• Tenant concentration and lease terminations — The portfolio is concentrated in 11 tenants; defaults, early terminations, or non-renewals could significantly impact revenue.
• Limited access to capital markets — Reduced liquidity of common stock and limited availability of clearing firms could hinder secondary offerings and financing.
• Geographic and regulatory concentration — Properties are concentrated in 12 states, and cannabis laws vary by state, exposing the company to changes in state regulations and local market dynamics.

Outlook

Management expects continued consistent results, citing full collection of contractual rent in Q2 2026. The company plans to continue disciplined capital allocation, including accretive acquisitions like the Kentucky dispensary purchased in August 2026. The revolving credit facility amendment lowers borrowing costs and extends maturity to May 2029, providing financial flexibility. Forward-looking statements indicate anticipated growth in funds from operations, but actual results may differ due to regulatory and market risks.