NewLake Capital Partners (OTCQX: NLCP)

**NewLake Capital Partners (OTCQX: NLCP) is an internally managed cannabis-focused REIT specializing in single-tenant, triple-net sale-leaseback and build-to-suit transactions for state-licensed cannabis operators (cultivation facilities and dispensaries).** It is one of the larger pure-play public cannabis REITs and trades at a significant discount to book value with a high covered dividend.

### Q2 2026 (Quarter Ended June 30, 2026) Financial Snapshot

Key results (reported early August 2026):

•**Revenue**: $12.1 million (down ~6.5% YoY from $12.9 million). Rental income was $11.8 million. Decline driven primarily by lost rent from three vacant cultivation properties (Massachusetts, Pennsylvania, Nevada) that became available in 2025, partially offset by contractual rent escalations (~2.6% average) and contributions from prior Ohio acquisitions.

•**Net income attributable to common stockholders**: $5.9 million, or $0.29 per diluted share (vs. $7.3 million / $0.35 prior year).

•**FFO**: $9.9 million, or $0.47 per diluted share.

•**AFFO**: $10.3 million, or $0.49 per diluted share (down ~10% YoY mainly due to vacancies and carrying costs). AFFO payout ratio ~88% (within the company’s 80–90% target).

•**Six months ended June 30, 2026**: Revenue $24.4 million; net income ~$11.7 million ($0.56 diluted); FFO $19.6 million ($0.93); AFFO $20.4 million ($0.97).

**Balance sheet (June 30, 2026)** — standout strength:

•Cash & equivalents: ~$25.8–26 million.

•Gross real estate assets: ~$433 million; net real estate ~$364 million; total assets ~$415 million.

•Debt: Only $7.6 million drawn on a $90 million revolving credit facility (debt-to-gross assets ~1.6%; debt-to-EBITDA ~0.2x). Effectively net cash positive.

•Stockholders’ equity: ~$382–389 million.

•Book value per share: ~$18.57.

•Shares outstanding: ~20.58 million (common).

Post-quarter, the company amended the credit facility (August 5, 2026): extended maturity to May 2029, reduced rate to Prime (or minimum 6.25%), and adjusted unused fees. It also acquired a small Kentucky dispensary (~$0.6 million purchase + ~$1.6 million improvement commitment).

**Dividend**: Quarterly $0.43 per share ($1.72 annualized). Ex-date around June 30, 2026; paid mid-July. Yield ~10.8–11% at recent prices around $15.75–15.90. Dividend has grown ~79% since the 2021 IPO. Coverage remains solid via AFFO.

**Portfolio**: ~34–35 properties (including post-quarter addition) across 12–13 states, ~1.7 million sq ft. Mix of ~15 cultivation / 19–20 dispensaries. 31–32 leased to ~12 tenants; 3 cultivation facilities available for lease (being marketed). Weighted average remaining lease term ~11.6–12 years. Heavy focus on limited-license states. Largest tenants include Curaleaf (~25%), Cresco Labs (~15%), Trulieve (~12%), with others such as Cannabist, Calypso, etc. Many tenants are MSOs or vertically integrated; significant public-company exposure. Strong security deposits noted historically. Property-level rent coverage has been highlighted as relatively robust in prior commentary.

G&A remains low (~1.5% of total assets; ~13% of revenue in the quarter). Internally managed structure supports cost control.

### Valuation & Trading Context (as of mid-August 2026)

•Stock price: ~$15.75–15.90 (52-week range roughly $12–16.75).

•Market cap: ~$325–330 million.

•Trades at a meaningful discount to book (~0.85x or lower).

•AFFO multiple is modest given the yield and balance sheet.

•Analyst targets around $17.50 in some notes; consensus leaning positive/Strong Buy in limited coverage.

### Jussi Askola (@askjussi / High Yield Landlord / Leonberg Capital) Analysis

Jussi Askola (REIT-focused analyst/author of *The REIT Advantage*) has been consistently constructive on NLCP and prefers it over peer Innovative Industrial Properties ($IIPR) on a risk-adjusted basis. Key recent points (August 2026 and earlier):

•NLCP yields ~11% vs. IIPR’s ~13%, but offers a safer payout, essentially no leverage (net cash), better assets, and a more focused/disciplined strategy. He owns it in the High Yield Landlord portfolio.

•Balance sheet is a major differentiator: NLCP is net cash positive while IIPR carries debt and preferred equity. This provides flexibility, tenant bargaining power, and optionality for growth when conditions improve.

•NLCP went public later (after the cannabis bubble peaked), which forced discipline in underwriting—focus on limited-license states, larger/stronger tenants, better leases, and large security deposits. Result: fewer tenant issues.

•Sector is inherently risky (tenant credit, regulatory, vacancy), but NLCP’s structure mitigates this better than most peers. Dividend is covered. Rescheduling (or further normalization) could lower tenant taxes, improve access to capital, reduce risk, boost sentiment, and unlock growth—creating an attractive “11% yield + growth” profile that is rare.

•Earlier comments emphasized property-level rent coverage strength and upside from Schedule III benefits for tenants.

He views capital as limited and explicitly prefers allocating to NLCP over IIPR for superior risk/reward.

### Strengths, Risks, and Catalysts

**Strengths**:

•Extremely conservative balance sheet (rare in the sector) provides downside protection and dry powder.

•Covered high yield with internal management and low G&A.

•Long-term triple-net leases with escalators and security deposits.

•Early-mover scale in a specialized niche; exposure to limited-license markets.

•Regulatory tailwinds: Schedule III rescheduling (noted in company materials around April 2026), potential banking reform (SAFE Banking), uplisting pathways, hemp product restrictions that could redirect demand to licensed operators, and state-level expansion (medical/adult-use).

**Risks & Edge Cases**:

•Tenant concentration and cannabis industry volatility (credit risk, margin pressure, illicit competition, state-level changes). Cannabist’s Canadian restructuring and U.S. Chapter 15 recognition was flagged, though rent remained current with deposits.

•Three vacant cultivation assets create drag (lost rent + carrying costs); leasing them is a key near-term lever.

•Revenue/AFFO pressure persists until vacancies resolve or new deployments ramp.

•OTCQX trading (liquidity, institutional access limited vs. major exchanges); potential uplisting is a catalyst but not guaranteed.

•Broader cannabis stigma, capital markets access, and execution on growth (new acquisitions, TI funding, available properties).

•Interest rate sensitivity on the revolver (though lightly used and recently improved terms).

**Growth engines** (per company materials): Annual escalators (no new capital), funding remaining TI commitments, leasing the three available properties, and new sale-leasebacks/build-to-suits with available liquidity/credit capacity.

### Bottom Line / Due Diligence Take

As of the June 30, 2026 quarter-end data and contemporaneous analysis, NLCP presents as a high-yield cannabis REIT with one of the strongest balance sheets in the space, solid (if currently pressured) coverage, and asymmetric upside from regulatory normalization and vacancy resolution. Askola’s view aligns with the numbers: safer risk/reward than higher-yielding but more leveraged peers like IIPR, with the net-cash position as a key differentiator. The main near-term watch items are progress on the three vacant properties, tenant health (especially larger MSOs), and any acceleration in rescheduling/banking reform benefits.

This is not investment advice—cannabis real estate remains high-risk due to regulatory, tenant, and sector-specific factors. Review the full 10-Q, investor presentation (posted with the Q2 results), and latest SEC filings for complete details, footnotes on non-GAAP measures, and risk factors. Cross-check current pricing, any subsequent updates, and your own risk tolerance/position sizing.