NewLake Capital Partners (NLCP 0.07%), a real estate investment trust focused on cannabis-related properties, reported second-quarter 2025 results on August 6, 2025. The company announced GAAP revenue of $12.9 million, outpacing analyst expectations of $12.49 million (GAAP) and Revenue increased approximately 3.8% year-over-year for the second quarter. Adjusted funds from operations (AFFO) per share reached $0.55. Net income attributable to common stockholders (GAAP) rose to $7.3 million. Overall, the quarter reflected steady operational performance with limited external growth but continued dividend stability. The GAAP results exceeded expectations, highlighting stability but also caution in a stressed industry environment.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS – AFFO per share – Diluted (Non-GAAP) | $0.55 | $0.30 | $0.53 | 3.8% |
| Revenue | $12.9 million | $12.49 million | $12.5 million | 3.8% |
| Funds From Operations per share – Diluted (Non-GAAP) | $0.54 | $0.50 | 8.0% | |
| Net Income Attributable to Common Stockholders | $7.3 million | $6.8 million | 7.4% | |
| Dividend per Share | $0.43 | $0.43 | 0.0% |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Current Focus
NewLake Capital Partners specializes in buying and leasing commercial real estate to companies operating in the regulated U.S. cannabis sector. Its main assets are cultivation facilities and retail dispensaries, with 34 properties across several states. The company's business model centers around long-term sale-leaseback agreements, which offer financing to cannabis businesses in exchange for predictable rental income.
The company’s key areas for success include managing tenant credit risk, growing its property portfolio, and maintaining strong REIT (real estate investment trust) compliance. In recent quarters, NewLake concentrated on portfolio stability, limiting new acquisitions amid industry headwinds and pauses in capital expenditure by cannabis companies. Regulatory uncertainty, tenant health, and access to growth opportunities remain central concerns for management.
Quarterly Developments and Financial Performance
The quarter was marked by modest growth and operational discipline. Revenue (GAAP) climbed 3.8% year-over-year, benefitting from stable rent collections and incremental contributions from prior small acquisitions. The rise in AFFO (non-GAAP) per share, a metric that strips out some accounting items to show recurring earnings from property ownership, signals healthy cash flow and supports continued dividend payments.
NewLake added three dispensary properties during the year, with outlays totaling $1.7 million for the six months ended June 30, 2025. The company used a like-kind property exchange to acquire a Pennsylvania dispensary.
On the balance sheet, liquidity remains a highlight. As of June 30, 2025, NewLake held $21.9 million in cash and cash equivalents and had total liquidity, including available credit, of $104.3 million. With only $7.6 million drawn on the revolving credit line and no debt maturities until May 2027. The company has no preferred stock outstanding, and its debt-to-gross assets ratio stood at 1.6%.
The portfolio saw limited external investment as the cannabis industry faced a pause in large capital expenditures. Unfunded commitments totaled $12.1 million for the six months ended June 30, 2025, but progress on these future improvements remains slow, as tenant C3 Industries reassesses its plans for a Connecticut cultivation site. This cautious approach limits current growth but supports NewLake’s ability to maintain payouts and preserve capital flexibility.
Tenant Risk and Industry Conditions
Tenant credit quality was a focal point during the quarter. Revolutionary Clinics, responsible for a small part of total rental income, entered receivership in late 2024 and paid only half the contractual rent before vacating its Massachusetts property in July 2025. NewLake is now actively seeking new tenants for that facility, and management previously quantified the income impact as about $0.15 per share of AFFO (non-GAAP).
Another tenant, AYR Wellness, which contributed approximately 5.9% of rental revenue for the six months ended June 30, 2025, began a restructuring after the quarter ended. While rent payments were current through July, payments for August have not been received as of August 6, 2025. The company holds security deposits worth roughly 3.5 months of rent on the two affected properties as of August 6, 2025, offering a temporary buffer. However, future rental income from AYR is now uncertain, and management emphasized its intent to enforce all lease rights to protect its position.
The rest of the tenant portfolio remained generally stable, though management acknowledged that tenant financial health is a sector-wide risk. As CEO Anthony Coniglio explained, “the best way to continue getting paid rent is to enter into deals that provide good cash flow for the tenant.” Underwriting discipline, focus on limited-license states, and property-level cash flow have helped insulate NewLake from wider industry disruption so far.
Industry conditions for new investment also remained subdued. There was a marked reduction in deal activity as cannabis operators curtailed capital expenditures and the underlying need for sale-leaseback financing dipped. Management pointed to the large volume of real estate still on operator balance sheets as a long-term growth driver once industry growth resumes, especially if regulatory reforms unlock new markets or new financing avenues.
Dividend and Outlook
The quarterly dividend remained steady at $0.43 per share, equating to a 79% AFFO (non-GAAP) payout ratio and $1.72 annualized. This level is in line with the company’s stated 80–90% AFFO payout ratio policy. Management did not increase the dividend or change its guidance around payouts, emphasizing financial prudence given sector challenges and tenant risks.
No formal financial guidance was provided for future quarters or fiscal 2025. The absence of numerical forecasts leaves the outlook more dependent on ongoing property-level performance and the resolution of current tenant challenges. NewLake will need to closely monitor tenant credit events, acquisition opportunities, and regulatory trends in the sector. Investors should pay particular attention to developments at AYR Wellness, as well as NewLake’s pace of capital deployment and any notable industry or policy changes that could influence the long-term growth and stability of earnings and dividends.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
