NewLake Capital Partners (OTCMKTS:NLCP) reported lower third-quarter revenue as vacant cultivation facilities weighed on rental income, while executives said the company had repaid its credit facility and continued to work through tenant restructurings.
The cannabis-focused real estate investment trust reported revenue of $12 million for the third quarter of 2026, down from $12.6 million a year earlier. Adjusted funds from operations, or AFFO, totaled $10.3 million, or $0.49 per diluted share.
Chairman Gordon DuGan said revenue and AFFO were in line with expectations. The company collected 99.7% of contractual rent through the first nine months of the year, he said, and its quarterly dividend represented an 88% AFFO payout ratio.
Vacancies Weigh on Results
Chief Financial Officer Lisa Meyer said three cultivation facilities available for lease in Pennsylvania, Nevada and Massachusetts reduced rental income and increased property carrying costs. Annual rent escalators of approximately 2.6% and income from recently acquired dispensaries partially offset those pressures.
Net income attributable to common stockholders was $4.2 million, or $0.20 per diluted share, in the quarter. Funds from operations, or FFO, totaled $10 million, or $0.47 per diluted share.
Results included approximately $1.9 million of accelerated, noncash amortization associated with the planned termination of The Cannabist Company’s lease at a property in Aurora, Illinois. Meyer said the charge reduced net income but was excluded from FFO and AFFO. NewLake also recognized about $100,000 in September rental income from the tenant’s security deposit at that property.
For the first nine months of 2026, revenue fell to $36.4 million from $38.7 million a year earlier. AFFO was $30.7 million, or $1.46 per diluted share.
Tenant Transitions and New Acquisitions
President and CEO Anthony Coniglio said NewLake had signed a lease with the acquirer of The Cannabist’s operations in Aurora and a termination agreement with the existing tenant. Both agreements take effect when the acquisition closes, subject to regulatory approval.
At NewLake’s three other properties leased to The Cannabist, full contractual rent had been paid through November, Coniglio said. The company was working with the tenant and other parties to minimize potential rent disruption.
Coniglio also said Cresco Labs completed its acquisition of PharmaCann’s Pennsylvania dispensaries, including operations at a NewLake property whose lease is now guaranteed by Cresco. Rent remained current at two other PharmaCann dispensaries as the tenant pursued a potential transition to a new operator.
NewLake has one property still directly leased to Acreage, a cultivation facility in Sterling, Massachusetts. Coniglio said rent remained current and the lease had guarantees from Acreage’s parent and Canopy USA. He noted that Canopy USA had disclosed a credit agreement default and was looking at strategic alternatives.
On the investment side, NewLake acquired three dispensaries leased to existing tenant C3 Industries: one in Kentucky during the third quarter and properties in Michigan and Kentucky after quarter-end. Coniglio said the Michigan acquisition was NewLake’s first in the state, where the company had previously been hesitant to invest.
The three vacant cultivation properties remain actively marketed to cannabis and industrial companies, Coniglio said. He added that NewLake would announce new leases when agreements are signed.
Balance Sheet and Regulatory Outlook
NewLake repaid the $7.6 million outstanding on its revolving credit facility during the quarter and ended September with no outstanding debt and $17.9 million in cash and equivalents. The company also amended its $90 million facility, reducing its interest rate by 100 basis points and extending its maturity to May 2029.
The company paid a quarterly dividend of $0.43 per share on October 15. Its board also extended the stock repurchase program through December 31, 2028, with approximately $8.2 million remaining available, Meyer said. She expects costs to remain relatively constant in the fourth quarter but anticipates a modest decline in income related to the Aurora lease.
Coniglio said NewLake evaluated an exchange uplisting structure for the approximately half of its portfolio leased to medical-only operations, but decided against pursuing it because of the cost and time involved. He described broader cannabis rescheduling as a potential catalyst for a listing and said the company intends to move forward when the regulatory environment permits.
About NewLake Capital Partners (OTCMKTS:NLCP)
NewLake Capital Partners is a real estate investment trust focused on properties used by state-licensed cannabis operators in the United States. The company acquires and leases facilities supporting cannabis cultivation, processing and retail sales.
NewLake primarily uses long-term lease arrangements to provide cannabis businesses with access to real estate while allowing them to direct capital toward their operations. Its portfolio has included cultivation and processing facilities as well as dispensaries in multiple U.S.
