Interview With NewLake Capital Partners (Strong Buy Reaffirmed)
Important Note:
I am spending this week at the REIT Week Conference in NYC, where I will be meeting with many REIT management teams. As a result, I may be a bit slower than usual to answer questions. Thank you for your patience. I expect to share exclusive insights from several REIT CEO interviews later this week. Stay tuned!
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NewLake Capital Partners: CEO Interview After Major Cannabis Catalyst
NewLake Capital Partners (NLCP) has been one of our more speculative REIT investments, but also one with potentially significant upside.
The stock remains deeply discounted, despite owning a portfolio of cannabis cultivation facilities, maintaining one of the strongest balance sheets in the REIT sector, and paying a very large dividend, yielding over 10%.
The reason is simple.
Cannabis remains a very challenged sector. Operators have faced severe tax burdens, limited access to capital, regulatory uncertainty, pricing pressure, and in some cases, distress. NLCP has not been immune to these issues. A few of its tenants have struggled, three properties are currently available for lease, and AFFO per share has declined recently as a result.
This is why the stock is so cheap, but there has also been a major positive development.
The proposed rescheduling of cannabis could eliminate the 280E tax burden for many operators, which would materially improve tenant cash flows, profitability, balance sheets, and ultimately, rent coverage.
This matters because the main risk to NLCP has always been tenant credit quality.
If tenant credit improves, then NLCP’s valuation could rerate materially higher.
Even after the recent rally, NLCP remains priced at a very low multiple, offers a double-digit dividend yield, and has a net cash balance sheet. This is not a typical high-yielding REIT that is overleveraged and being forced to cut the dividend. NLCP has very little debt, significant liquidity, and a management team that owns a lot of stock alongside shareholders.
To better understand what this catalyst could mean for NLCP, I recently interviewed Anthony Coniglio, the CEO of NewLake Capital Partners.
The discussion made clear that rescheduling could be a major positive, but also that this remains a nuanced recovery story. The opportunity is not simply about one regulatory change. It is about improving tenant credit, protecting the dividend, eventually restarting growth, and potentially expanding the investor base over time.
Below are my main takeaways from the interview, followed by the full Q&A.
