EDGAR 10-K Filing

Company CIK: 1854964
Filing Year: 2025
Filename: 1854964_10-K_2025_0001854964-25-000004.json

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ITEM 1. BUSINESS
Item 1. Business.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
Our Properties
We seek to acquire specialized real estate assets used for cultivation and processing of cannabis as well as retail dispensaries that are strategic profit centers for our tenants and are well positioned for the regulatory evolution of the industry. These licensed facilities are critical components of the cannabis industry, particularly in limited-license jurisdictions. As of December 31, 2024, we owned 32 properties comprised of 17 dispensaries and 15 cultivation facilities that are 100% leased to state-licensed cannabis operators, with a weighted average remaining lease term of 13.39 years. Based on invested capital, as of December 31, 2024, our portfolio is comprised of approximately 91.1% cultivation facilities and 8.9% dispensaries.
As of December 31, 2024, we have aggregate unfunded commitments to invest $11.0 million for the development and improvement of our existing cultivation facility in Connecticut. We define these improvement allowances as a commitment pursuant to our lease with the tenant to fund alterations, additions or improvements to the premises. Our leases are generally structured to disburse capital over specified periods of time. The leases also generally contain certain provisions that require tenants to pay rent on the full amount of capital under each lease, whether or not disbursed.
Existing Portfolio. The table below sets forth our property portfolio as of December 31, 2024 (in thousands, except square feet):
Property Type State Tenant(1)
Rentable Square Feet(2)
Investment in Real Estate(3)
Real Estate Construction in Progress Total Real Estate In-Place Lease Intangible Assets(4)
Total Investment
Cultivation Florida Curaleaf 417,350 $ 75,983 $ - $ 75,983 $ - $ 75,983
Cultivation Illinois Cresco Labs 222,455 50,732 - 50,732 - 50,732
Cultivation Massachusetts Revolutionary Clinics, Inc. 145,852 42,860 - 42,860 - 42,860 (5)
Cultivation Pennsylvania Trulieve 144,602 44,270 - 44,270 12,331 56,601
Cultivation Arizona Mint 100,758 21,810 - 21,810 - 21,810
Cultivation Pennsylvania Calypso Enterprises 99,200 31,007 1,006 32,013 - 32,013
Cultivation Missouri C3 Industries, Inc. 94,570 29,017 - 29,017 - 29,017
Cultivation Missouri Organic Remedies 81,808 21,101 - 21,101 - 21,101
Cultivation Connecticut C3 Industries, Inc. 58,436 3,993 981 4,974 - 4,974
Cultivation Nevada AYR Wellness 56,536 13,579 - 13,579 - 13,579
Cultivation Massachusetts The Cannabist Company 38,890 13,826 - 13,826 4,120 17,946
Cultivation Massachusetts Acreage 38,380 9,791 - 9,791 - 9,791
Cultivation Pennsylvania AYR Wellness 38,031 15,278 - 15,278 - 15,278
Cultivation Illinois The Cannabist Company 32,802 11,361 - 11,361 3,106 14,467
Cultivation Pennsylvania Acreage 30,625 10,161 - 10,161 - 10,161
Dispensary Connecticut Curaleaf 11,181 2,930 - 2,930 441 3,371
Dispensary Massachusetts PharmaCann 11,116 2,112 - 2,112 363 2,475
Dispensary Arkansas Greenlight 7,592 2,157 - 2,157 320 2,477
Dispensary Ohio Curaleaf 7,200 3,353 - 3,353 582 3,935
Dispensary Illinois Curaleaf 6,100 1,734 - 1,734 257 1,991
Dispensary Illinois Curaleaf 5,040 3,362 - 3,362 575 3,937
Dispensary Illinois The Cannabist Company 4,736 1,215 - 1,215 206 1,421
Dispensary North Dakota Curaleaf 4,590 2,174 - 2,174 355 2,529
Dispensary Massachusetts The Cannabist Company 4,290 2,320 - 2,320 373 2,693
Dispensary Illinois Curaleaf 4,200 1,024 - 1,024 178 1,202
Dispensary Ohio PharmaCann 3,735 1,550 - 1,550 - 1,550
Dispensary Pennsylvania Curaleaf 3,500 2,226 - 2,226 369 2,595
Dispensary Pennsylvania PharmaCann 3,481 1,315 - 1,315 256 1,571
Dispensary Connecticut Acreage 2,872 929 - 929 - 929
Dispensary California The Cannabist Company 2,470 3,774 - 3,774 1,071 4,845
Dispensary Pennsylvania Curaleaf 1,968 1,918 - 1,918 320 2,238
Dispensary Illinois Curaleaf 1,851 594 - 594 98 692
Total 1,686,217 $ 429,456 $ 1,987 $ 431,443 $ 25,321 $ 456,764
(1) Lease is with a subsidiary of this entity, for which this entity or an affiliate is a guarantor.
(2) Includes estimated rentable square feet at completion of construction.
(3) Includes the purchase price (and in some cases, transaction costs that have been capitalized into the purchase price) and building and improvement commitments funded, if any, as of December 31, 2024. Excludes building and improvement commitments not funded as of December 31, 2024.
(4) Represents gross In-Place Intangibles at acquisition. Does not include accumulated amortization.
(5) Includes approximately $40.0 million in cash and 88,200 OP Units issued in connection with the purchase of the property.
The following table sets forth a summary of the lease expirations for leases in place as of December 31, 2024 for each of the ten full calendar years beginning January 1, 2025. The information set forth in the table does not assume exercise of renewal options by tenants (square footage and annualized base rent in thousands).
Year of Lease Expiration Number of Leases Expiring
Square Footage of Leases Expiring
% of Portfolio Net Rentable Square Feet
Annualized Base Rent(1)
% of Portfolio Annualized Base Rent
Annualized Base Rent per Leased Square Foot(2)
2025 - - - % $ - - % $ -
2026 - - - % - - % -
2027 - - - % - - % -
2028 - - - % - - % -
2029 3 11 0.7 % 878 1.7 % 76.33
2030 - - - % - - % -
2031 2 15 0.9 % 411 0.8 % 28.13
2032 8 44 2.6 % 1,729 3.4 % 39.66
2033 2 10 0.6 % 585 1.1 % 60.77
2034 5 442 26.2 % 15,781 30.7 % 35.73
Thereafter 12 1,165 69.0 % 32,051 62.3 % 27.50
Total/Weighted Average 32 1,686 100.0 % $ 51,434 100.0 % $ 30.50
(1) Annualized base rent is calculated by multiplying (i) contractual rental income (including contractual rent from two non-performing tenants since the leases had not be modified as of December 31, 2024, and excluding reimbursable revenues) for the month ended December 31, 2024, by (ii) 12.
(2) Annualized base rent per leased square foot is calculated by dividing (i) annualized contractual base rent (including contractual rent from two non-performing tenants since the leases had not be modified as of December 31, 2024 and excluding reimbursable revenues) by (ii) net rentable square feet. Amounts may not recalculate due to rounding.
We target companies that have successfully navigated complex state regulation and fulfilled rigorous state-licensing requirements. We believe we have been diligent in partnering with a diverse tenant base of experienced operators in limited licensed jurisdictions that have strong management teams. Our tenants have generally demonstrated access to capital, which is critical to continuing to execute on their respective business plans.
As of December 31, 2024, all of our revenues were derived from 13 tenants. The following table sets forth the tenants in our property portfolio as of December 31, 2024 (dollars in thousands). All of our leases include a parent or other affiliate guarantee.
Tenant(1)
Total Investment(2)
Number of Leases
Percentage of Annualized Rental Income(3)
Curaleaf $ 98,474 10 22.8 %
Cresco Labs 50,732 1 12.9 %
Trulieve 56,601 1 11.0 %
The Cannabist Company 41,373 5 8.2 %
C3 Industries 33,990 2 7.5 %
Calypso Enterprises 32,013 1 7.1 %
Acreage 20,880 3 6.6 %
Mint 21,810 1 5.9 %
Ayr Wellness 28,857 2 5.8 %
Revolutionary Clinics, Inc. 42,860 1 5.7 %
Organic Remedies 21,101 1 4.8 %
PharmaCann 5,595 3 1.2 %
Greenlight
2,478 1 0.5 %
Total $ 456,764 32 100.0 %
(1) Lease may be with a subsidiary of this entity, for which this entity or an affiliate is a guarantor.
(2) Includes the purchase price (and in some cases, transaction costs that have been capitalized into the purchase price), gross In-Place Lease Intangible Assets and building and improvement commitments funded, if any, as of December 31, 2024. Excludes building and improvement commitments not funded as of December 31, 2024.
(3) Annualized Rental Income is calculated by multiplying (i) contractual rental income (including contractual rent from two non-performing tenants since the leases had not be modified as of December 31, 2024, and excluding reimbursable revenues) for the month ended December 31, 2024, by (ii) 12.
Curaleaf
We own nine dispensaries and one cultivation facility that are leased to subsidiaries of Curaleaf, which is, or an affiliate is, the corporate guarantor. Curaleaf is publicly-traded on the TSX and OTC markets under the symbols CURA and CURLF, respectively. Curaleaf’s filings, including their financial information, are electronically available at www.sec.gov and from the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com, the Canadian equivalent of the SEC electronic document gathering and retrieval system.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
As of December 31, 2024, we were not a party to any material legal proceedings. From time to time, we may in the future be a party to various claims and routine litigation arising in the ordinary course of business.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY
Not Applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock is listed on the OTCQX® Best Market operated by the OTC Markets Group, Inc., under the symbol "NLCP".
Dividend Information
In accordance with the requirements for maintaining REIT status, we intend to distribute to stockholders aggregate dividends equaling at least 90% of our REIT taxable income (determined without regard to the deduction of dividends paid and by excluding any net capital gain) for each taxable year and will endeavor to distribute at least 100% of our REIT taxable income so as not to be subject to federal income tax. Distributions of economic profits could be classified as return of capital due to differences between book and tax accounting rules. We may make additional returns of capital when the potential risk-adjusted returns from new investments fail to exceed our cost of capital. Subject to the limitations of applicable securities and state corporation laws, we can return capital by making purchases of our own capital stock or through payment of dividends.
Shareholder Information
As of December 31, 2024, there were 213 holders of record of our common stock. This figure does not represent the actual number of beneficial owners of our common stock because shares of our common stock are frequently held in “street name” by securities dealers and others for the benefit of beneficial owners who may vote the shares.
Sales of Unregistered Securities
None.
Use of Proceeds from Sales of Registered Securities
None.
Purchase of Equity Securities by the Issuer
On November 7, 2022, the board of directors of the Company authorized a stock repurchase program of up to $10.0 million of its common stock through December 31, 2023. On September 15, 2023, the board of directors authorized an amendment to the stock repurchase program for the repurchase of up to an additional $10.0 million of outstanding common stock and extended the program through December 31, 2024 and on November 19, 2024, the board of directors authorized extending the duration of our existing share repurchase plan to conclude on December 31, 2026. Purchases made pursuant to the stock repurchase program will be made in the open market, in privately negotiated transactions, or pursuant to any trading plan that may be adopted in accordance with Rule 10b-18 of the Securities and Exchange Act of 1934, as amended. The authorization of the stock repurchase program does not obligate the Company to acquire any particular amount of common stock. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors.
The Company did not repurchase any shares under the stock repurchase program during the year ended December 31, 2024.
The following is a summary of common shares repurchased:
Period Total Number Of Common Shares Purchased(1)
Average Price Paid Per Common Share(2)
Total Number Of Common Shares Purchased As Part Of Publicly Announced Plans Or Programs(1)
Approximate Dollar Value Of Common Shares That May Yet Be Purchased Under the Plan Or Programs
October 1, 2024 - October 31, 2024 - - - $ 8,193,910
November 1, 2024 - November 30, 2024 - - - $ 8,193,910
December 1, 2024 - December 31, 2024 2,124 (3)
$ 17.50 1,309 (3)
$ 8,193,910
Total for the three months ended December 31, 2023 2,124 $ 17.50 1,309
(1) Relates to shares of common stock owned by certain of our employees which have been surrendered by them to satisfy their tax and other compensation related withholdings associated with the vesting of restricted stock units issued under the 2021 Equity Incentive Plan.
Securities Authorized for Issuance Under Equity Compensation Plan
For information about our equity compensation plans and other related stockholder matters, see Item 12 of Part III of this Annual Report on Form 10-K.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. RESERVED.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.
This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Cautionary Statement Regarding Forward-Looking Statements" in this Annual Report on Form 10-K. You should review the disclosure under the heading "Risk Factors" in this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.
Overview
NewLake Capital Partners, Inc., (the “Company,” "we," "our," "us,") is an internally managed REIT and a leading provider of real estate capital to state-licensed cannabis operators primarily through sale-leaseback transactions, third-party purchases and funding for build-to-suit projects. Our properties are leased to single tenants on a long-term, triple-net basis, which obligates the tenant for the ongoing expenses of the leased property, in addition to its rent obligations.
We were incorporated in Maryland on April 19, 2019. We conduct our business through a traditional umbrella partnership REIT structure, in which properties are owned by an operating partnership, directly or through subsidiaries. We are the sole general partner of our operating partnership and currently own approximately 98% of the OP Units. We have elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our short taxable year ended December 31, 2019 and intend to operate our business so as to continue to qualify as a REIT.
As of December 31, 2024, we owned a geographically diversified portfolio consisting of 32 properties across 12 states with 13 tenants, comprised of 17 dispensaries and 15 cultivation facilities.
Emerging Growth Company
We have elected to be an emerging growth company, as defined in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company, among other things:
•We are exempt from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act;
•We are permitted to provide less extensive disclosure about our executive compensation arrangements; and
•We are not required to give our stockholders non-binding advisory votes on executive compensation or golden parachute arrangements.
We have elected to use an extended transition period for complying with new or revised accounting standards.
We may take advantage of the other provisions for up to five years or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company upon the earliest to occur of: (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.2 billion (subject to adjustment for inflation), (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period or (iv) the last day of the fiscal year following the fifth anniversary of our initial public offering.
Factors Impacting Our Operating Results
Our results of operations are affected by a number of factors and depend on the rental revenue we receive from the properties that we own, interest income we receive from the loans we originate, the timing of lease expirations, general market conditions, the regulatory environment in the cannabis industry, and the competitive environment for real estate assets that support the cannabis industry.
Rental Income
We generate rental income from our real estate properties that we own. The amount of rental income depends upon a number of factors, including:
•Our ability to enter into new leases at market value rents inclusive of annual rent increases; and
•Rent collection, which primarily relates to each of our current and future tenant’s or guarantor’s financial condition and ability to make rent payments to us on time.
For the year ended December 31, 2024, all of our rental income was derived from triple-net leases to 13 tenants. Our leases include a parent or other affiliate guarantee and obligate the tenant for all the ongoing expenses of a property, including real estate taxes, insurance, maintenance and utilities. Our rental income is, therefore, dependent on our tenants (and related guarantors) ability to meet their respective obligations to us. Our tenants operate in the cannabis industry. Changes in current state or local laws in the cannabis industry may impair our ability to renew or re-lease properties and the ability of our tenants to fulfill their lease obligations and could materially and adversely affect our ability to maintain or increase rental rates for our properties. Further, some of our existing tenants have limited operating histories and may be more susceptible to payment and other lease defaults. Thus, our operating results will be significantly impacted by the ability of our tenants to achieve and sustain positive financial results.
Financial Performance and Condition of Our Tenants
We own 32 properties, leased to 13 tenants. As of December 31, 2024, all of our tenants are performing under their lease agreement with the exception of two tenants discussed below.
Condition of Our Tenants
During the fourth quarter of 2023, we amended our leases with: a) Revolutionary Clinics, Inc. (“Revolutionary Clinics”), as part of a restructuring of their business, their receipt of new third-party capital and new management; and b) Calypso Enterprises (“Calypso”) in connection with their sale to Canvas Acquisition Corporation. Both tenants experienced operating challenges during the latter half of 2024, impacting their ability to pay rent as described below.
Revolutionary Clinics
From June 2024 through December 2024, Revolutionary Clinics paid approximately 50% of its contractual rent. On December 13, 2024, Revolutionary Clinics entered into receivership. The Company is currently working with the receiver and the tenant and has reserved all rights under the lease agreement.
Calypso Enterprises
From September through December 2024, Calypso did not pay the contractual rent due under its lease agreement. We held an escrow deposit equivalent to approximately six months of rent and we applied approximately $1.2 million from the escrow deposit to cover the outstanding rent for this period. Additionally, as of September 2024, in accordance with the lease agreement, we suspended our obligation to fund the remaining improvement allowance of approximately $987 thousand until all outstanding rent is paid and the escrow deposit is replenished. The remaining balance of the escrow deposit as of December 31, 2024, was approximately $446 thousand. We are currently in discussion with the tenant and have reserved all our rights under the lease agreement.
See Item 1A. “Risk Factors” of this Annual Report on Form 10-K for additional factors that may impact our operating results.
2024 Financial Markets Update
During the first half of the year ended December 31, 2024, financial markets generally showed stability, though lingering risks from the prior year remained. In September 2024, the U.S. Federal Reserve cut interest rates by 50 basis points, followed by additional cuts of 25 basis points in November and December, totaling a full percentage point decrease for the second half of the year. This decision reflects the central bank's commitment to balancing its dual mandate of price stability and maximum full employment.
Before these rate cuts, the central bank was focused on combating inflation, with interest rates at their highest levels in over twenty years. For U.S. corporations, this high-interest rate environment increased the cost of capital. Despite the rate cuts in the latter part of 2024, interest rates remain relatively high compared to historical standards.
However, as of January 2025, the prime lending rate has come down to 7.5%, providing some relief to businesses by lowering the cost of borrowing. This reduction offers some support, but businesses still face challenges due to the overall high-interest rate environment. Access to capital remains somewhat constrained, and financial management strategies are still crucial. Consequently, the availability and cost of capital for our tenants remain high, necessitating the adoption of prudent financial management strategies.
Regulatory Update
On May 21, 2024, the Justice Department published a Notice of Proposed Rulemaking in the Federal Register for the Drug Enforcement Administration (“DEA”) to reschedule cannabis from Schedule I of the Controlled Substances Act (“CSA”), a list of completely prohibited drugs, to Schedule III, which includes prescription medications such as ketamine, Tylenol with codeine, and anabolic steroids. The proposed rule is based on an August 2023 recommendation by the Department of Health and Human Services (“HHS”). The comment period concluded on July 22, 2024. After reviewing over 43,000 comments to the proposed rule, including numerous requests for a hearing, the DEA Administrator granted a hearing and appointed an Administrative Law Judge (“ALJ”) to preside over the proceedings.
The ALJ held a procedural hearing in December 2024 and scheduled oral arguments to commence in January 2025. However, the hearing was delayed by at least 90 days due to a motion filed by parties in the proceedings to remove the DEA from hearings. This motion was granted by DEA Administrative Law Judge John Mulrooney, who cited compelling evidence suggesting that the DEA may have violated certain rules within the Administrative Procedures Act. A new hearing date has not been scheduled and is pending resolution of the request for the DEA’s removal.
The rescheduling of cannabis would mark a significant milestone, as we believe this reclassification would lift certain restrictions under IRS Section 280E, which currently prevents cannabis operators from taking certain tax deductions, resulting in onerous effective tax rates on state legal cannabis operators. Additionally, rescheduling should facilitate medical research and provide much-needed medical trials to document the efficacy of cannabis in treating multiple medical conditions.
Inflation and Supply Chain Constraints
While inflation has begun to subside, it continues to trend higher than in prior years, which may be negatively impacting some of our tenants. Based on the Bureau of Labor Statistics, the annual inflation rate for the United States was 2.9% for the twelve month period ended December 2024. This inflation has impacted costs for labor and production inputs for regulated cannabis operators, in addition to increasing costs of construction for development and redevelopment projects.
Ongoing labor shortages with global supply chain issues, and geopolitical issues, also continue to adversely impact costs and timing for the completion of these development and redevelopment projects. These factors may result in cost overruns and delays in commencing operations on certain of our tenants' projects.
Competitive Environment
We face competition from a diverse mix of market participants, including but not limited to, other companies with similar business models, independent investors, hedge funds and other real estate investors, mortgage REITs, hard money lenders, as well as would-be tenants and cannabis operators themselves, all of whom may compete with us in our efforts to acquire real estate zoned for cannabis cultivation, production or dispensary operations. Competition from others may diminish our opportunities to acquire a desired property on favorable terms or at all. In addition, this competition may put pressure on us to reduce the rental rates below those that we expect to charge for the properties that we own and expect to acquire, which would adversely affect our financial results.
Critical Accounting Estimates
In accordance with GAAP, our consolidated financial statements require the use of estimates and assumptions that involve the exercise of judgment and use of assumptions. Our most critical accounting estimates will involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. Actual results could differ materially from those estimates and assumptions.
We believe that all of the decisions and assessments upon which our consolidated financial statements have been based were reasonable at the time made and based upon information available to us at that time. Below is a summary of our critical accounting estimates that involve a significant level of estimation uncertainty or subjectivity and have had or are reasonably likely to have a material impact on our financial condition or results of operations. This discussion of our critical accounting estimates is intended to supplement the description of our accounting policies in the footnotes to our consolidated financial statements and to provide additional insight into the information used by management when evaluating significant estimates and assumptions. For further discussion of our significant accounting policies, refer to Note
2 “Basis of Presentation and Summary of Significant Accounting Policies” to our consolidated financial statements included in this Form 10-K.
Investment in Real Estate
Investments in real estate are presented at historical cost, less accumulated depreciation. Costs directly related to the properties’ acquisition, development, or redevelopment of the properties are capitalized. Repairs and maintenance costs incurred, if any, on the properties are expensed. Major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives.
We capitalize costs associated with building and tenant improvement when it is considered the accounting owner of such improvements. These improvements generally consist of building additions or significant upgrades to existing facilities. The improvements are classified under Buildings and Improvements in the consolidated balance sheet and are considered construction in progress until placed in service. Such improvements are considered placed in service when they are ready and available for their intended use.
Upon acquisition of a property, we allocate the purchase price of the real estate to land, building and improvements, site improvements and if applicable, determined intangibles, such as the value of above and below market leases and origination costs associated with the in-place lease. The tangible and intangible assets acquired and liabilities assumed are initially measured based upon their relative fair values. We estimate the fair value of land by reviewing comparable sales within the same submarket and/or region, the fair value of buildings on an as-if vacant basis and may engage third-party valuation specialists. Acquisition costs for asset acquisitions are capitalized as incurred. All of our real estate investments to date were recorded as asset acquisitions.
We depreciate the amount allocated to building and improvements on a straight-line basis over their estimated useful lives, which generally range from 20 to 35 years. Site improvements at our buildings, if any, are depreciated over the estimated useful lives, generally range from 8 to 15 years. Tenant improvements are depreciated on a straight-line basis over the lease term and intangibles related to in-place leases are amortized over the remaining lease term.
Impairment of Real Estate
We review current activities and changes in the business condition of all of our properties to identify any triggering events or impairment indicators. Each real estate asset is evaluated for impairment on a property-by-property basis. If triggering events or impairment indicators are identified, we assess the carrying value of the real estate for potential impairment. Indicators of impairment may include but are not limited to, deterioration in rent rates for a property, decline in projected rental rates, evidence of material physical damage to the property, holding period, and tenant defaults.
An impairment provision is recorded if estimated future operating cash flows (undiscounted and without interest charges) plus estimated disposition proceeds (undiscounted) are less than the current book value of the property. Key inputs that we utilize in this analysis include projected rental rates, estimated holding periods, capital expenditures and property sales capitalization rates. Our undiscounted cash flow and fair value calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flow and property fair values, including determining our estimated holding period and selecting the discount or capitalization rate that reflects the risk inherent in future cash flow. If the actual net cash flow or actual market capitalization rates significantly differ from our estimates, the impairment evaluation for an individual asset could be materially affected. The amount of the impairment recorded is based on the fair market value of the real estate asset.
Lease Classification
Lease classification for leases under which we are the lessor are evaluated at lease commencement and leases not classified as sales-type leases or direct financing leases are classified as operating leases. Leases qualify as sales-type leases if the contract includes transfer of ownership clauses, certain purchase options, a lease term representing a major part of the economic life of the asset, or the present value of the lease payments and residual guarantees provided by the lessee exceeds substantially all of the fair value of the asset. Additionally, leasing an asset so specialized that it is not deemed to have any value to us at the end of the lease term may also result in classification as a sales-type lease. Leases qualify as direct financing leases when the present value of the lease payments and residual value guarantees provided by the lessee and unrelated third parties exceeds substantially all of the fair value of the asset and collection of the payments is probable. The determination of lease classification requires the calculation of the rate implicit in the lease or the use of an appropriate capitalization rate which requires significant judgement.
Revenue Recognition
Our triple-net leases are accounted for as operating leases. Operating leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term, unless the collectability of minimum lease payments is not reasonably predictable. Rental increases based upon changes in the consumer price index are recognized only after the changes in the indexes have occurred and are then applied according to the lease agreements. Contractually obligated expenses as defined by the lease agreement that are paid directly by the tenant are not reflected in our consolidated financial statements.
Operating leases where the minimum lease payments are not reasonably predictable are recognized on a cash basis. The collectability criteria for our operating leases is assessed quarterly on an individual basis, incorporating several financial metrics, which include but are not limited to, free cash flow, profitability, debt profile and federal tax liability. In our assessment, we also consider the impact of federal regulatory uncertainty and state regulatory challenges in the cannabis industry, including the fact that cannabis remains illegal under federal law. These environmental factors are significant in
our assessment of collectability of lease payments given the pervasive impacts on our tenants' financial performance and ability to continue as a going concern. Based on this assessment, we determined collectibility of rent for each of our tenants is uncertain and rental income was recorded on a cash basis. We will continue to assess quarterly the collectability of lease payments for each tenant as required by ASC 842.
Financial Instruments - Credit Losses
We adopted ASC 326, Financial Instruments - Credit Losses ("CECL") on January 1, 2023. The CECL expected loss model requires an allowance for all expected credit losses for the life of a loan be recognized when the loan is either originated or acquired. The allowance for credit losses is a valuation account that is deducted from, or added to, the amortized cost basis of the financial asset(s) to present the net amount expected to be collected on the financial asset(s). At each reporting period, we will update the estimate and adjust the allowance for credit losses accordingly. Increases in the allowance are recorded through net income as credit loss expense. Decreases in the allowance are recorded through net income as a reversal of credit loss expense. This standard does not specify a specific measurement technique for estimating expected credit losses and the approach used to estimate credit losses requires judgement. We generally use a discounted cash flow model approach to determine the credit loss. Determining the appropriate discount rate that reflects the risk inherent in future cash flow requires significant judgement. If the discount rates differ significantly from our estimates, the provision for current credit loss could be materially affected.
Stock-Based Compensation
We record our compensation cost for all stock awards at fair value at the grant date and amortize the cost over the service period (generally equal to the vesting period) which is included in “Compensation Expense” on our consolidated statement of operations. The compensation cost for stock option grants is determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. We used the Black-Scholes option pricing model to estimate the fair value of options awards at the time of their grant, which required input of assumptions, including judgments to estimate expected stock price volatility, expected life, and forfeiture rate. The fair value of performance stock awards is determined using a Monte Carlo simulation for our future stock price and the corresponding peer group. There is significant uncertainty in the estimation of the valuation of our performance stock awards and there is additional uncertainty around forfeitures as we cannot determine if or when forfeitures will happen. The valuation of units can vary significantly since units are based upon target amounts that may or may not be met. If target metrics are not met upon vesting, the performance stock units are subject to cancellation. Cancellation of performance stock units has no impact on estimated or previously recognized expense.
2024 Highlights
Investment Activity
Real Estate Acquisitions
In May 2024, we purchased a cultivation facility in Connecticut for approximately $4.0 million and committed to fund approximately $12.0 million in improvements.
The following table presents our investment activity for the year ended December 31, 2024 (in thousands):
Tenant Market Site Type Closing Date Real Estate Acquisition Costs
C3 Industries Connecticut Cultivation May 7, 2024 $ 3,993
Total $ 3,993
Improvements Allowances
During the year ended December 31, 2024, we funded approximately $15.1 million of improvements to our cultivation facilities in Arizona, Connecticut, Missouri and Pennsylvania.
The following table presents the funded commitments and the remaining unfunded commitments for the year ended December 31, 2024 (in thousands):
Tenant Market Site Type Closing Date Funded Commitments Unfunded Commitments
Ayr Wellness, Inc. Pennsylvania Cultivation June 30, 2022 $ 750 $ -
C3 Industries Connecticut Cultivation May 7, 2024 981 11,043
C3 Industries Missouri Cultivation March 3, 2023 (1) 8,826 -
Mint Arizona Cultivation June 24, 2021 4,588 (2) -
Total $ 15,145 $ 11,043
(1) Funded commitments related to the Missouri cultivation facility expansion project.
(2) Effective June 6, 2024, the lease agreement was amended to include an additional commitment of approximately $800 thousand which was funded during the year ended December 31, 2024.
Financing Activity
Loan Payable
On January 3, 2024, we made our final annual principal and interest payment of approximately $1.0 million on our loan payable to the seller of a cultivation facility in Chaffee, Missouri.
Revolving Credit Facility
As of December 31, 2024, we had outstanding borrowings of $7.6 million under our Revolving Credit Facility and $82.4 million in funds available to be drawn, subject to sufficient collateral in the borrowing base. For further discussion of our Revolving Credit Facility, refer to Note 6 “Financings” to our consolidated financial statements included in this Form 10-K.
Capital Markets Activity
Dividends
During the year ended December 31, 2024, the Company’s board of directors declared cash dividends totaling $1.70 per share of common stock.
At the Market Program
On June 10, 2024, we entered into an Equity Distribution Agreement (the "EDA"), relating to shares of our common stock, $0.01 par value per share, pursuant to an “At The Market” (“ATM”) offering program. On November 20, 2024, we entered into another Equity Distribution Agreement (collectively the “EDAs”) related to our ATM program to add an additional sales agent. In accordance with the terms of the EDAs, we may offer and sell shares of our common stock having an aggregate offering amount of up to $50.0 million from time to time through a sales agent.
Results of Operations
General
We derive substantially all our revenue from rents received from single tenants at each of our 32 properties, all of which are under triple-net leases. As of December 31, 2024, our portfolio remains conservatively leveraged, with only $7.6 million outstanding under our Revolving Credit Facility. Additionally, we maintain low general and administrative expenses with an annualized ratio of 1.4% of total assets.
Comparison of the Year Ended December 31, 2024 and 2023 (dollars in thousands):
For the Year Ended December 31, Increase/(Decrease)
2024 2023 2024 vs 2023
Revenue:
Rental Income $ 48,926 $ 46,341 $ 2,585
Interest Income from Loans 533 521 12
Fees and Reimbursables 672 442 230
Total Revenue 50,131 47,304 2,827
Expenses:
Property Expenses 239 657 (418)
Depreciation and Amortization Expense 14,713 14,266 447
General and Administrative Expenses:
Compensation Expense 4,675 4,477 198
Professional Fees 1,506 1,361 145
Other General and Administrative Expenses 1,733 1,721 12
Total General and Administrative Expenses 7,914 7,559 355
Total Expenses 22,866 22,482 384
Provision for Current Expected Credit Loss 51 (167) 218
Impairment Loss on Warrants (522) - (522)
Income From Operations 26,794 24,655 2,139
Other Income (Expense):
Other Income 354 747 (393)
Interest Expense (565) (379) (186)
Total Other Income (Expense) (211) 368 (579)
Net Income 26,583 25,023 1,560
Net Income Attributable to Noncontrolling Interests (468) (438) (30)
Net Income Attributable to Common Stockholders $ 26,115 $ 24,585 $ 1,530
Revenues
Rental Income
Rental income for the year ended December 31, 2024 increased by approximately $2.6 million, to approximately $48.9 million, compared to approximately $46.3 million for the year ended December 31, 2023. The increase in rental income was primarily attributable to:
•Generated approximately $0.4 million in rental income from the purchase of a cultivation facility in Connecticut in May 2024, reflecting approximately eight months of rental income for the year ended December 31, 2024.
•Generated a full year of rental income in 2024 from the acquisition and development of our Missouri cultivation facility's expansion project, which was acquired in the first quarter of 2023. This resulted in an additional $0.2 million in rental income for the year ended December 31, 2024.
•The funding of $15.1 million of improvements at our cultivation facilities in Arizona, Connecticut, Missouri and Pennsylvania generated approximately $1.4 million in rental income during the year ended December 31, 2024.
•Annual escalations within our portfolio generated an increase of approximately $1.8 million in rental income during the year ended December 31, 2024.
The increases in rental income during 2024 described above were offset by decreases in rental income primarily attributable to:
•In 2023, Revolutionary Clinics defaulted under their lease agreement, leading us to amend the lease in the fourth quarter as part of their business restructuring, which included receiving new third-party capital and appointing new management. As part of the amendment, we collected a portion of the back rent and received warrants in Revolutionary Clinics. However, in the second half of 2024, the tenant faced new operating challenges that impacted their ability to pay their full contractual rent, resulting in partial rent payments. Consequently, our rental income decreased year over year by $1.1 million due to these rent shortfalls in 2024 and the one-time rental revenue recorded in 2023 from the warrants received in lease restructuring.
•A decrease in rental income of approximately $0.2 million related to the sale of a cultivation facility in Massachusetts in October 2023.
Interest Income from Loans
Interest income from loans increased slightly due to the annual rate adjustment on our one loan receivable.
Fees and Reimbursables
Fees and reimbursables for the year ended December 31, 2024 increased by approximately $0.2 million, to approximately $0.7 million, compared to approximately $0.4 million for the year ended December 31, 2023. The increase is primarily due to timing of revenue reimbursements year over year.
Expenses
Property Expenses
Property expenses for the year ended December 31, 2024 decreased by approximately $0.4 million to approximately $0.2 million, compared to $0.7 million for the year ended December 31, 2023. The decrease was primarily attributable to the timing of insurance costs incurred in 2023, which were reimbursed to us during 2024.
Depreciation and Amortization Expense
Depreciation and amortization expense for the year ended December 31, 2024, increased by approximately $0.4 million to approximately $14.7 million, compared to $14.3 million for the year ended December 31, 2023. The increase in depreciation was attributable to; (i) the acquisition of one cultivation facility acquired in May 2024 for approximately $4.0 million, which generated an increase of approximately $67 thousand; and (ii) an increase of approximately $0.4 million from approximately $37.3 million of improvements from our Arizona, Missouri and two Pennsylvania cultivation facilities that were placed into service during 2024.
General and Administrative Expenses
Total general and administrative expenses for the year ended December 31, 2024 increased by approximately $0.4 million, to approximately $7.9 million, compared to approximately $7.6 million for the year ended December 31, 2023. The increase in general and administrative expense is described below by category.
Compensation Expense
Compensation expense for the year ended December 31, 2024, increased by approximately $0.2 million to approximately $4.7 million, compared to approximately $4.5 million for the year ended December 31, 2023. The increase was primarily due the annual grant of restricted stock units (“RSUs”) and performance stock units (“PSUs”) to certain officers, employees and directors in 2024.
Professional Fees
Professional fees for the year ended December 31, 2024, increased by approximately $0.1 million to approximately $1.5 million, compared to approximately $1.4 million for the year ended December 31, 2023. The increase was mainly attributable to an increase of approximately $0.2 million of legal fees and approximately $0.1 million related to costs incurred for potential restructuring. These increases were partially offset by a reduction of approximately $0.1 million in audit and tax fees due to timing of these services.
Other General and Administrative Expenses
Other general and administrative expenses are primarily comprised of director and officer insurance, information technology fees, public relations fees, filing and regulatory fees, public reporting fees, corporate rent and various other expenses. Other general and administrative expenses were relatively flat year over year.
Provision for Current Expected Credit Loss
On January 1, 2023, we adopted ASC 326, Financial Instruments - Credit Losses. In connection with this adoption, we used a discounted cash flow model to determine an expected credit loss on our loan receivable and recorded a provision for current expected credit loss of $167 thousand during the year ended December 31, 2023. During the year ended December 31, 2024, we recorded a reduction in the provision for current expected credit loss of approximately $51 thousand, which reduced the allowance for credit loss to approximately $116 thousand as of December 31, 2024.
Impairment Loss on Warrants
During the fourth quarter of 2024, Revolutionary Clinics entered into receivership. Based on our impairment assessments, we determined that the investment in warrants was impaired due to the significant concerns about Revolutionary Clinics' ability to continue as a going concern raised by the receivership (See “Note 10 - Warrants” for further information). As a result, we recorded an impairment loss on warrants of $522 thousand.
Other Income (Expense)
Other Income
Other income, which is mainly comprised of interest income decreased during the year ended December 31, 2024, by approximately $0.3 million, to $0.4 million, compared to $0.7 million for the year ended December 31, 2023, due to lower cash balances in our money market accounts. We primarily used cash liquidity to pay dividends and fund improvement allowances. Refer to the “Summary of Cash Flows” for further information.
Interest Expense
Interest expense for the year ended December 31, 2024, increased by approximately $0.2 million to approximately $0.6 million compared to approximately $0.4 million for the year ended December 31, 2023. The increase was due to a higher outstanding balance on our Revolving Credit Facility.
Non-GAAP Financial Information and Other Metrics
Funds from Operations and Adjusted Funds from Operations
Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”) are non-GAAP financial measures and should not be viewed as alternatives to net income calculated in accordance with GAAP as a measurement of our operating
performance. We believe that FFO and AFFO are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.
We calculate FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. NAREIT currently defines FFO as follows: net income (loss) (computed in accordance with GAAP) excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by an entity. Other REITs may not define FFO in accordance with the NAREIT definition or may interpret the current NAREIT definition differently than we do and therefore our computation of FFO may not be comparable to such other REITs.
We calculate AFFO by starting with FFO and adjusting for non-cash and certain non-recurring transactions, including non-cash components of compensation expense and the effect of provisions for credit losses. Other REITs may not define AFFO in the same manner as we do and therefore our calculation of AFFO may not be comparable to such other REITs. You should not consider FFO and AFFO to be alternatives to net income as a reliable measure of our operating performance; nor should you consider FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity.
The table below is a reconciliation of net income attributable to common stockholders to FFO and AFFO for the year ended December 31, 2024 and 2023 (in thousands):
For the Year Ended
December 31,
2024 2023
Net Income Attributable to Common Stockholders $ 26,115 $ 24,585
Net Income Attributable to Noncontrolling Interests 468 438
Net Income 26,583 25,023
Adjustments:
Real Estate Depreciation and Amortization 14,695 14,266
FFO Attributable to Common Stockholders - Diluted 41,278 39,289
Impairment Loss on Warrants 522 -
Non-cash rental income - other - (522)
Provision for current expected credit loss (51) 167
Stock-Based Compensation 1,674 1,439
Non-Cash Interest Expense 269 282
Amortization of Straight-Line Rent Expense (3) (1)
AFFO Attributable to Common Stockholders - Diluted $ 43,689 $ 40,654
Liquidity and Capital Resources
Our cash requirements include the payment of dividends to our shareholders, distributions to our OP Units holders (“OP Unitholders”), general and administrative expenses, debt service, other expenses related to managing our existing portfolio, as well as acquisitions and unfunded improvement commitments on our properties. The sources of liquidity to fund these cash requirements include rental income from the leasing of our properties, which is our primary source of cash flow, borrowings under our Revolving Credit Facility and equity and debt issuances, including issuance of common stock under our ATM Program, if markets permit. Where possible, we also may issue OP Units to acquire properties from existing owners seeking a tax-deferred transaction.
As of December 31, 2024, we had $102.6 million of liquidity comprised of $20.2 million of cash and cash equivalents and $82.4 million available on our $90.0 million Revolving Credit Facility, subject to sufficient collateral in the borrowing base. Additionally, the ATM Program allows us to raise capital up to $50.0 million. We cannot however, be certain that these sources of funds will be available at a time and upon terms acceptable to us in sufficient amounts in the future.
During the second half of 2024, the Federal Reserve eased its monetary policy by reducing the target range for the federal funds rate by one percentage point. Despite this cut, interest rates have remained relatively stable. As of December 2024, the annual inflation rate in the U.S. is 2.9% for 2024. However, challenges persist due to higher interest rates and inflation, which may adversely impact our cash flow from ongoing operations.
We expect that our cash flow from continuing operations over the next twelve months, combined with our cash reserves, will be sufficient to fund our business operations, pay cash dividends to our shareholders, make distributions on our OP Units, and cover debt service.
Acquisitions and unfunded improvement allowance costs may require funding from borrowings, equity issuance and/or issuance of OP Units.
Summary of Cash Flows
The following summary discussion of our cash flows is based on the consolidated statements of cash flows in our consolidated financial statements and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below (in thousands):
For the Year Ended
December 31,
2024 2023
Net Cash Provided by Operating Activities $ 43,349 $ 40,084
Net Cash Used in Investing Activities $ (19,135) $ (12,835)
Net Cash Used in Financing Activities $ (29,844) $ (46,598)
Cash and Cash Equivalents - End of Year $ 20,213 $ 25,843
Net Cash Provided by Operating Activities:
Net cash provided by operating activities for the years ended December 31, 2024 and 2023 were approximately $43.3 million and approximately $40.1 million, respectively. Net cash flows provided by operating activities primarily related to contractual rent received from our properties, partially offset by our general and administrative expenses.
Net Cash Used in Investing Activities:
Net cash used in investing activities for the years ended December 31, 2024 and 2023 were approximately $19.1 million and approximately $12.8 million, respectively. Net cash used in investing activities for the year ended December 31, 2024 related to approximately $4.0 million used to purchase a cultivation facility in Connecticut and approximately $15.1 million used to fund improvements at four cultivation facilities. Net cash used in investing activities for the year ended December 31, 2023 related to approximately $0.4 million used to purchase an adjacent parcel of land by an existing cultivation facility in Missouri and approximately $14.4 million used to fund improvement at four cultivation facilities, partially offset by approximately $1.9 million of proceeds received from the sale of our Palmer, Massachusetts property.
Net Cash Used in Financing Activities:
Net cash used in financing activities for the years ended December 31, 2024 and 2023 was approximately $29.8 million and approximately $46.6 million, respectively. Cash used in financing activities for the year ended December 31, 2024, related to approximately $35.0 million in dividend payments to holders of our common stock, as well as distributions on our OP Units, $1.0 million to pay down our loan payable, approximately $0.3 million of deferred offering costs incurred in connection with our ATM Program and approximately $84 thousand of cash paid for taxes in lieu of issuance of common stock. These cash outflows were offset by a cash inflow of $6.6 million from draws on our Revolving Credit Facility. Net cash used in financing activities for the year ended December 31, 2023, mainly related to approximately $33.7 million in dividend payments to holders of our common stock, as well as distributions on our OP Units, $1.0 million to pay down our loan payable, approximately $11.8 million to buy back stock under the stock repurchase program and approximately $43 thousand of cash paid for taxes in lieu of issuance of common stock.
Dividends
To maintain our qualification as a REIT, U.S. federal income tax law generally requires that we distribute at least 90% of our REIT taxable income annually, determined without regard to the deduction for dividends paid and excluding net capital gains. We must pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our taxable income. We evaluate each quarter to determine our ability to pay dividends to our stockholders based on our net taxable income if and to the extent authorized by our board of directors. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service payments. If our cash available for distribution is less than our net taxable income, we could be required to sell assets or borrow funds to make cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution.
As a result of this distribution requirement, our Operating Partnership cannot rely on retained earnings to fund its ongoing operations to the same extent that other companies whose parent companies are not REITs can. During the year ended December 31, 2024, we declared and our board of directors approved, cash dividends on our common stock and restricted stock units and in our capacity as general partner of the Operating Partnership, we authorized distributions on our OP Units totaling $1.70 per share.
During the year ended December 31, 2023, we declared and our board of directors approved, cash dividends on our common stock and restricted stock units and in our capacity as general partner of the Operating Partnership, authorized distributions on our OP Units totaling $1.57 per share.
Contractual Obligations and Commitments
Unfunded Commitments
As of December 31, 2024, we had aggregate unfunded commitments to invest approximately $11.0 million to develop and improve our existing cultivation facility in Connecticut.
Corporate Office Lease
As of December 31, 2024, we are the lessee under one office lease for a term of four years, subject to annual escalations. The annual rent payments range from approximately $72 thousand in year one to $85 thousand in year four. The office lease has a remaining average lease term of approximately 1.67 years.
Revolving Credit Facility
As of December 31, 2024, the interest rate on our revolving credit facility was 5.65% and we had $7.6 million outstanding under the facility. See Note 6 - Financings for more details.
Adoption of New or Revised Accounting Standards
We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
Recent Accounting Pronouncements
Refer to Note 2 - “Basis of Presentation and Summary of Significant Accounting Policies” for recent accounting pronouncements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Interest Rate Risk
Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. We are subject to interest rate risk in connection with our Revolving Credit Facility. As of December 31, 2024, we had $7.6 million principal drawn on our Revolving Credit Facility, at a fixed interest rate of 5.65% through May 2025 and a floating rate thereafter. Therefore, if interest rates decrease, our required interest payments may exceed those based on current market rates. If interest rates remain higher for longer, our cost of financing will significantly increase when the Revolving Credit Facility adjusts to a floating rate in May 2025. We may choose to mitigate such interest rate risk through the use of interest rate derivative instruments.
Impact of Inflation
As of December 2024, the annual inflation rate declined to approximately 2.9% from 3.5% at the end of 2023 and a high of 6.5% at the end of 2022. We enter into leases that generally provide for annual fixed increases in rent at a predetermined rate. In some instances, leases provide for annual increases in rent based on the increase in the Consumer Price Index (“CPI”). We expect these lease provisions to result in rent increases over time. During times when inflation exceeds the rent increases stipulated in the leases, rent increases may not keep up with the rate of inflation.
Seasonality
Our business is not, and we do not expect our business to be, subject to material seasonal fluctuations.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this Item 8 is incorporated by reference to our Financial Statements beginning on page of this report.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES.
Our management, under the supervision and with the participation of our principal executive and financial officer, is responsible for and has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, including ensuring that such information is accumulated and communicated to our company's management, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officer have concluded that such disclosure controls and procedures were effective as of December 31, 2024 (the end of the period covered by this Annual Report).
Management’s Annual Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as a process designed by, or under the supervision of, the Company's Chief Executive Officer and Chief Financial Officer and effected by the Company's Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Management of the Company has assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2024. In making its assessment of internal control over financial reporting, management used the criteria described in Internal Control-Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission, ("COSO"). Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2024 based on criteria in Internal Control-Integrated Framework issued by the COSO.
This annual report does not include an attestation report of the company's independent registered public accounting firm due to a temporary exemption transition period established by rules of the Securities and Exchange Commission for emerging growth companies under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act").
Limitations on Controls
Our system of internal control over financial reporting was designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements in accordance with accounting principles generally accepted in the United States. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION.
During the quarter ended December 31, 2024, no director or officer of the Company adopted, modified or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, each as defined in Item 408 of Regulation S-K.
On March 6, 2025, the Company entered an amended and restated employment agreement with Ms. Lisa Meyer, effective June 13, 2025 (the “Effective Date”), pursuant to which she will continue to serve as the Chief Financial Officer, Treasurer and Secretary of the Company (the “Amended and Restated Employment Agreement”). As of the Effective Date, the Amended and Restated Employment Agreement will replace and supersede Ms. Meyer’s existing employment agreement (the “Prior Employment Agreement”) with the Company, which expires on June 13, 2025.
The Amended Employment Agreement modifies certain terms of the Prior Employment Agreement, including, but not limited to (i) adding the requirement that Ms. Meyer be employed at the end of the fiscal year in order to receive the Annual Bonus, unless Ms. Meyer is terminated without Cause, for Good Reason or due to her Death or Disability (as each term is defined in the Amended Employment Agreement); (ii) removing the provisions that Ms. Meyer is entitled to receive the Accrued Obligations (as such term is defined in the Amended Employment Agreement) in the event she is terminated without Cause, resigns for Good Reason, terminated due to her Death or Disability or terminated due to the non-renewal of the Term (as such term is defined in the Amended Employment Agreement) by the Company; and (iii) adding a provision that in the event (A) Ms. Meyer is terminated from the Company due to the non-renewal of the Term by the Company; (B) such termination occurs after the signing of a purchase or sale agreement that would result in a Change of Control (as such term is defined in the Amended Employment Agreement); (C) the Change of Control is not consummated prior to the termination; and (D) Ms. Meyer executes and does not timely revoke a written Release (as such term is defined in the
Amended Employment Agreement) in accordance with the terms of such Release, then Ms. Meyer shall be entitled to the following: (1) the Prior Year Bonus (as such term is defined in the Amended Employment Agreement) that was earned but unpaid as of the termination date; (2) the Pro Rata Bonus (as such term is defined in the Amended Employment Agreement); (3) a severance payment, equal to one times Ms. Meyer’s Base Salary (as such term is defined in the Amended Employment Agreement) in effect on the date of termination (without giving effect to any reduction in Base Salary that constitutes Good Reason) plus the target Annual Bonus for the year in which the termination occurred; (4) immediate vesting of any outstanding Company equity awards; and (5) a lump-sum payment equal to the COBRA premiums that Ms. Meyer would pay if she elected COBRA under the Company’s health plan for herself and her dependents for the 18-month period following the date of termination.
All other material terms contained in the Prior Employment Agreement remain substantially unchanged in the Amended Employment Agreement. The foregoing description of the Amended Employment Agreement does not purport to be complete and is qualified in its entirety by the full text of the Amended Employment Agreement, a copy of which will be filed with our Quarterly Report on Form 10-Q for the quarter ending March 31, 2025.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The information required by Item 10 is incorporated herein by reference to the proxy statement to be filed with the SEC within 120 days after December 31, 2024.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 is incorporated herein by reference to the proxy statement to be filed with the SEC within 120 days after December 31, 2024.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Equity Compensation Plan
The following table summarizes information about the Company’s equity compensation plan under which our common stock may be issued as of December 31, 2024.
Plan Category Number of Shares to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1)
Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Shares Remaining Available for Future Issuance under Equity Compensation Plans(2)
Equity compensation plans approved by security holders 393,096 1,796,909
Equity compensation plans not approved by security holders - - -
Total 393,096 - 1,796,909
(1) Consists of awards granted under the 2021 Equity Incentive Plan. This amount includes 59,217 vested RSUs, 68,253 unvested RSUs, 223,078 unvested PSUs and 42,548 PSUs scheduled to be issued on January 17, 2025. The number of unvested PSUs reflects the maximum number of shares issuable if the maximum performance criteria are achieved. There is no weighted-average exercise price for these RSUs and PSUs.
(2) Reflects shares available for issuance under the 2021 Equity Incentive Plan, assuming that maximum performance is achieved with respect to PSUs. Excludes 42,548 PSUs scheduled to be issued on January 17, 2025.
The remainder of the information required by Item 12 is incorporated by reference to the proxy statement to be filed with the SEC within 120 days after December 31, 2024.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required by Item 13 is incorporated herein by reference to the proxy statement to be filed with the SEC within 120 days after December 31, 2024.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information required by Item 14 is incorporated herein by reference to the proxy statement to be filed with the SEC within 120 days after December 31, 2024.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a)Documents filed as part of this report:
1.Financial Statements. See Index to Financial Statements.
2.Schedules to Financial Statements. See Index to Financial Statements.
All financial statement schedules not included have been omitted because they are either inapplicable or the information required is provided in our Financial Statements and Notes thereto.
3.Exhibits. See Exhibit Index below.
EXHIBIT INDEX
Exhibit
Number Description
3.1 Articles of Amendment and Restatement of NewLake Capital Partners, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
3.2 Articles Supplementary of NewLake Capital Partners, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on September 19, 2022).
3.3 Amended and Restated Bylaws of NewLake Capital Partners, Inc. (incorporated by reference to Exhibit 3.3 to the Registrant's Quarterly Report on Form 10-Q filed on November 10, 2022).
4.1 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K filed on March 18, 2022).
10.1 Amended and Restated Agreement of Limited Partnership of NLCP Operating Partnership LP (incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.2† NewLake Capital Partners, Inc. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Annual Report on Form 10-K filed on March 18, 2022).
10.3† Amended and Restated Employment Agreement between NewLake Capital Partners, Inc. and Anthony Coniglio (incorporated by reference to Exhibit 10.1 to the Registrant's Registration Current Report on Form 8-K filed on December 17, 2024).
10.4† Employment Agreement between NewLake Capital Partners, Inc. and Lisa Meyer (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed on May 9, 2024).
10.5† Indemnification Agreement between NewLake Capital Partners, Inc. and Lisa Meyer (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed on May 16, 2022).
10.6† Indemnification Agreement between NewLake Capital Partners, Inc. and David Weinstein (incorporated by reference to Exhibit 10.7 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.7† Indemnification Agreement between NewLake Capital Partners, Inc. and Anthony Coniglio (incorporated by reference to Exhibit 10.8 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.8† Indemnification Agreement between NewLake Capital Partners, Inc. and Gordon DuGan (incorporated by reference to Exhibit 10.10 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.09† Indemnification Agreement between NewLake Capital Partners, Inc. and Alan Carr (incorporated by reference to Exhibit 10.11 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.10† Indemnification Agreement between NewLake Capital Partners, Inc. and Joyce Johnson-Miller (incorporated by reference to Exhibit 10.12 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.11† Indemnification Agreement between NewLake Capital Partners, Inc. and Peter Kadens (incorporated by reference to Exhibit 10.13 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.12† Indemnification Agreement between NewLake Capital Partners, Inc. and Peter Martay (incorporated by reference to Exhibit 10.14 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.13† Indemnification Agreement, dated December 12, 2024, by and between NewLake Capital Partners, Inc. and Dina Rollman.
10.14†
Amended and Restated Investor Rights Agreement (incorporated by reference to Exhibit 10.15 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.15 Amended and Restated Registration Rights Agreement (incorporated by reference to Exhibit 10.16 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.16 Warrant Agreement between NewLake Capital Partners, Inc, and NLCP Holdings, LLC (incorporated by reference to Exhibit 10.17 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.17†
Form of Nonqualified Stock Option Grant Agreement (incorporated by reference to Exhibit 10.18 to the Registrant's Registration Statement on Form S-11 filed on June 21, 2021).
10.18†
Form of Senior Executive Restricted Stock Unit Agreement under the NewLake Capital Partners, Inc. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed December 20, 2021).
10.19†
Form of Senior Executive Performance Stock Unit Agreement under the NewLake Capital Partners, Inc. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed December 20, 2021).
10.20†
Form of Employee Restricted Stock Unit Agreement under the NewLake Capital Partners, Inc. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed December 20, 2021).
10.21†
Form of Employee Performance Stock Unit Agreement under the NewLake Capital Partners, Inc. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed December 20, 2021).
10.22†
Form of Non-Employee Director Restricted Stock Unit Agreement under the NewLake Capital Partners, Inc. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant's Current Report on Form 8-K filed December 20, 2021).
10.23 Loan and Security Agreement, dated as of May 6, 2022, among NLCP Operating Partnership LP, as borrower and a commercial federally regulated bank, as a lender and as agent for lenders that become party thereto (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2022).
10.24 Pledge and Security Agreement, dated May 6, 2022, among certain subsidiary guarantors and a commercial federally regulated bank as agent (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2022).
10.25 Continuing and Unconditional Guaranty, dated May 6, 2022, among NewLake Capital Partners, Inc., as parent, guarantors and a commercial federally regulated bank, as agent (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2022).
10.26 Equity Distribution Agreement, dated June 10, 2024, by and among the Company, NLCP Operating Partnership LP and Compass Point Research & Trading, LLC (incorporated by reference to Exhibit 1.1 to the Registrant's Current Report on Form 8-K filed June 11, 2024).
10.27 Equity Distribution Agreement, dated November 20, 2024, by and among the Company, NLCP Operating Partnership LP and Lucid Capital Markets, LLC (incorporated by reference to Exhibit 1.1 to the Registrant's Current Report on Form 8-K filed November 20, 2024).
10.28 Amendment Number One to Loan and Security Agreement, dated July 29, 2022, between the Operating Partnership and a commercial federally regulated bank, as a lender and as agent for lenders that become party thereto (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2022).
16.1 Letter from BDO USA, P.C. to the Securities and Exchange Commission, dated June 21, 2024 (incorporated by reference to Exhibit 16.1 to the Registrant’s Current Report on Form 8-K filed June 21, 2024).
19.1*
Insider Trading Policy.
21.1* List of Subsidiaries of the Registrant.
23.1* Consent of Marcum LLP.
23.2*
Consent of BDO USA, P.C.
31.1* Certification of Annual Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Annual Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1*
Clawback Policy.
101.INS* Inline XBRL Instance Document.
101.SCH* Inline XBRL Taxonomy Extension Schema Document.
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
_________________________
†Management contracts or compensatory plans required to be filed as Exhibits to this Form 10-K.
*Filed herewith.