NewLake Capital Partners, Inc.·Real Estate

NewLake Capital Partners offers high-yield REIT exposure to the cannabis sector, currently yielding over 12% with a healthy 84% payout ratio. NLCP trades at a significant discount (~0.75x book, 7x AFFO) due to OTCQX listing and regulatory overhang, providing a margin of safety. Regulatory reclassification of cannabis could double NLCP's valuation (to 15x AFFO), enable NYSE listing, and compress yields to ~8%.

NewLake Capital Partners, Inc. (NLCP) offers defensiveness and a 12% dividend yield, outperforming MSOS over the past three years. MSOS, an ETF heavily concentrated in top cannabis stocks, remains exposed to industry-wide oversupply, margin pressure, and bankruptcy risk. NLCP's low debt, resilient rent collections, and ability to replace tenants provide downside protection absent in MSOS.

NLCP has significantly underperformed since my initial bullish stance, with the stock price down over 26%. Despite collecting dividends, NLCP's total return remains negative at 9%, failing to offset capital losses. I maintained a bullish outlook and invested several times, but kept NLCP as a small portfolio position.

NewLake Capital offers a double-digit dividend yield, underpinned by a net cash balance sheet that reduces downside and liquidity risk. Rescheduling cannabis to Schedule III could significantly improve tenant credit quality and drive a re-rating of NLCP's valuation and yield. Despite tenant distress and sector volatility, NLCP's low leverage and long lease terms provide resilience and time to await regulatory catalysts.

Rental properties are far from passive; the workload never ends. REITs offer scalable, truly passive real estate exposure. I present a REIT portfolio that generates me $3,000 of monthly income.

NewLake Capital Partners (NLCP) offers a nearly 12% yield and stands out as a stable cannabis REIT. NLCP boasts a 91% occupancy rate, 52% net profit margin, minimal debt, and a steadily rising dividend since its 2021 IPO. NLCP's dividend safety and consistency outshine peers and it has a history of dividend increases.
NewLake Capital Partners is a leading provider of real estate capital to state-licensed cannabis operators. Founded in 2019, it is a triple-net lease REIT that acquires industrial and retail properties through sale-leaseback transactions, third-party purchases and build-to-suit projects. Its tenants are some of the leading operators in the U.S. state-licensed cannabis industry and it is a trusted partner for their real estate needs.
Real Estate
REIT - Specialty
8
2021-08-20
0.87