NewLake Capital Partners (OTCMKTS:NLCP) CEO Anthony Coniglio said the cannabis-focused net lease REIT is positioning itself as a yield-oriented way for investors to gain exposure to potential U.S. cannabis reform catalysts while collecting current income. Speaking in an interview hosted by Zuanic & Associates analyst Pablo Zuanic, Coniglio described NewLake as the second-largest owner of cannabis real estate in the U.S. and outlined the company’s portfolio mix, tenant landscape, views on deal structures, and how potential federal rescheduling could affect industry activity.
NewLake’s portfolio and operating model
Coniglio said NewLake buys cannabis properties from operators and leases them back under long-term, net lease arrangements. He noted the company has a 12-year remaining weighted average lease term and an approximate 13% yield across its leased portfolio, which he described as “above market” compared with traditional net lease real estate categories.
Comparisons: non-cannabis REITs, IIPR, BDCs, and mortgage REITs
Coniglio contrasted NewLake’s cap rates and dividend yield with traditional net lease REITs, which he said generally transact at cap rates around 6% to 7% and typically offer mid-single-digit dividend yields (around 6% to 7%). He also discussed differences versus Innovative Industrial Properties (IIPR), noting that NewLake remains cannabis-only while IIPR has made investments outside cannabis. Coniglio said NewLake operates its business to meet NYSE/Nasdaq standards but remains listed on the OTC because major exchanges “won’t have us because we focus on cannabis exclusively,” while IIPR was “grandfathered” after listing before certain rules changed.
On financing alternatives, Coniglio described:
- BDCs as more focused on underwriting cash flow like private credit investors, with shorter-duration structures and more active monitoring.
- Mortgage REITs as lending against real estate collateral, advancing a percentage of value.
- Sale-leaseback REITs as acquiring the property outright and leasing it back, generally producing longer duration and potentially higher proceeds for operators.
He said sale-leaseback cap rates are typically lower than the coupon rates on mortgage REIT or BDC transactions because the sale-leaseback owner holds title and can address defaults without foreclosure. He also said some operators previously avoided locking in 11% to 11.5% cap rate transactions (in 2021–2022) in favor of mid-teens debt, expecting borrowing costs to fall substantially by 2024—an expectation he said did not materialize broadly for the industry.
Discount to NAV, dividend coverage, and why the yield is high
Coniglio addressed investor concerns around NewLake’s high dividend yield and discount-to-NAV. He argued the company’s balance sheet and dividend coverage do not support the idea that leverage or dividend risk is driving the yield.
Key points he cited included:
- NewLake had “a little over $7 million” outstanding debt on a balance sheet he described as over $400 million, and he said the company is effectively in a net cash position given over $20 million in cash.
- The company had a $90 million credit facility with significant remaining capacity.
- NewLake’s dividend payout ratio was 82% of AFFO in the third quarter, within its stated target of 80% to 90%.
Coniglio said the payout ratio could drift closer to 90% as the company works to re-tenant vacated properties, but he said the dividend remains within the targeted coverage range. He also suggested that limited institutional participation related to OTC trading and custody constraints may be a factor behind the stock’s yield and valuation disconnect.
Tenant updates and approach to “working with” operators
Discussing portfolio issues cited by the interviewer, Coniglio said NewLake recovered two properties vacated by Ayr, cleaned them up, and was actively seeking to re-tenant them for cannabis use—one in Pennsylvania and one in Nevada—while noting the company also has the option to go non-cannabis if needed. He said a REV Clinics property that came back over the summer has similarly been cleared and is being marketed, and he characterized Calypso as a “non-event” with no issues for at least a year or two.
Coniglio also emphasized that NewLake aims to be a long-term partner given the 15-year lease nature of many arrangements. As an example, he described working with Curaleaf on an Illinois dispensary relocation through a deed-for-deed swap after the local community did not allow adult-use sales at the original medical dispensary location.
Rescheduling, timing, and market impacts
On federal cannabis rescheduling, Coniglio said the announcement had increased “chatter” and dialogue in January, but he suggested many market participants are waiting to see the final rule filed in the Federal Register before activity turns more tangible. He said Schedule III could serve as a catalyst for credit improvement, new investors, state program expansions, and additional opportunities over 2026 and 2027.
Regarding 280E, Coniglio said he had heard it would apply for the tax year, though he noted the issue is more appropriate for tax professionals and could depend on guidance accompanying the filing. He also said he does not expect a “free lunch” on past unpaid 280E-related liabilities; instead, he expects the IRS to seek payment and, in his view, likely through negotiated payment plans sized to cash flows.
On whether rescheduling would lead to a major exchange listing, Coniglio said Schedule III “doesn’t change” the current exchange position that NewLake violates federal law by operating in cannabis real estate, and he indicated a broader safe harbor—such as SAFER Banking with appropriate language—would likely be needed for access to U.S. capital markets.
Coniglio also discussed state-level dynamics in Pennsylvania, Florida, Illinois, Missouri, and Massachusetts, including his view that Pennsylvania remains a robust medical market and that political negotiations continue to shape adult-use prospects; that Florida’s outcome remains uncertain but could improve if concerns such as public consumption are addressed; and that Massachusetts has shown signs of stabilization with optimism tied to proposals to raise dispensary caps.
In closing remarks, Coniglio reiterated his view that yield-oriented cannabis investments like REITs may offer lower volatility than plant-touching operators, provide quarterly income while waiting for reform catalysts, and may benefit earlier from improvements in cost of capital as new capital enters the sector.
About NewLake Capital Partners (OTCMKTS:NLCP)
NewLake Capital Partners, Inc is a publicly traded real estate investment trust that focuses on the acquisition, development and operation of self-storage properties across the United States. Established in the mid-2010s, the company seeks to generate stable, long-term cash flows through a portfolio of facilities that serve both individual and commercial customers. By structuring investments through its operating partnership, NewLake delivers a REIT structure to investors while maintaining operational flexibility on the ground.
The company’s core activities include identifying value-add or newly developed self-storage facilities in growth-oriented markets, negotiating acquisitions or ground leases, and overseeing construction or renovation.
