Newlake Cap Partners Inc

Ladies and gentlemen, good morning and welcome to the New Lake Capital Partners third quarter earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Walter Pinto. from KCSA Strategic Communications. Please go ahead.

Thank you, Operator. Good morning and welcome everyone to the New Lake Capital Partners Third Quarter 2024 Earnings Conference Call. I'm joined today by Anthony Coniglio, President and Chief Executive Officer, Lisa Meyer, Chief Financial Officer, and Jared Annenberg, Senior Vice President and Head of Investments. Before we begin, I'd like to remind everyone that statements made during today's conference call may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995. And actual results may differ materially due to a variety of risks and uncertainties and other factors. For a detailed discussion of some of the ongoing risks and uncertainties in the company's business, I refer you to the press release issued yesterday and filed with the SEC on Form 8K, as well as the company's 10Q and other reports filed periodically with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income attributable to common shareholders to FFO and AFFO and definitions of terms are included in the end of a press release. Please refer to that press release for more information. Company's guidance is based on current plans and assumptions and subject to risks and uncertainties more fully described in the company's filings with the U.S. Securities and Exchange Commission. This outlook reflects management's view of current and future market conditions, including assumptions such as the pace of future acquisitions and dispositions, rental rates, occupancy levels, leasing activity, uncollectible rents, operating and general administrative expenses, weighted average diluted shares outstanding, and interest rates. With that, it's my pleasure to turn the call over to Anthony.

Thank you, Walter, and thank you, everyone, for joining our call today. Today, I will address the election, Schedule 3, the industry, and our portfolio where we had continued partial rent from one tenant and recognized one month's security deposit from another tenant. The elections. Last week's election delivered mixed results regarding cannabis policy. It's clear Americans support medical cannabis by wide margins, and I expect the expansion of access to medical cannabis to continue. However, there is caution in conservative districts regarding adult use policies. It was unprecedented that during this election cycle, both candidates embraced cannabis reform, with the president-elect expressing support for adult use cannabis, Schedule III, and legislation that would decriminalize cannabis at the federal level, allowing states to decide on their cannabis policy. On election day, Nebraska voted to legalize medical marijuana with the ballot initiative eclipsing 70% support. That's noteworthy since Donald Trump won the state with 60% support. In Kentucky, where the state legislature passed a medical marijuana bill in 2023, voters in more than 100 cities and counties voted voted to allow cannabis businesses to operate in their region. None of those jurisdictions voted against medical cannabis. None. In fact, many jurisdictions saw over 60% and in some cases over 70% support for medical cannabis in a state where the Republican presidential candidate won nearly 65% of the vote. On the other hand, adult use initiatives in red states faced a different fate on election day. Florida's adult use measure had a strong showing with 56% voter support, but unfortunately, it fell short of the 60% supermajority needed to pass. Meanwhile, North and South Dakota adult use initiatives, which only needed a majority of support to pass, received 47% and 44% support, respectively. President-elect Trump carried these red states with 56% in Florida and well over 60% of the vote in North and South Dakota. So to me, what Election Day 2024 has reinforced is that a strong majority of Americans across the political spectrum want access to cannabis for medical purposes, and work also remains in conservative districts to unlock freedom of choice for recreational purposes. I believe the resounding support for medical cannabis across the political spectrum can only be positive for the DEA's process to reschedule cannabis to Schedule III unlocking the opportunity for expanded research into the medical benefits of the plant and setting the stage for continued growth in the medical cannabis segment as more states seek to legalize, such as Kentucky and Nebraska recently did. On the legislative front, where Republicans want control of the Senate, we'll need to watch how upcoming committee membership and chair positions are filled to better understand the opportunity for reform in the upcoming Congress. It's certainly positive that Donald Trump is openly backed rescheduling banking rights for the cannabis industry and states' rights to decide on cannabis policy without federal interference. It's also positive for reform that Donald Trump said yesterday he's nominating Matt Gaetz as Attorney General. The former congressman voted yes on safe banking and has been an advocate for legalization. Rescheduling. The DEA's process to reschedule cannabis from Schedule 1 to Schedule 3 continues. There is a preliminary hearing set for next month with testimony scheduled to begin in January and February. As discussed on previous calls, we anticipate that when the rescheduling process happens, our tenants will all benefit from the elimination of IRS Section 280E, which we estimate will provide our tenant base with over $500 million of tax savings in the aggregate. We continue to expect the DEA to finalize the rescheduling process, and it would certainly be a positive if Matt Gaetz is confirmed as Attorney General, since in a congressional hearing, he actually pressed the current DEA administrator on why it was taking so long to reschedule cannabis. Turning to the industry and our portfolio. Looking at the overall industry, the cannabis sector continues to face headwinds from competition, hemp-derived products, and slower rollouts of new state legal programs like adult use in Ohio and adult use in New York. Last year saw many operators restructure, extend debt, and implement new strategies to face the slower growth environment. We are now seeing the fruits of those labors, and in some cases, the results have fallen short of expectations. We've seen this across the industry, and our portfolio is no different. The same two names we spoke about so often during 2023, Revolutionary Clinics and Calypso, continue to be areas of focus for our portfolio management, and the team is working hard to maximize value for our shareholders. Jarrett will provide more detail on this in a moment, but I would highlight that during the third quarter, our AFFO payout ratio was 84%. in the range of our 80% to 90% targeted payout ratio, providing ample protection for our dividend. Before I turn the call over to Jarrett, a quick comment on uplisting. This continues to be a major focus of ours. We understand the inherent limitations on custody and what that means for our shareholders. To remind everybody, we operate New Lake to comply with the listing standards of the NYSE and NASDAQ, but we're precluded from listing on those exchanges because of the industry we focus on. As a result, there are limits to custody of our stock by prime brokers. We know that a TSX listing has expanded custody for cannabis operators that restructured their business. We've been working with Council and the TSX to develop a structure that could work for the exchange, the company, and most importantly, our shareholders. This work continues, and while we cannot provide certainty or a timeline, I can pledge that we'll continue to pursue all avenues to expand custody and liquidity of our stock. With that, I will turn it over to Jared.