Good morning, and welcome to the New Lake Capital Partners Third Quarter 2026 Earnings Conference Call. Today's call is being recorded. I will now turn the call over to Walter Pinto, Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to the New Lake Capital Partners Third Quarter 2026 Financial Results Conference Call. Joining me on the call today are Gordon Dugan, Chairman, Anthony Coniglio, President and Chief Executive Officer, and Lisa Meyer, Chief Financial Officer. Before we begin, please note that certain statements made during today's call may be considered forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including our guidance for full year 2026 AFFO. Actual results may differ materially due to a variety of risks and uncertainties. For a more detailed discussion of these factors, please refer to the company's filings with the Securities and Exchange Commission, including our Form 10-Q for the quarter ended September 30th, 2026. During the call, we'll also reference non-GAAP financial measures, including FFO and AFFO. Reconciliations to the most directly comparable GAAP measures are included in our earnings release. With that, I'd now like to turn the call over to our Chairman, Gordon Dugan.

Thank you, Walter, and good morning. New Lake continues to deliver solid financial performance for our shareholders. Third quarter revenue and AFFO were in line with expectations. as we continue to successfully close new transactions and make meaningful progress on risk mitigation of our portfolio. Year to date, we have collected 99.7% of contractual rent and our dividend remains well covered at an 88% ASFO payout ratio. We are pleased with these results, particularly given the continued volatility and distress in parts of the cannabis industry. Where tenants have faced difficulties, our team has worked hard to find solutions that limit rent disruption and protect cash flow for our shareholders. Those efforts have helped New Lake deliver stable performance. The work remains in a limited portion of our portfolio. So far in 2026, we have re-tenanted or signed new leases at properties previously leased to The Cannabis, Pharmacan, and Acreage. In most cases, a new operator assumed the existing lease with no interruption in rent payments. Those outcomes reflect the quality of our real estate and our team's commitment to working through tenant challenges. On the regulatory front, the industry is at an inflection point. Earlier this year, state licensed medical cannabis moved to schedule three, a historic first step. We expect the DEA to complete its rulemaking to move all cannabis to schedule three and the federal closure of the hemp loophole is scheduled to take effect in December. Together, these changes set the stage for a much healthier, much healthier regulatory environment for the industry. with relief from the 280e tax burden, improved operator cash flow, and a more level playing field for licensed operators against unregulated intoxicating hemp products. A stronger tenant base supports the durability of our rent and creates new opportunities for New Lake to deploy capital. Looking ahead, New Lake is very well positioned. During the quarter, we repaid the outstanding balance for our credit facility. and today New Lake is one of the only, if not the only publicly traded REIT with a debt-free balance sheet. With an available credit facility to fund near-term investment opportunities in our pipeline and an 88% ASFO payout ratio, we have the financial flexibility to grow while continuing to support our dividend. With that, I'll turn the call over to Anthony.

Thank you, Gordon, and good morning, everyone. We delivered a steady third quarter with revenue and AFFO consistent with the second quarter. As Gordon mentioned, we repaid our credit facility during the quarter and now have an unlevered balance sheet. We also extended the facility's maturity to 2029 and reduced its pricing by 100 basis points, which preserves low-cost capacity to fund our pipelines. At the same time, we continue to make progress at properties leased to tenants in court-supervised restructurings or facing financial distress while adding new properties to our portfolio under long-term leases. Let me start with the cannabis. As we've discussed, the cannabis has been working through a court-supervised process in Canada. We lease four properties to the cannabis, a dispensary and cultivation facility in Illinois and a dispensary and cultivation facility in Massachusetts. In Aurora, Illinois, the cannabis operations are being acquired by a new operator. We have entered into a lease agreement with the acquirer and a lease termination agreement with the cannabis, both of which take effect when the acquisition closes, which is subject to, excuse me, which is subject to customary regulatory approval. Pending closing, the cannabis security deposit for this property was applied to September rent. At our other three cannabis properties, we continue to receive full contractual rent, which has been paid through November, and we hold approximately one month of security deposits across these properties. In July, Vireo Growth announced an agreement to acquire certain assets of the cannabis in five markets, including Illinois and Massachusetts. We are actively engaged with the cannabis and other parties to minimize the potential for rent disruption at our properties and we will provide updates as we have more definitive information to share. Turning to Pharmacan, since our last call, Cresco Labs completed its acquisition of Pharmacan's Pennsylvania dispensaries, including the operations at our property, and the lease is now guaranteed by Cresco. at our other two Pharmacan dispensaries. We're working with the company as it pursues a potential transition of the operations to a new operator and all rent remains current. Next, I'll turn to our investment activity. We have closed three dispensary acquisitions since the beginning of the third quarter, all leased to our existing tenant C3 Industries under long-term leases. During the third quarter, we closed an acquisition in Kentucky, which we discussed on our last call. Subsequent to quarter end, we closed acquisitions in Michigan and Kentucky. The Michigan property is our first investment in the state. And for years, you've heard us express hesitancy about unlimited licensed states like Michigan. Well, we've watched that market closely and it has matured. Much of the price compression has already played out and the operating environment is more stable today, which gives us a better basis to underwrite transactions there. This property also benefits from a region that has limited licenses and is operated by C3, a tenant we know well and whose performance in Michigan we've observed for years. Our three properties available for lease continue to be actively marketed. And as always, we will announce new leases once agreements are signed. Turning to the regulatory environment, the broader rescheduling process remains ongoing. The administrative law judge stay has expired as of today. On November 2nd, the DEA began issuing its first federal registrations to more than 900 state-licensed medical cannabis dispensaries across seven states, marking a significant step in the implementation of the federal government's Schedule III framework. while it's hard to predict the exact timing of full plant rescheduling, the recent briefings and proceedings reinforce my confidence that cannabis will indeed be moved to schedule three. On hemp, the federal redefinition of hemp is scheduled to take full effect on December 11th, eliminating intoxicating hemp products that have competed with state legal cannabis products. Congress extended that date from November 12th in the last continuing resolution and we've seen little appetite among legislators to extend it again. Similar to what we are observing in Ohio where a state ban took effect earlier this year, we expect the restriction to support sales growth across our tenant base. Tuesday's historic election results could have a meaningful impact on the cannabis industry. As we all saw, Massachusetts voters rejected question eight which would have repealed adult use sales in the state and we're encouraged that this first attempt to reverse cannabis legalization has failed. Pennsylvania State Senate will be controlled by Democrats for the first time in 32 years and it sets up the real opportunity for adult use reform in the Commonwealth during 2027. We're also encouraged to see reform minded candidates win in Texas, Wisconsin and in Iowa. Nationally, Democrats are squarely in the driver's seat in Congress for the next two years with control of both the House and the Senate. And for the cannabis industry, that could create an opportunity to move legislation forward, but we've all been here before. Cannabis banking reform has had bipartisan support for years, yet under majorities of both parties, Congress has been unable to get it done. The House passed the Safe Banking Act seven times and the Senate Banking Committee approved it in 2023, but it's never received a vote on the Senate floor. What may be different this time is the makeup of the incoming Senate. Key committee gavels are expected to move to members who have supported cannabis reform and the new Senate should include more senators who support reform than the outgoing class. We will await any sort of commentary out of this group to have any sort of expectation for legislation to pass. Finally, I'd like to address uplisting as it's a topic that comes up regularly on our quarterly calls and with my meetings with investors. Following Trulieve's restructuring into a medical-only company and its New York Stock Exchange listing in June, we evaluated options for uplisting in approximately 50% of our portfolio that is leased to medical-only operations. given the cost and the time required to execute such a structure and our expectation that full restructuring will, excuse me, that full rescheduling will happen, we concluded it was not worth pursuing at this time. We view rescheduling as a strong potential catalyst for uplisting and New Lake continues to satisfy the New York Stock Exchange and NASDAQ listing requirements other than the exchange's restrictions on cannabis related businesses and we intend to be well positioned to move forward when the regulatory environment permits. And with that, I'll turn the call over to Lisa to review our financial results in more detail.

Thank you, Anthony, and good morning. For the third quarter of 2026, total revenue was $12 million compared to $12.6 million in the prior year period. Net income attributable to common stockholders totaled $4.2 million or 20 cents per diluted share, funds from operations totaled $10 million or 47 cents per diluted share, and adjusted funds from operations totaled $10.3 million or 49 cents per diluted share. For the nine months ended September 30th, 2026, total revenue was $36.4 million compared to $38.7 million in the prior year period. Net income attributable to common stockholders total $15.8 million, or 70 cents per diluted share. Funds from operations, or FFO, total $29.6 million, or $1.41 per diluted share. And adjusted funds from operations, or AFFO, total $30.7 million, or $1.46 per diluted share. The drivers of the year-over-year results were generally consisted for both the three- and nine-month period ended September 30, 2026. Revenue and ASFO were primarily impacted by three cultivation facilities available for lease in Pennsylvania, Nevada, and Massachusetts, which reduced rental income and increased property carrying costs. The impact was partially offset by annual contractual rent escalators across the portfolio of approximately 2.6%, rental income from the two Ohio dispensaries acquired in 2025, including rent associated with funded improvement allowances, and rental income from the Kentucky dispensary acquired in August of 2026. As Anthony discussed during the quarter, we entered into a lease termination agreement with the cannabis at our Aurora property. In connection with the termination agreement, we recognized approximately $100,000 of rental income from the cannabis security deposit in September and $1.9 million of accelerated amortization of an in-place lease intangible associated with the cannabis lease at Aurora, reducing net income for the period. While net income was reduced by approximately $1.9 million, the accelerated amortization is a non-cash charge and is excluded from both SFO and ASFO. On September 14th, 2026, our Board of Correctors declared a quarter cash dividend of 43 cents per share, or $1.72 per share on an annualized basis. The dividend was paid on October 15th, 2026, to stockholders of record as of September 30th, 2026. This represents an ASFO payout ratio of 88%, which remains within our target range of 80 to 90%. It is important to note that the earnings power of our portfolio continues to fully support our dividends. Turning to the balance sheet. As of September 30, 2026, gross real estate assets totaled $433.8 million and we had $17.9 million in cash and cash equivalents. During the quarter, we repaid $7.6 million outstanding on our revolving credit facility and ended the period with no outstanding debt. In August, we amended our $90 million revolving credit facility which reduced our interest rate by 100 basis points and extended the maturity date to May of 2029. The facility remains available to fund future investments. Between our third quarter dispensary acquisition and the two properties acquired substitute to quarter end, we had approximately $3.3 million in unfunded commitment for property improvements. These funds are deployed, they will earn incremental contractual rent represented embedded organic revenue growth. Additionally, in November, our board of directors authorized an extension of our stock repurchase program through December 31st, 2028, with approximately 8.2 million currently remaining available under this program. Overall, our results for the quarter were in line with expectations. With no debt, a strong cash position, and Available Credit Capacity, we believe we are well positioned to pursue attractive opportunities as the regulatory environment for cannabis continues to evolve. Operator, please open up the line for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from Pablo Zuanek from Zuanek and Associates. Please proceed with your question.

Thank you and good morning, everyone. Look, I appreciate the color you gave on the cannabis and PharmaCan properties. Can you give an update on acreage and remind us of the structure of the guarantee there from Cannabis USA? Thanks.

Yes, so good morning, Pablo. With acreage, we started a couple of years ago with three properties that we leased to acreage. One of those was acquired by a business that is now guaranteed by GTI. That was a dispensary in Connecticut earlier this year. There was a transaction with Acreage's Pennsylvania cultivation facility. That transaction is now guaranteed by Holistic Industries. And we have one property left in Sterling, Massachusetts that is a cultivation facility that is directly leased to Acreage. We have a parent guarantee from the Acreage parent as well as a guarantee from Canopy USA. Canopy USA being the holding company that holds Canopy Growth's U.S. operations including their common stock investment in Terrasend as well as Juana, Jetty, and then all of Acreage. In terms of acreage, what we know about Canopy USA is that Canopy USA, per the Canopy growth disclosures from earlier this year, was in default of its credit agreement and was seeking... It had actually a stay of that until January of 2027. So it continues to pay rent. It continues to be current. and we know that the company is looking at strategic alternatives and we're obviously looking at what they intend to do with our facility and what our options are if they decide that that is a facility they want to either monetize or move away from.

Thank you. And in terms of the vacant properties, I think they're all cultivation, right? The two from AIR, Nevada and Pennsylvania and Rev Clinics in Massachusetts. Again, if you can provide an update on that. I think the one in Massachusetts, is that being marketed for cannabis or for other uses? And the same question for the ones from here. I mean, you would think that in the case of Pennsylvania, there may be more interest in that property now from a cannabis perspective. Any quarter would help. Thanks.

Yes. You know, I would say that since the rescheduling announcement in April, we have seen an uptick in activity across all the properties. with Massachusetts. There was, I'd call it a bit of a pause on the part of some of the folks that were looking at that property recently because of the repeal vote that was on the ballot. Now that that was resoundingly rejected by voters on Tuesday, we're going to continue to show that. And I think we'll only see continued interest for parts of that property. We are not, I should say though, Pablo, we don't, exclusively show properties only for cultivation. We're always showing properties to cannabis companies as well as industrial companies. You're absolutely right that in Pennsylvania with the flip of the state house there and flip of the Senate that you will absolutely see interest and we've seen continued interest in that property in Pennsylvania. And then in Nevada, strong interest in that property from non-cannabis companies as well as a all said we are seeing decent flow of interest to all three of those properties. We've said in the past that we will only announce signed leases for available for sale properties. We don't want to go announcing term sheets because term sheets come and go, but leases are durable. And so when we have a signed lease, we certainly will update our shareholders.

Thank you. Just a couple of more questions, maybe one for Lisa. in terms of modeling for Q, obviously you've talked about the properties, the new properties of wire and so far in fourth quarter, but is there anything in terms of moving parts, anything we should keep in mind on the negative side, especially higher cost in the fourth quarter, any quarter you can give there, thanks.

I don't think there'll be, I think the cost will pretty be constant quarter over quarter. I do think you're going to see a modest decline in income related to the Aurora lease. So there will definitely be a modest decline in income there.

That's good. And then, Anthony, I mean, of course, I totally agree with all the good news at the state level, right? You mentioned Wisconsin and there's other states there. And let's see what happens in Texas and, of course, Pennsylvania. But more in the near term, can you talk about any states where you're seeing more action, more inbound calls? people looking at expansion, whether it's Ohio on the cultivation side or maybe Virginia or Minnesota. If you can give more color, not so much on stores, but cultivation inbound calls in the near term.

Thank you. We are not getting many calls for brand new builds on cultivation. I think this industry, Pablo, continues to be hesitant to take on significant CapEx projects. I think if we were to see that, it would be in a Texas or in a Georgia. And we're just not seeing that yet in our pipeline. We are seeing people that have existing cultivation facilities looking to monetize those to generate growth capital, non-dilutive growth capital, and that's happening across cultivation as well as the retail properties.

And then the very last one.

I'm sorry, Pablo. Go on. I realize I didn't answer your specific question. No, there is no specific state that I would say is driving an outsized portion of our portfolio. We have in the last quarter seen opportunities that span the country in, I don't want to say every state where cannabis is legal, but probably across at least half of them. Some of the very mature states, you saw us execute a transaction in Michigan, which is a very mature state, and execute a transaction in Kentucky, which is a very new state. And so There is not a theme that's emerging in our pipeline yet about a concentration of opportunities in any one particular state.

Right. And the very last question, I know we've talked about this in the past, but given the favorable regulatory tailwinds and potential for more capital to be available for the industry, maybe on the private side or even from banks, I think at the Blank Room Conference, recent recent banks made some interesting, some positive comments. Is that a new source of competition for you? Are people thinking about sale leaseback in a different way, or is it just part for the course and normal? Thank you.

No, I mean, Pablo, few companies have less competition nearly eight years after they started, but we're one of them. It's hard for us to find someone that's executed a new sale leaseback process in this industry for the cannabis industry over the last couple of years outside of local landlords, but nobody in a national scale really that we see competing for sell-leasebacks. With respect to banks, I think that banks will first provide capital to a professionally managed diversified portfolio of commercial real estate, a portfolio such as New Lakes. before they go into direct lending to cannabis operators. So as this industry gains more access to capital markets, I think that inures to our benefit. In fact, if you look back when we announced our $90 million credit facilities over three years ago, we were one of the first ones to have that type of large-scale facility in this industry. And again, I think it's because we are professionally managing this portfolio of commercial real estate that has diversification and professional underwriting of tenants that, in my opinion, a group that knows this industry as better as anybody that underwrites the industry. And I think banks will be slower to not only come into the sector as normalization occurs, but to enter into direct lending to the industry.

Pablo, I would just add that our cost of capital as a REIT that doesn't really employ a lot of leverage Niki Krear, Niki Krear We've been very conservative with our capital structure, which means we have a high cost of capital. We expect that normalization will significantly decrease our cost of capital and allow us to be more competitive and grow our portfolio and compete with other capital sources for this industry.

Thank you.

That's a good call. Thank you.

We have reached the end of the question and answer session. I would like to turn the floor back over to Anthony Coniglio for closing comments.

Thank you everybody for joining us today. We hope you have a great end of the year and we look forward to talking to you again in the first quarter. Thank you.

Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may disconnect your lines and have a wonderful day.