Essential Investment? This REIT Believes in Cannabis-Related Real Estate

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

When cannabis companies were deemed essential businesses at the beginning of the global COVID-19 pandemic, it created an even bigger opportunity for investors to get in on the action.

Investors can invest in cannabis stocks such as Tilray Inc. TLRY or Canopy Growth Corp. CGC. Investors also have the option to invest in privately held cannabis companies. Among the increasingly popular ways to get involved in the industry is to invest in real estate that serves the cannabis industry, whether it’s retail storefronts or vast cultivation facilities.

NewLake Capital Partners Inc. NLCP, is a real estate investment trust (REIT) that recently went public. The company owns 27 properties across 10 states and raised $100 million in its IPO. It provides licensed cannabis operators with non-dilutive capital to fund their real estate needs, and the company says there are a number of reasons real estate in the cannabis space is an attractive investment:

• Better durability of cash flow: Diversification from a professionally managed portfolio of real estate leased to cannabis tenants generates a stable cash flow.  Particularly, since the cannabis industry was designated essential during COVID and the industry is benefiting from the increased profile.
• Well-positioned for a recession: Consumer discretionary goods and staples typically outperform on the downside during a recession.
• Continue capital investment: Construction for essential businesses has continued and the industry requires significant investment in real estate to meet the growing demand for cannabis. This provides a consistent opportunity to invest and continue to grow the company.
• Bolster liquidity: Cannabis businesses can tap into real estate they own to unlock capital while remaining at the property and not disrupting operations. Proceeds can be used to build up cash, invest in people or equipment or fund expansion projects.

Experience Matters

Founded in 2019, NewLake Capital acquires industrial and retail properties through sale-leaseback transactions, 3rd-party purchases and build-to-suit projects. The REIT pays a quarterly dividend and says its team’s specialized knowledge combines years of real estate, cannabis industry and capital markets expertise to deliver complete solutions for its clients.

“Our tenants are some of the leading operators in the U.S. state-licensed cannabis industry, and we are a trusted partner for their real estate needs,” said Anthony Coniglio, President of NewLake Capital. “We supply the necessary real estate capital to companies that cultivate, manufacture and/or dispense cannabis. We have purchased cultivation facilities and dispensaries from coast to coast, provided expansion capital for properties we own and funded build-to-suit projects.”

“While we focus on properties across the country, we see significant value in properties situated in states where the number of licenses is limited, resulting in a better operating environment for our tenant and more value for the properties we own,” Coniglio said.  

The cannabis industry has demonstrated its resiliency over the past 18 months and has established itself as a core consumer good with significant growth potential .This publicly traded REIT offers investors an alternative way to invest in the industry, capturing significant returns with the safety of a professionally managed real estate portfolio.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.