Cannabis Real Estate Investment Trusts to Keep an Eye on in September 2023
The cannabis sector in the United States is booming as the third quarter of 2023 draws to a close. Investors increasingly turn to top Cannabis Real Estate Investment Trusts (REITs) as a stable avenue for capitalizing on this growth. In general, these REITs focus on owning and managing properties leased to cannabis businesses, making them attractive to long-term investors. With the cannabis industry’s expansion and growing acceptance, these REITs offer dependable dividends and a smart choice for those looking to profit from its upward trend.
Investing in top cannabis REITs allows investors to participate in the cannabis market’s growth while avoiding the difficulties of cannabis manufacturing and distribution. In general, these REITs earn revenue primarily by leasing premises to licensed cannabis operators, allowing investors to receive reliable dividend payments. Additionally, as the cannabis business evolves and regulations evolve, these investments can provide stability and the potential for excellent long-term returns. Also, with the legal landscape for cannabis becoming more favorable and more states considering legalization, the performance of these REITs in Q3 2023 promises to be an interesting story within the larger storyline of the continued expansion of the US cannabis industry.
Cannabis REITs: Where to Invest in September 2023
- Innovative Industrial Properties, Inc. (NYSE: IIPR)
- NewLake Capital Partners, Inc. (OTC: NLCP)
- AFC Gamma, Inc. (NASDAQ: AFCG)
Innovative Industrial Properties, Inc.
Innovative Industrial Properties, Inc. is a cannabis-focused real estate investment firm based in the United States. In general, the company has 8.7 million square feet of rentable space, with an additional 2.5 million square feet on the way. Furthermore, most of these properties are fully leased, with an average lease length of 16.4 years. The company currently has 111 locations distributed throughout 19 states. By April, IIP had already spent $2.4 billion on property renovations, on top of the $227.1 million in anticipated rent payments. As a result of continued real estate investments in Pennsylvania and Massachusetts, the company expects its portfolio to rise significantly in 2022.
Second Quarter 2023
- Generated total revenues of approximately $76.5 million in the quarter, representing an 8% increase from the prior year’s quarter.
- Recorded net income attributable to common stockholders of approximately $40.9 million for the quarter, or $1.44 per diluted share.
- Recorded adjusted fund from operations (AFFO) of approximately $64.0 million, or $2.26 per diluted share, increases of 6% and 5% from the prior year’s quarter, respectively.
- Paid a quarterly dividend of $1.80 per common share on July 14, 2023, to stockholders of record as of June 30, 2023. The common stock dividends declared for the twelve months ended June 30, 2023, of $7.20 per common share represent an increase of $0.70, or 11%, over dividends declared for the twelve months ended June 30, 2022.
IIPR Stock Performance
On September 11th, IIPR stock closed at $89.34, up 8.55% in the last month of trading. The stock is trading in a 52-week price range of $63.36-$125.38, down 11.85% year to date. In this case, IIPR stock has a 12-month median price target of $95 per share, according to CNN Business analysts. In this forecast, this would be a 6.33% increase over the last trade price of $89.34.
NewLake Capital Partners, Inc.
NewLake Capital Partners is a well-known state-licensed lender for cannabis-related enterprises. In general, this triple-net lease REIT invests in commercial real estate, including industrial and retail buildings, through sale-leasebacks, third-party purchases, and build-to-suit activities. In addition, its tenants are some of the most well-known businesses in the nation’s state-licensed cannabis sector, making it a trustworthy real estate partner. According to the group, revenue was $10.2 million in the first three months of 2022, rising 130 percent from the same period in 2021. In addition, common stockholders received a $5 million net profit distribution in the first quarter of 2022.
Second Quarter 2023 Financial Highlights
Comparison to the first quarter ended March 31, 2023:
- Quarter-over-quarter revenue, net income, Funds from Operations (“FFO”), and Adjusted Funds from Operations (“AFFO”) were flat. As a result, presented below are only the second quarter financial highlights.
- Revenue totaled $11.4 million.
- Net income attributable to common stockholders totaled $5.8 million.
- FFO(1) totaled $9.5 million.
- AFFO-diluted(1) totaled $9.9 million.
- Cash and cash equivalents as of June 30, 2023, were $40.7 million, with $22.8 million committed to fund Tenant Improvements (“TIs”).
On June 15, 2023, the Company declared a second quarter 2023 cash dividend of $0.39 per share of common stock, equivalent to an annualized dividend of $1.56. In addition, the dividend was paid on July 14, 2023, to stockholders of record at the close of business on June 30, 2023.
Outlook for 2023
NewLake Capital is providing AFFO guidance for full year 2023 of $39.8 to $40.8 million, an increase of 4.1% over AFFO for the same period the prior year, assuming the midpoint of that range.
NLCP stock closed at $13.50 on September 11th, up 2.27% in the past month of trading. Additionally, the stock has a price range of $11.80-$19.50 and is down 15.73% year to date.
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AFC Gamma, Inc.
AFC Gamma, Inc. is a well-known cannabis ancillary firm that manages its cash flow and capacity effectively. The 2020-founded corporation focuses on supply and demand ideas, markets for those theories, real estate security, and other forms of collateral. Overall, AFCG specializes in first-lien loans, mortgage loans, construction loans, bridge financings, and other unconventional ways of financing. The most recent marketing attempts from AFC Gamma have focused on the fast-developing cannabis market. The corporation provided Verano Holdings Inc. with a $100 million option and a $250 million credit line.
Second Quarter 2023 Financial Highlights
- Second quarter GAAP net income of $12.1 million or $0.59 per basic weighted average common share and Distributable Earnings(1) of $9.9 million or $0.49 per basic weighted average common share
- Declared dividend of $0.48 per common share for second quarter 2023
AFCG Stock Performance
On September 11th, AFCG shares closed at $13.10, a 3.02 percent increase from the previous trading month. In general, tthe stock, which has a price range of $9.91 to $17.72, is down 15.85% year to date. In this case, analysts at CNN Business predict that the 12-month average price for AFCG shares will be $17.50. Compared to the stock’s most recent trading price of $13.10, this prediction shows a gain of 31.58 percent.
Profit Potential: Best Cannabis REITs to Consider in September 2023
In summary, as of September 2023, Cannabis Real Estate Investment Trusts (REITs) remain robust and profitable for those interested in the thriving US cannabis sector. Furthermore, due to the continuous growth of the cannabis market and favorable regulations, these REITs present investors with a lucrative avenue to benefit from industry expansion without the intricacies of cannabis operations. Through property leasing to licensed operators, these REITs generate a consistent income stream in the form of dividends, making them an appealing choice for long-term investors.
Overall, to prepare for the cannabis industry’s future, monitoring top Cannabis REITs is crucial. Keep abreast of evolving regulations and market shifts, and contemplate diversifying your investment portfolio with these promising opportunities. In addition, September 2023 holds significant potential in cannabis investments, and staying informed about the standout REITs will be instrumental in making informed choices in this rapidly expanding sector.
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