Innovative Industrial Properties, Inc. (IIP), the first and only
real estate company on the New York Stock Exchange (NYSE: IIPR)
focused on the regulated U.S. cannabis industry, announced today
that it is extending its long-term real estate relationship with
Kings Garden Inc. (Kings Garden), one of California’s top cannabis
producers, with the acquisition of a Southern California property,
which comprises approximately 192,000 square feet of industrial
space.
The purchase price for the property was approximately $25.4
million (excluding transaction costs). Concurrent with the closing
of the purchase, IIP entered into a long-term, triple-net lease at
the property with Kings Garden, which intends to operate the
property as a licensed cannabis cultivation and distribution
facility upon completion of redevelopment. Kings Garden is expected
to complete additional tenant improvements for the property, for
which IIP has agreed to provide reimbursement of up to $25.0
million. Including this property, IIP leases six properties to
Kings Garden, representing approximately 364,000 square feet of
industrial space and a total commitment (including purchase prices
and commitments to fund tenant improvements, but excluding
transaction costs) of approximately $95.0 million.
“Kings Garden is one of the preeminent operators in California,
and has pioneered industry best practices to develop the highest
quality and consistency in its cannabis products,” said Paul
Smithers, President and Chief Executive Officer of IIP. “We are
thrilled to expand our long-term real estate partnership and
support Kings Garden in significantly enhancing their capacity
through redevelopment of this new facility to Kings Garden’s
exacting environmental controls and specifications.”
As the pioneering real estate investment trust (REIT) for the
medical-use cannabis industry, IIP partners with experienced
medical-use cannabis operators and serves as a source of capital by
acquiring and leasing back their real estate assets, in addition to
offering other creative real estate-based capital solutions.
“IIP has been a powerful partner for us, enabling us to expand
operations in the largest cannabis market in the world,” said
Michael King, Chairman and CEO of Kings Garden. “Kings Garden
prides itself on working with only the best and IIP is on a
different level from all others, working collaboratively with us to
facilitate a smooth transaction. Our partnership with IIP provides
us with strategic, non-dilutive capital to continue to leverage our
expertise as purveyors of world-class cannabis products, to further
increase our reach to patients and customers throughout California.
We expect this new facility to increase our production capacity by
more than double, adding approximately 50,000 pounds of finished
cannabis on an annual basis.”
According to BDS Analytics, through September 30, 2020,
California generated over $2.6 billion in regulated cannabis sales,
which is expected to grow to nearly $7.4 billion by 2025. Also
according to Marijuana Business Daily, while only 168 of
California’s 540 cities and counties allow for regulated cannabis
companies to operate within their borders as of June, dozens of
city and county initiatives were approved by voters this month,
which are expected to further increase demand for regulated
cannabis products throughout the state.
As of November 16, 2020, IIP owned 64 properties located in
Arizona, California, Colorado, Florida, Illinois, Maryland,
Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York,
North Dakota, Ohio, Pennsylvania and Virginia, totaling
approximately 5.2 million rentable square feet (including
approximately 1.9 million rentable square feet under
development/redevelopment), which were 99.3% leased (based on
square footage) with a weighted-average remaining lease term of
approximately 16.3 years. As of November 16, 2020, IIP had invested
approximately $943.2 million in the aggregate (excluding
transaction costs) and had committed an additional approximately
$293.1 million to reimburse certain tenants and sellers for
completion of construction and tenant improvements at IIP’s
properties. These statistics do not include up to approximately
$3.2 million that may be funded in the future pursuant to IIP’s
lease with a tenant at one of IIP’s Massachusetts properties, as
the tenant at that property may not elect to have IIP disburse
those funds to the tenant and pay IIP the corresponding base rent
on those funds. These statistics also treat IIP’s Los Angeles,
California property as not leased, due to the tenant being in
receivership and its ongoing default in its obligation to pay rent
at that location.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised
Maryland corporation focused on the acquisition, ownership and
management of specialized industrial properties leased to
experienced, state-licensed operators for their regulated
medical-use cannabis facilities. Innovative Industrial Properties,
Inc. has elected to be taxed as a real estate investment trust,
commencing with the year ended December 31, 2017. Additional
information is available at
www.innovativeindustrialproperties.com.
About Kings Garden
Based in Coachella Valley, Kings Garden Inc. is California’s
predominant cannabis cultivation, processing and manufacturing
company, specializing in the world of premium grade boutique
products at an unsurpassed commercial scale. Now one of the largest
producers in California, Kings Garden prides itself on having
organized highly experienced cannabis management and operations
team, while being fully compliant and licensed across the state of
California. From its inception, Kings Garden has held unwavering
values focused on superior quality of end products, its team of
management and employees who are considered family, giving back to
local communities, and the advancement of the cannabis industry as
a whole. For more information visit https://kingsgarden.com/ or
https://www.instagram.com/kingsgarden.ca/.
Innovative Industrial Properties
Forward-Looking Statements
This press release contains statements that IIP believes to be
“forward-looking statements” within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
All statements other than historical facts, including, without
limitation, statements regarding the lease and redevelopment of the
California property, Kings Garden and the California regulated
cannabis market, are forward-looking statements. When used in this
press release, words such as we “expect,” “intend,” “plan,”
“estimate,” “anticipate,” “believe” or “should” or the negative
thereof or similar terminology are generally intended to identify
forward-looking statements. Such forward-looking statements are
subject to risks and uncertainties that could cause actual results
to differ materially from those expressed in, or implied by, such
statements. Investors should not place undue reliance upon
forward-looking statements. IIP disclaims any obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
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Catherine Hastings Chief Financial Officer, Chief Accounting
Officer and Treasurer Innovative Industrial Properties, Inc. (858)
997-3332
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