Innovative Industrial Properties Expands Real Estate Partnership with PharmaCann at Massachusetts Property
September 25 2019 - 5:00PM
Business Wire
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 entered into amendments of the lease and development
agreement with a subsidiary of PharmaCann LLC (PharmaCann) at the
property located at 465 Hopping Brook Road in Holliston,
Massachusetts, making available an additional $8.0 million in
funding for additional expansion of PharmaCann’s regulated cannabis
cultivation and processing facilities at the property. The lease
amendment also adjusted the base rent under the lease to take into
account the additional available funding and extended the term of
the lease agreement. Assuming full payment of the additional
funding, IIP’s total investment in the property will be $26.5
million.
IIP originally acquired the Massachusetts property and entered
into a long-term lease with PharmaCann in 2018, prior to
commencement of construction. With this additional funding,
PharmaCann expects to further enhance systems to significantly
expand production capacity at the property. In addition to the
Massachusetts property, IIP acquired and executed leases with
PharmaCann for its medical-use cannabis cultivation and processing
facilities in New York, Ohio and Pennsylvania, with the
Pennsylvania transaction closing last month.
PharmaCann is a leading multi-state cannabis operator with
licenses in Illinois, Maryland, Massachusetts, New York,
Pennsylvania, Ohio and Virginia.
“PharmaCann is one of the leading multi-state operators, and we
are very happy to continue to support them as their go-to real
estate partner for their mission-critical facilities,” said Paul
Smithers, President and Chief Executive Officer of IIP. “We look
forward to completion of our development projects with PharmaCann
and continuing to support their growth in these states and
beyond.”
“We are extremely pleased to team again with IIP on this planned
enhancement of our cultivation and processing facility in
Massachusetts,” said Brett Novey, PharmaCann’s Chief Executive
Officer. “IIP has been our long-term real estate capital partner
since 2016, and has played a key role for us to grow and achieve
the scale we are targeting. Massachusetts presents a tremendous
opportunity, and we look forward to bringing our highest quality
products to residents throughout the Commonwealth.”
From December 2018 through May 2019, representing just the first
six full months since Massachusetts launched its regulated
adult-use cannabis program, aggregate adult-use cannabis sales
approached $140 million, including $34 million in May sales alone,
according to Marijuana Business Daily. Massachusetts regulators
approved regulations earlier this week that govern cannabis cafes
and delivery, providing for two additional potential drivers for
continued strong growth of the industry.
As of September 25, 2019, IIP owned 31 properties located in
Arizona, California, Colorado, Illinois, Maryland, Massachusetts,
Michigan, Minnesota, New York, Nevada, Ohio and Pennsylvania,
totaling approximately 2.2 million rentable square feet (including
approximately 687,000 rentable square feet under
development/redevelopment), which were 100% leased with a
weighted-average remaining lease term of approximately 15.9 years.
As of September 25, 2019, IIP had invested approximately $293.1
million in the aggregate (excluding transaction costs) and had
committed an additional approximately $103.4 million to reimburse
certain tenants and sellers for completion of construction and
tenant improvements at IIP’s properties. IIP’s average current
yield on invested capital is approximately 14.5% for these 31
properties, calculated as (a) the sum of the current base rents
(after the expiration of applicable base rent abatement or deferral
periods), supplemental rent (with respect to the lease with
PharmaCann at one of IIP’s New York properties) and property
management fees, divided by (b) IIP’s aggregate investment in these
properties (excluding transaction costs and including aggregate
potential development/redevelopment funding and tenant
reimbursements of approximately $103.4 million). These statistics
do not include up to $40.0 million that may be funded in the future
pursuant to IIP’s lease with Trulieve Cannabis Corp. at one of
IIP’s Massachusetts properties, the additional $4.0 million which
may be requested by PharmaCann at one of IIP’s Pennsylvania
properties or $2.0 million that may be funded in the future
pursuant to IIP’s lease with Holistic Industries, Inc. at one of
IIP’s Massachusetts properties, as the tenants at those properties
may not elect to have IIP disburse those funds to them and pay IIP
the corresponding base rent on those funds.
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.
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 PharmaCann, the lease, the
development agreement and the Massachusetts 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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version on businesswire.com: https://www.businesswire.com/news/home/20190925005829/en/
Company Contact: Catherine Hastings Chief Financial Officer,
Chief Accounting Officer and Treasurer Innovative Industrial
Properties, Inc. (858) 997-3332
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