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 closed on the acquisition of a property in Harrison,
Michigan, which comprises approximately 45,000 square feet of
industrial space.
The purchase price for the Michigan property was approximately
$6.9 million (excluding transaction costs). Concurrent with the
closing of the purchase, IIP entered into a long-term, triple-net
lease agreement with an affiliate of Emerald Growth Partners L.L.C.
(EGP), which intends to operate the property as a licensed
medical-use cannabis cultivation and processing facility upon
completion of redevelopment. EGP is expected to complete tenant
improvements for the building, for which IIP has agreed to provide
reimbursement of up to approximately $3.1 million. Assuming full
reimbursement for the tenant improvements, IIP’s total investment
in the property will be approximately $10.0 million.
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.
“We are pleased to add EGP and its strong management team to our
premier tenant roster,” said Paul Smithers, President and Chief
Executive Officer of IIP. “EGP is well-positioned for success, with
its depth of industry experience and expected large-scale vertical
integration, and we look forward to supporting EGP through the
redevelopment of the Harrison facility and the launch of its
Pleasantrees retail locations throughout the state.”
EGP received pre-qualification status for full vertical
integration by the Michigan Marijuana Regulatory Agency for four
“Class C” cultivation licenses, one “Class A” cultivation license,
one processor license, and twelve provisioning center licenses. EGP
has raised approximately $20 million from investors to date as it
prepares to commence fully licensed operations in the state. EGP is
led by its Chief Executive Officer and Founder, Randall Buchman, an
industry veteran appointed by Governor Rick Snyder last year to the
state’s Marijuana Advisory Panel to represent cultivators.
“The IIP team has been great to work with, providing us the
efficient capital we need to complete the redevelopment of our
facility in a seamless manner,” said Randall Buchman, Chief
Executive Officer and Founder of EGP. “We look forward to launching
our operations, and bringing our high-quality products and
best-in-class service to patients throughout Michigan.”
Michigan first legalized medical cannabis in 2008 and is one of
the largest medical-use cannabis markets in the United States,
including approximately 270,000 medical-use cannabis cardholders as
of the end of 2017, according to ArcView Market Research (ArcView).
In November of last year, Michigan voters approved Proposition
18-1, a ballot initiative that legalizes adult-use cannabis, and
Michigan regulators have indicated that they would begin accepting
adult-use cannabis business license applications later this year.
ArcView projects that Michigan will be one of the top ten regulated
cannabis markets by 2022, with total regulated cannabis sales of
$1.4 billion.
As of June 21, 2019, IIP owned 22 properties located in Arizona,
California, Colorado, Illinois, Maryland, Massachusetts, Michigan,
Minnesota, New York, Ohio and Pennsylvania, totaling approximately
1.7 million rentable square feet (including approximately 321,000
rentable square feet under development/redevelopment), which were
100% leased with a weighted-average remaining lease term of
approximately 15.3 years. As of June 21, 2019, IIP had invested
approximately $229.4 million in the aggregate (excluding
transaction costs) and had committed an additional approximately
$57.4 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 14.7% for these 22 properties, calculated as (a) the
sum of the current base rents, supplemental rent (with respect to
the lease with PharmaCann LLC at one of IIP’s New York properties)
and property management fees (after the expiration of applicable
base rent abatement or deferral periods), 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 $57.4
million).
About Emerald Growth Partners
Headquartered in Detroit, Michigan, and parent company to
Pleasantrees, Emerald Growth Partners is built with the mission to
cultivate the highest quality cannabis and build a health and
wellness culture that our community can rely on every day. For more
information visit enjoypleasantrees.com.
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 the lease of the Michigan
property, EGP and the Michigan 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/20190621005046/en/
Catherine Hastings Chief Financial Officer, Chief Accounting
Officer and Treasurer Innovative Industrial Properties, Inc. (858)
997-3332
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