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 Scott Township,
Pennsylvania, and entered into a long-term lease and development
agreement with a subsidiary of PharmaCann LLC (“PharmaCann”) for an
approximately 23,000-square-foot industrial facility and an
approximately 31,000-square-foot greenhouse facility on the
property.
The contract purchase price for the property was $942,000.
PharmaCann is also expected to construct the project at the
property, for which IIP has agreed to provide reimbursement of up
to approximately $29.1 million, which includes up to an additional
$4.0 million which may be requested by PharmaCann within nine
months following the closing, subject to the satisfaction of
certain conditions. Assuming full reimbursement for the
construction, including the additional potential funding, IIP’s
total investment in the property will be $30.0 million (excluding
transaction costs). PharmaCann is a multi-state cannabis operator
with licenses in Illinois, Maryland, Massachusetts, New York,
Pennsylvania, Ohio and Virginia.
This acquisition and lease marks IIP’s fourth transaction with
PharmaCann as PharmaCann continues its nationwide expansion, with
prior IIP acquisitions and leases for PharmaCann’s medical-use
cannabis cultivation and processing facilities in New York,
Massachusetts and Ohio.
Medical-use cannabis dispensaries in Pennsylvania made their
first sales in 2018, and last month, the Pennsylvania Department of
Health (DOH) announced that there were more than 110,000 active
certified patients and more than 1,600 physicians in the medical
cannabis program. Similar to other medical-use cannabis states, the
DOH has expanded patient access to the program over time, including
recently approving anxiety disorders and Tourette syndrome to its
program’s list of medical conditions that qualify for treatment
with medical cannabis. The DOH also recently launched a clinical
research program for medical cannabis, providing for partnerships
with clinical registrants and universities to conduct research on
the efficacy of cannabis in treating the state’s listed medical
conditions.
“PharmaCann has demonstrated very clearly over time its
dedication to patients in providing the highest quality products in
a compassionate environment, and we are excited to partner with
them again as they bring their program to the people of
Pennsylvania,” said Paul Smithers, President and Chief Executive
Officer of IIP. “We look forward to working closely with the
PharmaCann team in the development of this new facility that will
provide them the highly controlled environment to meet their
exacting product specifications.”
“Innovative Industrial Properties has been our real estate
partner since 2016, and we are excited to partner with them once
again in Pennsylvania,” said Teddy Scott, Chief Executive Officer
of PharmaCann. “We are focused on the development of this property,
and look forward to bringing our expertise and standard of product
quality to patients throughout the state.”
As of August 12, 2019, IIP owned 27 properties located in
Arizona, California, Colorado, Illinois, Maryland, Massachusetts,
Michigan, Minnesota, New York, Nevada, Ohio and Pennsylvania,
totaling approximately 2.1 million rentable square feet (including
approximately 685,000 rentable square feet under
development/redevelopment), which were 100% leased with a
weighted-average remaining lease term of approximately 15.5 years.
As of August 12, 2019, IIP had invested approximately $264.2
million in the aggregate (excluding transaction costs) and had
committed an additional approximately $96.5 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 27
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 $96.5 million). These statistics do
not include any amounts that may be funded in the future pursuant
to IIP’s lease with Trulieve Cannabis Corp. at one of IIP’s
Massachusetts properties or the additional $4.0 million which may
be requested by PharmaCann at the Scott Township, Pennsylvania
property, as the tenants at those properties may not elect to have
us disburse those funds to them and pay us 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.
About PharmaCann
PharmaCann LLC is one of the largest medical cannabis providers
in the nation, with nine dispensary locations and three production
facilities currently operating across multiple states. Focused on
elevating the role of cannabinoid-based therapies in the healthcare
industry, PharmaCann offers pharmaceutical grade cannabis products
to patients looking for relief from qualifying medical conditions.
For more information about PharmaCann, please visit
www.pharmacann.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 and development of the
Pennsylvania property, PharmaCann and the Pennsylvania medical-use
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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