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 an amendment of the lease with a subsidiary of
Ascend Wellness Holdings, LLC (AWH) at the property located in
Barry, Illinois, making available an additional $8 million in
funding for expansion of AWH’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 $33 million.
IIP originally acquired the Illinois property and entered into a
long-term lease with AWH in December 2018. With this additional
funding, AWH expects to implement systems at the property to
significantly increase production, with exacting environmental and
other controls for the highest product quality and consistency. In
addition to the Illinois property, IIP acquired and executed a
lease with AWH for its regulated cannabis cultivation and
processing facilities in Michigan, with the Michigan transaction
closing in July.
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.
In August, with overwhelming bipartisan support, Illinois’
Compassionate Use of Medical Cannabis Program Act became a
permanent program and the “pilot” designation was removed. Also in
August, several medical conditions were added to the program’s list
of qualifying conditions for medical cannabis treatment, including
chronic pain, osteoarthritis, migraines and neuropathy, among
others, and nurse practitioners and physician’s assistants were
authorized to certify prospective patients for the program.
Earlier this year, Illinois also became the eleventh state to
approve the legalization of adult-use cannabis, which is expected
to launch in January 2020, and in late August, awarded the first
licenses to businesses to sell adult-use cannabis when the program
starts in January.
“It is heartening to see the many significant steps that
Illinois officials have taken to open the medical cannabis market
for patients in need, and we are excited to support AWH in the
enhancement of this facility to meet that demand,” said Paul
Smithers, President and Chief Executive Officer of IIP. “The AWH
management team is well-positioned overall to execute on tremendous
opportunities in each of their states of focus.”
AWH is a vertically integrated cannabis company, and expects to
be operating in each of Massachusetts, Illinois, Michigan and Ohio
by the end of this year. AWH has raised over $100 million in
capital to date.
“It is a great to have a real estate partner like IIP, with the
flexibility and reliability we need to optimally fund our real
estate needs to support our operations growth,” said Abner Kurtin,
Chief Executive Officer and Co-Founder of AWH. “AWH is excited to
be able to double our production in the Barry facility to meet the
demands of the opening of the adult-use market next year. Combined
with our four recreational dispensaries (under the new brand name
Illinois Provisions), we expect to be the largest player in the
southwestern region of the state.”
As of September 9, 2019, IIP owned 29 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 15.8 years. As of September
9, 2019, IIP had invested approximately $275.0 million in the
aggregate (excluding transaction costs) and had committed an
additional approximately $100.8 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 29 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 LLC 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 $100.8 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 LLC at one of IIP’s Pennsylvania properties, 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 AWH
AWH is a vertically integrated cannabis company with assets in
Massachusetts, Illinois, Michigan and Ohio, four of the largest
cannabis markets in the Eastern United States. Assets include
thirteen municipal approved dispensaries in Michigan, the sixth
largest dispensary group in Illinois, and the first dispensary
approved and permitted by the City of Boston. The flagship store in
Boston will be just steps from Faneuil Hall and the iconic TD
Garden, two of the most highly trafficked tourist destinations in
the country. AWH is redefining the cannabis retail experience,
offering a customer-centric environment and a curated selection of
products with effect-based categorization. For more information
about AWH, visit www.awholdings.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 AWH, the lease and the Illinois
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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Company Contact: Catherine Hastings Chief Financial Officer,
Chief Accounting Officer and Treasurer Innovative Industrial
Properties, Inc. (858) 997-3332
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