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 a sale-leaseback transaction with PharmaCann LLC
(PharmaCann) for a property located in Dwight, Illinois, which is
currently improved with approximately 48,000 square feet of
industrial space.
The purchase price for the property was $18.0 million (excluding
transaction costs). Concurrent with the closing of the acquisition,
IIP entered into a long-term, triple-net lease agreement for the
property with PharmaCann, which intends to continue to operate the
property as a licensed cannabis cultivation and processing
facility. PharmaCann is also expected to complete additional tenant
improvements for the property, including an approximately 18,000
square foot expansion and other improvements that are expected to
more than double production capacity, and for which IIP has agreed
to provide reimbursement of up to $7.0 million. Assuming full
reimbursement for the tenant improvements, IIP’s total investment
in the property will be $25.0 million. Founded in 2014, PharmaCann
is a multi-state cannabis operator with licenses in Illinois,
Maryland, Massachusetts, New York, Pennsylvania and Ohio, and is
licensed for up to 26 retail locations and five cultivation and
processing facilities.
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.
This sale-leaseback transaction marks IIP’s fifth property
acquisition and lease with PharmaCann as PharmaCann continues its
nationwide expansion and penetration into existing markets, with
prior IIP acquisitions and leases for PharmaCann’s licensed
cannabis cultivation and processing facilities in Massachusetts,
New York, Ohio and Pennsylvania.
“We have been the preferred real estate capital partner for
PharmaCann since our initial acquisition and lease of PharmaCann’s
New York cultivation and processing facility in 2016,” said Paul
Smithers, President and Chief Executive Officer of Innovative
Industrial Properties, Inc. “In the past three years of our
relationship, PharmaCann has made tremendous strides in executing
on its business plan and has developed a tremendous reputation for
the quality of its products and strength of its team of dedicated
employees throughout the organization. We are excited about what
the future holds for PharmaCann, and look forward to supporting
them in Illinois with continued enhancements to their facility to
meet the tremendous demand for medical-use cannabis and the
introduction of an adult-use cannabis program next year.”
PharmaCann currently operates four medical-use cannabis
dispensaries in Illinois, and expects to add four additional retail
store locations in 2020 in connection with Illinois’ expected
commencement of adult-use cannabis sales on January 1, 2020.
“As we start a new chapter in the evolution of our business, we
are thrilled to team once again with IIP as our long-term real
estate partner in Illinois,” said Brett Novey, Chief Executive
Officer of PharmaCann. “With our expected doubling of production
capacity at our Dwight facility and doubling of our retail presence
in high-traffic locations across greater Chicago, we are extremely
well-positioned to both continue to maximize our product reach to
patients in need through Illinois’ medical cannabis program and to
meet the tremendous demand anticipated in connection with the
roll-out of the adult-use cannabis program in just a few months’
time.”
As of October 30, 2019, IIP owned 38 properties located in
Arizona, California, Colorado, Florida, Illinois, Maryland,
Massachusetts, Michigan, Minnesota, New York, Nevada, Ohio and
Pennsylvania, totaling approximately 2.8 million rentable square
feet (including approximately 903,000 rentable square feet under
development/redevelopment), which were 100% leased with a
weighted-average remaining lease term of approximately 15.6 years.
As of October 30, 2019, IIP had invested approximately $403.3
million in the aggregate (excluding transaction costs) and had
committed an additional approximately $139.7 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 13.8% for these 38
properties, calculated as (a) the sum of the current base rents,
supplemental rent (with respect to the lease with PharmaCann 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 $139.7 million). These statistics
do not include up to $17.7 million that may be funded in the future
pursuant to IIP’s lease with GR Companies Inc. (Grassroots) at one
of IIP’s Illinois properties, $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 the leases of the Illinois
property, PharmaCann 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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version on businesswire.com: https://www.businesswire.com/news/home/20191030006139/en/
IIP Contact: Catherine Hastings Chief Financial Officer, Chief
Accounting Officer and Treasurer Innovative Industrial Properties,
Inc. (858) 997-3332
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