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 a subsidiary of
GR Companies Inc. (Grassroots) for a property located in
Litchfield, Illinois, which comprises approximately 70,000 square
feet of industrial space.
The purchase price for the property was $10.5 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 Grassroots, which intends to continue to operate the
property as a licensed cannabis cultivation and processing
facility. Grassroots is also expected to complete additional tenant
improvements for the property, including a 50,000-square-foot
planned expansion, for which IIP has agreed to provide
reimbursement of up to approximately $17.7 million, which funding
is subject to reduction at Grassroots’ option within the first nine
months of the lease term. Assuming full reimbursement for the
tenant improvements, IIP’s total investment in the property will be
approximately $28.2 million.
Grassroots is one of the leading multi-state cannabis operators,
with operations in Illinois, Pennsylvania, Maryland, Ohio, North
Dakota, Nevada, Michigan, Oklahoma, Vermont, Connecticut and
Arkansas. Mitch Kahn, Founder and Chief Executive Officer of
Grassroots, leads a highly experienced management team with a
strong track record of founding, building and managing highly
successful companies in a broad range of industries, including
cannabis, consumer products, merchandising, real estate and
finance.
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.
“Through Grassroots’ reputation for premium products and
leveraging its management team’s deep expertise and proven
entrepreneurship, Grassroots has emerged as one of the top
companies in the regulated cannabis industry today, and we are
thrilled to enter into this real estate partnership with them,”
said Paul Smithers, President and Chief Executive Officer of
Innovative Industrial Properties, Inc. “In the past five years,
they have developed a tremendous strategic footprint, with vertical
integration in several states with high barriers to entry, and in a
very short time have established themselves as a preeminent
operator in several markets. We look forward to supporting them in
the many years to come as a trusted, reliable real estate capital
partner, as they continue to grow their business in both existing
and new states.”
“Partnering with a proven real estate capital provider was a
logical choice for us, freeing up our capital to be redeployed into
our operations, while at the same time securing funding for our
expansion at the Litchfield property in anticipation of the
introduction in Illinois of the adult-use cannabis program in a few
short months,” said Mitchell Kahn, Chief Executive Officer and
Founder of Grassroots. “We thank the IIP team for moving quickly to
address our real estate capital needs with a solution that works
well for us, and we look forward to completing the significant
expansion of our production capacity at the property to address the
tremendous demand of patients and consumers of Illinois.”
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 approximately $17.7 million that may be funded
in the future pursuant to IIP’s lease with Grassroots at the
Illinois property, $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 LLC 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.
About Grassroots Cannabis:
GR Companies Inc. (dba Grassroots Cannabis) is a cannabis
company dedicated to serving, advancing and respecting the cannabis
movement. Through its unique, vertically integrated business model,
Grassroots grows, processes and sells trusted cannabis products
that enhance life’s moments for people from all backgrounds. Its
retail brand, Herbology, offers a unique, wellness and
education-focused dispensary experience.
Grassroots Cannabis has built its portfolio at an unprecedented
pace, with facilities in highly competitive markets, including
Illinois, Nevada, Pennsylvania, Michigan, Maryland, Oklahoma, Ohio,
Vermont, North Dakota, Arkansas and Connecticut. The company is
pursuing acquisitions in additional markets. The executive
management team is composed of a group of highly skilled business
leaders united by a common belief: Cannabis inspires us to live
deeply. For more information, visit
www.grassrootscannabis.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, Grassroots 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/20191030006135/en/
Catherine Hastings Chief Financial Officer, Chief Accounting
Officer and Treasurer Innovative Industrial Properties, Inc. (858)
997-3332
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