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 two sale-leaseback transactions with subsidiaries
of GR Companies Inc. (Grassroots) for two properties in
Pennsylvania and North Dakota, which comprise approximately 105,000
square feet of industrial space in the aggregate.
The purchase prices for the properties were approximately $24.1
million in total (excluding transaction costs). Concurrent with the
closings of the purchases, IIP entered into a long-term, triple-net
lease agreement for each property with a subsidiary of Grassroots,
which intends to continue to operate the properties as regulated
cannabis cultivation and processing facilities. Grassroots is
expected to complete additional tenant improvements for the
properties, including an approximately 35,000 square foot
redevelopment at the Pennsylvania property, for which IIP has
agreed to provide aggregate reimbursement of up to approximately
$13.2 million. Assuming full reimbursement for the tenant
improvements, IIP’s total investment in the two properties will be
approximately $37.3 million.
These sale-leaseback transactions mark IIP’s second and third
acquisitions and leases with Grassroots, with a prior
sale-leaseback transaction for Grassroots’ licensed cannabis
cultivation and processing facilities in Illinois completed in
October.
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.
“We are thrilled to partner again with Grassroots as their real
estate capital partner in Pennsylvania and North Dakota, on the
heels of our transaction with Grassroots’ Illinois facility in
October,” said Paul Smithers, President and Chief Executive Officer
of Innovative Industrial Properties, Inc. “Grassroots is an
operator with a proven track record of bringing the highest quality
products to market, resulting in tremendous brand recognition and
patient and consumer loyalty. We are proud to team with them once
again on these two facilities, providing an efficient capital
solution for them to focus on expanding their presence in both
states.”
“IIP moved quickly and effectively addressed a key part of our
capital plan, reinforcing their industry reputation as a reliable,
long-term real estate capital partner,” said Mitchell Kahn, Chief
Executive Officer and Founder of Grassroots. “In a short time
period, Grassroots has made tremendous strides in Pennsylvania,
with its flower and concentrate products among the highest rated in
the state and selling to 100% of state-wide dispensaries. With our
anticipated expansion plans and capital improvements at both the
Pennsylvania and North Dakota properties, we expect to
significantly ramp production in both facilities to meet the
tremendous and growing demand for our products by patients in these
states.”
Medical-use cannabis dispensaries in Pennsylvania made their
first sales in 2018. Partly through just its second year, as of
August 2019, over 180,000 patients had been registered for the
state’s medical cannabis program. In addition, in a September 2019
joint press conference, Governor Tom Wolf and Lt. Governor John
Fetterman announced the final report of Lt. Governor Fetterman’s
statewide adult-use cannabis tour, with Governor Wolf being in
favor of legalizing cannabis for adult-use consumption, in line
with the large majority of Pennsylvanians. Grassroots currently
operates nine medical-use cannabis dispensaries in
Pennsylvania.
The North Dakota regulated medical cannabis program is in its
early stages. Significant steps were taken by the North Dakota
regulatory authorities to expand patient access in April of this
year, including adding twelve new qualifying medical conditions
that may be treated with medical cannabis and providing that
physician assistants are permitted to issue medical cannabis
certifications. Grassroots is one of two licensed cannabis
cultivation and processing operators in the state of North
Dakota.
As of December 23, 2019, IIP owned 46 properties located in
Arizona, California, Colorado, Florida, Illinois, Maryland,
Massachusetts, Michigan, Minnesota, Nevada, New York, North Dakota,
Ohio and Pennsylvania, totaling approximately 3.1 million rentable
square feet (including approximately 913,000 rentable square feet
under development/redevelopment), which were 100% leased with a
weighted-average remaining lease term of approximately 15.3 years.
As of December 23, 2019, IIP had invested approximately $489.3
million in the aggregate (excluding transaction costs) and had
committed an additional approximately $144.9 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 13.6% for these 46
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 $144.9 million). These statistics
do not include up to $16.4 million that may be funded in the future
pursuant to IIP’s lease with Grassroots at one of IIP’s Illinois
properties, $37.4 million 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 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 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 properties,
Grassroots and the Pennsylvania and North Dakota regulated cannabis
markets, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191223005554/en/
IIP Contact: Catherine Hastings Chief Financial Officer, Chief
Accounting Officer and Treasurer Innovative Industrial Properties,
Inc. (858) 997-3332
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