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 Massachusetts,
which comprises approximately 118,000 square feet of industrial
space in the aggregate.
The purchase price for the property was approximately $7.8
million (excluding transaction costs). Concurrent with the closing
of the purchase, IIP entered into a long-term, triple-net lease
agreement for the property with a wholly owned subsidiary of Cresco
Labs Inc. (Cresco), which intends to operate the property as a
regulated cannabis cultivation, processing and dispensing facility
upon completion of redevelopment. Cresco is expected to complete
additional tenant improvements for the property, for which IIP has
agreed to provide reimbursement of up to $21.0 million. Assuming
full reimbursement for the tenant improvements, IIP’s total
investment in the property will be approximately $28.8 million.
This sale-leaseback transaction marks IIP’s fifth acquisition
and lease with Cresco, with prior IIP acquisitions and leases for
four of Cresco’s licensed cannabis cultivation and processing
facilities in Illinois, Michigan and Ohio.
Earlier in the month, IIP also entered into amendments to its
leases with Cresco at one of IIP’s Michigan and one of IIP’s Ohio
properties, making available an additional $17.0 million in funding
for additional improvements of their cannabis cultivation and
processing facilities at the properties. The lease amendments also
adjusted the base rent under the leases to take into account the
additional available funding. Assuming full payment of the
additional funding, IIP’s total investment in the Michigan
property, which comprises 115,000 square feet of industrial space,
will be $32.0 million, and IIP’s total investment in the Ohio
property, which comprises 50,000 square feet of industrial space,
will be approximately $13.5 million.
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.
“Cresco is a true leader in quality, customer experience and
patient care in its core markets, and we are pleased to further
expand our long-term real estate partnership with them in
Massachusetts,” said Paul Smithers, President and Chief Executive
Officer of IIP. “The Massachusetts regulated cannabis industry is
still in its early stages, and is emerging as one of the strongest
medical and adult-use cannabis markets on the East Coast. Our
transaction with Cresco represents our fifth property acquisition
in Massachusetts, and we are firmly committed to being a strong
real estate partner to the industry here for many years to
come.”
Founded in 2013, Cresco is one of the largest
vertically-integrated cannabis companies in the United States, with
licensed operations in nine states. With its pending acquisitions,
Cresco has 15 licensed cannabis production facilities, 29 retail
cannabis licenses and 15 operational cannabis dispensaries.
Employing a consumer-packaged goods (“CPG”) approach to cannabis,
Cresco’s house of brands is designed to meet the needs of all
consumer segments and includes some of the most recognized and
trusted national brands including Cresco, Remedi and Mindy’s, a
line of edibles created by James Beard Award-winning chef Mindy
Segal. Sunnyside*, Cresco’s national dispensary brand, is a
wellness-focused retailer designed to build trust, education and
convenience for both existing and new cannabis consumers.
“We are thrilled to partner with IIP on our fifth lease with
them. They have been reliable partners and a consistent source of
non-dilutive capital that has allowed us to expand our capacity and
go deep in our strategic markets,” said Cresco Labs CEO and
Co-founder Charlie Bachtell.
Massachusetts, with approximately 6.9 million residents,
approved cannabis for medical-use by popular vote in 2012, with
first sales in 2014. The Commonwealth launched its adult-use
cannabis program in 2018, with first sales in November of that
year. In 2019, the first full year of the Massachusetts adult-use
cannabis program, retail cannabis sales exceeded $587 million, and
are expected to reach $1.35 billion by 2024, according to BDS
Analytics. Similar to other states during this coronavirus health
crisis, Massachusetts authorities ordered all businesses that are
not offering essential services to close operations for a period of
time. However, the Massachusetts Cannabis Control Commission deemed
Medical Marijuana Treatment Centers and Certifying Health Care
Providers as essential services that were permitted to remain open
during this time. The adult-use cannabis program was required to
close for approximately two months, but reopened in late May.
As of July 1, 2020, IIP owned 58 properties located in Arizona,
California, Colorado, Florida, Illinois, Maryland, Massachusetts,
Michigan, Minnesota, New York, Nevada, North Dakota, Ohio,
Pennsylvania and Virginia, totaling approximately 4.4 million
rentable square feet (including approximately 1.4 million rentable
square feet under development/redevelopment), which were 99.2%
leased (based on square footage) with a weighted-average remaining
lease term of approximately 16.2 years. As of July 1, 2020, IIP had
invested approximately $791.3 million in the aggregate (excluding
transaction costs) and had committed an additional approximately
$190.8 million to reimburse certain tenants and sellers for
completion of construction and tenant improvements at IIP’s
properties. These statistics do not include up to approximately
$7.0 million that may be funded in the future pursuant to IIP’s
lease with a tenant at one of IIP’s Illinois properties, or
approximately $19.7 million that may be funded in the future
pursuant to IIP’s lease with a tenant 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. These statistics also treat IIP’s Los
Angeles, California property as not leased, due to the tenant being
in receivership and its ongoing default in its obligation to pay
rent at that location.
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 lease of the Massachusetts
property, Cresco and the Massachusetts 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.
About Cresco Labs
Cresco Labs is one of the largest vertically-integrated
multi-state cannabis operators in the United States. Cresco is
built to become the most important company in the cannabis industry
by combining the most strategic geographic footprint with one of
the leading distribution platforms in North America. Employing a
consumer-packaged goods (“CPG”) approach to cannabis, Cresco’s
house of brands is designed to meet the needs of all consumer
segments and includes some of the most recognized and trusted
national brands including Cresco, Remedi and Mindy’s, a line of
edibles created by James Beard Award-winning chef Mindy Segal.
Sunnyside*, Cresco’s national dispensary brand, is a
wellness-focused retailer designed to build trust, education and
convenience for both existing and new cannabis consumers.
Recognizing that the cannabis industry is poised to become one of
the leading job creators in the country, Cresco has launched the
industry’s first national comprehensive Social Equity and
Educational Development (SEED) initiative designed to ensure that
all members of society have the skills, knowledge and opportunity
to work in and own businesses in the cannabis industry. Learn more
about Cresco Labs at www.crescolabs.com.
Cresco Forward-Looking
Statements
This press release contains “forward-looking information” within
the meaning of applicable Canadian securities legislation and may
also contain statements that may constitute "forward-looking
statements" within the meaning of the safe harbor provisions of the
United States Private Securities Litigation Reform Act of 1995.
Such forward-looking information and forward-looking statements are
not representative of historical facts or information or current
condition, but instead represent only Cresco's beliefs regarding
future events, plans or objectives, many of which, by their nature,
are inherently uncertain and outside of Cresco's control.
Generally, such forward-looking information or forward-looking
statements can be identified by the use of forward-looking
terminology such as, ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘would,’
‘expects,’ ‘plans,’ ‘anticipates,’ ‘believes,’ ‘estimates,’
‘projects,’ ‘predicts,’ ‘potential’ or ‘continue’ or the negative
of those forms or other comparable terms. Cresco’s forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause Cresco’s actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements, including but not limited to those
risks discussed under "Risk Factors" in Cresco’s CSE Listing
Statement filed with SEDAR; and other factors, many of which are
beyond the control of Cresco. Readers are cautioned that the
foregoing list of factors is not exhaustive. Because of these
uncertainties, you should not place undue reliance on Cresco’s
forward-looking statements. No assurances are given as to the
future trading price or trading volumes of Cresco’s shares, nor as
to Cresco’s financial performance in future financial periods.
Cresco does not intend to update any of these factors or to
publicly announce the result of any revisions to any of Cresco’s
forward-looking statements contained herein, whether as a result of
new information, any future event or otherwise. Except as otherwise
indicated, this press release speaks as of the date hereof. The
distribution of this press release does not imply that there has
been no change in the affairs of Cresco after the date hereof or
create any duty or commitment to update or supplement any
information provided in this press release or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20200701005264/en/
Company Contact: Catherine Hastings Chief Financial Officer,
Chief Accounting Officer and Treasurer Innovative Industrial
Properties, Inc. (858) 997-3332
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