Innovative Industrial Boosts Funding For Massachusetts Asset
Zacks Investment Research | Sep 26, 2019 08:23AM ET
Innovative Industrial Properties (NYSE:IIPR) recently announced entering into an amendment of lease and development agreement with a subsidiary of PharmaCann LLC (PharmaCann), offering an additional funding of $8 million. This financing will support expansion of PharmaCann’s regulated cannabis cultivation and processing facilities at a property in Holliston, MA.
The move also led to the adjustment of the base rent under the lease to incorporate the impact of additional available funding as well as extension of the lease agreement term. Considering full payment of the supplementary funding, cannabis-focused real estate company Innovative Industrial Properties’ total investment in the property, which it originally acquired and entered into a long-term lease with PharmaCann in 2018, will reach $26.5 million.
The partnership with PharmaCann, a multi-state cannabis operator, has taken place earlier as well, and the move will help Innovative Industrial Properties efficiently capitalize on the healthy market fundamentals. In fact, Innovative Industrial Properties has already partnered with PharmaCann for facilities in New York, Ohio and Pennsylvania, with the Pennsylvania transaction closing last month only.
Notably, the legalization of marijuana’s medical use in several states as well as permission of adult consumption in some states has opened up opportunities for the cannabis industry. Therefore, with more states in the United States giving cannabis the green light, Innovative Industrial Properties has incentive to partner with experienced medical-use cannabis operators and serve as a source of capital by acquiring and leasing back their real estate assets.
Particularly, Massachusetts is providing significant growth opportunities to the cannabis industry. In fact, in the first six full months since Massachusetts launched its regulated adult-use cannabis program, i.e. from December 2018 through May 2019, aggregate adult-use cannabis sales approximated $140 million, according to Marijuana Business Daily. This figure included $34 million in May sales only. Also, the regulations were approved by Massachusetts regulators recently, which govern cannabis cafes and delivery, offering several channels for business expansion.
Innovative Industrial Properties currently carries a Zacks Rank #2 (Buy). In the year-to-date period, shares of the company have outperformed the Zacks Investment Research
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