Acreage Holdings Inc. (ACRG.U) (ACRGF) announced on Monday that it was carving off its real estate assets and selling them to a REIT called GreenAcreage Real Estate Corp. or GARE. GARE will purchase the assets and then lease them back to Acreage Holdings.
The arrangement is described as “arms length” transaction, which suggests a separation of parties, yet the REIT will be managed by GreenAcreage Management LLC, which Acreage Holdings owns a 20% interest in and CEO Kevin Murphy is also invested in. GARE is also described as remaining “independent” from Acreage, yet the management company has Acreage ownership involved.
Following MedMen’s Footsteps
Not long ago, cannabis retailer MedMen pursued a similar strategy. In January, the company announced that it too was selling its real estate assets to a REIT called Treehouse Real Estate Investment Trust. That group raised $133 million and also has a right of first offer for three years. In February, MedMen sold three properties to Treehouse raising $18.4 million.
The Treehouse REIT was described as being externally managed, but it seems the two companies share several employees. The Treehouse Chief Executive Office is listed as Chris Ganan who is also the Chief Strategy Officer and a General Partner at MedMen. Treehouse’s Treasurer is Lisa Trager, who is MedMen’s general counsel. Trager resigned from MedMen last month as several top executives left the company amid a string of scandals.
The Treehouse Chief Operating Officer is Zeeshan Hyder, who is MedMen’s Chief Corporate Development Officer. Brian Kabot the CIO of Stable Road Capital is listed as a Treehouse Director. The plan is for Treehouse to go public.
GARE will need investor money prior to making the real estate purchases. Acreage Holdings is giving GARE the first offer to purchase the pipeline of properties over the next three years. The company lists the leadership team as Executive Chairman, Gordon DuGan, Vice Chairman and Founder, David Carroll, and Chief Executive Officer, Katie Barthmaier.
There was no security filing as of yet with regards to the announcement and Acreage Holdings had no further comment. It is unknown if the real estate assets were to be included in the Canopy Growth acquisition plans and whether the loss of these assets would affect the Canopy Growth shareholders. GARE has not yet responded to a request for comment.