Real Estate Archives - Green Market Report

StaffStaffJuly 22, 2020
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5min7060

As the pandemic stretches into more months, dispensaries are realizing that this might not be a temporary situation. Slapping up some plastic sheets isn’t a solution that will work for the long-term and it just doesn’t look nice. One company has incorporated new safety design measures in its dispensaries and it seems that these local level efforts could set a trend nationwide.

Led by the Guadagnino family (a family-owned business), Keystone Canna Remedies (KCR) is an MMJ dispensary chain in Pennsylvania that currently has 3 locations – Allentown, Bethlehem, and Stroudsburg (the Poconos). Its third dispensary in Stroudsburg, PA has included features in its design of the space by architect Ryan Welty of RGW Architecture, LLC to make sure both patients and employees are safe.

Since many medical marijuana patients are already dealing with immunocompromised conditions, it is even more important to protect them. The patients need to feel safe if they are leaving their homes to meet with a professional or get medicine. 

KCR Stroudsburg’s design and policy measures included the following measures:

  • The efficient use of space to expedite patient flow
  • Tempered glass partitions separating patients from sale counters
  • Quartz countertops, which boast anti-microbial properties
  • Physical distancing markers indicating appropriate spacing throughout indoor and outdoor waiting areas
  • Pharmacy consultation rooms designed to accommodate 6ft distancing
  •  Pre-order options
  • Designated parking area to accommodate curbside transactions if needed
  • Patient limits within indoor waiting and point of sale areas
  • PPE requirements for all patients and staff (facemasks and gloves), which will be provided for those without

The cannabis industry is accustomed to making adjustments as rules and regulations are frequently changed. However, in this case, most dispensaries took it upon themselves to adapt to a new normal. In KCR’s case, during the height of the pandemic, it moved all patient transactions out of the dispensary buildings and into the parking lots to maximize social distancing. It moved staff around to fill areas of need.  Some employees were tasked with being “runners” between the patient/caregiver in their parked car and counter staff.

Glass shields were installed to separate patients and staff at both the reception desk and the point of sale counters. Social distancing efforts inside the dispensary include signs and physical distancing markers which serve as reminders, and limited patient counts in our waiting area and our sales area.

In Closing

These measures may have been enacted as a response to a deadly virus, but it really does make sense to protect medical marijuana patients as much as possible. It is likely that such efforts will remain in place long after the COVID-19 threat passes. If this virus could be so deadly, there is no doubt more viruses will be in our future.

 

 

 


StaffStaffJuly 20, 2020
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4min3940

Columbia Care (OTCQX: CCHWF) sold two of its properties in New Jersey for $12.4 million to Innovative Industrial Properties, Inc. (IIP) (NYSE: IIPR). Columbia Care will then rent the two properties which include an industrial building comprising approximately 50,000 square feet and a retail location comprising approximately 4,000 square feet.

Columbia Care will continue to operate the retail property as a regulated medical-use cannabis dispensary and the industrial property as a regulated medical-use cannabis cultivation and processing facility. Columbia Care is expected to complete improvements to the industrial property and IIP has agreed to provide reimbursement of up to $1.6 million. This brings IIP’s total investment in the two properties to approximately $14.0 million if all the improvement money is reimbursed.

“Columbia Care is one of the preeminent cannabis operators in the United States, and we are thrilled to introduce them as a new tenant partner,” said Paul Smithers, President and Chief Executive Officer of Innovative Industrial Properties, Inc. “As one of the largest cannabis operators, Columbia Care is dedicated to providing the highest quality products and services to patients and customers, and we look forward to supporting them as a long-term real estate capital partner in New Jersey, including providing the additional real estate capital for further enhancements to their cultivation and processing facility.”

Columbia Care in New Jersey

Columbia Care is one of only three operators licensed to dispense medical cannabis in the southern region of New Jersey. In June, the company announced the opening of a dispensary location and produced its first harvest this month at its cultivation and processing facility. New Jersey classified medical cannabis dispensaries as “essential,” allowing them to remain open during the coronavirus pandemic, while implementing additional safety and social distancing protocols to protect the health of patient customers and employees. Last month, the New Jersey Department of Health also enacted a waiver that allows licensed operators to provide home delivery of medical cannabis products to patients.

Nicholas Vita, CEO of Columbia Care said, “Partnering with IIP provides Columbia Care with access to nondilutive capital that offers flexibility and provides us with the ability to continue to build and expand our cultivation, manufacturing, and retail capabilities in the markets that matter most.”

The dispensary in Vineland NJ will be supported by the company’s 50,000 sq. ft. cultivation and manufacturing facility, which will supply both the dispensary as well as Columbia Care’s wholesale operations in the state. Adhering to both local and state guidelines for social distancing, patients have access to curbside and express pickup options as well as Columbia Care’s innovative Virtual.Care portal, providing the industry’s most complete virtual shopping experience.

 

As of July 20, 2020, IIP owned 61 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 4.5 million rentable square feet (including approximately 1.5 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 16.1 years. As of July 20, 2020, IIP had invested approximately $820.4 million in the aggregate (excluding transaction costs) and had committed an additional approximately $213.3 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. .


Debra BorchardtDebra BorchardtJuly 1, 2020
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8min2320

Cresco Labs Inc. and Innovative Industrial Properties, Inc. (IIP) have closed on the acquisition of a property in Massachusetts with a leaseback agreement. The property is approximately 118,000 square feet of industrial space and the deal is valued at $7.8 million.

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.”

Cresco Labs has agreed to a long-term, triple-net lease agreement for the property, which it plans to operate as regulated cannabis cultivation, processing and dispensing facility upon completion of redevelopment. Cresco said it is expected to complete additional tenant improvements for the property, for which IIP has agreed to provide reimbursement of up to $21 million. Assuming full reimbursement for the tenant improvements, IIP’s total investment in the property will be approximately $28.8 million.

A String Of IIP Deals


Debra BorchardtDebra BorchardtJune 4, 2020
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4min4200

Grassroots Cannabis has sold two facilities it operated in North Dakota to Scythian Real Estate. Scythian purchased the properties from Grassroots Cannabis for $3.4M. Grassroots is going to lease back the properties. Grassroots Cannabis will continue to operate both North Dakota locations under the name Herbology, offering high-quality medical marijuana products including flower, concentrates, tinctures, vape pens and topicals, as well as one-on-one patient consulting.

“This sale-and-leaseback agreement with Scythian represents a non-dilutive capital solution for Grassroots Cannabis as we expand our retail operations,” said Steven Weisman, Chief Strategy Officer and Co-founder of Grassroots Cannabis.

Curaleaf (OTC:CURLF)  announced it was acquiring Grassroots in 2019, but the deal has yet to close. In May, Curaleaf said it is still working through state approvals and hopes to close by the end of the second quarter.

Joseph Lusardi, Chief Executive Officer of Curaleaf said in the company’s recent earnings release, “We expect the pending completion of our purchase of Grassroots, the largest private vertically integrated multi-state cannabis operator, to affirm our position as the world’s largest cannabis company by both revenue and operating presence.”

Scythian Deal

The acquisition includes a recently renovated 4,500-square-foot facility located at 310 US-2 in Devils Lake and a newly constructed 4,995-square-foot facility located at 318 24th St. East in Dickinson.

“Scythian is committed to working with cannabis operators like Grassroots Cannabis that have a proven track record of success,” said Randy Roberts, Partner at Scythian. “Both of these locations are well-positioned to support the long-term growth of Scythian’s portfolio as we continue to identify opportunities with highly sophisticated operators in quality markets.”

Scythian’s investment fund is currently valued at nearly $40 million with 18 assets under management, including various locations operated by The Green Solution in Colorado. The firm is raising an additional $25 million in capital to fulfill an existing acquisition pipeline across multiple states.

Acreage Holdings has announced early in April it was closing the North Dakota dispensary. The North Dakota location operated under Acreage’s “Botanist” banner — reopened as Pure Dakota Health, according to the state’s Division of Medical Marijuana.


Debra BorchardtDebra BorchardtMay 7, 2020
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5min4640

Cannabis REIT Innovative Industrial Properties, Inc.  (NYSE:IIPR) reported its results for the first quarter ending March 31, 2020, with total revenues of approximately $21.1 million. This was a 210% increase from the prior year’s first quarter. Innovative Industrial also delivered a net income of approximately $11.5 million or $0.72 per diluted share.

The adjusted funds from operations (AFFO) were approximately $17.8 million, or $1.12 per diluted share. Net income available to common stockholders and AFFO increased by 249% and 236% from the prior year’s first quarter, respectively. The company paid a quarterly dividend of $1.00 per share on April 15, 2020, which increased approximately 122% increase over the first quarter of 2019’s dividend.

“One of the pillars of our business strategy has consistently been a conservative, flexible balance sheet, and we believe we are exceptionally well-positioned to not only weather this unprecedented health crisis and economic disruption but to continue to make real estate investments on a long-term basis with best-in-class tenant operators,” said Alan Gold, Executive Chairman of IIP. “We remain steadfast in our support of this industry and its bright long-term future and are working every day through this crisis with our tenant partners toward continuing to build a tremendous future forward of growth and strength for many years to come. When we overcome this crisis through the collective ingenuity of our top medical professionals and researchers, the regulated cannabis industry will continue to thrive and be one of the top drivers of growth and good jobs across the country.”

COVID Rent Deferrals

While cannabis was deemed an essential service in many states, social distancing was still required. This makes working in a grow facility a challenging prospect. IIP said it has had conversations with each of its tenants in March and April over the situation. As a result, the company said that it is providing temporary rent deferrals for three of its 21 tenants. The decision was to apply a portion of the security deposit IIP holds under each lease to pay April rent in full, defer rent for May and June in full, and provide for the pro-rata repayment of the security deposit and deferred rent over an 18 month time period starting July 1.

That means a total of $743,000 of security deposits that IIP holds in cash were applied to the payment of rent for April, and a total of approximately $1.5 million in rent was deferred for May and June. The total of this amount, $2.3 million, represents approximately 3% of IIP’s total revenues as reported for the three months ended March 31, 2020, annualized.

Current Portfolio

As of May 6, 2020, IIP said it owned 55 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, North Dakota, Ohio, Pennsylvania, and Virginia, totaling approximately 4.1 million rentable square feet (including approximately 1.3 million rentable square feet under development/redevelopment), which were 99.1% leased (based on square footage) with a weighted-average remaining lease term of approximately 15.9 years. As of May 6, 2020, the company has invested approximately $719.7 million in the aggregate and had committed an additional approximately $143.2 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties.

Financial Picture

In January, IIP completed an underwritten public offering of 3,412,969 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 445,170 shares, resulting in net proceeds of approximately $239.6 million. The company reported that it has roughly $108.3 million in cash and cash equivalents and approximately $272.9 million in short-term investments, totaling approximately $381.2 million.


Debra BorchardtDebra BorchardtMarch 27, 2020
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4min9180

Cannabis real estate firm Zoned Properties, Inc. (OTCQB: ZDPY) announced its financial results for the year ending December 31, 2019, following the market close on Thursday. Revenues for Zoned Properties were $1.26 million for the year versus $1.24 million for 2018.

The company reported that operating expenses were $1.26 million for 2019 versus $3.20 million for 2018, which included a one-time non-cash write-off of $1.85 million related to deferred rent receivables in the second quarter of 2018.

“Zoned Properties closed 2019 with a tight capital structure, a clean balance sheet with no toxic debt, and a positive cash position, a rarity among companies operating in the regulated cannabis industry. We have a strong, unleveraged portfolio of triple-net leased properties producing passive rental revenue that are positioned for large-scale expansion and increased value potential. I am extremely excited about our opportunity to utilize the past year’s achievements to scale Zoned Properties in the coming years,” commented Bryan McLaren, Chief Executive Officer.

Cannabis Franchise Investment

Earlier this week, Zoned announced it had partnered with a start-up cannabis franchise organization. Zoned Properties made an initial investment of $100,000 into the start-up cannabis franchise organization, in the form of a 5-year Convertible Debenture that bears interest at the rate of 6.5% per year. Assuming full conversion of the Convertible Debenture, at the sole discretion of the company, Zoned Properties would own a 33% membership interest in the organization. McLaren will also serve on the franchise organization’s management committee to oversee the investment and provide advisory expertise.

“With this strategically placed investment, we are thrilled to formalize our partnership with an exciting and innovative new organization,” commented Bryan McLaren, Chief Executive Officer. “The founders of the start-up cannabis franchise organization have significant industry experience that we believe will be an important growth driver for Zoned Properties. We plan to release further details about the partnership and the start-up organization in the coming months.”

Looking Ahead

“I believe 2020 will be a transformative year for the cannabis industry. As we continue to execute on our strategic plan, Zoned Properties is positioned to play an important leadership role in shaping this emerging industry while capitalizing on this transformation for the benefit of all stakeholders,” continued Mr. McLaren. “Subsequent to the 2019 year-end, Zoned Properties was validated by the United Nations and One Carbon World as the first cannabis industry-focused business to achieve carbon neutrality, we completed a $100,000 investment in an exciting new franchise start-up organization, and we have continued to expand our advisory services across the cannabis industry. We very much look forward to sharing tangible updates as we work to grow Zoned Properties as an industry-wide leader.”

The stock was listed from its 52-week of 13 cents to lately trade at 17 cents.


Kaitlin DomangueKaitlin DomangueJanuary 25, 2020
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2min10560

Innovative Industrial Properties, Inc. (NYSE:IIPR) has placed approximately 2,000,000 shares of common stock for public offering, representing roughly 22% of the shares outstanding.

The company’s plan for the revenue of the sale is to invest in specialized real estate assets. The assets are intended for cultivation and processing facilities for corporate use and in alignment with the company’s investment strategy.

The company placed the public offering of 2.967M common shares at $73.25/share. Gross proceeds will equate to $217.4M. Underwriters are expected to be offered a 30-day option to purchase up to an additional 300,000 shares of its common stock.

According to MarketWatch, since the announcement of the public offering, the REIT’s stock has dropped 4.5% in premarket trading, pricing 7.8% Thursday’s close of $79.45.

Key players in the offering include BTIG, LLC as sole-book running manager, BTIG, LLC is acting as sole book-running manager for the offering; Compass Point Research & Trading, LLC and Ladenburg Thalmann & Co. Inc., a subsidiary of Ladenburg Thalmann Financial Services Inc. as co-lead managers, and Roth Capital Partners as a co-manager.

Innovative Industrial Properties, Inc. is an internally managed real estate investment trust. It is focused on the acquisition, ownership and management of specialized industrial properties leased to licensed medical-use cannabis facilities.


StaffStaffJanuary 16, 2020
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4min17510

Caliva has officially announced the opening of its new cannabis retail concept store, DELI,  in Bellflower, CA, officially marking the brand’s expansion into the Los Angeles area. The new DELI store location also allows for deliveries within a 10-mile radius around Bellflower and enables Caliva to reach over 2.7MM customers in greater Los Angeles.

Designed to cater to cannabis connoisseurs, DELI offers an experience, not just a transaction. The store resembles a traditional deli, with a friendly vibe designed to evoke the nostalgia of great customer service in a trusted neighborhood environment. Upon arrival, customers take a number and are seated at the deli counter, where budtenders talk through their freshest product assortment. 

“Our mission at Caliva is to provide ubiquitous access to plant-based solutions for happiness, health and healing. Expanding into the Los Angeles market, both with a physical retail location and a same day delivery service, has been a priority for us. We are thrilled about our opening of our innovative omni-channel DELI experience,” said Dennis O’Malley, CEO of Caliva.

 As one of the largest flower companies by revenue in California, as reported by BDS Analytics, Caliva’s DELI retail store will provide the same quality flower consumers have come to know and love, but at neighborhood-friendly prices and purchase bulk options. The DELI retail store will also offer a full range of DELI by Caliva branded products, including pre-rolls and flower at affordable prices for consumers looking for consistency and convenience. DELI will be open Sunday through Thursday 9 am to 9 pm as well as Friday & Saturday from 9 am to 10 pm. The DELI store is located at 9535 Artesia Blvd. Bellflower, California US 90706. 

“The DELI store concept is all about catering to the well-versed cannabis consumer who knows what they like. Customers learn about daily deals and fresh new items that are added regularly to the assortment. In keeping with this mindset, DELI provides a unique shopping experience allowing customers to come in and browse their favorite products at leisure, knowing when they walk out the door, they receive superior service and have have quality products from one of the best cannabis retailers,” said Elizabeth Cooksey, SVP of retail at Caliva.

 


StaffStaffJanuary 8, 2020
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5min28402

A new Ontario-based limited partnership created to buy cannabis-based real estate businesses called Subversive Real Estate Acquisition REIT closed on its initial public offering by raising $200 million. Making this the largest post-market correction equity capital raise to date. Subversive REIT also began trading its Class A Restricted Voting Units on the NEO Exchange as NEO:SVX.UN.

While most cannabis companies have been struggling as money quickly dried up, this raise was done in less than two weeks. Particularly notable was that it was done in December when most people were focused on the holidays.  The company said that the initial tranche of capital will potentially be allocated to only a portion of Subversive REIT LP’s broader pipeline of high-quality real estate assets. Particularly those in need of non-dilutive growth capital to fund high-ROI investment opportunities like expansion into new geographical markets.

The Subversive REIT brings together three cannabis industry-leading investment companies, including Subversive Capital, an investment firm with a diverse portfolio and which raised $575 million in 2019 for a cannabis special-purpose acquisition company (SPAC) called the Subversive Capital Acquisition Corp. (NEO: SVC.A.U), The Inception Companies,  a private opportunistic investment firm based in Beverly Hills and London and Canaccord Genuity. Inception REIT’s management team launched a private, independent platform in 2018 providing real estate capital solutions to leading operators in the U.S. cannabis industry, is managing the SPAC.

Subversive REIT said it looks to provide capital to top cannabis operators via real estate sale-leasebacks transactions across retail and industrial assets. Richard Acosta, founder and CEO of Inception REIT, as well as founder and CEO of IA REIT Advisors (external manager of Inception REIT), will be heading Subversive REIT as director and CEO.

Selling Assets

Numerous cannabis companies have begun selling their real estate assets as a way to generate cash. The leaseback model has worked as a way to maintain their business location while monetizing a valuable asset. Most cannabis companies found that in the early days of the industry, banks were unwilling to lend money for mortgages and most were forced to buy buildings. Landlords were also unwilling to rent their buildings to cannabis companies and this added to the challenge of finding a place to do business.

Several companies like MedMen (OTC: MMNFF)and Acreage Holdings (ACRG.U)created separate real estate companies that would buy the buildings and then set up the lease arrangements. Innovative Industrial Properties (NYSE: IIPR) was the first REIT to identify this opportunity within the cannabis industry and has been handsomely rewarded for being first to market.

 

 


Kaitlin DomangueKaitlin DomangueNovember 7, 2019
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3min8470

California-based cannabis REIT Innovative Industrial Properties (IIP) (NYSE:IIPR) shares shot up over 10% in trading on Thursday after reporting solid results for their 2019 third-quarter after the market closed on Wednesday. The stock was lately trading at $80.02, well above its 52-week low of $42.10. 

In Q3 of 2019, IIP’s earnings per share were $0.55, a significant increase from their EPS of $0.21 2018’s Q3. Wall Street was looking for an EPS of $0.47, so the company greatly exceeded expectations. IIP’s 2019 Q3 AFFO per share was $0.86, creating growth of 126% from $0.38 in 2018’s Q3. Their AFFO for the quarter was $9.5 million. 

The company reported a net income of $6.2 million in Q3 in 2019, a noteworthy increase from their $1.5 million in 2018’s third quarter, with an operating income of $6.8 million. IIP also paid a quarterly dividend of $0.78 per share on October 15, 2019, which was a 30% increase from IIP’s second-quarter 2019 dividend and an approximately 123% increase over the third quarter 2018’s dividend.

Innovative Industrial Properties’ net rental revenue for Q3 of 2019 was $11.2 million, a 201% change from their report of net rental revenue of $3.7 million for 2018’s Q3. Wall Street expected $10.7 million for this year’s third quarter. The company’s continual revenue growth can be attributed to the acquisition of new properties.

During the quarter, IIP acquired 10 properties. Five are located in California, and one in Arizona, Massachusetts, Nevada, Michigan, and Pennsylvania. Their Massachusetts property is leased to a subsidiary of Trulieve Cannabis, the leading medical cannabis company in Florida. Each property is fully leased to a tenant through a triple-net, long term lease. 

Analysts are modeling for an EPS of $0.57 on revenue of $13.1 million, representing a 138% growth for their EPS, and growth of 174% for their revenue in the fourth quarter. IIP has been able to capitalize on the tightening of financial markets for cannabis companies. These businesses are turning to real estate assets in order to access capital. 

According to the company statement, as of November 6, 2019, IIP owned 41 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 15.5 years.



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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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