New York Stock Exchange-listed REIT Innovative Industrial Properties (IIPR) closed on a previously announced property in Arizona for $15 million. The Pharm, LLC operates the 358,000 square foot greenhouse and industrial space.
The Pharm is one of the largest wholesalers of medical-use cannabis in the state of Arizona and is expected to complete some tenant improvements to the building. IIPR will reimburse The Pharm up to $3 million for those improvements, which would bring the total investment in the building to $18 million.
“We are very pleased to introduce The Pharm as our newest tenant, and to be able to creatively structure a real estate transaction to meet their capital needs for planned expansion in the Arizona market and beyond,” said Ben Regin, Director of Investments and Finance at IIPR. “We believe that The Pharm’s highly experienced, multi-disciplinary management team is well positioned to continue to grow its market share in a rapidly expanding Arizona medical-use cannabis market, in addition to carrying its highly successful program to new markets in other states.”
The Pharm will use the property to cultivate and process medical marijuana. The initial lease if for 15 years with an initial annualized aggregate base rent of $2,520,000, payable monthly. In connection with the execution of the lease, The Pharm subsidiary also deposited with the Company a security deposit of $630,000.
“Innovative Industrial Properties collaborated with us closely throughout this transaction, providing creative solutions to address our specific capital needs,” said Randy Smith, Founder and Chief Executive Officer of The Pharm. “We are thrilled to have a great real estate partner like Innovative Industrial Properties that provides us the key capital we need to drive our strong growth and execution on strategic priorities.”
IIPR stock has increased 48% for the past year according to Yahoo Finance, versus the S&P 500 which has risen 18%. It is one of the few cannabis companies that pays a dividend giving this stock a 2.4% yield.