Innovative Industrial Properties Pulls $300 Million Offering

Last week Innovative Industrial Properties, Inc.  (NYSE: IIPR) announced that its operating partnership, IIP Operating Partnership, LP had launched a $300 million offering, but on Friday after the market closed, the company quietly pulled it. The company’s filing stated that it “determined not to proceed with its proposed public offering of $300 million of senior notes due 2027 previously announced on February 1, 2022, due to market conditions.” IIP stock has tumbled from approximately $286 in November 2021 to lately sell at $193.

The cannabis REIT (real estate investment trust) had originally planned to use the net proceeds from the offering to invest in specialized industrial real estate assets used in the regulated cannabis industry that are consistent with its investment strategy, and for general corporate purposes. The notes were to include a 3.75% Exchangeable Senior Notes due 2024 and 5.50% Senior Notes due 2026. As of September 2021, the company had $127 million in cash and cash equivalents.

IIP Portfolio

At the beginning of January, IIP reported that it owned 103 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia, and Washington, representing a total of approximately 7.7 million rentable square feet (including approximately 2.5 million rentable square feet under development / redevelopment). As of January 5, 2022, IIP had invested approximately $1.7 billion across its portfolio (consisting of purchase price and construction funding and improvements reimbursed to tenants, but excluding transaction costs) and had committed an additional approximately $316.1 million to reimburse certain tenants and sellers for completion of construction and improvements at IIP’s properties. The company said that these statistics did not include an $18.5 million loan from IIP to a developer for construction of a regulated cannabis cultivation and processing facility in California and up to $55.0 million that may be funded between June 15, 2022 and July 31, 2022 pursuant to IIP’s lease with a tenant at one of IIP’s Pennsylvania properties, as the tenant at that property may not elect to have IIP disburse those funds and pay IIP the corresponding base rent on those funds.

Ina short span of time, (from October 1, 2021 through January 5, 2022), IIP made 29 acquisitions (including 28 new properties and the acquisition of certain facilities at an existing property) for properties located in California, Colorado, Michigan, North Dakota and Pennsylvania, and executed one lease amendment to provide an additional improvement allowance at a property located in Massachusetts. In these transactions, IIP established new tenant relationships with Gold Flora, LLC, Medicine Man Technologies, Inc. (Schwazze), and Southwest Alternative Care, LLC (Kaya Cannabis), while expanding existing relationships with Columbia Care Inc., Curaleaf Holdings, Inc., LivWell Holdings, Inc. and Temescal Wellness of Massachusetts, LLC.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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