real estate Archives - Green Market Report

Kaitlin DomangueJuly 29, 2021
2104-16-1230-scaled.jpg?fit=1200%2C797&ssl=1

9min12010

Smoking cigarettes indoors has been shown to reduce a home’s resale value by up to 29%, says Realtor.com. When it comes to buying a cannabis enthusiast’s home, the resale value research is less clear, though 30% of realtors say they have struggled to sell a house where cannabis was grown. A recent study conducted by the National Association of Realtors said 50% of leasing professionals found it wasn’t hard to re-lease a property after tenants smoked cannabis indoors, and the organization “does not have a position on cannabis legalization.”

Legal cannabis raises home value

There’s been a lot of chatter surrounding cannabis and the real estate market. But, what kind of impact do cannabis operations have on property value by simply just existing in the same town or city as your house? According to research by real estate data company, Clever, property values rose by $17,113 more in states where recreational cannabis is legal, compared to states where it’s illegal or just legal at the medicinal level. Not to mention, millions of dollars in tax revenue created. In 2021, average home values increase by $470 for every $1 million increase in overall tax revenue from cannabis. 

Clever combined data from Zillow, the U.S. Census, and other resources to produce their report. 

New businesses, tourism, and jobs all contribute to the increase

When it comes to answering the “why”, that’s a little more complex. According to Clever, there’s a variety of reasons why property values are increasing as cannabis legalization takes place. “Numerous factors determine home values, including the home’s features and condition, the area’s amenities, and local crime rates. Legalizing marijuana can impact each of these criteria in ways that are both predictable and surprising — particularly by creating fresh demand for housing, new businesses, and tourism,” says the report. 

We often look to Colorado as a model representing cannabis’ potential in different states. Legalization brought Colorado a wave of new business, and the crime rate also dropped. Also, hotel revenue rose by $130 million in the first year after Colorado legalized, according to a study conducted by Penn State

Key Findings

  • Home values increased by $6,338 from 2017 to 2019 in states where cannabis is legal in some form, compared to states that haven’t legalized at all
  • On average, home values increase by $470 for every $1 million increase in tax revenue
    • Eight states reported a full year of tax revenue generated from cannabis sales in 2020, totaling $2.3. $1 billion of that being California sales alone. 
    • The seven states (plus D.C.) who haven’t yet sold a year’s worth of legal cannabis are predicted to collect $601 million in new annual tax revenue.
  • Home values are predicted to increase by an average of $61,343 in states that have legalized recreational cannabis, but sales aren’t yet taking place.  
    • California has seen the biggest increase in home values, up by $128,341 since 2017, among states that have legalized at the recreational level
  • Cities with more dispensaries are positively correlated with higher home values, suggesting legalization boosts jobs and economic growth.
    • In cities with recreational dispensaries, home values increased by $22,090, compared to states where recreational cannabis is legal but not yet being sold in retail locations
    • Property values increase by $519 with each new dispensary a city adds

According to Clever’s future predictions, home values will increase by more than $60,000 on average.

Looking at tax revenue

When it comes to tax revenue, where does it all go? Different states allocate their tax revenue towards different things, but according to a report by Urban Institute, education programs (including community colleges and pre-K schools) are the most likely to benefit. 

Oregon, for example, donates 40% of its tax revenue to the state’s school fund, accumulating $180,252,103 between 2017 and 2021. Arizona recently legalized cannabis for recreational consumption, and they plan to follow suit by donating 33% of their tax revenue to the state’s community colleges. 

Other states use their tax revenue for different things, like Washington, where the tax revenue goes towards a healthcare trust account to provide basic healthcare services to people without insurance. Ranked from most to least common, here’s how different states use their cannabis tax revenue: 

  • Education programs
  • Substance abuse education and treatment programs
  • Reparations for those negatively affected by the War on Drugs/criminal justice reform
  • General funds
  • Transfers to local governments
  • Administrative costs of initiating new laws
  • Public health and safety programs
  • Law enforcement, crime reduction, and fire departments
  • Transportation and infrastructure
  • Programs for conservation
  • Programs for veterans

Cannabis’ impact on local communities

This is just another piece of evidence supporting cannabis’ positive impact on local and state economies. According to Leafly, the legal cannabis industry supports 321,000 full-time jobs across the United States, adding 77,300 of those last year. Not to mention the tax revenue generated from legal cannabis sales. Criminal justice reform, education, substance abuse treatment, and local governments all benefit from the new source of revenue. 

As the cannabis industry continues to grow, we see it positively affects more than just consumers. 


StaffJuly 12, 2021
growingfacility.jpg?fit=1200%2C803&ssl=1

10min19750

This article by Nadja Sayej was originally published on Leverage.com and is being republished with permission.

On March 31, New York Governor Andrew Cuomo announced that the state would legalize medical and adult-use cannabis in the coming year. According to Cuomo, it’ll create over $350 million in revenue, and at least 30,000 jobs.

“This is a historic day in New York, one that rights the wrongs of the past by putting an end to harsh prison sentences,” Governor Cuomo said in a statement. “It embraces an industry that will grow the Empire State’s economy and prioritizes marginalized communities so those that have suffered the most will be the first to reap the benefits.”

New York is just one of 17 states across the country legalizing cannabis. In the coming months, marijuana plant-related businesses are going to be popping up all over the east coast, now that New York, New Jersey, Maine and Massachusetts have legalized cannabis, among other states with limited capacity (like Pennsylvania).

A cannabis real estate boom is likely to follow. The global legal cannabis industry is predicted to hit $40.6 billion in global spending by 2024, which will be a 300% increase from 2019, according to a report from Arcview Market Research & BDS Analytics.

But what exactly does this mean for commercial cannabis real estate?

The industry consensus is that it’s tough to get a cannabis business going; whether it’s getting a license or getting a location. Though the dispensary boom is all over, it will likely flock to touristic towns like Great Barrington, MA, known as a skiing town, which now has five cannabis dispensaries in a town of 7,000.

With cannabis coming to the states of New Jersey and New York, the market is expected to grow for adult-use cannabis starting this year in NJ, and on April 1, 2022 in New York.

“There is a lot of demand and not a lot of supply,” Brian Lauray from MMLG consultants recently said. “It will come down to the operators that have the money and can tweak many levers.”

Just look at Pennsylvania, a medical-only cannabis state (it isn’t legal for non-medical, recreational adult-use). Even still, they’ve seen their medical cannabis sales grow from $40 million in January 2020 to $98 million in January 2021, according to a report from Headset. Is this a sign of the cannabis real estate boom to come for other states?

“The short answer is yes,” said Akiva Gottlieb, a commercial broker at Lev Capital in New York City. “We will see top brands fit in nicely for trendy areas in New York City, Jersey Shore and Hoboken, and be picked up quickly by hippie-type areas. Just nowhere near private schools and corporate industries.”

Gottlieb explained that the country’s cannabis experts are well aware of the market oversaturation in the west and Midwest, from California to Colorado. Cannabis businesses will likely move to, or expand in, the east coast.

“Experts predict that your common shops like 7/11 and the likes will carry some sort of medical or recreational cannabis products,” Gottlieb said.

Cannabis financing is a key step to securing a property to address the hot cannabis real estate world. Gottlieb drew a parallel between the black market to the legalization of products over time. Take the prohibition era, where the 18th amendment banned the sale of alcohol, and now in 2021, where the sale of alcoholic drinks has already turned over $254,564 million, according to a report from Statistica, and is expected to grow roughly 6% before 2025.

The cannabis industry could see the same turnover, eventually. Cannabis real estate isn’t just dispensary retail, but where the product is grown, harvested, stored, sold, and consumed, all within state lines. Commercial real estate is in demand, not only for storefronts but warehouses and other types of related land.

“Previously determined ‘safe’ and ‘secure’ asset classes, like retail and multifamily are now considered volatile,” Gottlieb said. “We have seen a major shift in large institutional investment corps who were forced to pivot their core businesses toward alternative products.”

Could it be pandemic-proof? He explained that medical-use cannabis has been deemed an essential business during the pandemic in many states.

“With the likes of Target, Walmart, Burger King, and Starbucks closed, your local dispensary has been open servicing the community and racking up their revenue,” Gottlieb said. “And to our landlords, most importantly, they are paying their rent.”

To say the industry is growing is an understatement.

“As a commercial financing advisory firm, we come across numerous transactions that include some form of a cannabis element to it,” he claimed. “Ranging from a minority tenant in a strip mall to a triple net (NNN) lease on an industrial cultivation facility, cannabis is everywhere right now.”

Real estate firms like Lev are “approaching these deals just like we would any standard commercial asset,” Gottlieb said.

The future of cannabis in commercial real estate comes down to financing.

“As the industry develops more, more states will pass the Safe Banking Acts, which means that state-authorized marijuana businesses will have easier access to banking services,” Gottlieb said.

Gottlieb predicted that, by spring of 2022, many mainstream corporate and national banks will be on board with financing, “and will allocate significant capital under their balance sheet to this particular market.”

Here’s one step forward: Many real estate firms are adding a Cannabis Real Estate Division, like Lev has, to their websites. Just look at James Capital Advisors, which recently started a new Cannabis Real Estate Division in Los Angeles. With this sort of example, many other real estate companies who specialize in commercial real estate are likely to follow.

“The industry follows the cash flow, and the cash flow is overwhelmingly available in the cannabis industry,” Gottlieb said. “Especially in debt with firms like Lev, the people need assistance financing these unique properties and the brokers of our new modern world will fill that void.”

 


Debra BorchardtApril 12, 2021
Dispensary-2.jpg?fit=960%2C640&ssl=1

27min58010

Real estate is one of the more difficult aspects of the cannabis industry. Securing a license is tough but getting your location is even tougher. Each state has different regulations and restrictions, which combined with unique real estate markets makes finding and securing property essential. It’s an expensive endeavor and one in which traditional mortgages aren’t typically an option. 

This presentation will focus on the New England and New York area cannabis real estate markets. It will cover the following states: Maine, Vermont, New Hampshire, Connecticut, Massachusetts, New York, New Jersey, and Pennsylvania. 

Many of the states that have gone fully legal – meaning legalized both medical use and adult-use cannabis often have opt-out clauses for municipalities. This means that in some areas if a town or village decides against allowing cannabis stores or facilities in its location, that puts even more demand for locations in the municipalities that approve cannabis businesses. 

Growth in the Northeast

The Northeast cannabis industry has been expanding at a blistering pace. In 2018, there were only 187 dispensaries across nine states. Fast forward to March 2021 and you see the number has jumped to 424. Of this 424, only Massachusetts and Maine have adult-use products for the sale, the rest are entirely medical marijuana. These numbers are expected to jump even higher as states like New Jersey and New York go fully legal. “It plays out in typically New England ways – Maine has been really friendly, Portland was very competitive,” said MMLG Managing Director Brian Lauvray. 

 

Dispensary/Retailers 2018-YTD 2021
State 2018 2019 2020 3/2021
CT 18 18 18 18
MA 65 98 161 206
ME 8 8 20 23
NH 4 5 5 5
NJ 6 8 13 14
NY 30 38 38 38
PA 47 76 104 110
RI 3 3 3 3
VT 6 6 7 7
Total 187 260 369 424
Copyright © 2021 by CNB Media LLC dba Cannabiz Media
Source: Cannabiz Media License Database www.cannabiz.media

Massachusetts

One area in Massachusetts that saw a dispensary boom is Great Barrington. This lovely town in the heart of the Berkshire mountains is a center for tourism. Skiing in the winter, plus hiking, biking and camping in the summer. There’s a bustling summer performance calendar as well that brings lots of baby boomers up to watch dance and theatre groups. It’s the perfect place to locate a dispensary and the town initially opened its doors. 

That sparked a flood of dispensaries and now the town, despite having no cap on stores is saying they have enough, thank you. The population has less than 7,000 people but 5 dispensaries. Springfield in the middle of the state has attracted several stores and then Boston and its surrounding suburbs has numerous dispensaries, but there are big pockets of the state where there are zero dispensaries. Mostly due to the lack of a major highway or tourist center.

Capitalizing on the Asset

Cannabis companies continue to struggle with getting big mortgages for buildings. They continue to use the capital raised in order to fund a store or facility purchase. The later, the company can sell the property to a REIT or real estate investment trust and then lease it back. Innovative Industrial Properties or IIP is a popular REIT that has done this so often, that it is the leader in the space. 

Let’s look at Massachusetts again. Almost every big player in the space has sold a property to IIP. (The investment figure is in thousands and the data is from the IIP 2020 annual report.)

 

Rentable Sq. Ft Investment
PharmaCann MA Massachusetts May 31, 2018 58,000 30,500
Holistic MA Massachusetts July 12, 2018 55,000 14,750
Trulieve MA Massachusetts July 26, 2019 150,000 43,500
Ascend MA Massachusetts April 2, 2020 199,000 33,775
Cresco MA Massachusetts June 30, 2020 118,000 8,904
4Front MA Massachusetts December 17, 2020 67,000 15,500

In 2020, IIP closed on the acquisition of a property in Massachusetts, which was approximately 118,000 square feet of industrial space in the aggregate. The purchase price for the property was approximately $7.8 million (excluding transaction costs). IIP also entered into a long-term, triple-net lease agreement for the property with a wholly owned subsidiary of Cresco Labs Inc. (Cresco), which intends to operate the property as a regulated cannabis cultivation, processing and dispensing facility upon completion of redevelopment. Cresco is expected to complete additional tenant improvements for the property, for which IIP has agreed to provide reimbursement of up to $21.0 million. Assuming full reimbursement for the tenant improvements, IIP’s total investment in the property will be approximately $28.8 million.(Data from IIP’s annual 2020 report)

Going back a couple of years in 2018, closed on the acquisition of a property located at 96 Palmer Road in Monson, Massachusetts, which comprises approximately 55,000 square feet of industrial space situated on approximately 5.4 acres. The purchase price for the property was $12.75 million. Concurrent with the closing of the purchase, the Company entered into a long-term, triple-net lease agreement with Holistic Industries, Inc. (“Holistic”), which intends to continue to operate the property as medical-use cannabis cultivation and processing facility in accordance with Massachusetts medical-use cannabis regulations. 

Newcomers – New Jersey & New York

Massachusetts looks like an old-timer compared to the soon-to-be fully legal states of New Jersey & New York. Both markets are expected to be sizable and both are only legal for medical marijuana at this time. Both have recently decided to legalize adult-use cannabis and New Jersey could begin sales in 2021, while New York will begin sales on April 1 2022. Both states are also famous for expensive real estate. 

Any new entrant to the market is best served by hiring a consultant that knows the ins and outs of navigating the red tape that comes with cannabis. The competition for licenses will be fierce. Brian Lauray from MMLG consultants said, “New York & New Jersey will be a battle royale from an application standpoint. Borough commissioners and aldermen and who you know.” Plus, both states allow municipalities to opt out of the cannabis industry. “In New Jersey, a few desirable municipalities have indicated they are open for business – like Jersey City,” said Lauvray. “It’s a really interesting market – everyone wants in. But there is a lot of demand and not a lot of supply. It will come down to the operators that have the money and can tweak many levers” 

IIP has also been busy in the New York market buying properties despite the relatively small size of the number of stores and facilities. New York is a limited license state that only gave 10 operators the opportunity to be in the industry. That will change with full legalization, but those 10 operators have all struggled with the medical-only nature of the state. It had a very restricted list of conditions in order to get the license and sales have been dismal versus the amount of money invested. So it was no surprise to see some companies selling off real estate to IIP in order to get some cash in the kitty.  

IIP said in a securities filing that in December 2019, one of its properties in New York accounted for 6% of our net real estate held for investment. In December 2020, the company said it amended its lease and entered into a development agreement with PharmaCann at one of our New York properties, making available $31.0 million in construction funding at the property. “Assuming full payment of the construction funding, our total investment in the property will be $61.0 million. As of December 31, 2020, we incurred approximately $70,000 of the construction costs, of which none was funded.”

 

Rentable Sq. Ft Investment
Curaleaf NJ   New Jersey July 13, 2020 111,000 18,940
Columbia Care NJ Portfolio   New Jersey July 16, 2020 54,000 13,033
PharmaCann NY   New York December 19, 2016 127,000 30,000
Vireo NY   New York October 23, 2017 40,000 6,717

 
In New Jersey, the Columbia Care parcel is actually two properties and IIP said that Columbia Care was expected to redevelop one of the properties and IIP would reimburse them $1.6 million. Curaleaf was redeveloping its building with a reimbursement of up to $29.5. IIP said  $20 million was spent on redevelopment costs and IIP funded $13.4 million of that. Both New Jersey and New York give cannabis companies the best of both worlds. Each state has urban dense population locations and then long-term agricultural areas. In upstate New York, much of this agricultural land is economically depressed as well and welcomes large-scale grow facilities despite the smell and light pollution. 

Pennsylvania

Pennsylvania is a medical-only state at this time, although there seems to be incredible pressure on the state to go fully legal as its neighbors New York and New Jersey. In the last 12 months, Pennsylvania medical cannabis sales totaled $910 million. Medical cannabis sales have grown steadily in the past 13 months, starting at $40M in January 2020 and ending at close to $98M in January 2021. The state’s stores have grown from 47 in 2018 to 110 in 2021 for just a medical market. The size of the spaces is growing as well. While Canadian companies may have overbuilt facilities, Pennsylvania operators are clamoring for more. In December Ayr Strategies closed on the purchase of CannTech PA for $57 million. This acquisition included a 143,000 sq. ft. cultivation and processing facility on 13 acres.

 

Rentable Sq. Ft Investment
Jushi PA Pennsylvania April 6, 2018 89,000 13,381
Maitri PA Pennsylvania April 24, 2019 51,000 21,402
Green Leaf PA Pennsylvania May 20, 2019 266,000 13,592
PharmaCann PA Pennsylvania August 9, 2019 54,000 25,730
GTI PA Pennsylvania November 12, 2019 148,000 39,600
Curaleaf PA Pennsylvania December 20, 2019 72,000 25,749
Holistic PA Pennsylvania June 10, 2020 108,000 15,007

Parallel is working to set up a 120,000-square-foot grow facility in a space owned by The Buncher Co. in the Chateau neighborhood of the North Side, working in partnership with the University of Pittsburgh through its venture called Goodblends PA. The company said that the venture needed a big building for a range of uses that will include growing and processing medical cannabis products, conducting research, training employees as well as meeting basic distribution and warehousing demands. A fully legal state could see an additional boost in real estate. At this time, Pennsylvania is IIP’s second-largest market for a property with rents accounting for 15.7% of rental revenue. Seven properties with 788,000 rentable square feet bring in $18.3 million a year (as of December 2020). 

Maine

An example of the effect on a fully legal state can be seen in the recent increase in stores in Maine, which jumped from 8 in 2019 to 23 in 2021. Propco., a subsidiary of New York-based real estate investment trust Power REIT acquired a three-acre property in York County, Maine. The sales price was $400,000. That property currently houses an under-construction, 32,800-square-foot cannabis cultivation facility. It also has a 2,800 square foot processing/distribution building with construction recently completed. PropCo. Said it will fund the construction of an additional 9,900 square feet of processing space and the renovation of an existing 2,738 square foot building at the recently acquired property. The completion of construction on the new property is targeted for Summer 2021.

The combined properties are expected to be one of the largest cannabis greenhouse cultivation and processing/distribution properties in the state of Maine upon completion. David Lesser, Power REIT’s Chairman and CEO said that it’s not easy to raise capital for large-size facilities despite all the talk. He also noted this his REIT is focused on greenhouse cultivation facilities. 

CT, NH, RI

The remaining states are relatively smaller parts of the real estate story in the Northeast. Connecticut has four producers that account for 18 dispensaries and facilities. Vermont has seven, New Hampshire has five and Rhode Island has three. This week a bill to legalize marijuana in Connecticut was approved by a key committee on Tuesday—but it “remains a work in progress,” the chairman said. The legislation is said to be backed by the governor and includes a series of new social equity provisions. A week ago, Marijuana Moment reported a pair of Rhode Island Senate committees held a joint hearing on two marijuana legalization proposals—including one proposed by the governor—as well as several bills to reform the state’s existing medical cannabis program. In late 2020, Vermont’s governor allowed a legalization law to take effect without his signature. However, it may be some time before actual legal sales can begin as decisions around licensing have yet to be decided. 

Rents

Ultimately, the real estate side of cannabis seems to be a solid choice. Lesser said that so far in cannabis if tenants have trouble making the rent, it often gets worked out. Either new investors come in or the company is acquired, but the situation is typically resolved. IIP has noted that its rents are on time as well. In October 2019, a court-appointed a receiver of the tenant at its Los Angeles, California property. That tenant subsequently defaulted on its lease payments to us for all of 2020. It had been leased to Vertical in southern California, in which Vertical made partial payments of contractual rent due.

The purchase price for the southern California portfolio was approximately $17.3 million.  Then Holistic the cannabis operations from the tenant, which had been in receivership. Holistic closed on this transaction and then quickly executed a long-term, triple-net lease with IIP for the entire property. Assuming full reimbursement for the redevelopment of the property, IIP’s total investment in the property will be $24.0 million. The company did say that for some or all of 2021, it expected that many of its tenants would continue to incur losses as their expenses increase in connection with the expansion of their operations and that they have made and will continue to make rent payments to us from proceeds from the sale of the applicable property or cash on hand, and not funds from operations.IIP says it has not provided deferrals of any rent obligations to any tenant since July 1, 2020.

In Closing

The New England market holds a great deal of promise for the cannabis industry. The pandemic has caused a huge disruption in traditional retail for many of these economies. Lockdowns caused a spike in online shopping causing many brick & mortar retailers to close up, presenting opportunities for dispensaries. While rural land values have risen as remote working created an opportunity for urban dwellers to relocate to more rural settings. Once depressed towns have seen new life, so the days of cheap big acreage in remote locations have declined. It’s still relatively early in this cycle for cannabis industries and the picture is sure to change as rules regulations get decided and then perhaps tweaked again. 


Debra BorchardtDecember 13, 2018
Harvest.jpg?fit=1200%2C800&ssl=1

3min22780

Harvest Health & Recreation, Inc. (CSE: HARV)  has formed a joint venture with Aina We Would (AWW), LLC for a real estate investment vehicle that plans to provide funding to purchase cannabis-related real estate assets. In addition to a Harvest subsidiary, AWW is made up of two family offices, Aina Advisors LLC and Stadlen Family Holdings, LLC.

Aina and Stadlen have both committed to fund or arrange up to $100 million to fund projects for the joint venture. The statement said that AWW plans to buy, develop and finance new construction projects, engage in land purchases, capital improvements and sale-leasebacks to Harvest and other operators in the cannabis industry.

As a part of the arrangement, Harvest will have the opportunity to get lease rates below current market providers and then source permanent financing for the properties it acquires. Harvest may also use AWW for its construction and real estate development needs.

In addition, Harvest said that it was has committed to lending AWW a minimum of up to $30 million in short-term financing to permit AWW to seek out acquisition projects. The company said that the goal of the short-term financing was so that they could move quickly on projects.  These funds will be replaced by permanent financing provided or sourced by Stadlen and Aina.

“AWW gives Harvest an excellent funding option for the development of cultivations, manufacturing facilities, and dispensaries,” said Harvest President Steve Gutterman.  “This new vehicle, combined with the approximate $290 million we raised in conjunction with our recent debt and equity financing transactions, affiliate roll-up and recently completed acquisitions leading up to and following our listing on the CSE, gives us one of the strongest balance sheets in the industry.”

Harvest owns more than 40 cannabis licenses with a domestic footprint that includes real estate, equipment and other assets in 11 states, including Arizona, Arkansas, California, Colorado, Florida, Maryland, Massachusetts, Nevada, North Dakota, Ohio and Pennsylvania.

“Real estate is the lifeblood of the cannabis economy and a huge piece of any company’s bottom line,” said Harvest Executive Chairman, Jason Vedadi. “With this partnership, AWW has been structured to turn a significant cost center into a potential profit driver and to become a potentially attractive source of financing for Harvest’s expected expansion.”


Jack SmithMarch 29, 2018
shutterstock_421629436.jpg?fit=960%2C632&ssl=1

3min19930

Innovative Industrial Properties Inc. (IIPR) reported fourth-quarter earnings of 7 cents a share and highlighted the steps it has taken since becoming a publicly traded company, perhaps paving the way for more small and mid-cap cannabis companies to do the same.

Innovative, which trades on the New York Stock Exchange under the ticker “IIPR,” said in a statement it earned 7 cents a share on $2.3 million in revenue. The commercial real estate company also said that adjusted funds from operations (AFFO), a widely used measure for real estate organizations, was 23 cents a share in the quarter.

During the quarter, Innovative said it acquired a medical-use cannabis cultivation and processing facility in Arizona with a subsidiary of The Pharm in a sale-leaseback deal. The total amount spent was $18 million, including $15 million for the purchase.

It also acquired two other medical-use cannabis cultivation facilities with similar transactions, signing deals with Vireo Health for facilities in New York and Minnesota. The combined cost for the two facilities was $8.4 million, including $1 million spent on tenant improvement costs.

The acquisitions bring Innovative’s property portfolio to five, spread across the country. Totaling 617,000 square feet, all of the properties are 100 percent leased. The average length left on the leases is approximately 14.7 years, the company noted in the statement.

As of the end of the year, Innovative said it had invested $68.3 million in the properties, with an additional $5 million for tenant improvements at the various properties.

The company also noted its fourth-quarter dividend was 25 cents a share, a 67 percent sequential increase. The dividend was paid on Jan. 16, 2018 to shareholders on record as of Dec. 29, 2017.

Innovative’s shares yield 3.77 percent at current levels, significantly more than the 2.77 percent yield on a 10-year U.S. Treasury bond.

San Diego-based Innovative also said that it had sold an additional 3.22 million shares in a public offering after the quarter closed, giving the company an additional $79.3 million to be used for general corporate purchases.

Innovative shares closed at $26.32 on Wednesday, up 1.9 percent. Shares of the company have fallen nearly 30 percent since the start of the year.


StaffDecember 18, 2017
The-Pharm.jpg?fit=1200%2C675&ssl=1

3min35910

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.


Debra BorchardtOctober 9, 2017
zoned.jpg?fit=798%2C365&ssl=1

3min24130

Zoned Properties (ZDPY) released a company presentation on Monday that shows that the company has moved from an annual loss of $501,576 in 2016 to a year-to-date gain of $1 million. Zoned Properties develops and leases properties in emerging industries, including licensed medical marijuana.

The company is coming from a position of strength uncommon among many pot stocks with a solid balance sheet of $9.6 million in assets and $2.2 million in liabilities, but no warrants and no convertible debt. The company currently has six properties in its portfolio with five locations in Arizona and one in Colorado.

Part of the turn in fortunes for Zoned Properties for 2017 was the one-time net gain from the sale of a property in Tempe Arizona for $831,753. The book value for the company as of June 30 is $9.4 million and the market value is $23.7 million.

The stock though hasn’t performed as well as the company’s balance sheet. It has plunged 48% over the past year from a 52-week high of $3.88 to a low of 50 cents. The stock started to recover following the company’s second-quarter earnings release in August. In that release, the company noted that its revenue had increased 23% to $505,000 from the previous year’s second-quarter earnings of $410,000. Operating expenses also declined 32% to $355,000 from the previous year’s second quarter expenses of $524,000. The net income was also positive at $118,000 versus the previous year’s loss of $173,000.

Zoned also announced last week that it increased the space being leased by its tenant in Tempe Arizona. “Expansion at the Tempe Property will drive increased revenue and profitability in the coming quarters as increased monthly rent payments take effect,” commented Bryan McLaren, Chief Executive Officer of Zoned Properties. “Our anchor tenant now occupies more than 50% of the 60,000 square feet of total rentable space under long-term lease agreements with guaranteed rent escalators throughout their terms.”

So, while Zoned Properties is humming along in the Arizona market, some investors may be wanting to see if they’ll be expanding beyond the state and pursuing properties in other bigger markets. The real estate space in the cannabis industry is becoming crowded very quickly. It may be that the stock will respond as Zoned expands their footprint further away from the Arizona market.


StaffOctober 3, 2017
Terra.jpg?fit=960%2C716&ssl=1

3min21170

New York Stock Exchange-listed Innovative Industrial Properties Inc. (IIPR) announced that it filed for a public offering of Series A Cumulative Redeemable Preferred Stock that would trade under the symbol IIPRPrA. The proceeds from the offering will be used to support the company’s investment strategy of finding specialized industrial facilities that are used to cultivate medical marijuana.

Ladenburg Thalman (LTS)  is acting as the book-runner and National Securities Corporation (NHLD) is acting as the co-manager for the offering.  The company said in a statement that it will grant the underwriters a 30-day option to buy additional shares to cover over-allotments. A copy of the preliminary prospectus for the offering may be obtained, when available, from Ladenburg Thalmann & Co. Inc., 570 Lexington Avenue, 11th Floor, New York, NY 10022, or by email at prospectus@ladenburg.com.

Innovative Industrial Properties recently declared a quarterly dividend of 15 cents. It is one of the few, if not the only, cannabis stocks to pay a regular dividend. This 60 cents annual dividend gives the company a yield of 3.2% on an approximate price of $18.69 per share.

According to Yahoo Finance, there are two analysts covering the stock and both have a buy rating. The average target price is $21.75. The company is down 2.4% for the past year, but in the last six months, the stock has climbed over 9%. The 52-week low is $14.50, while the high is $20.52.

On the last earnings call, CEO Paul Smithers said, “We’re in advanced discussions regarding a number of potential acquisitions with a pipeline of approximately $100 million spanning a number of states including Arizona, Illinois, Maryland, Massachusetts, Ohio, and Pennsylvania to name a few.”

Executive Chairman Alan Gold added, “This nascent industry that has witnessed amazing growth with state-regulated medical-use cannabis markets, now comprising a majority of the United States. We are very optimistic about the future of this industry and our ability to deliver an enduring value to our tenant partners in providing tailored real estate solutions that meet their key operational and capital needs.”

 

 

 

 


Don't Miss This Week's Groundbreaking News

Join the thousands of subscribers who stay informed with GMR's exclusive news briefs delivered directly to your inbox every Friday afternoon.

We respect your privacy. See our privacy policy.


About Us

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


READ MORE



Recent Tweets

@GreenMarketRpt – 1 day

New Report from ⁦@headset_io⁩ Says Medical Cannabis Consumers Spend More. New story from ⁦@julsaitch⁩

@GreenMarketRpt – 1 day

Yowza. Be careful when investing in crowdfunding deals. SEC files complaint against CEO and others for…

Back to Top