Home » Innovative Industrial Properties Picks Up Cresco Labs Facility

Innovative Industrial Properties Picks Up Cresco Labs Facility

Cannabis REIT company Innovative Industrial Properties Inc. (NYSE: IIPR) picked up another cannabis facility this week. Illinois-based Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) signed a binding agreement to sell its Joliet and Kankakee, Illinois properties to Innovative Industrial Properties (IIPR) for roughly $46.3 million, which includes funding for additional tenant improvements at the Kankakee property.
This follows an announcement earlier this month that IIPR closed on the final parcel of a four property portfolio in southern California with the company Vertical. A long-term, triple-net lease was signed for each property with Medical Investor Holdings who is known as Vertical, for continued operations as licensed cannabis cultivation, extraction, manufacturing, and distribution facility.
This is becoming a typical strategy for cannabis companies. Most buy their facilities since banks don’t want to offer mortgages. Then they are able to sell those assets and quickly put some cash in the coffers. “This strategic transaction with IIP allows us to unlock our capital tied to our real estate and redeploy those proceeds into the tremendous opportunities we see ahead in the cannabis industry, in California and beyond,” said Bill Sutman, CFO of Vertical.
“We are thrilled to add Vertical and its strong management team to our tenant roster,” said Paul Smithers, President and Chief Executive Officer of IIP. “With its breadth of cannabis brands and highly experienced team, Vertical is well-positioned to capitalize on the tremendous growth of the California regulated cannabis industry in the many years to come, and we look forward to continuing to support Vertical and its long-term growth initiatives.”
Cresco Labs

Similar to the Vertical deal, Cresco Labs will enter into a long-term, triple-net lease agreement with IIP and will continue to operate each property as a licensed cannabis cultivation and processing facility. The two properties represent approximately 100,000 square feet of industrial space in aggregate. The agreement is expected to close within the next 30 days.

“This sale-and-leaseback agreement with IIP represents a non-dilutive capital solution for Cresco Labs that will support the expansion of our Illinois operations in preparation for the legalization of adult-use cannabis on January 1, 2020,” said Cresco Labs CEO and Co-founder Charlie Bachtell. “A portion of the proceeds from the sale of the two properties will be utilized to create the scale in our cultivation capacity and retail dispensary network necessary to meet the significant increase in demand projected from the legalization of adult-use cannabis and the expansion of the medical-use program in Illinois. With the Illinois cannabis market projected to reach $2 billion to $4 billion in annual sales at maturity, the expansion of our operations will position Cresco Labs to build upon our leading market share and significantly increase the revenue we generate from Illinois in the coming years.”
IIPR is one of the few cannabis stocks that has managed to keep its head above water in the cannabis sector selloff. The stock was lately trading at $95, higher than its 52-week low of $39.45. While it is lower than its year high of $139, many cannabis stocks have fallen much further.

Share This Post
Have your say!
00

Customer Reviews

5
0%
4
0%
3
0%
2
0%
1
0%
0
0%

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

    Thanks for submitting your comment!
    Top