Innovative Industrial Properties, Inc. (IIPR) closed on the acquisition of a property located in Alachua, Florida for $23.8 million. The announcement was made on January 25, 2021, and involves roughly 295,000 square feet of industrial space. The price tag does not include transaction costs and will see IIPR entering into a long-term, triple-net lease agreement at the property by partnering with a subsidiary of Harvest Health & Recreation, Inc. Harvest plans to continue to use the property as a licensed cannabis cultivation and processing plant. IIPR will provide an additional $10.8 million for what is being called “tenant improvements” which pushes IIPR’s total investment at the site to $34.6 million.
What They Had To Say
IIPR president and CEO Paul Smithers commented, “We are thrilled to form our new real estate partnership with Harvest…(which) has established a tremendous footprint in its four core markets of Arizona, Florida, Maryland, and Pennsylvania, and continues to execute strongly on its targeted growth and expansion in those markets.” He added, “We look forward to working closely with Harvest to complete the build-out of additional enhancements and productive capacity at the Alachua facility, which will enable their continued expansion in Florida to meet the tremendous demand from the over 460,000 registered patients in the state, the largest registered patient population of the 35 medical-use cannabis programs in the United States.”
Harvest Chief Executive Officer Steve White commented, “We are pleased to secure real estate financing to support expansion activities at our Alachua cultivation and processing facility.” He added, “Florida is one of our core markets with a rapidly growing medical patient population…we look forward to opening new retail locations in Florida after additional capacity at Alachua comes online.” Harvest has a total of two cultivation and processing facilities. In addition to the one in Alachua, there is a cultivation-only facility in Gainesville. Between them, they provide products for the six medical dispensaries operated by Harvest located in Gainesville, Jacksonville, Kissimmee, Longwood, North Port, and Tallahassee.
Why Florida Is So Attractive
Florida happens to be one of the largest medical-use cannabis markets in the US. It is also one of the fastest-growing. This is due to the overwhelming support residents in the state gave the medical-use cannabis program back in 2016. With voter approval of 71%, the program was allowed to launch. The program is in place to help treat various qualifying conditions which include cancer, PTSD, epilepsy, HIV/AIDS, multiple sclerosis, and others. There are currently over 2,700 qualified physicians in the program. Another reason why IIPR is involved in this most recent property acquisition is that they already own other properties in the state. Now, with four properties owned in Florida, they can provide access to 1-million square feet of rentable space which includes square footage that has already been redeveloped and square footage currently under development. These properties bring IIPR’s total investment in Florida to about $151.5 million including commitments to fund upcoming development and tenant improvements.
More About Innovative Industrial Properties, Inc.
IIPR is a Maryland corporation that is self-advised and focuses on acquiring, owning, and managing specialized industrial properties. These properties are leased to state-licensed, experienced operators who develop regulated medical-use cannabis facilities. As of January 25, 2021, IIPR owned a total of 67 properties in 17 different US states. Combined, these properties represent about 5.7 million rentable square feet which include 2.1 million rentable square feet that are either under development or redevelopment. All of these properties have been leased with a weighted-average remaining lease term of about 16 years. The company has also committed close to $1.4 billion by investing most of that into the aggregate and committing the rest as reimbursements to certain tenants for making improvements on the properties. The company states, “We believe this industry is poised for significant growth in coming years, and our highly experienced management team is focused on being a creative capital provider to this industry through the long-term ownership of cultivators’ mission-critical facilities.” At closing on February 1, 2021, at the NYSE, IIPR was selling at USD 194.58 per share – an increase of 7.46 USD or 3.99%.
More About Harvest Health & Recreation Inc.
Harvest is based in Tempe, Arizona, and is a vertically integrated cannabis company and multi-state operator. The company has been committed since 2011 to expand its retail and wholesale footprint in the United States. They have done this by acquiring, manufacturing, and selling cannabis products for patients in the medical cannabis market as well as to consumers. Harvest also provides services to retail dispensaries. It was back in December 2018 when Harvest CEO Steve White announced that his company aimed to become the “largest cannabis company in the World.” At the time, the company already had one of the largest footprints in the US with operations spanning 10 states and had a reported revenue for 2017 of $29 million. At the time, White was quoted as saying, “As a lawyer and CEO, being part of a community that is working to overturn failed laws while taking our company public has simply been incredible.” He added, “Harvest Health & Recreation has been a part of that change and we’ve worked hard to better educate regulators, decision-makers, patients, and consumers, so laws and lives change for the better.” At the close of trading on February 1, 2021, at the Canadian Securities Exchange, Harvest Health & Recreation Inc. was trading at CAD 3.93 per share which was an increase of 0.090 or 2.34%.
What do you get when you combine a company that specializes in the acquisition of cannabis-based properties with one of the fastest-growing cannabis cultivating companies in the United States? Well, one thing is for sure that a combination of these two players (Innovative Industrial Properties, Inc. and Harvest Health & Recreation Inc.) spells success no matter what direction you come at it from. Both have a proven track record in the medical cannabis field and are showing signs of continued success through wise property decisions in states that are medical-cannabis use friendly. Expect to hear the names of both of these companies frequently in the coming years as they continue to capitalize on one of the fastest-growing industries in the United States.