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The cannabis real estate market is heating up and Innovative Industrial Properties, Inc. (IIPR) has been one of the main beneficiaries of this trend. The company is the only cannabis focused real estate investment trust (REIT) to trade on the New York Stock Exchange (NYSE) and we are impressed with the way the story has advanced over the last two years.
From a merger and acquisition (M&A) standpoint, Innovative Industrial Properties has been nothing short of an execution story and has been making acquisitions at a very fast pace. The company is clearly trying to take advantage of its first mover advantage before additional cannabis REITs come to market and we will be closely monitoring this trend.
Earlier this week, Innovative Industrial Properties completed the acquisition of a property in Alachua, Florida, which comprises approximately 295,000 sq. ft. of industrial space. The purchase price for the property was $23.8 million (excluding transaction costs) and the company has agreed to provide reimbursement of up to approx. $10.8 million.
Florida is attractive cannabis market and we are favorable on the leverage the cannabis REIT has to the market. During the last year, the number of medical cannabis patients in Florida has steadily increased and this is a trend that we expect to become more significant over the coming years.
In the next few years, we expect Florida to legalize recreational cannabis and expect companies like Innovative Industrial Properties to benefit from the continued advancement of the market. Going forward, we expect to see the company announce additional acquisitions of real estate in Florida and will keep an eye on this trend.
As of January 25th, Innovative Industrial Properties reported to own 67 properties (Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Virginia and Washington) that have approx. 5.7 million rentable square feet (including approximately 2.1 million rentable square feet under development/redevelopment). The properties are 100% leased with a weighted-average remaining lease term of approximately 16.6 years.
We find these numbers to be attractive and expect Innovative Industrial Properties to continue to acquire properties at a rapid pace. When it comes to raising capital, the company has had no issues and Wall Street seems to be very willing to lend money to the business. Innovative Industrial Properties has used Wall Street to fund its acquisition strategy and we expect this trend to continue.
If you are interested in learning more about Innovative Industrial Properties, please send an email to support@technical420.com with the subject “Innovative Industrial Properties” to be added to our distribution list.
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