As the entire world closes businesses, event centres and front doors, the cannabis sector’s bastion of property investment — Innovative Industrial Properties, Inc. (NYSE: IIPR) — is closing another deal.
The real estate investment trust said Thursday it has acquired 373,000 square feet of industrial and greenhouse space from Parallel, a multi-state cannabis company with operations in Florida, Massachusetts, Nevada and Texas.
Parallel is the corporate parent of Surterra Wellness, a vertically-integrated company with production facilities, a variety of product offerings and 39 dispensaries in Flordia, according to its website.
In a statement, IIP said it bought the property for US$35.3 million, excluding transaction costs, and agreed to cover costs of up to an additional US$8.2 million in property improvements.
Along with the purchase, IIP and Parallel have entered into a triple-net lease agreement with Surterra, which intends to continue using the facility as a regulated medical cannabis cultivation and processing facility.
Before today’s stock market plunge at a rate not experienced since 1978, according to the New York Times, IIP’s share price was on a relative uptick to around US$98.13 on March 4. Since then, the company’s valuation has plunged with the rest of the market by 33 per cent to US$65.69.
Innovate Industrial CEO Paul Smithers said his company looks forward to being a long-term capital partner with Parallel in Florida and elsewhere.
“Parallel has a tremendous footprint in Florida with its 39 operating dispensary locations, and we expect the Wimauma facility to be a critical catalyst to Parallel’s continued growth and expansion of operations to meet the tremendous patient need for high quality medical cannabis products throughout Florida,” he said.
According to the release, Parallel is one of the largest privately-held multi-state cannabis operators in the U.S., with leading positions in several of the largest and fastest-growing markets, including Florida, Massachusetts, Nevada and Texas.
Parallel’s operations include 42 retail dispensaries, a portfolio of proprietary consumer brands and products, and state-of-the-art cultivation, production and research facilities. IIP says Parallel has over 1,700 employees, has raised more than US$3 million to date and its management team is led by CEO William “Beau” Wrigley, the previous chief executive of famed gum manufacturer the Wm. Wrigley Jr. Company — which was acquired by Mars, Inc. in 2008 for US$23 billion.
Florida is one of the largest and fastest growing medical cannabis markets in the U.S., IIP said. According to the Florida Office of Medical Marijuana Use, as of March 6 there were over 320,000 qualified patients and over 2,500 qualified physicians in the medical-use cannabis program.
Among other details in the long press release, IIP mentioned a tenant in California hasn’t been paying rent, and so IIP’s statistics have not been treating that property as leased.
Top photo by Cannabis Tours via Wikimedia Commons