Cannabis investors with faith in the slump-resistant lease-buyback model of Innovative Industrial Properties, Inc. (NYSE: IIPR) have a window of opportunity.
The real estate investment trust announced Thursday afternoon that it started a public offering of two million shares of its common stock, and expects to grant the underwriters a 30-day option to buy 300,000 more.
All of the shares are being sold by the company.
The REIT has made its profits by buying properties from cash-starved cannabis producers and then leasing those properties back to the companies. It’s what looks to be a win-win model so far.
Its share price dipped almost three per cent to US$76 in aftermarket trading following the news, which could be attributable to dilution of the additional common stock.
However, the IIPR has maintained steady year-over-year growth and offered dividends amid a slumping cannabis market.
In a press release, the company said it intends to use the proceeds from the stock offering to invest in specialized industrial real estate assets that support the regulated cannabis cultivation and processing industry.
IIPR said some of the funds will be used for general corporate purposes.
BTIG, LLC is acting as sole book-running manager for the offering; Compass Point Research & Trading, LLC and Ladenburg Thalmann & Co. Inc., a subsidiary of Ladenburg Thalmann Financial Services Inc. (NYSE American: LTS), are acting as co-lead managers for the offering; and Roth Capital Partners is acting as a co-manager for the offering.
Top photo by Cannabis Tours via Wikimedia Commons