Vireo Growth secures US$60M loan for New York and Florida facilities
The 8.5 per cent property loan matures in April 2034 and puts cultivation sites in Johnstown and Palatka behind the debt.
Theo Marchetti
New York and Florida cultivation properties secure a US$60 million real estate loan, according to Vireo's Oct. 5 financing announcement. Vireo Growth Inc. CNSXVREO OTCMKTSVREOF said approximately US$49 million of the proceeds are being used to refinance debt tied to its Johnstown, N.Y., facility, while approximately US$11 million will finance its acquisition of a Palatka, Fla., facility.
Vireo shares closed at C$13.40, down 2.19 per cent, on the Canadian Securities Exchange at 4 p.m. EDT on Oct. 5 CNSXVREO. The company's Oct. 5 release describes operations in 10 states and more than 170 dispensaries, putting the two properties inside a business that spans cultivation, production and retail.
The loan bears 8.5 per cent annual interest and matures April 2, 2034, Vireo said on Oct. 5. Lenders receive a first-priority mortgage on both properties, pledges of interests in borrowing subsidiaries, and security over substantially all personal property of the borrowers and other loan parties. At a constant US$60 million principal balance, the stated rate implies US$5.1 million of annual interest before principal reductions.
Vireo said additional material loan terms will appear in regulatory filings. Its Oct. 5 release does not give an amortization schedule or name the commercial bank and institutional lender. The filings could clarify how repayment is spread across the years before maturity.
Johnstown Purchase Carried a 15 Per Cent Seller Note
Vireo announced on May 26 that a subsidiary had completed the Johnstown purchase for US$88.5 million. The 389,000-square-foot cultivation and production facility had previously been leased. Its acquisition financing included a US$49 million seller note at 15 per cent annual interest. The note was due May 25, 2027, and a US$41 million junior loan also helped fund the purchase.
The Oct. 5 release describes approximately US$49 million of the new loan as refinancing senior debt incurred in connection with that purchase. It does not identify the creditor being repaid or say what happens to the junior loan. The stated rate on the new borrowing is lower than the rate of the earlier seller note, but the releases do not set out a combined debt-service comparison.
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Palatka Property Will Get a New Lease
Vireo said the Palatka cultivation and production facility supports its Green Dragon operations in Florida. The property was leased from Rainbow Palatka FL LLC; that lease will end in connection with the acquisition, and a new lease with Vireo affiliate Green Dragon Florida LLC will be executed. The allocated US$11 million of financing proceeds is not stated as the property's full purchase price.
"This $60 million credit facility is an important milestone for Vireo and directly supports our strategic growth plans," Vireo chief financial officer Tyson Macdonald said in the Oct. 5 release.
Vireo reported US$122.7 million of cash at June 30 in its Aug. 11 quarterly release. That dated balance precedes the new loan and the Palatka financing; the Oct. 5 announcement gives no updated cash figure.
Vireo said it will disclose additional material terms in regulatory filings, without giving a filing date. The new loan matures April 2, 2034.
