It’s safe to say that 2019 was an impressive year for Innovative Industrial Properties (IIPR). This dividend paying cannabis company quadrupled its real estate portfolio, by making over 30 acquisitions.
So far, 2020 is looking like it’s going to be another exciting year, as the company announces yet another acquisition. Recently IIPR raised over $200 million to fund future operations and they did not waste any time putting the money to work.
On Monday, IIPR closed on their most recent transaction with Green Thumb Industries to Sell and Lease Back Its Oglesby, Illinois Cultivation and Processing Facility. The company announced Green Thumb Industries will lease back the facility via a long-term agreement and continue to operate and manage it. This fits in line with IIPR’s long term business model.
IIPR will invest a total of $50 million into the property, assuming full compensation for extensive improvement and capacity increases of up to $41 million. There was also a $9 million dollar purchase price for the property which excluded transaction costs.
This will be Green Thumb Industries’ third transaction with IIPR. This follows the sale-leasebacks for Green Thumb Industries cannabis cultivation and processing facility in Danville, Pennsylvania which was completed in November 2019 along with their Toledo Ohio processing facility in February 2020.
Green Thumb Industries CEO Ben Kovler had some words to say regarding the most recent news, “The highest ROIC in global cannabis today is in wholesale capacity expansion in our home state of Illinois. IIP is a proven long-term real estate capital partner and provides us with another flexible real estate capital solution that allows us to put our capital to work in the best way possible.” He was also very excited about the Illinois market and mentioned that, “With the introduction of Illinois’ adult-use cannabis program this year, we continue to ramp up production to meet the demand from cannabis consumers and patients.”
IIPR’s CEO Paul Smithers also had some positive words regarding the transaction, “We are thrilled to expand our relationship with Green Thumb, one of the country’s leading regulated cannabis operators. This investment enables GTI to significantly expand their consumer products manufacturing capacity and reflects our belief in their continued success in serving the growing demand.”
IIPR also owns a cultivation and processing facility in Rock Island along with seven retail locations across the state of Illinois, with licenses to open three additional locations. IIPR has put emphasis on the companies they work with and makes sure that quality tenants occupy their facilities. This is a crucial aspect of IIPR’s business and so far their model has worked very well. Illinois recently legalized recreational sales as of January 1st, 2020 and so far has generated almost $75 million in revenue in the first two months. Experts predict that when fully matured, Illinois alone will be a $2.5 billion market.
As IIPR continues to execute on its long term strategy, the company is building a diverse portfolio of high-quality properties. This is attractive to investors because IIPR is able to show immediate results.
We believe in IIPR long term but remain cautious during these volatile times. However, if you are looking into investing in IIPR, also know that as the stock market continues to pull back due to the coronavirus and drag shares of IIPR lower, their dividend yield rises.
IIPR shares were trading at $85.92 per share on Tuesday afternoon, up $2.78 (+3.34%). Year-to-date, IIPR has gained 13.25%, versus a -10.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...
