Despite the recent negativity in the cannabis sector, one stock that remains on the top of our watchlist is IIPR for multiple reasons. While most cannabis companies have lost immense amounts of value over the past few months IIPR has held onto its gains and is even showing like it could be heading back up into the triple digits again. IIPR currently trades at just under $90 per share.
The company started off 2019 in the mid ’40s and has since doubled. What recently brought the company down was the fact that they raised over 100 million dollars to fund future growth initiatives, but the only problem was that it was dilutive for current shareholders. The difference between IIPR and over cannabis companies that we mentioned previously is the fact that although IIPR has diluted their shares, they have a clear plan as to what they are going to do with the money and how that will translate into increased revenues.IIPR has been on an acquisition spree so far this year more than doubling the size of its real estate portfolio to a total of 31 properties. The company has acquired 20 properties so far this year starting off 2019 with only 11 properties. In their most recent deal, IIPR acquired another property from Cresco Labs. This property is Cresco’s Joliet and Kankakee property in Illinois. The property cost approximately $46.3 million. This amount includes funding for additional tenant improvements at the Kankakee property. The best part about this acquisition is that Cresco Labs will enter into a long-term, triple-net lease agreement with IIPR and will continue to operate each property as a licensed cannabis cultivation and processing facility.
Both properties combined total of approximately 100,000 square feet of industrial space. Both companies expect the deal to go through in the next 30 days. There is huge potential within the Illinois cannabis market as it’s projected to reach $2 billion to $4 billion in annual sales after becoming fully mature. The best part about this deal is that the additional capital will help Cresco Labs scale their cultivation capacity and broaden their retail dispensary network.
Deals like these are just one of the many reasons we like IIPR. The company is able to help other cannabis companies focus on their operations while they focus on the real estate aspect of the business. Helping their tenants grow will only translate in to lower vacancy and delinquency rates which means more revenue.Now, this deal might just be another deal for IIPR since they have already acquired 20 properties this year, but we love how fast the company is moving to utilize their capital. As the stock still sits well off of its 52-week highs of almost $140 per share, we feel that IIPR could easily soar much higher in the coming years if they can sustain this momentum, not to mention the quality of the deals they are doing. IIPR may look still too expensive for some, but the momentum that’s building might be unstoppable.
IIPR shares were trading at $91.51 per share on Friday afternoon, up $1.59 (+1.77%). Year-to-date, IIPR has gained 105.32%, versus a 19.10% 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...