US (PA): Real estate firm acquires Pennsylvania property and enters into agreement with cannabis producer

Innovative Industrial Properties (IIP) has closed on the acquisition of a property in Saxton, Pennsylvania, which comprises two buildings totaling approximately 266,000 square feet of industrial space.

According to the company, the purchase price for the Pennsylvania property was $13.0 million (excluding transaction costs). Concurrent with the closing of the purchase, IIP entered into a long-term, triple-net lease agreement with a subsidiary of Green Leaf Medical which intends to operate the property as a licensed medical-use cannabis cultivation and processing facility. "Green Leaf Medical has redeveloped approximately 103,000 square feet of the industrial space for medical-use cannabis cultivation and processing, with the remaining approximately 163,000 square of industrial space available for future redevelopment," the team with the company explains. 

Green Leaf Medical conducts licensed medical-use cannabis operations in multiple states, holding cultivation, extraction and retail licenses in Maryland, Pennsylvania, Ohio and Virginia. According to Green Leaf Medical, its cultivation facility in Frederick, Maryland, generated over $9 million in sales in its first eleven months of operations under its gLeaf brand, with Green Leaf Medical's consolidated operations achieving positive net operating income in 2018 in excess of 20 percent of sales. Green Leaf Medical has raised $24 million since its inception in 2014 and holds one of 25 grower / processor licenses in Pennsylvania.

As of May 20, 2019, IIP owned 21 properties located in Arizona, California, Colorado, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Ohio and Pennsylvania, totaling approximately 1.6 million rentable square feet (including approximately 221,000 rentable square feet under development/redevelopment), which were 100% leased with a weighted-average remaining lease term of approximately 15.1 years, according to the company. As of May 20, 2019, IIP had invested approximately $213.2 million in the aggregate (excluding transaction costs) and had committed an additional approximately $45.6 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP's properties. IIP's average current yield on invested capital is approximately 14.7% for these 21 properties, calculated as (a) the sum of the current base rents, supplemental rent (with respect to the lease with PharmaCann LLC at one of IIP's New York properties) and property management fees (after the expiration of applicable base rent abatement periods), divided by (b) IIP's aggregate investment in these properties (excluding transaction costs and including aggregate potential development/redevelopment funding and tenant reimbursements of approximately $45.6 million).

For more information:
Innovative Industrial Properties
11440 West Bernardo Court, STE 220
San Diego, CA 92127

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