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US (MA): Acquisition completed of a 199,000 sq. ft. property

Innovative Industrial Properties has closed on the acquisition of a property in Athol, Massachusetts, which comprises approximately 199,000 square feet of industrial space.

"The purchase price for the Massachusetts property was approximately $26.8 million (excluding transaction costs)," the team with the company explains. "Concurrent with the closing of the purchase, IIP entered into a long-term, triple-net lease agreement with a subsidiary of Ascend Wellness Holdings (AWH) for continued operation as a licensed cannabis cultivation and processing facility. AWH is expected to complete tenant improvements for the property, for which IIP has agreed to provide reimbursement of up to approximately $22.2 million. Assuming full reimbursement for the tenant improvements, IIP’s total investment in the property will be $49.0 million. The lease provides for an initial annualized aggregate base rent of 13.5% of the sum of the initial purchase price and tenant improvement allowance, subject to a phase-in of the base rent associated with the tenant improvement allowance at the beginning of the term."

"This Massachusetts property represents IIP’s third real estate transaction with AWH," they further explain. "In December 2018, IIP acquired a 75,000 square foot industrial facility in Illinois and entered into a long-term, triple-net lease agreement with AWH for use as a regulated cannabis cultivation and processing facility, with IIP’s total investment in the property being $33.0 million. In July 2019, IIP acquired a 145,000 square foot industrial facility in Michigan and entered into a long-term, triple-net lease agreement with AWH for use as a regulated cannabis cultivation and processing facility upon completion of redevelopment, with IIP’s total investment in the property, assuming full reimbursement for tenant improvements, expected to be approximately $19.8 million."

"AWH is a vertically integrated cannabis company, and is operating in each of Massachusetts, Illinois, Michigan and Ohio. AWH has raised $100 million in equity capital to date, including a $28.2 million round of financing that closed in December of last year. AWH is expected to have its first cannabis harvest at its Athol facility this month, and in January, received its provisional license from the Massachusetts Cannabis Control Commission for what is expected to be one of the largest dispensaries on the East Coast, a 16,000 square foot retail location situated near Faneuil Hall and TD Garden in the heart of downtown Boston. The Boston location is expected to open in January 2021."

“Abner and his team have achieved a tremendous amount of success over the past year, executing on their focused business model and ramping operations, and we are thrilled to support them as their long-term real estate capital partner on this third transaction in Massachusetts,” said Paul Smithers, President and Chief Executive Officer of IIP. “We are pleased that the Commonwealth of Massachusetts, in step with other state and local jurisdictions, has deemed medical cannabis an essential product, providing continued access to patients throughout the Commonwealth during this very difficult period.”

“We greatly value our real estate partnership with IIP, and are very pleased to team with them for a third time on our Athol facility,” said Abner Kurtin, Chief Executive Officer and Co-Founder of AWH. “With the tremendous acclaim and market success of our Ozone brand in Illinois and Michigan, we look forward to bringing our curated selection of cannabis products to the people of Boston and throughout the Commonwealth.”

Similar to other states during this coronavirus health crisis, Massachusetts authorities ordered all businesses that are not offering essential services to close operations for a period of time. However, the Massachusetts Cannabis Control Commission deemed Medical Marijuana Treatment Centers and Certifying Health Care Providers as essential services that will remain open during this time, while instituting new protocols, such as certifications via telehealth, social distancing, cleaning and steps to protect populations particularly vulnerable to COVID-19 infection.

For more information:
Innovative Industrial Properties
11440 West Bernardo Court, STE 220
San Diego, CA 92127
858-997-3332
ir@iipreit.com     


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