Innovative Industrial Properties, Inc. (IIP) closed on the acquisition of a property in Illinois, and entered into a long-term lease with a subsidiary of 4Front.
The purchase price for the property was $6.5 million (excluding transaction costs). 4Front is expected to construct approximately 250,000 square feet of industrial space at the property, for which IIP has agreed to provide reimbursement of up to $43.75 million. Assuming full reimbursement for the construction, IIP’s total investment in the property is expected to be $50.25 million (excluding transaction costs). 4Front intends to operate the property upon completion of construction as a licensed cannabis cultivation and processing facility.
IIP also owns and leases to subsidiaries of 4Front a regulated cannabis cultivation, processing and dispensing facility in Massachusetts and a managed regulated cannabis cultivation and processing facility in Washington. Assuming full reimbursement for tenant improvements under the Illinois lease, IIP’s total investment in properties leased to 4Front is expected to be $83.25 million, encompassing approximately 431,000 square feet.
As the pioneering real estate investment trust (REIT) for the regulated cannabis industry, IIP partners with experienced, regulated cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.
"We are thrilled to expand our long-term real estate partnership with 4Front with this new ground-up development project in Illinois," says Paul Smithers, President and Chief Executive Officer of IIP. " We look forward to working closely with the 4Front team in the coming months on the development of this state-of-the-art facility, which we expect will provide 4Front with tremendous, cost-effective scalability and a highly controlled environment for production of the quality products that 4Front is known for."
New Frontier projects Illinois to be in the top three states for regulated cannabis sales by 2025, and we believe 4Front will be well-positioned to meet that continued demand growth.
"We are excited to expand our partnership with IIP as the Illinois marketplace continues its record-breaking sales streak. This next-generation cultivation and manufacturing facility will not only allow us to best meet the state’s robust market demand, but it will also broaden the reach of our innovative, low-cost cultivation and manufacturing methodologies," says Leo Gontmakher, Chief Executive Officer of 4Front. "We look forward to continuing to expand our operations in Illinois, creating brands and products that consumers love and driving added value for our customers and shareholders."
For more information:
Innovative Industrial Properties
11440 West Bernardo Court, STE 220
San Diego, CA 92127