Innovative Industrial Properties closed on the acquisition of a property in New Jersey, and entered into a long-term lease with a subsidiary of Ascend Wellness Holdings (AWH) at the property.
The purchase price for the property was $35.4 million (excluding transaction costs). AWH is expected to complete additional improvements for the approximately 114,000 square foot property as a regulated cannabis cultivation and processing facility, for which IIP has agreed to provide reimbursement of up to $4.6 million. Assuming full reimbursement for the tenant improvements, IIP’s total investment in the property is expected to be $40.0 million. AWH is planning to build out its overall New Jersey cultivation footprint to include a lab, kitchen and 150,000 square feet of canopy by the end of 2023.
In addition to this New Jersey property, IIP owns and leases to AWH three other properties in Illinois, Massachusetts and Michigan, with IIP’s total investment in properties leased to AWH, including commitments to fund future tenant improvements, equaling approximately $179.75 million.
As a 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 have been AWH’s long-term real estate partner since 2018, and are excited to once again expand our relationship with Abner and his team,” said Paul Smithers, President and Chief Executive Officer of IIP. “The AWH team continues to distinguish themselves in delivering the highest quality cannabis products and services to their patients and customers, and has developed a tremendous strategic footprint in some of the strongest regulated cannabis markets, including New Jersey.”
“Throughout these transformational years of AWH, we have greatly valued our long-term real estate partnership with IIP, working closely together to deliver optimal real estate capital solutions that have been instrumental in driving our expansion over time,” said Abner Kurtin, Chief Executive Officer and Co-Founder of AWH. “With IIP’s partnership, we look forward to significantly enhancing our production capacity in New Jersey, and bringing our award-winning products and exceptional service to patients and customers throughout the state.”
New Jersey has taken strong steps in recent years to expand access of the medical cannabis program to patients throughout the state, including amending the rules to allow for oil-based formulations, and adding seven new qualifying medical conditions, including PTSD, anxiety, migraines and certain types of chronic pain. The program was further expanded by the passage of the Jake Honig Compassionate Use Medical Cannabis Act, which, among other things, increased the monthly limit for cannabis patients, allowed physician assistants and advanced practice nurses to recommend medical cannabis to patients, and allowed the dispensing of cannabis edibles to adult patients.