Innovative Industrial Properties Inc., the first real estate company on the New York Stock Exchange focused on the regulated U.S. cannabis industry, today announced it closed on the acquisition of a property located at 29600 Stephenson Highway in Madison Heights (halfway between 12 Mile and 13 Mile roads).
The purchase price for the property was $6.2 million (excluding transaction costs). Concurrent with the closing of the purchase, Innovative Industrial Properties entered into a long-term, triple-net lease agreement with a subsidiary of Holistic Industries Inc., which intends to operate the property as a regulated cannabis cultivation, processing, and dispensing facility upon completion of development of an approximately 63,000-square-foot industrial building.
In connection with the development of the property, Innovative Industrial has agreed to provide reimbursement of up to $18.8 million. Assuming full reimbursement for the development of the property, the company’s total investment in the property will be $25 million.
“Innovative Industrial has been an excellent real estate partner, and we appreciate their unwavering support in facilitating our expansion over the past three-plus years,” says Josh Genderson, founder and CEO of Holistic. “We look forward to working closely with Innovative Industrial in the development of this property and the vision we have for the community (and) creating … an operation that provides great jobs and opportunities for career advancement for local residents.”
Holistic is one of the largest private, vertically integrated multi-state operators in the cannabis industry, with operations in Michigan, California, Maryland, Massachusetts, Pennsylvania, and Washington, D.C.
According to a Michigan Marijuana Regulatory Agency report, July 2020 total sales for medical-use and adult-use cannabis were approximately $109.6 million, equating to approximately $1.3 billion in sales on an annualized basis and representing a continued strong, month-to-month growth.
Michigan began regulated adult-use cannabis sales in December of last year. As of today, Innovative Industrial’s total investment, including committed funding for future tenant improvements, for the properties it owns in Michigan is approximately $155.8 million.
“We have had the privilege of being Holistic’s long-term real estate partner since 2017, and supporting them in their expansion over the years with key growth capital along the way,” says Paul Smithers, president and CEO of Innovative Industrial. “Josh and his team of dedicated professionals have set a standard for product quality, patient care, and customer experience that we are proud to support.”
As of Sept. 1, Innovative Industrial owned 62 properties in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Nevada, North Dakota, Ohio, Pennsylvania, and Virginia, totaling approximately 4.7 million rentable square feet (including approximately 1.7 million rentable square feet under development/redevelopment), which were 99.3 percent leased (based on square footage) with a weighted-average remaining lease term of approximately 16 years.
In addition to the Michigan property, Innovative Industrial owns and leases to Holistic three other properties in Maryland, Massachusetts, and Pennsylvania.
As the pioneering real estate investment trust (REIT) for the medical-use cannabis industry, Innovative Industrial partners with experienced medical-use cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other real estate-based capital solutions.