Back to top

Image: Bigstock

Innovative Industrial Raises Funding for Illinois Property

Read MoreHide Full Article

Innovative Industrial Properties (IIPR - Free Report) recently announced entering into an amendment of lease with a subsidiary of Ascend Wellness Holdings, LLC (AWH) at a property in Barry, IL, offering an additional funding of $18 million. This financing will support the expansion of AWH’s regulated cannabis cultivation and processing facilities at the property.

This strategic move also adjusted the base rent under the lease to incorporate the impact of additional available funding. Considering full payment of the supplementary funding, cannabis-focused real estate company Innovative Industrial Properties’ total investment in the property will be worth $51 million.

The partnership with AWH, a multi-state cannabis operator with assets in Illinois, Michigan, Ohio, Massachusetts and New Jersey, will help Innovative Industrial Properties efficiently capitalize on the solid market fundamentals. In fact, AWH presently operates two dispensaries in Springfield and Collinsville under the brand name Illinois Supply and Provisions in Illinois and plans to open two additional dispensaries, including its flagship retail location in Fairview Heights.

Along with this Illinois property, Innovative Industrial Properties owns and leases two other properties in Massachusetts and Michigan to AWH, resulting in $119.8 million total investment in properties leased to AWH, including commitments to fund future tenant improvements.

The legalization of marijuana’s medical use across several states, as well as the permission of recreational consumption in some, has created opportunities for the cannabis industry. Therefore, with more states in the United States giving cannabis the green light, Innovative Industrial Properties has incentives to partner with experienced medical-use cannabis operators and serve as a vital source of capital by acquiring and leasing back their real-estate assets. Its strategy is to acquire the existing, redeveloped and under-development industrial buildings, including attached enclosed greenhouse facilities.

Particularly, Illinois is the 11th state to legalize cannabis for adult use and the state started adult-use cannabis sales on Jan 1, 2020. The state is providing an avenue of significant opportunities for the cannabis industry. In fact, per the Illinois Department of Financial and Professional Regulation, Illinois’ adult-use cannabis dispensaries generated nearly $61 million in sales (excluding medical cannabis sales) in July, reflecting solid growth month over month.

Innovative Industrial Properties too remains well poised to benefit from its ownership of six regulated cannabis-cultivation and processing facilities in Illinois, representing a total expected investment of $204.6 million.

Innovative Industrial Properties currently carries a Zacks Rank #3 (Hold).

Year to date, shares of the company have outperformed the industry. The stock has rallied 59.3% against the industry’s decline of 7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Duke Realty Corporation’s Zacks Consensus Estimate for 2020 FFO per share has been revised 3.5% upward to $1.49 over the past month. The company currently carries a Zacks Rank #2 (Buy).

Alexandria Real Estate Equities, Inc.'s (ARE - Free Report) FFO per share estimate for the ongoing year has remained unchanged at $7.31 over the past week. The company currently carries a Zacks Rank of 2.

Stag Industrial, Inc.'s (STAG - Free Report) FFO per share estimate for 2020 has been revised 1.1% upward to $1.86 over the past month. It currently carries a Zacks Rank of 2.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>

Published in