Innovative Industrial Properties Inc (NYSE:IIPR) is positioning itself to exploit the real estate wave resulting from cannabis market growth. One of the initial steps includes the acquisition of a cannabis-focused property in Illinois. The property sits on around ten acres of land and covers over 75,000 square feet.
Innovative Industrial Properties bolstering business strategy
Innovative is a real estate investment trust (REIT) focused on the cannabis sector. The industry is just beginning to catch traction as governments rush to formulate regulations. The firm notes that the decision by Canada to allow both medical and recreational use of marijuana turned the sector around. As such, there is an ongoing real estate demand boom that is way above supply.
IIPR agreed with a subsidiary of Ascend Wellness Holdings, LLC to acquire and operate the cannabis-focused property. The agreement is long term and will incorporate a cultivation facility for medical-use cannabis. Also, the property will house a cannabis processing unit.
Interestingly, the new agreement fits in with the company’s overall business strategy. In essence, the firm partners with experienced firms in the cannabis sector to deliver project goals. Usually, IIPR acts as a source of capital for the partner while it takes care of all the operations and day-to-day running of the facility.
Doubled assets under management
In the case of the agreement with Ascend, IIPR will provide capital as the firm completes improvements on the property. As part of the deal, IIPR will reimburse Ascend for up to $6 million for the additional improvements. IIPR will commit a total investment of $25 million for the whole project.
Abner Kurtin, Chief Executive Officer and Co-Founder of Ascend recognizes IIPR’s prowess in the sector. Particularly, he believes that their partnership with the firm is the best decision. Further, he acknowledged IIPR’s commitment towards the success of their joint venture.
IIPR has had an unstoppable year and it is likely to continue with the positive trajectory if the cannabis market continues to develop. The firm doubled its property portfolio this year. Currently, the firm has over ten properties under management compared to only five at the end of 2017.