The Company Expects to Invest Up to $15 Million in the 72,000
Square Foot Medical-Use Cannabis Cultivation Facility
SAN DIEGO--(BUSINESS WIRE)--
Innovative Industrial Properties, Inc. (the “Company”) (NYSE: IIPR), the
leading provider of creative real estate capital solutions to the
medical-use cannabis industry, announced today that it has executed an
agreement to purchase the 9220 Alaking Court property in Capitol
Heights, Maryland, which is currently under development and expected to
comprise approximately 72,000 square feet upon completion. Concurrent
with the closing of the purchase, the Company expects to enter into a
long-term, triple-net lease agreement with Holistic Industries LLC
(“Holistic”), which intends to use the facility as the only medical
cannabis cultivation facility in Prince George’s County. Holistic is one
of 15 companies throughout the state of Maryland to receive provisional
approval for the cultivation of medical-use cannabis by the Maryland
Medical Cannabis Commission (the “MMCC”), having also received
provisional approval from MMCC for processing and dispensing medical
cannabis in Maryland. Holistic is led by Josh Genderson, who brings
years of experience and a proven track record in the medicinal cannabis
industry.
The initial purchase price for the property is $8 million, and the
seller, an affiliate of Willco Construction Co., Inc., a leading
developer with more than 50 years of experience in commercial real
estate in the Washington, D.C. metropolitan area, will be responsible
for completing certain development milestones after the closing of the
acquisition, for which the seller will be reimbursed $3 million.
Holistic, as tenant, is also expected to complete tenant improvements
for the building, for which the Company has agreed to provide
reimbursement of up to $4 million. Assuming full payment for each step
of the development, the Company’s total investment in the property will
be $15 million.
The initial term of the lease is 16 years, with three options to extend
the term for three additional five-year periods. The lease provides for
an initial annualized aggregate base rent of 15% of the sum of the
initial purchase price, the additional seller reimbursement and the
reimbursed tenant improvements, subject to three months of rent
abatement at the beginning of the term and the Company’s additional
establishment of a rent reserve of $1.9 million that is amortized over
the initial term of the lease. The aggregate base rent is subject to
3.25% annual increases during the initial term of the lease, and
Holistic is also responsible for paying the Company a property
management fee equal to 1.5% of the then-existing aggregate base rent.
As one of only three companies in Maryland to be provisionally approved
for complete vertical integration with licenses in cultivation,
processing and dispensing of medical cannabis, Holistic’s management
team and board of advisors bring decades of experience in executive
management, agriculture, business, health and medical science, including
the ownership, management and operation of successful medical-use
cannabis cultivation and processing facilities in Washington, D.C., as
well as approval for cultivation and dispensary operations in
Massachusetts. Mr. Genderson’s longstanding Washington, D.C. operations
manufacture a rare category of medicinal products designed specifically
for young patients suffering from seizures and associated symptoms.
Holistic plans to produce these same medicines in Maryland as part of an
extensive product line.
“My goal has always been to provide the highest-quality,
cannabis-derived medical products at the best possible value, and my
primary focus has been on beneficial medicinal products specifically
designed for the most sensitive patients,” said Mr. Genderson, Chief
Executive Officer of Holistic. “We are fortunate to have found a partner
in Innovative Industrial Properties that has the capabilities and
experience to help us achieve that goal on behalf of the people of
Maryland. As the only grower to launch cultivation operations in Prince
George’s County, we look forward to joining the local business community
with the addition of our state-of-the-art facility.”
“We are excited to have Holistic as a new tenant, and to partner with
Willco and its first-class development team on the completion of the
development of the Alaking property,” said Robert Sistek, Chief
Financial Officer and Executive Vice President, Investments. “Similar to
our New York medical-use cannabis cultivation and processing facility
leased to PharmaCann, the Alaking property is being developed as an
institutional-grade facility that will be instrumental in Holistic’s
execution on its mission to provide the highest-quality products with
exacting specifications to meet the tremendous demand for treatment from
patients throughout the state of Maryland.”
The transaction is expected to close in the second quarter 2017, and
property development is expected to be completed in the third quarter
2017. The transaction is subject to the Company’s continued diligence
and customary closing conditions, and the Company cannot provide
assurances that it will close on the transaction on the terms described
herein, or at all.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised Maryland
corporation focused on the acquisition, ownership and management of
specialized industrial properties leased to experienced, state-licensed
operators for their regulated medical-use cannabis facilities.
Innovative Industrial Properties, Inc. intends to elect to be taxed as a
real estate investment trust. Additional information is available at www.innovativeindustrialproperties.com.
About Holistic Industries LLC
Holistic Industries, LLC was founded in 2015 with the mission of
providing the highest-quality medicinal cannabis to the people of
Maryland most in need. Holistic has been granted Stage One license
pre-approvals by the State of Maryland for the cultivation and
processing of medical cannabis in Prince George’s County, Maryland, and
for the dispensing of medical cannabis in Rockville, Maryland. Holistic
is led by Josh Genderson, who brings years of experience in the
medicinal cannabis industry; Richard Cohen, Chairman of Willco and
veteran of the real estate industry; and Wilton Lash, a respected
minority business owner with more than 30 years of experience in waste
management and the founder and owner of Lucky Dog Industries. For more
information, visit www.holisticindustries.com.
About Willco
Willco is a leading developer, owner, investor, and manager of
commercial real estate in the Washington, DC area, with a current
portfolio of approximately three million square feet and an additional
eight million square feet of potential new development. Locally owned
with a broad network of partners and a deep understanding of the
Washington, DC market – one of the world’s most vibrant real estate
markets – Willco is uniquely adept at identifying overlooked
opportunities as evidenced by its long track record of profitable
investments. The firm’s service offerings include acquisitions,
financing, development, asset management, property management and
leasing. For more information, visit www.willco.com.
Innovative Industrial Properties Forward-Looking Statements
This press release contains statements that the Company believes to
be “forward-looking statements” within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. All
statements other than historical facts, including, without limitation,
statements regarding the purchase, development and lease of the Alaking
property and the terms thereof, are forward-looking statements. When
used in this press release, words such as we “expect,” “intend,” “plan,”
“estimate,” “anticipate,” “believe” or “should” or the negative thereof
or similar terminology are generally intended to identify
forward-looking statements. Such forward-looking statements are subject
to risks and uncertainties that could cause actual results to differ
materially from those expressed in, or implied by, such statements.Investors
should not place undue reliance upon forward-looking statements.The
Company disclaims any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170504005286/en/
Innovative Industrial Properties, Inc.
Robert Sistek, (858) 997-3332
Chief
Financial Officer and Executive Vice President, Investments
Source: Innovative Industrial Properties, Inc.