While Innovative Industrial Properties (IIP) executives were fortunate enough to be able to take the company public through an IPO in December 2016, most cannabis companies are denied this access to public markets due to federal prohibition, and must find more creative ways to raise capital.
IIP has a solution. The real estate company has set its sights on the regulated cannabis industry and provides real estate capital to medical cannabis business operators. As a real estate investment trust (REIT), IIP partners with qualified businesses and serves as a source of capital by acquiring and leasing back their real estate assets, according to Paul Smithers, the company’s chief executive officer, president and director.
IIP’s national portfolio comprises specialized industrial and greenhouse buildings for a total of 1,027,000 rentable square feet, with approximately 114,000 square feet under development, Smithers says. This space is leased to state-licensed medical cannabis growers in nine states: New York, Maryland, Arizona, Pennsylvania, Massachusetts, Minnesota, Michigan, Colorado and Illinois.
Since launching its IPO on the New York Stock Exchange (NYSE) in late 2016, IIP has increased its total assets to over $250 million, and with access to capital in the public markets, it has helped fund multiple cannabis projects, such as facility buildouts, Smithers says. As of late December, the company has invested or committed over $167 million in real estate transactions.
Removing Financial Barriers
IIP acquires properties from cannabis growers, who reinvest the proceeds into their core operations, Smithers says. The properties are then leased back to the cultivators under long-term, absolute net lease agreements.
“Our highly experienced team is institutionalizing the opportunity for entrepreneurs to continue to grow their medical cannabis businesses by removing financial barriers and providing them with growth capital,” Smithers says.
Most of the IIP team comes from Biomed Realty, which was