Innovative Industrial (IIPR) Expands With Texas Property Buyout



This story originally appeared on Zacks

Innovative Industrial Properties IIPR recently announced closing the acquisition of a Texas property for $12.0 million. The company has acquired the property to enhance its portfolio and bank on healthy market fundamentals. This property buyout expands the company’s footprint to 111 properties, with 8.4 million rentable square feet (including approximately 2.6 million rentable square feet under development/redevelopment), in 19 states.
This real estate investment trust (“REIT”), focused on a cannabis-centered real estate portfolio, has also entered into a long-term lease agreement for the property with a subsidiary of Texas Original Holdings, LLC.
A large portion of the project sitework had been completed at the time of closing. Moreover, the construction of the roughly 85,000-square-foot industrial and hybrid greenhouse facility is expected to be completed by Texas Original and Innovative Industrial Properties will provide the reimbursement of up to around $10.0 million for this.
Considering the full reimbursement for construction, IIPR’s total investment will be $22.0 million (excluding transaction costs) for the same. On completion, the property is expected to include around 49,000 square feet of cultivation space, with the remaining space utilized for manufacturing, processing, testing and administrative activities.
The legalization of marijuana for medical use across several U.S states and recreational use in several states has opened opportunities for the cannabis industry. Therefore, 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 existing, redeveloped and under-development industrial buildings, including enclosed greenhouse facilities.
The Texas cannabis market is growing. While, the neighboring state, New Mexico, legalized cannabis for adult use earlier this year, Oklahoma and Louisiana legalized cannabis for full medical use. Therefore, the expansion of Innovative Industrial Properties’ footprint in Texas and the tie-up with Texas Original make sense. Texas Original is one of the three vertically integrated cannabis license holders in Texas. It is headquartered in the state and is projected to hold a large section of the present market share within Texas’ medical cannabis program.
Over the past month, shares of this Zacks Rank #4 (Sell) company have declined 14.3%, wider than the 7.5% fall of the industry.



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