Innovative Industrial Properties, Inc. (IIP) (NYSE: IIPR), the first and only real estate company on the New York Stock Exchange focused on the regulated U.S. cannabis industry, announced today that it completed the acquisition of a property in San Marcos, Texas, and entered into a long-term lease with Surterra San Marcos LLC (Surterra San Marcos), a subsidiary of Surterra Texas, which is a subsidiary of Parallel, one of the largest privately-held multi-state cannabis operators in the United States.
The purchase price for the property was approximately $3.4 million (excluding transaction costs). Surterra San Marcos is expected to construct three buildings (one retail and two industrial) comprising an aggregate of approximately 63,000 square feet on the property, for which IIP has agreed to provide reimbursement of up to $24.0 million. Assuming full reimbursement for the construction, IIP’s total investment in the property is expected to be approximately $27.4 million (excluding transaction costs). Surterra San Marcos intends to operate the property upon completion of construction as a licensed cannabis cultivation, processing and retail facility.
IIP also owns and leases to subsidiaries of Parallel two regulated cannabis cultivation and processing facilities in Florida, which, together with the Texas property, comprise a total of approximately 656,000 square feet. Assuming full reimbursement for tenant improvements under the leases, IIP’s total investment in properties leased to Parallel is expected to be approximately $127.3 million.
As the pioneering real estate investment trust (REIT) for the medical-use cannabis industry, IIP partners with experienced medical-use cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.
“We are excited to continue the expansion of our long-term real estate partnership with the Parallel team, led by Beau Wrigley, who exemplify operational excellence as well as demonstrated strategic leadership within the industry,” said Paul Smithers, President and Chief Executive Officer of IIP. “Parallel has developed tremendous footprints in their operating markets as they continue to expand access to their proprietary cannabis products and support communities across multiple states. We look forward to partnering with them in Texas on the development of a state-of-the-art cannabis cultivation, production and retail facility. While the Texas licensed medical cannabis program is limited today, we are encouraged that the 2021 Texas legislature may potentially expand the program meaningfully for the residents of Texas.”
“We believe that Texas will be a significant cannabis market and our collaboration with Innovative Industrial Properties will enable us to build a cultivation and production facility that will help us advance our mission to improve well-being through cannabinoids,” said Beau Wrigley, Jr., Chairman and CEO of Parallel. “IIP has proven to be a consistently valuable business partner and we appreciate their dedication to excellent service and overall understanding of the complex needs of the cannabis industry.”
Texas, the second most populous state with nearly 30 million residents, passed the Texas Compassionate Use Program in 2015, which is currently a limited program providing medical cannabis to qualifying patients. The program currently provides for a limited set of qualifying medical conditions, including epilepsy and seizure disorders, multiple sclerosis, spasticity, terminal cancer, incurable neurological disorders, autism and ALS. There are currently three vertically-licensed operators in the state, including Surterra Texas. According to a recent University of Texas/Texas Tribune Poll, a large majority of Texas voters support possession of cannabis for recreational and/or medical use, while only 13% of respondents said it should not be legal for any use. Texas lawmakers pre-filed over a dozen pieces of cannabis-related legislation for consideration in the 2021 legislative session, including expanding qualifying medical conditions, removing the THC cap, and decriminalizing cannabis possession, among others.
As of March 11, 2021, IIP owned 68 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia and Washington, representing a total of approximately 5.9 million rentable square feet (including approximately 2.1 million rentable square feet under development/redevelopment), which were 100% leased with a weighted-average remaining lease term of approximately 16.7 years. As of March 11, 2021, IIP had committed approximately $1.4 billion across its portfolio, including capital invested to date (excluding transaction costs) and additional capital commitments to fund future construction and tenant improvements at IIP’s properties.
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. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.
innoParallel is one of the largest privately held, vertically integrated, multi-state cannabis companies in the United States with a mission to pioneer well-being and improve the quality of life through cannabinoids. Parallel recently announced that it intends to become a public company through a definitive business combination agreement with Ceres Acquisition Corp. (Ceres), (NEO: CERE.U, CERE.WT; OTCQX: CERAF), a special purpose acquisition corporation (SPAC). Parallel owns and operates retail dispensaries in four medical and adult-use markets: Surterra Wellness in Florida and Texas; New England Treatment Access (NETA) in Massachusetts, and The Apothecary Shoppe in Nevada. Parallel also has a license under its Goodblend brand in Pennsylvania for vertically integrated operations and up to six retail locations, in addition to a medical cannabis research partnership with the University of Pittsburgh School of Medicine. The Company has a diverse portfolio of high quality, proprietary and licensed consumer brands and products including Surterra Wellness, Coral Reefer, Float and Heights. Parallel operates approximately 50 locations nationwide, including 42 retail stores, and cultivation and manufacturing sites. Through its wholly-owned Parallel Biosciences subsidiary, it conducts advanced cannabis science and R&D for new product development in its facilities in Massachusetts, Florida, Texas and a facility in Budapest, Hungary through an exclusive license and partnership. Parallel follows rigorous operations and business practices to ensure the quality, safety, consistency and efficacy of its products and is building its business by following strong values and putting the well-being of its customers and employees first. Find more information at www.liveParallel.com.