Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the regulated U.S. cannabis industry, announced today that it entered into an amendment of the lease with a subsidiary of Jushi Holdings Inc. (Jushi) (CSE: JUSH; OTCMKTS: JUSHF) at its Scranton, Pennsylvania grower-processor facility (the Facility), making available an additional $30.0 million in funding for the completion of the buildout of the existing 89,000 square foot building and approximately 40,000 square foot expansion of the Facility, and adjusted the base rent under the lease to take into account the additional available funding. Assuming full payment of the additional funding and completion of the expansion, IIP’s total investment in the approximate 129,000 square foot Facility will be $45.8 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.
Founded in 2018, Jushi is a leading vertically integrated, multi-state operator with a presence across six states, including Pennsylvania, Illinois, Virginia, California, Nevadaand Ohio, and comprising 32 retail licenses (17 of which are operational), three cultivation facilities, four extraction and processing facilities and over 650 employees. With a seasoned management team led by Jim Cacioppo, Jushi’s Chief Executive Officer, Chairman and Founder, Jushi continues to deepen its footprint in Pennsylvania, through its subsidiaries, which includes, in addition to its subsidiary’s grower-processor facility, 11 operational dispensaries and an additional seven dispensaries expected to open later this year.
“We are thrilled to further build on our real estate partnership with Jushi, providing them the real estate capital for this strategic expansion of production capacity at our Scranton property,” said Paul Smithers, President and Chief Executive Officer of IIP. “Jushi is a best-in-class operator and has developed a tremendous footprint across its states of operation and in Pennsylvania in particular, and we expect this timely expansion to put them in an excellent position to continue to deliver at scale their award-winning brands throughout the Commonwealth.”
“We appreciate the strong support of IIP as a long-term real estate capital partner, teaming with us to provide strategic real estate capital at an opportune time for our continued expansion in Pennsylvania,” said Jim Cacioppo, Chief Executive Officer, Chairman and Founder of Jushi. “The Pennsylvania regulated cannabis industry continues to represent one of the strongest medical-use cannabis markets in the country, and we expect this expansion to dramatically increase our production capacity, while maintaining the highly controlled cultivation and production environment that allows us to continue to produce the consistent, high quality and diverse set of cannabis products that our patients have come to expect from our company.”
With first sales in 2018, the Pennsylvania medical cannabis market continues its strong growth trajectory. According to BDSA, 2020 medical-use cannabis sales were estimated to be approximately $545 million, and overall regulated cannabis sales are projected to grow to over $1.3 billion by 2026. With limited licensing, the state allows for up to 25 cultivation and processing licenses and up to 150 dispensary licenses. Including this property, IIP owns seven properties in Pennsylvania comprising an aggregate of approximately 830,000 square feet, and a total investment of approximately $224.5 million (including commitments to fund future development, redevelopment and tenant improvements at the properties, but excluding transaction costs).
As of April 5, 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 6.0 million rentable square feet (including approximately 2.2 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 April 5, 2021, IIP had committed approximately $1.5 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.