The sole real estate firm listed on the New York Stock Exchange, IIPR (NYSE: IIPR), dedicated to the regulated U.S. cannabis sector, has finalized the acquisition of a 16-acre property encompassing 145,000 square feet of industrial space in Ocala, Florida. This move coincides with its long-term, triple-net lease agreement with a subsidiary of AYR Wellness Inc. (CSE: AYR.A, OTCQX: AYRWF) (AYR).
The property was secured at a purchase price of $13.0 million, amounting to $90 per square foot. AYR is slated to refurbish one building on the premises, spanning 98,000 square feet, intended for use as a regulated cannabis cultivation facility. For this redevelopment, IIP has committed to reimbursing up to $30.0 million. Assuming full reimbursement for construction, IIP’s total investment in the property is anticipated to reach $43.0 million, exclusive of transaction expenses.
Additionally, IIP already possesses and leases to AYR a processing facility in Ohio, covering 11,000 square feet.
As the pioneering real estate investment trust (REIT) in the regulated cannabis industry, IIP collaborates with seasoned, regulated cannabis operators, acting as a capital source by procuring and leasing back their real estate assets, besides offering various innovative real estate-based capital solutions.
AYR stands as a prominent, vertically integrated cannabis operator in the U.S., operating across eight states with 18 production facilities and 91 dispensary locations. AYR recorded total revenues of $118 million and adjusted EBITDA of $29 million in the first quarter of 2024. In Florida, AYR manages 64 dispensary locations and boasts 745,000 square feet of existing production capacity, excluding the newly acquired property.
Florida boasts the largest medical-use cannabis market in the U.S., with a 71% voter approval in 2019. As per the Florida Office of Medical Marijuana Use (OMMU) data as of May 31, 2024, there were over 880,000 qualified patients and over 2,300 qualified physicians in the medical-use cannabis program, while BDSA reported 2023 regulated sales of $2.6 billion. Floridians are anticipated to vote on adult-use cannabis legalization in November 2024, necessitating a 60% approval rate to pass. Under this initiative, existing licensed medical cannabis operators are expected to gain authorization to sell cannabis for personal use to adults, and the Florida state legislature could establish state laws for the licensing of other entities for adult-use cultivation and sales.
As of June 10, 2024, IIP possesses 108 properties, spanning 9.0 million square feet (including 722,000 rentable square feet under development/redevelopment) across 19 states. By the same date, IIP had invested $2.5 billion across its portfolio, inclusive of capital invested to date (excluding transaction costs) and additional capital commitments for future construction and enhancements at its properties.
