Innovative Industrial Properties Inc. has closed on the acquisition of a property in Holyoke, Massachusetts, which comprises approximately 150,000 square feet of industrial space, from Trulieve Cannabis Corp.
Concurrent with the closing of the purchase, IIP entered into a triple-net lease agreement with a subsidiary of Trulieve, which intends to operate the property as a licensed cannabis cultivation and processing facility upon completion of redevelopment. Trulieve is expected to complete tenant improvements for the building, for which IIP has agreed to provide reimbursement of up to $40.0 million, which funding is subject to reduction at Trulieve’s option within the first six months of the lease term.
The purchase price for the Massachusetts property was $3.5 million (excluding transaction costs). Assuming full reimbursement for the tenant improvements, IIP’s total investment in the property will be approximately $43.5 million. The initial lease term is ten years, which may be extended for up to an additional 18 months in accordance with the terms of the lease, with two options to extend the term of the lease for five years each. The initial annualized base rent is equal to 11% of the sum of the purchase price for the property and the reimbursement for tenant improvements then funded by IIP.
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 thrilled to add a tenant with the strength of credit and of the caliber of Trulieve to our tenant roster,” said Paul Smithers, President and Chief Executive Officer of IIP. “Through its dedication to providing Florida patients with the highest quality products in a welcoming, compassionate environment, Trulieve has become the preeminent operator in Florida, and we look forward to supporting Trulieve as a long-term real estate capital partner as it continues to expand its operations in Massachusetts.”
Trulieve is a publicly traded Canadian company and multi-state cannabis operator employing over 2,000 people with licenses in Florida, Massachusetts, California and Connecticut.
“The IIP team provided us with a flexible, creative transaction structure for cash-efficient redevelopment of the property, and moved quickly to meet our timeframe,” said Kim Rivers, Chief Executive Officer of Trulieve. “We look forward to developing this property and to bringing our best-in-class operations and dedication to patient satisfaction to the residents of Massachusetts.”