The cannabis operator is selling the property to Innovative Industrial Properties
Cresco Labs just completed the acquisition of Tryke Companies in a deal reportedly worth $282.5 million, and is now looking to unload some of its previously-held properties. According to a press release from Friday, the company has agreed to sell two facilities in Illinois to a real estate investment trust (REIT), a move that follows a recent trend of REITs buying cannabis properties and leasing them back to the original companies.
Cresco will sell its properties in Kankakee and Joliet to Innovative Industrial Properties Inc. for around $46.3 million. At the same time, Cresco will enter into a “long-term, triple-net lease agreement” with the REIT to operate the facilities. If everything goes as Cresco hopes, the deal could be finalized within 30 days of the announcement.
Charlie Bachtell, Cresco’s co-founder and CEO, says in the statement, “This sale-and-leaseback agreement with IIP represents a non-dilutive capital solution for Cresco Labs that will support the expansion of our Illinois operations in preparation for the legalization of adult-use cannabis on January 1, 2020. A portion of the proceeds from the sale of the two properties will be utilized to create the scale in our cultivation capacity and retail dispensary network necessary to meet the significant increase in demand projected from the legalization of adult-use cannabis and the expansion of the medical-use program in Illinois. With the Illinois cannabis market projected to reach $2 billion to $4 billion in annual sales at maturity, the expansion of our operations will position Cresco Labs to build upon our leading market share and significantly increase the revenue we generate from Illinois in the coming years.”