Innovative Industrial Properties inks new deal, stock continues to find more support

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The cannabis-focused REIT is gaining strength in the cannabis market, and the stock market

The real estate investment trust (REIT) focused on the cannabis industry, Innovative Industrial Properties (IIP), has announced the closure of a new sale-leaseback deal. It has entered into an agreement to buy a complex privately held by Holistic Industries for which it will pay $8.9 million – excluding transaction costs – for the complex in New Castle, PA. The continuing string of acquisitions is causing investors to take notice.

The Holistic Industries facility is a 7.4-acre property with an industrial space of 108,000 square feet. Once the purchase is done, IIP will sign a sale-leaseback agreement with Holistic. The details about the monthly rent the company will start paying were not specified; however, IIP did confirm that it is ready to provide at least $6.4 million as reimbursement for the improvements needed to the complex.

This kind of transaction in which a property’s owner sells their real estate and then leases it from the buyer is becoming more popular among the cannabis industry. Since cannabis businesses are still barred from getting any kind of credit solution or financial support for the traditional banking industry, this has been a great way for the cannabis industry to have a much-needed capital to operate and grow. The cannabis industry frequently struggles with cash flow and profitability issues while it has no access to bank loans.

This is not the first business deal between IIP and Holistic; it is actually the third one, according to IIP. The two other previous deals were in properties located in Maryland and Massachusetts. At its Pennsylvania facility, Holistic has been growing and processing medical cannabis since the state has only legislation for medical cannabis and nor recreational. This is one of the most successful and profitable cannabis ventures in the stock market; it was trading at $87.54 last Thursday, and, as of this writing, sits at $95.31.