Trulieve Taps Cannabis REIT for $43.5 Million Sale/Leaseback in Massachusetts

Innovative Industrial Properties Acquires Massachusetts Property and Enters into New Tenant Relationship with Trulieve Cannabis Corp.

SAN DIEGO, July 29, 2019–(BUSINESS WIRE)–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 closed on the acquisition of a property in Holyoke, Massachusetts, which comprises approximately 150,000 square feet of industrial space, from Trulieve Cannabis Corp. (Trulieve), a leading and top-performing cannabis company in the United States (CSE: TRUL) (OTC: TCNNF).

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. 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.

Paul Smithers, President and Chief Executive Officer of IIP

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. 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.

Kim Rivers, Chief Executive Officer of Trulieve

As of July 29, 2019, IIP owned 26 properties located in Arizona, California, Colorado, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, Ohio and Pennsylvania, totaling approximately 2.0 million rentable square feet (including approximately 631,000 rentable square feet under development/redevelopment), which were 100% leased with a weighted-average remaining lease term of approximately 15.6 years. As of July 29, 2019, IIP had invested approximately $262.1 million in the aggregate (excluding transaction costs) and had committed an additional approximately $72.6 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. IIP’s average current yield on invested capital is approximately 14.6% for these 26 properties, calculated as (a) the sum of the current base rents, supplemental rent (with respect to the lease with PharmaCann LLC at one of IIP’s New York properties) and property management fees (after the expiration of applicable base rent abatement or deferral periods), divided by (b) IIP’s aggregate investment in these properties (excluding transaction costs and including aggregate potential development/redevelopment funding and tenant reimbursements of approximately $72.6 million). These statistics include IIP’s most recent acquisitions and leases of properties with a subsidiary of MJardin Group, Inc. in Nevada and DionyMed Brands, Inc. in California, and do not include any amounts that may be funded in the future pursuant to IIP’s lease with Trulieve at the Massachusetts property.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.

Original press release

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