Rainbow Realty Group, LLC and Rainbow Realty Group II, LLC (collectively "Rainbow") and MJ Real Estate Investment Trust, nationwide owners and lenders of real estate to the US cannabis industry, acquired in a sale-leaseback, a 21,600 square foot modern concrete industrial building located in Sacramento for $4.0 million. The going-in unlevered cap rate on the transaction is 12.6%.
At closing, the tenant entered into a 15-year absolute net lease. According to the company, the tenant, who has been a profitable operator in California since 2019, is consolidating its operations into the subject property and further improving the facility for cultivation, distribution, and manufacturing operations. Rainbow will also fund up to $420,000 in tenant improvements subject to certain construction milestones being reached.
Additionally, Rainbow closed a $5.85 million bank loan which is secured by a 5-unit portfolio of owned retail properties in Missouri. The 10-year loan has a fixed rate of 7.53%.
Kyle Shenfeld, president of Rainbow, stated: "We are excited to add yet another high-quality industrial property to our growing portfolio at an unlevered 12.6% cap rate. The closing of the bank loan, at a 7.53% fixed interest rate, is at an excellent cost of capital considering the financing challenges that exist within the cannabis industry. Both transactions reinforce our initial business strategy of providing above market risk-adjusted returns on down-side-protected real estate collateral, which is usable by both cannabis and non-cannabis operators."
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Photo: Benzinga edit with photos by geralt and lindsayfox on Pixabay
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