Cannabis-focused real estate company Innovative Industrial Properties, Inc. IIPR confirmed Monday it has finalized the purchase of a Warren, Michigan-based property for around $10.3 million. The acquired property spreads across 85,000 sq. ft. of industrial space.
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What happened
In relation to the acquisition, IIP signed a long-term, triple-net lease with a subsidiary of Sozo Companies, Inc. for further use as a cannabis growing, processing and retail facility. A vertically integrated, multi-state cannabis and hemp operator, Sozo is scheduled to finalize extra tenant advancements for the property.
Under the deal, for these improvements, IIP will provide financial support of $5.6 million. With full reimbursement for renovation, IIP’s total investment would amount to $16.0 million.
“We are excited to welcome Sozo as the newest addition to our premier tenant roster,” Paul Smithers, president and CEO of IIP, said. “Aaron and his team at Sozo have created a strong operational platform in Michigan, and we expect this strategic transaction to unlock key capital for the Sozo team to significantly enhance their retail presence in the state, along with additional capital for the facility to drive cannabis production capacity.”
Aaron Rasty, founder and CEO of Sozo said they are pleased to cooperate with IIP as its company develops. “This opportunity allows Sozo to continue to expand its brand and reach as a premier, vertically-integrated cannabis company.”
Why It Matters
With this latest acquisition, IIP’s total investment in proprieties in Michigan, taking into account future tenant improvements, amounts to around $209.3 million.
In 2008 Michigan legalized medical cannabis. Some 10 years later, adult-use cannabis was legalized by popular vote and marijuana sales began in 2019.
Based on the data from New Frontier, in just the first year of adult-use sales, Michigan became one of the top ten legal cannabis markets in 2020, reaching $1.0 billion in total recreational and medical cannabis sales.
As of May 17, IIP owns 71 properties across 18 states.
Price Action
IIP’s shares were trading 0.19% lower at $172.43 per share at the time of writing.
Photo by davide ragusa on Unsplash
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