Innovative Industrial Properties, Inc. (IIP) recently announced the completed acquisition of a property located in New Castle, Pa., for the purchase price of about $8.9 million, excluding transaction costs.
The New Castle property is comprised of approximately 108,000 square feet of industrial space situated on roughly 7.4 acres.
IIP is the only real estate company on the New York Stock Exchange focused on the regulated U.S. cannabis industry. With the closing of the New Castle property, Innovative Industrial also entered into a long-term, triple-net lease agreement with Holistic Industries, which intends to continue to operate the location as a medical-use cannabis cultivation and processing facility.
This sale-leaseback transaction marks IIP’s third acquisition and lease with Holistic.
“We have teamed with Holistic as their long-term real estate partner since the acquisition and lease of our Maryland property in 2017, and are thrilled to further expand our relationship with them in Pennsylvania, which continues to develop as one of the most vibrant medical cannabis markets in the United States,” IIP President and CEO Paul Smithers said. “We greatly value our long-term relationship with the Holistic team, and look forward to supporting their real estate capital needs for many years to come.”
Holistic is expected to complete additional tenant improvements for the property, for which IIP has agreed to provide reimbursement of up to $6.4 million.
Holistic is one of the largest private, vertically integrated multi-state operators in the cannabis industry with operations in California, Maryland, Massachusetts, Michigan, Pennsylvania, and Washington D.C.
Holistic Founder and CEO Josh Genderson said, “IIP’s strong support allows us to continue to focus on our growth as a national medical and consumer goods company, a cultivation and extraction network and a retail dispensary chain.”
Pennsylvania’s first sales within the cannabis industry were reported in 2018 and the state cannabis market has grown significantly since. More than 300,000 patient certifications have been issued by practitioners since the program began, according to a May 15 report released by the Pennsylvania Department of Health.
Following emergency orders to close businesses during the height of the COVID-19 pandemic, Pennsylvania, similar to other states, shuttered operations for all non-essential businesses in March. However, the state government determined that regulated medical-use cannabis providers were essential businesses and allowed them to remain open, subject to state and federal health guidelines.