Innovative Industrial Properties (NYSE:IIPR) has purchased a facility in Ohio from Cresco Labs (OTC:CRLBF) for roughly $10.5 million, and will lease it back to the grower and dispensary operator. The sale-leaseback deal was announced in separate press releases by both companies.
The approximate $10.5 million price includes funds for tenant improvements at the facility, which is used by Cresco Labs for both cultivating and processing product. It is located in the town of Yellow Springs, which is between the city of Dayton and the capital Columbus. Both companies said it comprises around 50,000 square feet of industrial space all told.
This is not the first sale-leaseback deal between Innovative Industrial Properties, a cannabis industry real estate investment trust (REIT) and Cresco Labs. The two previously closed a pair of similar arrangements in the latter company's home state of Illinois. This is their first sale-leaseback of a property in Ohio. Cresco Labs will be the tenant at Yellow Springs under a triple-net lease contract.
Sale-leaseback deals have been increasingly popular in the cannabis industry. Due to a number of factors it can be difficult for companies in the sector to obtain capital; selling company-held property provides a ready and near-immediate source of funds.
Innovative's recent results have been boosted by sale-leaseback arrangements. This new one gives its portfolio a total of 48 properties in 15 states, with a total of roughly 3.1 million rentable square feet at present.
The shares of both marijuana stocks closed up higher on Tuesday; Innovative rose by almost 9%, while Cresco Labs rose marginally by slightly less than 1%.