Two notable companies in the cannabis sector are collaborating on a real estate deal in Florida. Harvest Health & Recreation (HRVSF) and Innovative Industrial Properties (IIPR -2.60%) announced Monday that they have entered into a sale-leaseback arrangement for a growth and cultivation facility in Florida.
Under the terms of the deal, Harvest sold the facility, in the city of Alachua and comprising around 295,000 square feet of industrial space, for $23.8 million to Innovative. The two companies then entered into a triple-net lease for Harvest to continue using the facility.
The key terms of this tenancy agreement were not specified, although Harvest and Innovative said the latter would reimburse the former for up to $10.8 million in tenant improvements.
Innovative is currently the only publicly traded real estate investment trust (REIT) specializing in cannabis properties. Harvest, an ambitious multistate operator (MSO) based in Arizona, currently manages six medical marijuana dispensaries in Florida (which currently prohibits recreational marijuana). In addition to the Alachua facility, the company runs a cultivation facility in Gainesville, Florida.
"Florida is one of our core markets with a rapidly growing medical patient population," Harvest CEO Steve White said. "We look forward to opening new retail locations in Florida after additional capacity at Alachua comes on line."
Innovative, which has done very well with sale-leaseback deals, is surely happy about this latest arrangement, too. With the new Florida asset, it now owns 67 cannabis industry properties across 17 states. All are fully leased.
On Monday, both stocks fell by around 0.2%, against the nearly 0.4% rise of the S&P 500 index.