Expanding its footprint in one of the states that has legalized recreational marijuana, Innovative Industrial Properties (IIPR -0.32%) on Monday announced a new acquisition in Michigan. The company, a real estate investment trust (REIT) that specializes in buildings and land used by the cannabis industry, said it has closed a deal for a property in the town of Windsor, near the city of Lansing. The price is $15.6 million, exclusive of transaction costs.

This construes a sale-leaseback deal for Innovative under a triple-net lease agreement. The counterparty is marijuana producer Skymint Brands, which will use the roughly 175,000 square foot facility for its growing, processing, and distributing needs. It will also presumably make some improvements to the property, as Innovative has agreed to provide up to $14.4 million for its redevelopment.

Marijuana plant in a growing facility with overhead lights.

Image source: Getty Images.

Innovative and Skymint are used to working together; in its press release trumpeting the acquisition, the former company said that it is the landlord on seven other Skymint properties. The two have collaborated in this fashion since 2018. Innovative quoted its CEO Paul Smithers as saying:

We have been Skymint's long-term real estate partner since 2018, and are excited to partner with them again on the redevelopment of this new property that is expected to dramatically expand Skymint's cannabis production capacity to meet the tremendous demand across the state, and support Skymint's continued dispensary expansion plans.

With this latest deal, the REIT now owns 69 properties located in 18 states, 11 of which have legalized the sale and consumption of recreational marijuana.

Despite the company's news, its stock was down in late afternoon trading Monday. Innovative had fallen by over 2.2%, a steeper decline than the 0.7% of the S&P 500 index.