Innovative Industrial Properties (NYSE:IIPR), ever on the hunt for suitable properties to add to its portfolio, has found another one in Pennsylvania. The specialty marijuana real estate investment trust (REIT) announced Friday it has closed a deal for a site in Pittsburgh. It is paying $41.8 million to a subsidiary of privately held multi-state operator (MSO) Parallel for the property.
As is its habit, Innovative has entered into a triple-net, sale-leaseback deal for the facility with the Parallel unit.
The facility will contain roughly 239,000 square feet of industrial space once a planned redevelopment project is completed, according to Innovative. As the property's tenant, Parallel will utilize 160,000 square feet of its space, while the remainder will be subleased. Parallel is slated to make up to $26 million worth of improvements to the property, for which it will be compensated by Innovative.
Parallel and Innovative are no strangers to each other; Innovative already owns three properties used by the company. Two are located in Florida and one is in Texas.
Referring to its tenant's presence throughout the U.S., Innovative quoted CEO Paul Smithers as saying that "Parallel has developed a focused, strategic footprint in Florida, Massachusetts, Pennsylvania and Texas, and we are proud to support them as real estate capital partner for this newest state-of-the-art facility in Pennsylvania, which has developed into one of the strongest medical cannabis markets in the United States."
Although the Keystone State hasn't yet legalized recreational marijuana, it's very possible it will do so in the near future. Its two most prominent neighboring states, New York and New Jersey, both recently flipped the switch on such legalization. If Pennsylvania were to follow, this would immediately benefit Parallel and -- by extension -- Innovative.