Innovative Industrial (IIPR) Grows With Missouri Property Buyout

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Innovative Industrial Properties IIPR recently announced completing the acquisition of a Missouri property for $1.53 million. The company has acquired the property in a bid to enhance its portfolio and bank on the healthy market fundamentals. This property buyout expands the company’s footprint to 75 properties, with 7 million square feet of area across 19 states.
The real estate investment trust (REIT), focused on a cannabis-centered real estate portfolio, has also entered into a long-term lease agreement for the property with CPC of Missouri – Smithville, LLC (CPC), a subsidiary of Calyx Peak, Inc.
CPC intends to construct around 83,000 square feet of industrial space at the property. Upon completion of the construction, CPC intends to operate the property as a licensed cannabis cultivation and processing facility. Considering the full reimbursement for the construction, Innovative Industrial Properties’ total investment would be $28.25 million (excluding transaction costs) for the same.
The legalization of marijuana for medical use across several states in the United States as well as the permission of adult consumption in some has opened up opportunities for the cannabis industry. Therefore, with states signaling the green light for cannabis, Innovative Industrial Properties has incentives to partner with experienced medical-use cannabis operators, and serve as a vital source of capital by acquiring and leasing back their real-estate assets. Its strategy is to acquire the existing, redeveloped and under-development industrial buildings, including attached enclosed greenhouse facilities.
The expansion of footprint in Missouri specifically makes sense owing to its growth potential. Last October, Missouri launched medical cannabis sales. Since then, there has been a rapid growth in regulated medical-use sales and according to the Missouri Department of Health and Senior Services, the total sales in August 2021 came in at roughly $22 million. Missouri’s regulations provide for several qualifying medical conditions for treatment with cannabis and therefore, the move seems a strategic fit.
Over the past six months, shares of this Zacks Rank #3 (Hold) company have outperformed the industry. The stock has gained 33.1% compared with the industry’s rally of 14.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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