Cannacurio No. 68 – Real Estate Mutual Fund

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Cannabiz Media’s business intelligence product presents data through a series of dashboards that now number over 30. One of the most unique datasets includes real estate investment trusts (REITs), which have played a prominent role in the cannabis industry.

We track REITs because the transactions are so closely tied to the licenses in our database. The following analysis focuses on which companies relied on these transactions, where transactions took place, and which REITs performed the transactions.

background

In a sale-leaseback transaction, a cannabis company sells its property to a REIT and then immediately leases the property back at an agreed price. This gives the cannabis company instant funding that would otherwise be difficult to come by.

Not all REITs choose to share their transaction data. Likewise, private companies are not obliged to pass on details. Our information comes from deal announcements, SEC filings, and advisor tombstones. We collected data on 119 transactions involving 195 licenses, 62 companies and 9 REITs.

The chart below shows deals back to Q1 2019. It’s easy to see that the number of deals has gone down:

Source: Cannabiz Media License Database www.cannabiz.media

companies

The top of the leaderboard is filled with large, mostly public MSOs. Here are the top 10 companies by number of REIT deals:

Source: Cannabiz Media License Database www.cannabiz.media

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And here is their ranking by total value of their REIT deals and average rent:

Source: Cannabiz Media License Database www.cannabiz.media

REITs

We were able to find deals from nine REITs. Innovative Industrial Properties is by far the leader:

Source: Cannabiz Media License Database www.cannabiz.media

conditions

Colorado, Massachusetts and Pennsylvania had the most licenses that went through the REIT process. This table shows the number of licenses covered by a REIT. For example, there are 56 Colorado licenses that have been involved in a REIT transaction.

Source: Cannabiz Media License Database www.cannabiz.media

key figures

The price per square meter was on the card, so to speak. Removing the highest and lowest values ​​from the sample, we saw a deal in Oklahoma at $18.79 per square foot and a few north of $600 per square foot. The average rent for the top 10 companies ranged from $192 to $399 per square foot. The average contract term is 20 years.

Diploma

Cannabis operators must contend with some of the toughest business rules for any industry. They are burdened with limited banking, 280E tax penalties and a rulebook that forces them to build a supply chain in every state they do business in.

Therefore, it is not surprising that they have used all the means at their disposal. It makes sense to release the value of your real estate to preserve working capital — as well as not paying taxes to the IRS because the 6% penalty is cheaper than other funding sources available.

author

Ed Keating is co-founder of Cannabiz Media and oversees the company’s data research and government relations efforts. He has spent his career working with and advising information companies on compliance issues. Ed has managed product, marketing and sales while overseeing complex product lines in multiple jurisdictions in the securities, corporate, UCC, safety, environmental and human resources markets.

At Cannabiz Media, Ed enjoys the challenge of working with regulators around the world as he and his team gather corporate, financial and licensing information to track the people, products and companies in the cannabis economy.

Ed graduated from Hamilton College and received his MBA from the Kellogg School at Northwestern University.

Cannabiz Media customers can stay up to date on these and other new licenses through our newsletter, notification and reporting modules. Subscribe to our newsletter to get these weekly reports in your inbox. Or you can schedule a demo to learn more about how to access the Cannabiz media license database yourself to dig deeper into this data.

Cannacurio is a weekly column from Cannabiz Media featuring insights from the most comprehensive licensing data platform. Check out Cannacurio’s posts and podcasts for the latest updates and information.