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Cannabis REIT Innovative Industrial Properties, Inc. (NYSE:IIPR) confirmed Monday it has closed on the acquisition of a 16-acre property comprising 145,000 square feet of industrial space in Ocala, Florida. Under the deal, it has entered into a long-term, triple-net lease with a subsidiary of AyrWellness Inc. (OTCQX:AYRWF).
The purchase price for the property was $13.0 million ($90 per square foot). Ayr is expected to redevelop one building on the property comprising 98,000 square feet of industrial space for expected use as a regulated cannabis cultivation facility upon completion, for which IIP has agreed to provide reimbursement of up to $30.0 million. Assuming full reimbursement for the construction, IIP's total investment in the property is expected to be $43.0 million (excluding transaction costs).
In addition to this property, IIP owns and leases to Ayr one processing facility in Ohio comprising 11,000 square feet.
Ayr, a vertically integrated cannabis operator in the U.S, operating in eight states with 18 production facilities and 91 dispensary locations. Recently, the company disclosed its first quarter 2024 total revenues of $118 million and adjusted EBITDA of $29 million. In the Sunshine State alone, Ayr operates 64 dispensary locations, with 745,000 square feet of existing production capacity (excluding this property).
Florida represents the largest medical-use cannabis market in the United States, with the program having received 71% voter approval in 2019. According to the Florida Office of Medical Marijuana Use (OMMU), as of May 31, 2024, there were over 880,000 qualified patients and over 2,300 qualified physicians in the medical-use cannabis program, and BDSA reported 2023 regulated sales of $2.6 billion. Floridians are expected to vote on adult-use legalization of cannabis in November 2024, which requires 60% approval to pass. Under the initiative, existing licensed medical cannabis operators are expected to be authorized to sell cannabis to adults for personal use. The Florida state legislature could provide the licensure of other entities to cultivate and sell cannabis for adult use.
IIPR shares traded 0.78% lower at $106.05 during Monday's pre-market session.
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