The actual property funding belief acquired a develop facility in Massachusetts for $21.5 million to lease to Curaleaf.
Hashish REIT Progressive Industrial Properties (NYSE: IIPR) acquired a develop facility for $21.5 million to lease to Curaleaf (OTCQX: CURLF) in a bid to fortify their partnership towards the Northeast.
The Webster, Massachusetts, property comprises 104,000 sq. toes of business area and is absolutely constructed out and operational as a regulated hashish cultivation and processing facility. IIPR paid $207 per sq. foot and mentioned that the property is estimated to have capability for round 32,000 kilos of hashish flower yearly.
Curaleaf, which is headquartered in Wakefield, already has a vertical presence in Massachusetts consisting of 4 dispensaries and two cultivation and processing services, together with the brand new Webster buy.
The 2 corporations have a string of properties collectively throughout the Midwest as much as Pennsylvania, however this may mark the primary within the Northeast area. Curaleaf is IIPR’s fifth-largest tenant companion when it comes to capital funding.
The actual property funding belief owns 111 properties in 19 states as of Sept. 1, representing a complete of about 8.7 million rentable sq. toes.
IIPR mentioned that it has dedicated roughly $2.4 billion throughout its portfolio, together with capital investments and extra capital commitments to fund future development and enhancements at its properties.
Rental Dangers
Questions stay over whether or not IIPR’s renters can maintain paying rising hire as costs for hashish maintain falling. This deal comes off the again of stories that one among its California-based leaseholders, Kings Backyard, did not pay $2.2 million in July hire and administration charges for six of its properties. IIPR mentioned the default represents 8% of its portfolio, and it’s taking them to courtroom over the nonpayment of hire.
In a short-seller report on IIPR earlier this 12 months, Blue Orca Capital steered that falling hashish inventory valuations are a looming danger for the REIT. The agency mentioned that the present local weather creates a cycle of fairness raises and falling inventory costs, elevating the price of capital.
Most hashish corporations report destructive web earnings and destructive free money flows, the report mentioned.
“This issues as a result of IIPR’s inventory value is contingent on the monetary well being of its tenant portfolio and the flexibility of its hashish corporations to proceed to pay excessive lease charges over the following 15-20 years,” Blue Orca wrote.
IIPR responded, saying that Blue Orca merely doesn’t comprehend the challenges of changing customary industrial properties into absolutely operational, superior develop websites.
Blue Orca wrote that it believes IIPR’s mortgage guide has “degraded considerably” because the sector has develop into extra aggressive, including that IIPR stretched for decrease high quality tenants seeking persevering with development.
“IIPR’s largest tenant is a failed SPAC that seems in extreme monetary misery and was just lately sued by buyers accusing it of securities fraud and being in impact a Ponzi scheme,” the report mentioned, referring to Parallel Hashish. Inexperienced Market Report wrote about this publicity when it uncovered the extent to which IIP will depend on hire from Parallel Hashish, which has been paying its hire regardless of defaulting on a few of its debt.
“We consider Parallel because the canary within the coal mine – demonstrative of broader danger that we consider exists throughout a lot of IIPR’s portfolio; long-term leases made to low credit score high quality tenants with important draw back within the occasion of default,” Blue Orca wrote.
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