Large cannabis companies increasingly are selling their own cultivation, processing and storage facilities and immediately leasing them back as a way to instantly raise tens of millions of dollars at a time when outside financing is scarce.
Unlocking the value of real estate with a sale provides money that can be used to grow a marijuana firm’s core business, without diluting the value of its stock, the way issuing more shares would.
In real estate parlance, these deals are known as sale-leaseback transactions, since the property is sold and leased back.
In other words, the marijuana company becomes a tenant and the real estate investor becomes a landlord.
Sale-leaseback transactions are common for other, more established types of commercial real estate, such as office buildings, retail, warehouses and even casinos.
Recent examples of sale-leaseback deals include:And the bottom line is that marijuana companies want to be in the cannabis industry, not the real estate space.
- In December, Chicago-based Cresco Labs closed a $50 million sale-leaseback deal in Lincoln, Illinois, with GreenAcreage Real Estate, a real estate investment trust (REIT).
- Also in December, New York-based multistate operator (MSO) Columbia Care raised $35 million by selling and leasing back six properties in California, Illinois and Massachusetts. New Lake Capital Partners, based in Maryland, bought the properties.
- In November, Green Thumb Industries, a Chicago-based MSO, completed a $39.6 million sale-leaseback deal for a cultivation facility in Pennsylvania with San Diego-based Innovative Industrial Properties (IIPR), the nation’s largest REIT to focus exclusively on the cannabis industry.
- In October, New York-based Acreage Holdings, another MSO, signed a $72 million sale-leaseback deal for properties in Florida, Massachusetts and Pennsylvania. The buyer was GreenAcreage, created in May to buy properties from Acreage Holdings and other cannabis companies.
Meanwhile, executives at Miami-based Tower Commercial Real Estate told Marijuana Business Daily that its cannabis division is working on a sale-leaseback deal with an unidentified MSO for approximately 40 retail stores in about 10 states.
Published: January 06, 2020