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Innovative Industrial Properties IIPR recently announced completing the acquisition of a Massachusetts property for $3.1 million. The company has acquired the property in a bid to enhance its portfolio and bank on the healthy market fundamentals.
Located in North Adams, in northwestern Massachussetts (much closer to Albany, NY than Boston), this property expands the company’s footprint to 72 properties, with 6.6 million square feet of area across several states. The property comprises around 70,000 square feet of industrial space.
The real estate investment trust (REIT), focused on a cannabis-centered real estate portfolio, has also entered into a long-term, triple-net lease agreement for the property with Temescal Wellness of Massachusetts, LLC. It is for use as a regulated cannabis cultivation and processing facility upon completion of redevelopment. Considering the full reimbursement for the tenant improvements, Innovative Industrial Properties’ total investment would be $18.1 million 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 more states in the nation giving cannabis the green light, 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.
Over the past six months, shares of the company have outperformed the industry. The stock has gained 18.1% compared with the industry’s rally of 14.3%.
Moreover, the expansion of footprint in Massachusetts makes sense because of its growth potential. Notably, Massachusetts was the eighth largest regulated cannabis market by sales in 2020. In addition, according to New Frontier Data, Massachusetts is expected to capture 5% of the estimated $41.5 billion in total U.S. regulated cannabis sales by 2025.
Innovative Industrial Properties too is well poised to benefit from this favorable trend, with total investment worth $203.1 million in the seven properties it owns in Massachusetts, including the committed funding for future development, redevelopment and tenant improvements.
However, the trend in estimate revision of 2021 funds from operations (FFO) per share does not indicate an upbeat outlook, the estimate being revised downward over the past month. Currently, Innovative Industrial Properties carries a Zacks Rank #5 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Industrial Logistics Properties Trust’s ILPT FFO per share estimate for the current year moved up 5% to $1.88 in the past month. The company currently carries a Zacks Rank of 2 (Buy).
OUTFRONT Media Inc.’s OUT Zacks Consensus Estimate for 2021 FFO per share has moved nearly 6% north to 89 cents over the past month. The company carries a Zacks Rank of 2, currently.
Braemar Hotels & Resorts Inc. BHR carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised 37.5% upward to 44 cents over the past month.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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