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Innovative Industrial (IIPR) Fortifies Ties With Goodness Growth

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Innovative Industrial Properties IIPR recently announced the expansion of its long-term real estate partnership with Goodness Growth Holdings, Inc. by acquiring 92.3 acres of land in New York for $10.23 million. The move comes as part of the company’s strategy to enhance its portfolio and bank on the healthy market fundamentals.

The land is neighboring a property that the company has leased to Goodness Growth, where both companies will join forces to develop 324,000 square feet of industrial space. Therefore, simultaneously, the company amended its existing lease with Goodness Growth at the adjacent property to include this new project.

Upon the completion of development, Goodness Growth plans to operate the consolidated property as a licensed cannabis cultivation and processing facility. The reimbursement of up to $46.1 million for the construction of the new building is expected to be provided by Innovative Industrial to Goodness Growth.

The expansion of long-term partnership with Goodness Growth seems a strategic fit. This is because Goodness Growth has operations spanning five states, including five production facilities and 18 dispensaries. Moreover, it is one of the 10 licensed operators in New York’s medical cannabis program. Together with this transaction, Innovative Industrial leases two properties to Goodness Growth, one in New York and one in Minnesota, encompassing roughly 453,000 square feet of industrial and greenhouse spaces, and a total commitment of $72.8 million.

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 states signaling the green light for cannabis, 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.

The expansion of footprint in New York specifically makes sense owing to its growth potential. In fact, with the anticipated introduction of the adult-use cannabis program and relaxation of the medical-use cannabis program restrictions, New York will be the second largest regulated cannabis market in the United States by 2025, behind only California, per the New Frontier Data projections.

Over the past six months, shares of this Zacks Rank #3 (Hold) company have outperformed the industry. The stock has gained 38.7% compared to its industry’s 8.5% rally. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Stocks to Consider

The Zacks Consensus Estimate for OUTFRONT Media Inc.’s OUT 2021 FFO per share has moved 8% north to 94 cents over the past two months. The company flaunts a Zacks Rank of 1, currently.

The Zacks Consensus Estimate for Extra Space Storage Inc.’s EXR current-year FFO per share has moved up marginally to $6.57 in the past month. The company currently carries a Zacks Rank of 2.

Highwoods Properties, Inc. HIW carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised marginally upward to $3.69 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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Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report

Extra Space Storage Inc (EXR) : Free Stock Analysis Report

OUTFRONT Media Inc. (OUT) : Free Stock Analysis Report

Innovative Industrial Properties, Inc. (IIPR) : Free Stock Analysis Report

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