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Innovative Industrial (IIPR) Expands Maryland Base With Buyout

Innovative Industrial's (IIPR) Maryland property buyout and tie-up with a subsidiary of Harvest to help the REIT bank on solid opportunities in the company's markets and boost its top line.

This story originally appeared on Zacks

Innovative Industrial Properties IIPR recently announced completing the acquisition of a Maryland property for $16.6 million. The company has acquired the property in a bid to enhance its portfolio and bank on the healthy market fundamentals.

Located in Hancock, this property expands the company’s footprint to 74 properties, with 6.9 million square feet of area across several states.

The real estate investment trust (REIT), focused on a cannabis-centered real estate portfolio, has also entered into a long-term lease agreement for the property with a subsidiary of Harvest Health & Recreation Inc. Harvest intends to complete additional tenant improvements for the property as a regulated cannabis cultivation and processing facility. Considering the full reimbursement for the tenant improvements, Innovative Industrial Properties’ total investment would be $29.5 million for the same.

The expansion of long-term real estate partnership with Harvest is a strategic fit. Particularly, Harvest is a vertically-integrated U.S. multi-state operator with licensed operations in Arizona, California, Colorado, Florida, Maryland, Nevada and Pennsylvania, including 44 retail locations, 11 cultivation and processing locations. Earlier this year, Innovative Industrial Properties acquired a Florida property and executed a long-term lease with Harvest, which comprises approximately 295,000 square feet.

Moreover, 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 Maryland specifically makes sense owing to its growth potential. There were roughly $140 million in medical cannabis sales during the three months ended Jun 30, 2021, according to the Maryland Medical Cannabis Commission. Moreover, per a Goucher College poll conducted this February, approximately two-thirds of Maryland residents support the legalization of adult-use cannabis.

Innovative Industrial Properties too is well poised to benefit from this favorable trend, with total investment worth $51.9 million in the two properties it owns in Maryland, including the committed funding for future tenant improvements.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have outperformed the industry. The stock has gained 35.2% compared with the industry’s rally of 9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Stocks to Consider

Public Storage’s PSA FFO per share estimate for the current year moved up 1.9% to $12.15 in the past week. 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 3.4% north to 90 cents over the past week. The company carries a Zacks Rank of 2, currently.

Extra Space Storage Inc. EXR carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised 1.3% upward to $6.42 over the past week.

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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