Innovative Industrial Properties Acquires Pennsylvania Property and Expands Real Estate Partnership with Parallel, a Leading U.S. Cannabis Well-Being Company

SAN DIEGO–(BUSINESS WIRE) – Innovative Industrial Properties, Inc. (IIP) (NYSE: IIPR), the first and only real estate company on the New York Stock Exchange to focus on the US regulated cannabis industry, announced today that it has completed a property purchase in Pittsburgh, Pennsylvania, which is expected to include approximately 239,000 square feet of commercial space when the redevelopment is complete.

The purchase price for the property was approximately USD 41.8 million (excluding transaction costs). Simultaneously with the completion of the purchase, IIP entered into a long-term triple net lease for the entire property as a regulated cannabis cultivation and processing facility with a subsidiary of Parallel, one of the largest private cannabis operators in several states in the United States. Upon completion of the first phase of development, Parallel is expected to have 124,000 square feet of space plus 36,000 square feet of additional space, with the remaining 79,000 square feet to be sublet. At the same time, further tenant improvements are expected to be carried out on the property, for which IIP has agreed to reimburse up to USD 26.0 million. Assuming a full reimbursement of tenant improvements, IIP’s total investment in the property is expected to be approximately $ 67.8 million.

IIP also owns and leases subsidiaries of Parallel two regulated cannabis cultivation and processing facilities in Florida and one property in Texas that are expected to be used for regulated cannabis cultivation, processing and retailing activities upon completion of development. Assuming a full reimbursement for tenant improvements under the leases, IIP’s total investment in properties leased to Parallel is projected to be approximately $ 195.1 million and occupy approximately 895,000 square feet.

As a pioneering Real Estate Investment Trust (REIT) for the medical cannabis industry, IIP works with experienced medical cannabis operators and serves as a source of capital by buying and leasing their real estate assets and offering other creative real estate-based capital solutions.

“We are excited to build on our long-term real estate partnership with Beau and the Parallel team with this latest investment in Pennsylvania,” said Paul Smithers, president and chief executive officer of IIP. “Parallel has developed a focused, strategic presence in Florida, Massachusetts, Pennsylvania and Texas. We are proud to partner with you as a real estate capital partner for this newest state-of-the-art facility in Pennsylvania that has grown to be one of the strongest medical cannabis markets in the United States. ”

“IIP has been a great business partner and our continued collaboration has allowed us to rent back and improve our facilities in Florida, Texas and now Pennsylvania. The total revenue from these transactions of nearly $ 200 million has helped us scale in these high-growth cannabis markets, “said William” Beau “Wrigley, Jr., Chairman and CEO of Parallel. “We look forward to bringing quality of life support products to patients across the Commonwealth when we anticipate going live this summer.”

With first sales in 2018, the medical cannabis market in Pennsylvania continues its strong growth trajectory. According to the BDSA, sales of cannabis for medical purposes were estimated at approximately $ 545 million in 2020, and regulated cannabis sales are expected to rise to over $ 1.3 billion by 2026. With limited licenses, the state allows up to 25 cultivation and processing licenses and up to 150 pharmacy licenses. According to Muhlenberg College’s March 2021 Public Health Survey, nearly six in ten adult Pennsylvania residents also support the “full legalization” of cannabis in the Commonwealth, the eighth year in a row of growing support, according to the survey. Including this property, IIP owns eight properties in Pennsylvania with a total area of ​​approximately 1.1 million square feet and a total investment of approximately $ 292.3 million (including commitments to fund future development, redevelopment, and tenant improvements to the properties, but excluding transaction costs) .

As of May 14, 2021, IIP owned 70 properties in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia, and Washington, the represents a total of approximately 6.4 million rentable square feet (including approximately 2.4 million rentable square feet under development / redevelopment) 100% rented for a weighted average remaining lease of approximately 16.8 years. As of May 14, 2021, IIP had allocated approximately $ 1.6 billion to its portfolio, including the capital invested to date (excluding transaction costs) and additional capital commitments to fund future construction and tenant improvements to the IIP properties.

About innovative industrial properties

Innovative Industrial Properties, Inc. is a Maryland self-advised company focused on the acquisition, ownership and management of specialized industrial real estate that has been leased to experienced, state-licensed operators for their regulated medical cannabis facilities. Innovative Industrial Properties, Inc. has chosen to be taxed as a real estate mutual fund effective December 31, 2017. More information is available at www.innovativeindustrialproperties.com.

Innovative forward-looking statements on industrial real estate

This press release contains statements that IIP believes to be “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than historical facts, including, but not limited to, statements relating to the Parallel Regulated Pennsylvania Cannabis Market, are forward-looking statements. In this press release, words such as “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” or “should” or their negative or similar terminology are generally used to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Investors should not place undue reliance on forward-looking statements. IIP disclaims any obligation to update or revise any forward-looking statements as a result of new information, future events or for any other reason.