Benzinga | Sep 28, 2021 12:25PM EDT

Cannabis REIT IIP To Fund $56.2M Goodness Growth Development In New York

Cannabis company Goodness Growth Holdings, Inc. (CSE:GDNS, OTCQX: GDNSF)) announced Tuesday the closing of a sale leaseback transaction in New York with marijuana-oriented real estate investment trust Innovative Industrial Properties, Inc. (NYSE:IIPR).

Goodness Growth sold to IIP around 92.3 acres of land adjacent to Goodness Growth's existing cannabis cultivation and processing facility in Johnstown, New York for $1.2 million, excluding transaction costs.

Under the deal, IIP should provide tenant improvement reimbursement to Goodness Growth of $55.0 million for the construction of a new 324,000 square foot cannabis cultivation, processing, and research and development facility.

The new 324,000 square foot facility will contain approximately 100,000 square feet of indoor cultivation capacity and 90,000 square feet of combined space for manufacturing, processing, office space and facilities equipment areas. It will enable the company to produce high-quality flower and manufacture the full suite of cannabis product form factors, including vapes, soft gels, oils, oral solutions, balms, concentrate forms, edibles and beverages.

The initial annualized base rent will be 10.5% of the tenant improvement budget plus the purchase price for a term of twenty years.

"We are looking forward to beginning construction on this state-of-the-art facility in New York, which will immediately become the flagship cultivation and processing facility in our Company's portfolio," Goodness Growth chairman and CEO, Kyle Kingsley, M.D. stated. "This facility will produce the highest-quality indoor flower we've ever produced and help prepare our business for the massive spike in demand expected when New York's adult-use cannabis program goes online next year."

Price Action

Goodness Growth shares were trading 3.09% higher at $1.67 per share at the time of writing Tuesday morning, while IIPR's shares were 3.38% down at $233.37 per share.

Photo: Courtesy of Matteo Paganelli on Unsplash