Innovative Industrial Properties Expands Real Estate Partnership With Green Thumb Industries At Pennsylvania Property

Innovative Industrial Properties, Inc. IIPR entered into an amendment of the lease with Green Thumb Industries Inc. GTBIF GTII The lease amendment in Danville, Pennsylvania, provided $55.0 million in reimbursement to Green Thumb for the recently completed development of a 152,000-square-foot industrial building for cultivation and processing, in addition to a new electric substation on the property to enhance electrical load capacity.

The lease amendment also adjusted the base rent under the lease to take into account the additional available funding for the development. IIP funded in full the reimbursement, making IIP’s total investment in the 300,000-square-foot property $94.6 million. This lease amendment was made pursuant to the exercise of an option by Green Thumb for IIP to provide reimbursement of these improvements, with this option originally included in a lease amendment executed in 2021.

“We are grateful for the continued partnership with IIP at our Danville facility,” stated Green Thumb founder and CEO Ben Kovler. ”Having negotiated the lease and terms last year, we are pleased to have waited to draw the remaining funds until now when the facility is complete. We are excited about the future of cannabis in Pennsylvania.”

Details of the IIP Pennsylvania property are as follows:

IIP originally acquired the property for $20.3 million and entered into a long-term lease with Green Thumb in 2019 and under the lease made available $19.3 million for qualifying improvements to the property. At the time, the facility consisted of approximately 148,000-square-feet of industrial space, about half of which was operational.
Improvements included build-out of the remainder of the facility, consisting of new grow rooms, production rooms, processing rooms and the construction of additional mezzanine space to house new mechanical, plumbing and electrical infrastructure.
IIP’s $55.0 million additional capital commitment was utilized as reimbursement to Green Thumb for costs incurred in the ground-up development of an additional approximately 152,000-square-foot indoor cultivation and processing facility.
Eligible direct costs for the project for which IIP reimbursed Green Thumb included site planning and preparation, base building construction and the enhanced HVAC, electrical, mechanical, fertigation and other building systems required for indoor cannabis cultivation and processing, in addition to the construction of the new electrical substation located on the property.
The new facility contains flower rooms, veg rooms, mother rooms, dry rooms, processing, storage, office and supporting spaces.

“We are proud to have supported Green Thumb as their long-term real estate partner since 2019,” stated Paul Smithers, IIP’s president and CEO. “Since that time, Green Thumb has grown from $216 million in revenues in 2019 to nearly $900 million in revenues in 2021, demonstrating the strength of Green Thumb’s operational footprint and their ability to execute and produce high quality products for patients and customers at scale throughout the United States.”

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