Innovative Industrial Properties, Inc. (IIP) of California has acquired a property previously owned by Holistic Industries, a medical-marijuana company, in New Castle.
“We have teamed with Holistic as their long-term real estate partner since the acquisition and lease of our Maryland property in 2017, and are thrilled to further expand our relationship with them in Pennsylvania, which continues to develop as one of the most vibrant medical cannabis markets in the United States,” said Paul Smithers, IIP president and chief executive officer.
The property at 911 Industrial St. is approximately 108,000 square feet of industrial space on roughly 7.4 acres. It was purchased by IIP for about $8.9 million, excluding transaction costs.
IIP, a real estate company, entered into a long-term, triple-net lease agreement with Holistic, which means Holistic will continue to be responsible for all of the expenses of the property.
Holistic will retain their marijuana grow license and intends to continue to operate the location as a medical-use cannabis cultivation and processing facility.
"This is effectively a financing transaction," said Barry Bass, chief financial officer Holistic. "Rather than have capital tied up in real estate, we will use the capital raised from the sale of the property to grow the business."
"Innovative (IIP) is also funding additional build-out of the New Castle facility, which will allow us to produce more product (which will require more people/jobs)."
Holistic is expected to complete additional tenant improvements for the property within the next couple of months, which IIP has agreed to provide reimbursement of up to $6.4 million.
“IIP’s strong support allows us to continue to focus on our growth as a national medical and consumer goods company, a cultivation and extraction network and a retail dispensary chain,” said Josh Genderson, founder and chief executive officer of Holistic.
Holistic reportedly bought the former Snark Boats building for around $550,000 after it was granted one of 24 medical marijuana grow licenses available in Pennsylvania in June 2017. After the site was acquired, upwards of $10 million was used to fix up the building. It became operational on March 29, 2018.
Holistic also operates marijuana-related facilities in California, Maryland, Michigan and Washington D.C.
IIP is the only real estate company on the New York Stock Exchange focused on the regulated U.S. cannabis industry. This transaction marks IIP’s third acquisition and lease with Holistic.
“We greatly value our long-term relationship with the Holistic team, and look forward to supporting their real estate capital needs for many years to come,” Smithers continued.