San Diego and Maryland-based Innovative Industrial Properties, Inc. (NYSE: IIPR), a real estate investor and REIT in the medical cannabis industry, declared a Q4 2017 dividend of $0.25 per share of common stock, a 67% increase over its Q3 dividend of $0.15 per share.
The company also declared a regular quarterly dividend of $0.5375 per share of its 9.00% Series A cumulative redeemable preferred stock. The dividends are payable on January 16, 2018 to stockholders of record at the close of business on December 29, 2017.
IIPR targets medical cannabis cultivation facilities for acquisition, typically sale-leaseback transactions, with tenants that are licensed growers. The leases are structured as long-term triple-net leases, where the tenant is responsible for all costs of the property during the lease.
Two weeks ago, the company acquired an 8 acre Arizona greenhouse and industrial property for $15 million from a subsidiary of The Pharm, a medical cannabis producer, and leased it back to them for a period of 15 years, with two 5-year extensions allowed. The Pharm subsidiary must make of up to $3 million of property improvements, to be reimbursed by IIPR.
The initial rent will be $2.5 million per year, or 14% of the purchase price and tenant improvements, and is subject to 3.25% annual increases. The Pharm subsidiary must also pay IIPR a property management fee of 1.5% of the rent.
The deal frees up capital for The Pharm to use on growing its operations, where it expects to earn higher returns utilizing the dollars.
The Pharm is one of the largest wholesalers of medical cannabis in Arizona, serving 40 of Arizona’s 99 dispensaries. It offers the retail brand “Sunday Goods,” available to state-licensed patients in dispensaries and online.
“The Pharm intends to grow in the Arizona medical-use cannabis market, which as of October 2017 had nearly 150,000 registered patients being treated for numerous qualifying medical conditions, including chronic pain,” said Paul Smithers, President and Chief Executive Officer of IIPR.
Source Innovative Industrial Properties press release