Innovative Industrial Properties Acquires Massachusetts Property and Enters Into Long-Term Lease with Holistic Industries

Innovative Industrial Properties Acquires Massachusetts Property and Enters Into Long-Term Lease with Holistic Industries

Innovative Industrial Properties, Inc. (the”Company”) (NYSE: IIPR), the leading provider of creative real estate capital solutions to the medical-use cannabis industry, announced today that it closed on the acquisition of a property located at 96 Palmer Road in Monson, Massachusetts, which includes approximately 55,000 square feet of industrial space situated on approximately 5.4 acres.

The purchase price for the property was $12.75 million. Concurrent with the closing of the purchase, the Company entered into a long-term, triple-net lease agreement with Holistic Industries, Inc. (“Holistic”), which plans to continue to operate the property as a medical-use cannabis cultivation and processing facility according to Massachusetts medical-use cannabis regulations. The initial term of the lease is 20 years, with three options to extend the term for three additional five-year periods. The lease provides for an initial annualized aggregate base rent of $1,912,500, which is equivalent to 15% of the purchase price of the property. The aggregate base lease is subject to 3.25% annual increases during the period of the lease, and Holistic is also responsible for paying the Company a property management fee equal to 1.5% of their then-current aggregate base lease. As a part of its medical cannabis permit, Holistic is allowed up to three registered marijuana dispensaries, which are in varying stages of development.

Massachusetts, with approximately 6.9 million residents, approved cannabis for medical-use by popular vote in 2012, with first sales in 2014. As of June 30, 2018, there were 36 registered marijuana dispensaries and over 51,000 active patients in the medical-use cannabis program, treating a vast array of qualifying health conditions, such as cancer, HIV/AIDS, anxiety, depression, chronic back pain and multiple sclerosis. Massachusetts voters also approved cannabis for adult-use in November 2016, with first sales under the controlled adult-use cannabis program expected to take place in 2018. ArcView Market Research projects Massachusetts’ total controlled cannabis spending to grow rapidly, from roughly $380 million in sales in 2018 to approximately $1.2 billion by 2022.

“We are extremely happy to close on this transaction with Holistic in Massachusetts, whose seasoned management team has worked in controlled medical-use cannabis markets for several years,” stated Paul Smithers, President and Chief Executive Officer of the Company. “We look forward to encouraging Holistic as their long-term real estate partner, as they continue to expand their operations and develop their dispensary places to deal with compelling patient needs.”

“The IIP team was great to work with throughout this transaction, making the process smooth and accelerating our time to close, which provides us the funds to reinvest into our program expansion in Massachusetts,” said Josh Genderson, Chief Executive Officer of Holistic. “We are focused on creating the highest quality product with exacting specifications for our patients, and this facility provides us the state-of-the-art environment to do precisely that. We look forward to bringing that level of quality to our Massachusetts patients for several years to come.”

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their controlled medical-use cannabis facilities. Additional information can be found in www.innovativeindustrialproperties.com.

This press release contains statements that the Company 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, without limitation, statements about the lease of the Massachusetts property, the Massachusetts regulated cannabis market, are forward-looking statements. When used in this press release, words such as we”expect,””intend,””plan,””estimate,””expect,””believe” or”should” or the negative thereof or similar terminology are usually meant to identify forward-looking statements. Investors should not place undue reliance upon forward-looking statements. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Catherine HastingsChief Financial Officer, Chief Accounting Officer and TreasurerInnovative Industrial Properties, Inc.. -LRB-858-RRB- 997-3332

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Released at Fri, 13 Jul 2018 10:33:06 +0000

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