IIP Buys Industrial Space in Ocala With Eye on Cannabis Cultivation

Innovative Industrial Properties, which focuses on the regulated US cannabis industry, has closed on the acquisition of a 16 acre property comprising 145,000 square feet of industrial space in Ocala, Fla., and entered into a long-term, triple-net lease with a subsidiary of AYR Wellness.

The purchase price for the property was $13 million, or $90 per square foot. AYR is expected to redevelop one building on the property comprising 98,000 square feet of industrial space to be used as a regulated cannabis cultivation facility, for which IIP has agreed to provide up to $30 million. Assuming full reimbursement for the construction, IIP’s total investment in the property is expected to be $43 million.

IIP’s business model is to partner with regulated cannabis operators and serve as a source of capital by acquiring and leasing back their real estate assets. AYR operates in eight states with 18 production facilities and 91 dispensary locations.

Florida represents the largest medical-use cannabis market in the United States, with the program having received 71% voter approval in 2019. Floridians are expected to vote on adult-use legalization of cannabis in November 2024, which requires 60% approval to pass. Under the initiative, existing licensed medical cannabis operators are expected to be authorized to sell cannabis to adults for personal use, and the Florida state legislature could provide by state law for the licensure of other entities to cultivate and sell cannabis for adult-use.

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