Innovative Industrial Properties Acquires New Jersey Property

SAN DIEGO, Feb. 10, 2022 – PRESS RELEASE – Innovative Industrial Properties Inc. (IIP), the first and only real estate company on the New York Stock Exchange focused on the regulated U.S. cannabis industry, announced that it closed on the acquisition of a property in New Jersey, and entered into a long-term lease with a subsidiary of Ascend Wellness Holdings Inc. (AWH) at the property.

The purchase price for the property was $35.4 million (excluding transaction costs). AWH is expected to complete additional improvements for the approximately 114,000-square-foot property as a regulated cannabis cultivation and processing facility, for which IIP has agreed to provide reimbursement of up to $4.6 million. Assuming full reimbursement for the tenant improvements, IIP’s total investment in the property is expected to be $40 million. AWH is planning to build out its overall New Jersey cultivation footprint to include a lab, kitchen and 150,000 square feet of canopy by the end of 2023.

In addition to this New Jersey property, IIP owns and leases to AWH three other properties in Illinois, Massachusetts and Michigan, with IIP’s total investment in properties leased to AWH, including commitments to fund future tenant improvements, equaling approximately $179.75 million.

As a pioneering real estate investment trust (REIT) for the regulated cannabis industry, IIP partners with experienced, regulated cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.

“We have been AWH’s long-term real estate partner since 2018 and are excited to once again expand our relationship with Abner and his team,” said Paul Smithers, president and CEO at IIP. “The AWH team continues to distinguish themselves in delivering the highest quality cannabis products and services to their patients and customers, and has developed a tremendous strategic footprint in some of the strongest regulated cannabis markets, including New Jersey.”

AWH is a publicly traded, vertically integrated cannabis company, with assets in Illinois, Michigan, Ohio, Massachusetts and New Jersey and approximately 1,500 employees. AWH owns and operates state-of-the-art cultivation facilities, grows award-winning strains, and produces a curated selection of products, including its Ozone branded products. In New Jersey, AWH currently operates two dispensaries in Montclair and Rochelle Park, and expects to open an additional dispensary in Fort Lee in late spring of 2022.

“Throughout these transformational years of AWH, we have greatly valued our long-term real estate partnership with IIP, working closely together to deliver optimal real estate capital solutions that have been instrumental in driving our expansion over time,” said Abner Kurtin, CEO and co-founder of AWH. “With IIP’s partnership, we look forward to significantly enhancing our production capacity in New Jersey and bringing our award-winning products and exceptional service to patients and customers throughout the state.”

New Jersey has taken strong steps in recent years to expand access of its medical cannabis program to patients throughout the state, including amending the rules to allow for oil-based formulations and adding seven new qualifying medical conditions, including PTSD, anxiety, migraines and certain types of chronic pain. The program was further expanded by the passage of the Jake Honig Compassionate Use Medical Cannabis Act, which, among other things, increased the monthly limit for cannabis patients, allowed physician assistants and advanced practice nurses to recommend medical cannabis to patients, and allowed the dispensing of cannabis edibles to adult patients.

In addition, Gov. Phil Murphy signed into law the New Jersey Cannabis Regulatory, Enforcement, Assistance, and Market Modernization Act (CREAMMA) in February 2021, which legalized cannabis for adult-use. In August 2021, New Jersey’s Cannabis Regulatory Commission adopted its initial rules and regulations.

IIP owns three regulated cannabis cultivation and processing facilities and one dispensary in New Jersey, representing a total expected investment of approximately $90 million, which includes commitments by IIP to fund future improvements at certain properties.

As of February 10, 2022, IIP owned 105 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia and Washington, representing a total of approximately 7.9 million rentable square feet (including approximately 2.5 million rentable square feet under development/redevelopment).

In addition, IIP has committed approximately $2.1 billion across its portfolio, including capital invested to date (excluding transaction costs) and additional capital commitments to fund future construction and tenant improvements at IIP’s properties.