Innovative IndustrialProperties, a publicly traded company, is transitioninginto long-term leases with its latest acquisition. The company,which focuses on sale-leasbacks for medical-use cannabis companies,has acquired a four-property portfolio in Southern California for$17.8 million and has single a long-term triple-net lease at eachproperty with Medical Investor Holdings LLC, which operates underthe name Vertical.

"We chose to enter into long-term leases for a number ofreasons.  From the tenant's perspective, these facilitiesare mission-critical for their businesses, and they prefer tomaintain long-term control over these facilities,"Catherine Hastings, CFO, chief accounting officersand treasurer at Innovative Industrial Properties, "With our long-term, triple-net lease structure andtenant options to extend the term of the lease, we provide thatassurance to these tenants. From our perspective, we structure ourleases on a long-term basis with the goal to provide predictable,long-term cash flows for our investors, and reduce our exposure tore-leasing costs."

Innovative is a pioneer in serving the medical-use cannabisindustry, which is still in its infancy. Although there has been alot of chatter, investors have been slow to enter the market. "Foras much press as the regulated cannabis industry receives, it stilla nascent industry in its very early stages of development," saysHastings. "As such, licensed operators are growing rapidly, androlling out their operations in any state that requires significantcapital investment into cultivation and processing facilities,either through ground-up development of new facilities orredevelopment of industrial buildings."

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.