Cannabis REIT buys, leases back Tilt Holdings property in $40 million deal

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Cannabis industry real estate investment trust Innovative Industrial Properties (IIP) announced a $40 million acquisition and leaseback deal for a Tilt Holdings marijuana production facility in Taunton, Massachusetts.

San Diego-based IIP said marijuana multistate operator Tilt bought the property from its previous landlord for $13 million and invested more than $27 million to improve the 104,000-square-foot industrial space on a 12-acre site.

The facility includes cultivation space, a kitchen, an extraction facility and retail space, according to an IIP news release.

IIP said it now owns 110 cannabis properties in the United States, including nine in Massachusetts.

In its own news release, Phoenix-based Tilt said the roughly $27 million in proceeds from the sale-leaseback deal will be used to pay down corporate debt.

A Tilt subsidiary in Massachusetts is leasing the facility back from IIP for a 20-year term, with the possibility of two five-year extensions.

Tilt also said another subsidiary signed a $15 million sale-leaseback deal with an IIP affiliate related to a Tilt production facility in White Haven, Pennsylvania.

That transaction has not yet closed, but Tilt said it will “also execute a long-term, triple-net lease agreement with substantially the same terms as the lease pertaining to the Taunton facility.”

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The combined $55 million from both transactions would be used “to pay down outstanding debt by up to 50%, representing the first two legs of a stool designed to improve (the company’s) overall capital structure,” Tilt said.

IIP shares trade as IIPR on the New York Stock Exchange.

Tilt shares trade as TILT on the Canadian NEO Exchange and as TLLTF on the over-the-counter markets.