Group inks $182.8M of cannabis deals in bid to become publicly traded REIT

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A New York-based limited partnership said it has entered binding agreements to acquire 15 marijuana-related properties in nine states for $182.8 million with the intention of becoming a leader in the cannabis real estate investment trust (REIT) sector.

Subversive Real Estate Acquisition REIT characterized the acquisitions as its qualifying transaction to be among the first to convert from a special purpose acquisition company (SPAC) into a publicly traded real estate investment trust.

The company said it anticipates completing that process by the end of October.

After that initial process is completed, Subversive expects to close on the acquisitions of two additional properties for a total of $17.9 million. The latter two deals would increase the company’s total acquisitions to $200.7 million.

SPACs are becoming an increasingly popular way for private cannabis companies to raise money and become publicly traded.

REITs, meanwhile, have been providing an important source of cash to marijuana companies through the sale and leaseback of properties. San Diego-based Innovative Industrial Properties currently is the marijuana industry leader in that category.

Michael Auerbach, founder of Subversive Capital, said in a news release that the group intends to focus on assets of leading U.S. cannabis operators in high-growth markets.

He said entering the public stock market likely will provide greater access to capital, which then can be deployed into a “capital-starved industry.”

The partnership also announced a private placement to raise $40 million of senior secured convertible debt at a 6% annual interest rate.

The initial portfolio consists of mostly cannabis cultivation and processing properties. The name of the sellers weren’t disclosed.

The list (and the number of properties in each state) includes:

  • Arizona, one.
  • California, six, including properties in Los Angeles and San Francisco.
  • Florida, two.
  • Maryland, one.
  • Michigan, one.
  • Nevada, one large cultivation and processing facility in North Las Vegas.
  • Ohio, one.
  • Pennsylvania, one.
  • Washington, one.