Our Executive Chairman, Alan Gold, is a 30-year veteran of the real estate industry, including co-founding two New York Stock Exchange-listed REITs: BioMed Realty Trust (formerly NYSE: BMR), a REIT focused on acquiring, leasing, developing and managing laboratory and office space for the life science industry, where he served as chairman, chief executive officer, and president until Blackstone’s acquisition of BioMed Realty in 2016 for $8 billion; and Alexandria Real Estate Equities (NYSE: ARE), an urban office REIT focused on collaborative science and technology campuses, where he served as president and a director. Our senior management team has significant experience in all aspects of the real estate industry, including acquisitions, dispositions, construction, development, management and lending.
The Licensed Medical-Use Cannabis Industry
We target medical-use cannabis facilities for acquisition, including sale-leaseback transactions, with tenants that are licensed growers under long-term triple-net leases. We believe this industry is poised for significant growth in coming years, and we are focused on being a creative capital provider to this industry through the long-term ownership of cultivators’ mission-critical facilities.
According to The ArcView Group, nationwide sales of legal cannabis grew to $5.4 billion up from $4.6 billion in 2014. Of the $4.6 billion in estimated sales in 2014, approximately 92% of such sales consisted of medical-use sales. By 2020, legal market sales are expected to grow to an estimated $21.8 billion, of which estimated medical-use sales will be approximately $10.2 billion.
As of November 15, 2016, 29 states and the District of Columbia allow their citizens to use medical cannabis, with an estimated combined population of 203.3 million. We expect other states to approve medical-use cannabis in coming years as well. A 2015 poll by Harris found that 81% of Americans support legalization of cannabis for medical use.
Medical-Use Cannabis Cultivation and Processing Facilities
We acquire specialized industrial real estate assets that are used for growing medical-use cannabis and operated by state-licensed growers. We focus on properties with sophisticated technology and infrastructure to meet rigorous quality standards for medical-use cannabis. Concurrently with our acquisition of these properties, we enter into leases with the state-licensed growers under long-term, triple-net lease agreements. We act as a source of capital to these licensed medical-use cannabis growers by entering into sale-leaseback transactions with them for their specialized industrial real estate.
Sophisticated, Best-in-Class Medical-Use Cannabis Growers
We work with growers who have been among the top candidates in the rigorous state licensing process.
Through thorough research and analysis of the companies and their management teams, we identify what we consider to be the best licensed medical-use cannabis growers that would benefit from financing for their properties to raise capital to meet their growing needs. Our research expertise is instrumental to uncovering opportunities with the most qualified growers.
Long-Term, Triple-Net Arrangements
Our leases with tenants are generally long-term triple-net lease arrangements, where the tenant is responsible for taxes, maintenance, insurance and structural repairs, in addition to base rent. Our lease terms are generally fifteen years or more, with renewal options exercisable by the tenant, and with contractual annual rent adjustments. By selling the property and building to us, and then leasing it back from us, growers are able to redeploy the proceeds into their company’s core operation and yield a higher return than they would otherwise get from owning their own real estate.