IIPR - Earnings call transcript Q2 2020 | Innovative Industrial Properties, Inc.

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Operator

Good morning, and welcome to Innovative Industrial Properties Second Quarter 2020 Earnings Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Brian Wolfe, General Counsel. Please go ahead.

Brian Wolfe

the joining for you call. Thank of Alan Presenting President and Chairman; President Smithers, Executive Chief today Ben Executive Vice Officer; are and Financial Officer; Paul Chief Gold, Catherine Investments. Regin, Hastings,

of results to to Litigation Before we today's uncertainties call XXXX. Reform risks, harbor meaning Act be may of everyone a the actual statements forward-looking within the made of conference statements factors. remind may deemed of other begin, due during that the variety differ like materially I'd safe and Private And Securities

For a filed risks the company's refer detailed on the discussion of and the reports as to the with of business, and ongoing some X-K news you yesterday as Form disclaims company any forward-looking the uncertainties call future issued SEC hand The SEC. over release of intention well I revise obligation events now Alan. update of the with whether or Alan? periodically statements, new to any the to a or as result information, I'll or otherwise. filed company's

Alan Gold

Thank welcome, everyone, second our you, Brian, call. and quarter earnings to

effective hope in effective highly heartened health is extreme we treatment experiencing made has disruption, short advancements want foremost, time as fighting a our the caregivers by professionals, the these to appreciation vaccine. patients are and of all health are and our continue of we deep crisis we It trying formulate our this battle resulting many to medical First and researchers science pandemic are coronavirus to time the we plans globe. front our who the been disease highly its on has such lines and but a and express months, across over to we a this period and community economic what for understand

quarter Ascend of These and representing in to our with transactions amended tenant collectively call, to partners ways answered our Care. continued totaling recap, ensure feet investments facilitate adult-use, of deemed state operations service the As continued second last support adapting industry, leases industry, vast jurisdictions XXX,XXX expansion for X medical States. and employees. Regin, of to our And tenants XXXX, detail operators the the essential industry-leading environment our including and both discuss to our in on have individualized Curaleaf the relationships in that and tenant acquired cannabis Garden; of including new designed their Ben comprised and our majority and United maximize operators: portfolio. and we an service million overall was compassionate their existing Kings of health X in the of local properties, President Columbia the investments call we May, future existing patients follow-on by $XXX regulated Investments, in on states both this and square an will during property Vice discussed of Wellness, and with to in customers recent acquisitions investments. in safety additional And our our Cresco, more Holistic tenant of were customers over in improvements, tremendous patients, over their

with our XX to basis own that a a on The not one high-quality As receivership. is licensed in XX% operators. over XX under Angeles property we of Los in states California are leased tenant million leased today, which X.X feet, long-term portfolio our properties cannabis square totaling is property

for customary will are on licenses approval. and the yesterday, in with optimistic remain this And that completion regarding again we to partnering subject our long-term and release our press agreement to tenant court for into final basis Massachusetts, of this issued acquire Holistic has Industries, conditions operational entered the in Holistic property. transaction this closing and a definitive receivership Maryland noted Pennsylvania, long-term As partner property

press May, issued due our and the our rent in of our noted deferral each in for July we tenants April, of XXX% aside of As contractually months Angeles June yesterday, from QX. from have we rent temporary Los including paid property, release X/XX provided which the

no second have by also a income economic our at dividend of constitute as note, dividend, customers, we a and by after year-over-year driven XX, account tenant to stock tremendous a increase tenants As the regulated execution believe today, The July their tenants per and the severe over which by the first This partners, adapt to plus of common cannabis serving of program, and their have on Paul into rent our under adapted touch we and normal. on stockholders does end disruption AFFO, of supported rental the well all continued ways dividend to new share XXX% net quarterly our base we to well patients of on constituting COVID-XX which believe acquisitions our we testament take completed X exceptionally ability we million pandemic not the tenant this additional in our new of our $X.XX deferral to recession quarter XX% growth quarter will was $XX industry, other and paid investments. and of our strength pipeline our resilience which revenue, to quality faced is the acquisitions. Reflecting representing XXXX later.

stockholders, detail the also would results also and tenant Catherine long-term while our forging provide continued activity. support, the proceeds front, to our initiatives, over last more support of personally financing additional expansion over owners steadfast top-tier raising the financial capital in and their our gross with the industry. partnerships us in million regarding partners like will all $XXX operators months I long-term company our their to providing thank X On for

and focused for years crisis continued come. challenges to in posed industry these to on quite being I'd we the that, strong turn and over to young With continuing still challenges, long-term in be continue call the stewards a real always, like immense we Paul? are Despite to navigating investment the your its economic As company of through disruption. health provider resilience and capital believers and key by to the be many the growth to our Paul. estate potential enable of

Paul Smithers

Thanks, Alan.

this cannabis industry regulatory I call, closely. with cannabis of update continue the developments during pandemic the and on current to operators for dynamics two, during COVID-XX on environment an a focus industry provide to the this plan one, this For the crisis that we including: the and monitor regulated crisis;

assurance discussion, last our as general significantly while noting of not also like this will landscape on we landscape preface developments regulations want you mentioned no As change. there can evolving that rapidly. a this are I'd now, industry and to provide call, to And that be

as First, pandemic. environment regarding current the pertains regulatory COVID-XX the to it

cannabis we to As state in exception orders. been as to the cannabis not certain noted general the be May. shutdown processing, during essential such applied as authorities and dispensing. supply In exceptions, with each throughout cannabis applicable businesses reopen has in state majority generally for where developments local permitted closely. essential, as been a by of and in continue The been cultivation, essential designation allowing on states, to to of local as to medical-use them however, period our previous call, have adult-use the businesses determined we government tenants businesses packaging, operate pandemic, of medical-use adult-use can have late and continue that and chain continue our shut Massachusetts, There be down governor this but vast to to distribution and an essential monitor touch operate including time,

during pre-pandemic, as further designation As essential medical-use and the nearly long up another clear, key watershed adult-use this legalization in to term, cannabis And point crisis vote medical very front year managing patients their industry we as as of positive to states offering touched XXXX over validation shaping was uniform on residents noted as the be previously, medical cannabis importance cannabis legalization. on of in or for with the medical prior we many for businesses of conditions. a expected XX on the as see the calls, state

states forward sufficient of of Even impacted have However, a face are And in the challenges, in growth number the with and of of ability good will be as of in the acquired clear for a revenues properties postponed. person. ballot for pandemic, organizers over key in been opinions of and greatly Post November such properties. XXX,XXX citizens signatures, initiatives to number not to to of over initiatives adult-use come. years expect the we momentum moving across as gather we organizers ancillary signatures orders jobs, tax of paying X having an with that a own importance an of long-term what's than of many the X New nationwide shelter-in-place Jersey, voter end economic source likely on where result, after a and program collected if increase, line the that shifts continue, and serve will communities legalization Arizona, including industry supporting legalization adult-use XXX,XXX appears approval adult-use quarter required. strong both in medical-use It a where in we more

federal of Finally, this to the efforts substance. able and to cannabis support the agricultural as a the during number groups pandemic status of businesses programs controlled have PPP put the support still benefits programs a given certain of of place despite assistance note, in range a there businesses to while of wide been and industry leaders, are congressional Federal themselves Schedule avail EIDL, X cannabis not of or

pandemic. industry the dynamics regarding Secondly, this during

and in and teams out, protect protocols and their day procedures access consumers patients tenants for to designed while to our health work, and day providing tirelessly tremendous employees. of patients, consumers, and have off, First working cannabis to implement dedicated done the

to that environment, in up is and accommodating on And been in sanitation federal name and of orders, scheduling, held said, certainly stay-at-home adaptability variation certainly On procedures and and driven across quickly adapt and been the notwithstanding delivery, changes. distancing level, resilience cannabis as significant number tremendous Our pickup the as able the a legal while infection of curbside the few just demonstrated to complete by shutdown delivery, and support pickup local the this ordering, this state with country faced. among greatest adult-use instituting tenants to amount macro has operations, few the online enhanced face as local the performance a levels, very lack governments new of afforded states, to as the including of further there industries. whole has of economic rates, there such curbside in our these have duration a well current social factors and all cannabis disruptions the as That challenges of COVID environment, of a state others. were one in well one has to breadth of advanced health other has Massachusetts of of industry and sectors nearly implementing good economy a

has impact which for And tourism, had state a which the effect in and a of a precipitous the adult-use had state like has states few example, Pennsylvania patients. close For of continue in in by time, significant Massachusetts, months cannabis experienced growth to At month same tremendous required Nevada to of on sales. Maryland exhibit state's each were stores market. very the significant a course, service dampening decline on and adult-use resiliency authorities,

We and has now months also in some Care's theme been industry, continue of markets of of Grassroots of last Solution, whom on and Green the tenants. capital that a which Curaleaf the for to acquisition consolidation our all with cannabis are of have consolidation out Columbia portfolio, the see month continued our operators. its of we Within challenges seen play for a acquisition closing pending number late

differentiation strong this in We that also come. provide the to strong further balance in expect and sheets will months environment brands

certainly partnerships of expanding detail. best-in-class our will proud continued our and have we operators, of are describe the operators, some estate in as many with with We strategy to focusing strong, multistate work well-positioned on real developing and Ben

believe of property forecast represents. While industry again, for Arcview will the nearly BDS to and cannabis exhibited one opportunity, billion from And of regulated challenging comparison to in exceptional thrive this difficult our growth regulated resilience opportunity. walk turn It exceptional continue what to U.S. we and investments our represents portfolio. in in $XX.X long-term will who in XXXX, follow the the draw top an over our country growth bears over a is it I'll our that is an across to a jobs good repeating recent billion any growth really call now compound growth rate crisis Canada and Ben in you and country. the acquisitions to the an and industry be industry drivers on through extremely $X.X has XX%. this the such world, of and Ben? to in time XXXX annual world date that

Ben Regin

Thanks, Paul.

properties mix we new As estate X X Alan expansion real noted, since with representing and partnerships our April operators states, existing tenant establishment acquired of top of of a in relationships. X, have

own states, tenant plan we XX some of million each by the to feet including properties portfolio feet calls, I million also across under As about and state. X.X acquisitions square overall redevelopment. of X.X state or approximately development and touch past our information in our today, XX representing each on approximately Similar provide square to

million month, previously another announced Grassroots, we the the As tenant XXth in with leases at our total a feet we at presence our ours XX In properties aggregate. in and we of a Curaleaf the with multistate the strong Curaleaf North and XXX,XXX-square-foot in investment over million with in lease into Dakota. licenses, X and and New comprising cultivation in fund processing is Shortly a of to future states acquisition Pennsylvania state, Columbia our month, tenant just Care, a with improvements. operator. Curaleaf facilities announced improves representing and late Illinois, long-term including a X.X Curaleaf of sale-leaseback of We entered its sites, operator commitments acquisition together acquisitions investment industrial acquired and another Grassroots, after the Curaleaf multistate $XXX square X property XX into with properties million, completed long-term last $XX of Grassroots of entered Jersey. properties last tenant we acquiring transactions closing have transaction, little capacity. our X and expected of property locations and over cultivation a leading operational XX to have over in dispensary total, XXX total XX be dispensary

a together XX of facilities, X U.S. feet of XX Solution, in As may Columbia ours production you in tenant future cultivation represent X and the locations, dispensary investment just These capacity expected a of XX Green tenant jurisdictions and million in in Care total X,XXX commitments the Solution to fund of transactions processing the Columbia cultivation know, over over and operate million are improvements. Care acquiring $XX including is Colorado. process Green Jersey square employees. under with to New

the has prospects current introduction the where properties, program Jersey about polling improve Governor, represents market the of and steps medical-use medical-use we the this and access expand the New Phil of an program. Jersey adult-use own both and of are strong New XXth is state important excited we patients for and program, the the under to potential cannabis for legalization for adult-use taken recent majority of ballot on showing support. Murphy, residents November for with

Now to Massachusetts.

total improvements Ascend property be call, the industrial we our in in to discussed expected long-term we last and on the Wellness with and April, a into $XX the entered aggregate. As property our XXX,XXX-square-foot lease with acquired investment million a tenant in acquisition at

Massachusetts, a be with expected Illinois, into at previously acquisition cultivation facilities industrial and MSO our property and long-term Michigan with and acquisition acquisition vertically Illinois for total cultivation Cresco, improvements acquisitions and investment in in with leases Cresco's and having fifth million. This previously long-term the XXX,XXX-square-foot their property lease of into lease operations Cresco the Illinois, third $XX lease cultivation tenant end for little is with Ohio and to and executed the marked our processing a and cannabis Ascend and having transaction Labs in cannabis acquired entered This and a and transaction represented Ohio. with facilities under on And we quarter, very Ascend Michigan. closed and entered processing in at the Ascend, integrated retail the a leases with Michigan.

Cresco, States and Holy to including properties we be our regulated PharmaCann funding for property. of the are additional leased Massachusetts, As operators may and future at of also Industries, properties $XX tenant the including investment, top Trulieve our including United X have X in Oak today, Ascend, is These total million, requested some committed improvements, $XXX in by the which cannabis Trulieve. Holistic million,

essential As to open late adult-use reopening for to determined and months medical-use approximately stores with Paul X adult-use keep May. in cannabis an previously close noted, as cannabis service businesses cannabis Massachusetts stores

Michigan. for Now

XXX,XXX-square-foot improvements by As our April, with in and after the Cresco a an $XX we increase million discussed expected property amendment acquired investment on acquisition a our in total industrial at transaction be aggregate million. $XX in tenant the allowance call, with last the improvement sale-leaseback additional property tenant our recent the to in to

$XX the an demonstrate year. very Newcastle at June, processing annualized leased total and facilities total acquisition and total our is million. the previously to in MSOs early And compared our is operations XXX,XXX of to committed and of Marijuana or processing, economic cultivation for expanded integrated the the sales with report, medical-use Michigan redeveloped Pennsylvania a medical-use facility and XXX,XXX-square-foot Massachusetts, on funding Michigan for California, basis in with businesses million to we million and property environment. XXXX Holistic the funding adult-use Leaf in and Regulatory our expected industrial remain Holistic regulated of the own U.S. a investment the Industries previously our to vertically billion Agency a Maryland for In cannabis of Green over future square Massachusetts. cannabis million the this Saxton on these remaining June the June, A and Maryland, providing and million in sales approximately redevelopment feet difficult acquisition of the according has investment, and tenant As little in we backdrop industry $XX to in of about we over cannabis Michigan, closed cannabis private Leaf resiliency acquired of against of $XXX were in one today, medical-use investment the with On improvements lease are Medical property allowed a We including Green third We January feet. Leaf for facility. XXX,XXX for in tenant aggregate. about $XX Washington for square little facility, at $X D.C. in with Holistic's be our and later believe improvements statistics cultivation industrial we open. both largest adult-use XXX,XXX-square-foot Green Pennsylvania. properties cannabis total $XX Michigan, during the

Green Leaf XX,XXX-square-foot to leased year. job also fostering earlier state facility an Virginia, to We expansion property dispensing excellent we have of acquired this that Pennsylvania processing of an and patients Richmond, cultivation, our and in the authorities state. access throughout the growth done

letter As June, there this Marijuana to And Pennsylvania's of double support pulling of a in according part $XXX month, of adult-use of of are the year, losses help sales in State sent bills Business patients. the the pandemic. XXX,XXX current With tax leaders expected and cannabis Pennsylvania in generate to last the pending Governor legislation. to majority Multiple to legalizing pursue large from Daily, offset a Democrats medical much-needed approaching are were nearly Pennsylvania's legalization well, as legalization, adult-use to majority adult-use end legislative registered stemming to of million. revenue

industrial its feet entered investors. property, manufacturing of In square cultivation, in with to April industrial we we properties industry, that Garden for operator, having Garden equity we quality. X California. a long-term tremendous lease the top-shelf XXX,XXX property first Kings in this quarterly and X California and to this developed $XX.X Notably and acquired processing is Kings reputation of million June and unique leading this portfolio, in May, brand cannabis Southern XX,XXX-square-foot dividend into in last highly declared its for Now for a consistent year year. Including including Kings property totaling Garden Garden. Kings leased a a acquired

to date of cultivation weeks, we of call, coming weeks we are A property. the and Finally, to receivership. distribution, to Los the we point, as for disclosed Maryland, which licenses certain and court established the announcement our discussions Holistic, an this that close from at the has in we transaction sale the in is Alan is beginning in mentioned, retail in and in advanced Nothing a the in Pennsylvania approval agreement Holistic be are and press former will in Angeles with tenant the been as has acquire few we executed optimistic the to approval. partner manufacturing make our this tenant near the but Massachusetts able of lease licenses yesterday, release definitive that expect property, a future. of after our

to continue real we strong existing demand a forward to Catherine? months top-tier sheet. operators, it with utilize In look them and to both complete our our of balance and negotiations very terms to of and are over continuing that, number sharing overall additional to tenants capital of a as ones I'll come, the in transactions the strength for we estate pipeline, Catherine. in With active solutions new see turn

Catherine Hastings

increase market shown It's results Ben. resiliency its financial really that the XXX% certain contractual of certain QX last reflected rent approximately generated properties, tenant times, was Thanks, and improvement quarter, $XX.X and at the months has acquisition adjustments, driven total are provided and additional The busy new properties, We in both year. by of million deferrals. resulted another temporary rent in year-to-date. rent and of cannabis offset quarter, our for yet allowances at primarily to been the regulated X revenues base leasing for properties quarter which of second escalations tenants increase a these unprecedented from the during by

amendments deposits with to and full for of in last during these under of period security June. we've in the we the approximately pro was full, Pursuant each discussions times were rent temporary been As provide total of from we apply X, May of July lease and and rata The each April that as our over cash million deferred QX. for for and of we million deferred hold a hold reported annualized rent to of repayment rent XX-month deposit generally security of time XXXX. an and represents deposit to in the on May pay the security our XX tenants, rent for for structured and applied discussed defer for rent in June $XXX,XXX amendments, a these deferrals amount payment our starting unprecedented in of rent of to close X.X% a total total April executed our these $X.X X $X.X call, revenues tenants of portion total

As Alan the were property, of due XXX% rent of portfolio from Angeles mentioned, other and repayment our of including for we've and June of than collected tenants across deferred rent contractually deferral our full that July the April, rent rent May, months total under the for Los security X and July, repayments the pro rata program. deposit

have also tenants. than rent additional We executed not these other for any X deferrals tenants

revenue for As quarter partial QX executed few the burn reflects leases next revenues of our for we've our for we of the as expected are leases course, revenues, our indicated in executed to a of basis. of and deferrals revenues the or to the leases during the certain rent no acquisitions from in the cash account after and abatements by only quarter the under the leases were that end off quarters also all months past, continue And impacted quarter. on

was X funds back noncash operations, income operations, which from senior expense of our to XXXX, $XX June million. property the from compensation depreciation recorded net million. notes, $XX adds to which $XX.X income, net ended Adjusted exchangeable interest For back and million. Funds expense noncash we stock-based XX, adds months was related

July XX, $X.XX June we On prior a shareholders from year's months increase dividend quarter. dividend from The XXX% period. paid the XX, year to reflects of common XX% grew June For the from prior operations XXXX, as QX of funds XXXX ended our share adjusted second stock XX. common the per of record X quarterly

Board target AFFO a to indicated payout XX% the XX% ratio dividend portfolio we've of As to stabilized of the basis. in a continues past, on

many During also our as fund to our development the offered continued tenant improvement operators under allowances improvements properties we into estate leases. to in construction or of our real quarter,

funding to cannabis demands. critical a we an noted, previously to or facility these As address existing expansion either market improvements to growing facility redeveloping are

amend increase to As our Ben many corresponding at provide operators rent. additional base partner previously of our capital for been proud we've and a leases facilities expansion mentioned, to tenant for with the in

offering full billion billion our raising the additional in June the activity of with including of leases. X $XXX million of a XX, aggregate stock, months completed preferred improvements capitalized of of to ended of capital we purchase our another During common our capital approximately financing tenant construction at Series our $XXX stock, raised A XXXX, to exercise And or to funded respect our about we million the stock, activity, approximately gross million proceeds our offering net to follow-on notes of relating option public XX% common to brings $XXX in $XXX.X million follow-on the approximately IPO in about exchangeable To our of total This under and exercise and properties. May, additional $X.X costs underwriters' public completed in follow-on full purchase underwriters' offerings, $X.X July, including stock proceeds the shares. common raising from option approximately senior our around in and ATM program. we date, raised shares. And committed we've

stronger support, best focused for our navigate proceeds these the we're truly are times and closely our even other from and continued recent all on We tenants out tenants raises equity grateful stakeholders' with to end. investing our come through of the and with unprecedented on the working

gross consisting to XX% total year like we and leverage only approximately real truly equating totaling Finally, X.XX%, back have as among of do balance our mature XXXX. exchangeable total notes our end. rate And Alan? sheet with billion of no last Those senior of on interest of estate secured debt at leveraged assets the senior cash I'd sheet fixed rate debt to is notes quarter I'll to our cash end, very a Alan. interest per with $X.X it of notes, the payments not quarter until companies. approximately have that that, as assets a highlighted $X.X call, note unique million exchangeable turn composition of exchangeable conservatively that and remain Those we balance on and

Alan Gold

Catherine. Thanks,

As to we I'd prior in in following highlighted have closing. the like note calls,

of have ongoing proud access that adapted to consumers. that way commend are them our in this and and and to We provide tenants to have to reliable continue pandemic safe accomplished the everything they patients

in as are as And flexible weather we whole to industry, allow stockholders asset future. bright, last a our your We the and personally resiliency strong, your this want and stewards tremendous steadfast uncertain with continued sheet our tenants us demonstrated times support to thank that I continued few the these of very have balance expansion. of and well and for capitalized to long-term we are and months the of its as industry support continue tremendous belief us investment. believe entrusting its we our to see a

do could We continue questions? for call best that, and With like up open I'd our will that for every up to day. questions. it you open very Operator, in have role to please the

Operator

Instructions]. [Operator

Our today comes first with Tom from question BTIG. Catherwood

William Catherwood

here, -- decriminalization So taking I its a that then it's step at to primarily don't supports politics platform DNC medical recently. talk it but the XXXX through down targeted want legalization action, rescheduling back, and federal from voted executive cannabis. And

cannabis interstate would And to decriminalization portfolio, commerce your business? could expose other it or to impact of relation from competition countries? in or your So import rescheduling your from tenants how

Paul Smithers

Tom, it's Paul.

much adopted we're -- interesting DNC that to pretty Biden-Sanders policy published. yes, So see the

was So we that was to pleased there, but surprise the see now what the actually DNC. and of kind Biden-Sanders no policy were

legal is what that federal that any over states, XX recommend know, you medical cannabis which without be as So doctors intervention. cannabis they're means can proposing

would open of because medical it for that's up a cannabis, descheduling our it's So does What that and -- a cannabis all real to which not certainly we business think opens the industry the interstate without not commerce. necessity to states up vote. positive

net think. that's we So another positive,

is take the STATES fruition Democrats change, as this if the plan to see So and what to like we're we year, the but see next that of Biden some is because not comes Act all elected And into going a really like the opposed looks we're bid Senate, Act. cannabis. it positive look descheduling complete could MORE pretty would about adapting

industry and certainly, it tenant positive the as net put recreational would cannabis so the individual that to we So to our a the decision states, operators. for see

William Catherwood

and it. PharmaCann, Columbia mentioned the I deal increased was govern but do back And you credit corporate you signed after agreement additional then Jushi how closing MedMen would addressing and guarantees? a to recall TGS announced get that ownership? correctly, which one transaction. with during leases Got Pennsylvania, Grassroots, be a next tri-party you Holdings bit, PharmaCann's With Vireo even Care enhancements if Curaleaf going this changes in on obviously, leases had between And to in or with any and, how are your when you is, handled acquire goes

Alan Gold

any the our position we of who agreement have believe new is guarantee and we to place is no the with we us an do our the entity just of The And a come corporate was new but place. don't just Treehouse new and clarification, what and leases review as in transactions come -- to acquisition -- our entity. and than financial any then that disappear now and the corporate whether All and then stay back that the guarantee when then. we And give occurs. didn't of to then what are new us, leases entity. new ability So -- we -- entity leases previous acquiring corporate better new so to through transfer. a of -- the in is to And if MedMen, do, approvals the is, one then do that that guarantee that our subject guarantor agreement one we an our be in The the -- there entity all tri-party it for if with to wouldn't / so with is -- -- -- exist. leases

William Catherwood

Got it.

Okay.

-- approve is guarantee and I would -- it's the duration, from it that of rents, if guess then rest that new entity, remain the in you assume transfer previous if agreement, -- over original it's all I the the increases to whether lease up terms and new of correct? corporate remains and you rent time, whether get the So the that point that same, the from it's whether lease is

Alan Gold

none a early There's changes, to the tenant no are all lease -- a have terms, no we our no purchase termination one than pre-agreed where lease of to lease. rights. Other Yes. there's of -- option, them modification has any right

William Catherwood

was to seems assets first In How XXXX. you point XXXX are licenses. and same under to Paul to contract But held sounded But at throughout for resolved to have processing it Holistic's process agreements. recall to receivership here. in great on that in that the understand regards lease space. the up there a then did follow? hear the Got correctly, it. Holistic that Is that asset the just receiver inquiries California this receivership And that those the before to is very maybe licenses is the the space? decided acquire exactly? work reverse It process, interest your of licenses you've the Or Street, similar that Esperanza deal process help the me your at If under be process. like time, and in I can and

Paul Smithers

Yes.

been certainly, the and and Angeles by with offices some in So Los with helped the shutdowns it's it been a hasn't process, long of the receiver. administrative COVID

So transfer we'll final Holistic's we've we're We're of and of to the now lease, in happy But about property. the see the Holistic, close. lease be licenses deal. but approval a talk court then for gets terms. premature this position But the receiver the discuss it's still been working receiver, a point, in us to the at the to will closely optimistic interest when done not very it's it with to

Alan Gold

by specific receivership in that And process for in complicated was And was started source the process just a that receivership the started fact started and California previous was the receivership a owner there was up process that owner receivership or the tenant. little to when was process investor then bit then that it adjudicated, the L.A. And the it -- just Canada. second was then on transaction, primary further capital became there Canadian the back and

of on administrative on the top in process California. courts So complicated and of process to the COVID, access that further lack top of the

wouldn't that keeping that So of all just we in see mind. type Typically, complication. we are --

William Catherwood

Ben. Got And last it. helpful. one really me, then Got That's for it. for

may have tenant now, expansions. kind fingertips of a at right but spoke You this, about your of, kind lot not you

is obviously X a space, be or Phase So your acreage? a it within sense on someone the in of assets sense of it's Do any seems have that whether investment fitting own, space to of great source potential it's their X much out out building expansion you how whether additional of or you already Phase greenfield portfolio. Do you there that that? expansion already exists have

Ben Regin

Yes.

between specific Illinois. real see we existing and expansion our the by continue business, a in driven saw the we to And see a to states, mix new the investments. Similar in it's lot in nice much continuing we're state-by-state aspects facilities pipeline many So to of very as markets.

think increase As is a medical of in the demand an I market East we'll in lot a year, the states Coast see estate lot example, long see is year. acquisition continuing to these for driving late Midwest, able the last and in of that this will real going of going term. be over itself the building where capital expand market the or part we site that facilities, to The the our underwriting it on the the support

Operator

comes question Partners. with ROTH Capital Our from Fortune next Scott

Scott Fortune

you've line sense about or months, we pipeline. X velocity on extending environment, of board, but delays this are to deploying of COVID's want environment year-to-date. can get the Congrats provide come on a out But you expectations of or just in the acquired this capital? Normalized, working placing X that $XXX since time I going you've the of to it's about the said forward? know COVID seeing kind through I of And quarter. million

Alan Gold

on raises, -- a are issues -- So pace continues clear X- the difficult could done slightly We of our raised time that last that our X transact Scott, for while more to that to has believe and don't X- on we capital in when those that very that COVID location, time capital capital any path we in little businesses or deploy we've it specific schedule. frame. overcoming team we does that job raised of in it X-month that the us COVID make bit capital we believe a a made and X-month And -- frame. to fantastic that the -- place ahead we to we're right

Scott Fortune

And the board. about bit changes then that are Great. more kind seeing portfolio, follow-up legalization Okay. and potential a legalization Paul, you and there's descheduling, the on competitors federal can are you of little we here? into potential on But tenants ahead front. look and that. kind talk yields forward November lot as like quick momentum federal dynamics you a holding the off legalization reform? Just a mentioned still seeing on more in seems the and range with of of, It which Or about XX% Kind policy of high? remain since come

Paul Smithers

happen think White potential Yes, from we've be the to the people going House, Scott, than going believe rights of so that states talked we're what understand seen think And to takes think I we've the lot think. mostly people any in White takes hesitancy I action, wait see who could to and November don't a the happen, in where takes about type house, be a real because if cannabis our parts earlier some that's do any a Senate. on we who of movement. there's of But slower moving to what's might But acquisitions descheduling see going will Biden and process see it some congressional CSA. I not I that

So going it's still a X. whether to Schedule X a controlled substance, remain it's or

Act. immediately a anticipating towards not great We're we States seeing other, not commerce one the whatever interstate we with we're So huge November. in States so see really way industry. Rights, the more the happens that's for If the or do shift Rights think legislation

have the differences seeing we're able within to So state being today what as as each their we tremendous in boundaries. of operators the far not operate

industry we'll for for our but So and very we're see and optimistic the have to what wait operators. happens,

Alan Gold

legalization predicting federal seeing on And federal as to be we we're the right now. not are clear, legalization horizon

what a party to seeing preference and rights both that's platforms are having we're states seeing. We

Scott Fortune

I And one from quick then side. real agree. real last, my

the of pipeline, and pipeline underneath job expanding new players the a is seeing top potential nice But with out you as start are profitable big the up continued more done capital and guys that move discussing far As have obviously, probably onboard smaller are to regional upcoming there them. deployment into these question, have to coming a for players? you MSOs

Ben Regin

Yes.

nice I a think of mix we're seeing both. still

top of with the We have established lot groups. relationships a

markets sense or state footprint. expand with might at as And we're we'll that private point, they're activity relationships a they smaller, the through we continue a well. pursue. single any a are that these of at to a and I makes look look lot markets, the your those think And to those also perhaps underwriting taking like successful in growth organic to look if their in are M&A that operators through investment, or in smaller the taking we

Operator

Eric Des Our comes Lauriers Group. Capital from next Craig-Hallum with question

Eric Des Lauriers

Scott's management a there, on a Just but question follow-up risk perhaps from more perspective.

the willing X understand about to individual you do would full have So you through question it's runway to existing with deferrals tenants? a follow-up, My versus to can ever much your on any payments us your done within to bit tenants? X example, have sense rental also For assets? you trying great get made of is, help tenants. of increasing see base take diversifying XXX% obviously operator? to of company's get how great that guys And the And for your guys your exposure July. Tier with kind exposure want job production tenant as you increasing your of rent tenants existing a to how a guys you're think Just your exposure then a Tier you you to X

Alan Gold

you. Thank

add the we to excited growers begin tenants states throughout of segment everybody number think are relatively they that the ones us with. an that team I to top-quality a that have, the continue that supporting gives comfortable of partner with top-quality that our size cadre small are And years that do as to with about attract new their with. forward. business don't So a model the very is very it I we over quality a that to moving that We several facilities And We currently of be always emerge, we and and as have tenants growth small of be is to amount do that growth high support emerging growing last is capital. or or think greatest wish to with. we and and being that is their do the nor that but risk-adjusted only -- provide we industry pleased industry, it -- our has all a business and in we the in one in. and the We in is portfolio. the and estate remind certain their tenants and they the appropriate industry they're all it been a this to their this those sense very of We a that plans risk have really with provide a that our able we're certain tenants and of tenants tenants a of believe those and the significant we has partnered them that has ability it real been doing of we're expand think with nascent portion

Operator

with John Ladenburg next Our Massocca comes from Thalmann. question

John Massocca

a Esperanza on bit Touching little more.

property at the rather existing with Assuming lease Holistic correct in than you're am lease? that taking things the as negotiating go planned, a new over Holistic I

Alan Gold

That's correct.

John Massocca

Holistic paying cash you And regards rents where I could was terms to this, future in would be provide on versus prior? DionyMed a restricted know with be you you was might may little but be of what can bit what say potential any color with

Alan Gold

-- the approval do been in hasn't We of transaction to and still the courts, court subject to position by it's because approved confidential. and that the aren't a

prepared that today. to talk be about able we aren't to So

John Massocca

I think in of a volume, of recent were perfectly of understood. about the things at acquisition term, time then in particularly raise. couple equity the That's most there the the as cadence Okay. And maybe near pipeline

or solid? that X has still LOI the may particular closed, pipeline but in today? PSA those more kind Florida And from the be that of to of Some Is was slightly there moved big in in was that transaction something in pipeline.

Alan Gold

million we LOIs. $XXX we when the the did So about that or had -- capital raise, we indicated -- between and PSAs

about now transaction. million in X on $XX under million of in We addition, that transaction PSA. that, total addition approximately still total of not no, -- PSA a X large leaving is that And $XX including today large have closed

John Massocca

affect And as Helpful. decriminalization legalization. with your to decriminalization of little a versus you potentially it ability the maybe debt kind to kind mean I on side? a bit access -- then well, have that particularly what I you access might We that for your is terms about legalization would how little much capital, as of full with does capital of But picture. as bit guess debt bigger in tenants. talked

Alan Gold

access greatest or of we you to decriminalization we lowest plus our capital the capital, might of up That's legalization the or X, of banking side the -- given whatever cost has to whatever the know have of hard team -- want full it's sheet access the in what and don't mean That's the balance decriminalization years. debt expertise management where... it, tell or size X this whether over will and capital terms business. that because -- has legal X.X whoever last built But the

John Massocca

the And side portfolio on Okay. X circling back then of more things.

kind helpful. the it's if of would any be in bit Cresco a there What about at additional Michigan? color property little here. the funding drove Just round Sorry,

Ben Regin

is Ben. this to can John, sure. speak Yes, I that.

Cresco capital they it. to look transaction look happened is a they We'll that They where out what to on additional amendment oftentimes they're for to will meet discuss the market grow the facility they'll continue back wanted in us. to to provide the now. the with right similar the build-out market, an So to in And the particular portion right other Michigan. transactions, seeing where if of of capacity a initial the build many close our that we the as an building to tenant is facility in balance feel market come we'll additional of demand will the

John Massocca

back of for And a they that I of correct were -- way and and more wasn't for realized necessary, guess that other larger build and you. kind didn't framing were came capital get went is to they and Is essentially capital. a it? that back to hadn't going sources smaller you originally facility It facility to capacity. looking they It planned for it was

Ben Regin

expect too. definitive way And -- to a it, it's we're which frame Well, there's in that, capital, when provide we another is time we rents frame unique we start. in, position when a that,

capital they But paying plans upfront, the upfront. they're growth. be And it for so have take may they if going rent on the to

we So growth it. for need need behooves facility, it then they us they the additional capital. what they And when to just they -- back own take them absolutely to come need to after

Operator

[Operator to back Instructions]. Seeing no to hand closing further questions, I would like Gold the call Alan for over remarks. any

Alan Gold

I'd like also for for thank it And having to joining a And of us our the work continued and stockholders growth today. support. hard all you. importantly, the very their thank this and successful our to all and you also quarter stakeholders thank employees all such in Thank your And again for getting company.

thank will And So with sign we off. you. that,

Operator

attending has conference The today's you now Thank concluded. presentation. for

disconnect. now may You

Innovative Industrial Properties (IIPR) 6 Aug 202020 Q2 Earnings call transcript