New Marijuana REIT Rival for Innovative Industrial Properties Hits the Market

Since its IPO at the end of 2017, Innovative industrial properties (NYSE: IIPR) was the only publicly traded cannabis-focused real estate investment trust (REIT). But in the near future, a new kid will arrive in the neighborhood.

Like Innovative, this company will only focus on grow spaces, processing facilities, retail stores and other real estate required by the marijuana industry.

The new kid – the name it will bear remains a question mark – will hit the public market through a Special Purpose Acquisition Company (SPAC) now called Subversive real estate acquisition REIT (OTC: SBVR.F).

Image source: Getty Images.

In a move that has become all the rage in finance lately, an existing company – in this case, Inception REIT – will be placing itself within Subversive in a nearly $ 183 million “qualifying deal” that will merge the two. . This maneuver is essentially an initial backdoor public offering that is expected to be completed on Friday, October 30.

The resulting company will be significantly smaller than Innovative. Currently, Subversive’s portfolio consists of 12 properties subject to binding agreements and five senior loans; these are located in nine US states, primarily California. According to PSPC, this property is worth $ 201 million.

Inception REIT, meanwhile, owns three properties and a mortgage on a retail store, all located in Southern California.

In comparison, as of September 21, Innovative had 63 properties in its portfolio. Its real estate assets totaled more than $ 815 million at the end of its last quarter.

Like Innovative, the new company will focus on sale and leaseback operations. Such deals are popular with cannabis companies because they free up capital that cash-strapped and often money-losing marijuana industry operators badly need.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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