Q&A call today
We are hosting a Q&A call on the Consumer Staples, Restaurants, and Cannabis sectors today at 2PM ET. We hope you can join us. Email with your questions and we will answer them live.
CLICK HERE for event details, video and materials link.
IIPR expands partnership with Parallel with Florida acquisition
The company recently closed on the acquisition of a property in Lakeland, Florida from an affiliate of Parallel, one of the largest privately held MSOs. The purchase price for the property was approximately $19.6M (excl. transaction costs). IIPR entered into a long-term, triple-net lease agreement for the property with a subsidiary of Parallel, which intends to continue to operate the property as a regulated medical cannabis cultivation and processing facility. The property consists of approximately 65,000 square feet of industrial and greenhouse indoor cultivation and production space currently in operation, and Parallel expects to develop an additional approximately 155,000 square feet, resulting in a total of approximately 220,000 square feet of industrial and indoor cultivation space. IIPR has agreed to provide reimbursement for this development of up to approximately $36.8M; assuming full reimbursement, IIP’s total investment in the property will be $56.4M.
Parallel is the corporate parent company to Surterra Wellness, its market leading retail brand in Florida and one of the original licensed vertical operators in the Sunshine State, which has a rapidly growing footprint that includes 39 retail dispensaries across the state and multiple industrial-scale cultivation, production, kitchen and research facilities.
As of September 21, 2020, IIPR owns 63 properties nationwide totaling ~4.9M sq. ft. (incl. 1.9M rentable sq. ft. under development/redevelopment), which were 99.3% leased. IIPR has invested ~$877.3M in the aggregate (excl. transaction costs) and had committed an additional ~$274.2M to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIPR’s properties.
Last week, we presented our long thesis on IIPR. It stands in a unique position at the intersection of the cannabis industry and the REIT space in a rapidly changing legislative landscape, earning outsized returns in the current environment with few competitors. We cover the misunderstood risks of the stock and share our current views on the investment themes within the U.S. cannabis industry.
CLICK HERE for the replay (includes video and materials link).
Aurora Cannabis reports today after the close (ACB)
The Canadian LP will be reporting its Q4 results after the markets close today. The company gave preliminary results and several business updates earlier this month:
- The company reported its preliminary results for its fourth quarter and fiscal year ended June 30th, 2020. AGC expects net revenue to be CA$70 million and CA$72 million, a QoQ decline between -7.3% and -4.6%. versus FactSet Consensus of CA$77 million. During the same time period, total legal sales in Canada grew 16% QoQ.
- The company expects to record balance sheet adjustments, including announced fixed asset impairment charges, now expected to be up to CA$90 million, due to production facility rationalization, and a charge of approximately CA$140 million in the carrying value of certain inventory, predominantly trim, in order to align inventory on hand with near term expectations for demand
- The company expects to recognize a tremendous non-cash write-down of goodwill and intangible assets in the range of CA$1.6 to CA$1.8 billion.
- Lastly, the company and the UFC have agreed to mutually terminate their partnership, with Aurora expecting to make a one-time payment of US$30 million to terminate the contract in Q1 2021. The initial eight-year contract was meant to advance clinical research on CBD products and athlete wellness.
