IIPR stock is trading higher after Innovative Industrial Properties Inc (NYSE:IIPR) announced a sales-leaseback agreement with Grassroots.
The cannabis industry has gone through its fair share of troubles over the past months, and even some stocks that had performed well in the past have struggled to keep up the momentum. One such company is Innovative Industrial Properties (IIP), which primarily works with the cannabis industry, and today, the company made a major announcement. In a new development, IIP announced that it completed a sale-leaseback agreement with Grassroots for its 70,000 square feet property located in Litchfield, Illinois.
The property was purchased for $10.5 million by IIP and then leased back to Grassroots, which would use it as a facility for both the cultivation and processing of cannabis. In addition to that, Innovative Industrial Properties has agreed to pay around $17.7 million to Grassroots for the expansion of the facility by 50,000 square feet.
IIPR stock is up 3.50% at $75.22.
That being said, it could be reduced if the option is not triggered by Grassroots in nine months. Assuming it is triggered, the total value of the deal for IIP could be as much as $28.2 million. The company has grown at a remarkable pace over the past few years, and this is another deal that should boost its bottom line.
IIPR stock performed well up to a point this year, but after the company announced a fresh share offering back in July, its stock collapsed, and since then, the market cap has gone down by as much as 50%. The collapse in the stock following this type of announcement is not particularly unheard of. However, it needs to be kept in mind that the company now has 32 properties under its control and is poised to grow due to the growth in the cannabis business in the United States.
Cannabis is legal in as many as 12 states in the United States, and medical cannabis is legal in 33, which is why Innovative Industrial Properties could have a large addressable market in the years to come. The company is profitable and also pays out dividends, with a dividend yield of 4%.
Although IIPR stock has fallen 45% from its peak, the stock is still up 60% so far in 2019.
Featured image: DepositPhotos © Alexstar