Market Overview

Innovative Industrial Properties Acquires Pennsylvania Property and Enters Into Long-Term Lease with Vireo Health


Innovative Industrial Properties, Inc. (the "Company") (NYSE:IIPR), the
leading provider of creative real estate capital solutions to the
medical-use cannabis industry, announced today that it closed on the
acquisition of a property located at 2000 Rosanna Avenue in Scranton,
Pennsylvania, which comprises approximately 89,000 square feet of
industrial space.

The purchase price for the property was approximately $5.8 million. A
subsidiary of Vireo Health, Inc. ("Vireo Health"), the tenant at the
property, is also expected to complete additional tenant improvements
for the building, for which the Company has agreed to provide
reimbursement of up to approximately $2.8 million (the "TI Allowance").
Assuming full reimbursement for the tenant improvements, the Company's
total investment in the property will be $8.6 million. In addition to
its cultivation and processing of medical-use cannabis in Pennsylvania
at the property, Vireo Health operates one cultivation and processing
facility and four registered medical-use cannabis dispensaries in
Minnesota, and one cultivation and processing facility and four
registered medical-use cannabis dispensaries in New York.

Concurrent with the closing of the purchase, the Company entered into a
long-term, triple-net lease agreement with the Vireo Health subsidiary,
which intends to continue to operate the property as a medical-use
cannabis cultivation and processing facility in accordance with
Pennsylvania medical-use cannabis regulations. The initial term of the
lease is 15 years, with two options to extend the term for two
additional five-year periods. The lease provides for an initial
annualized aggregate base rent equal to 15% of the sum of the purchase
price of the property and the TI Allowance. The aggregate base rent is
subject to annual increases of 3.5% during the term of the lease.

The Company previously executed two sale-leaseback transactions with
Vireo Health for its cultivation and processing facilities in New York
and Minnesota in 2017, representing a total investment by the Company of
approximately $8.4 million, including a $1.0 million tenant improvement
allowance available at each property to fund future tenant improvements.
These leases were also for 15 year initial terms, with initial
annualized aggregate base rent equal to 15% of the sum of the purchase
price and tenant improvement allowance made available for each property.

Pennsylvania, the fifth largest state in the country with nearly 13
million residents, enacted medical-use cannabis legislation in May 2016,
and dispensaries made their first sales in February of this year. Twelve
grower/processor licenses were issued in the first phase of this
program, including the license to Vireo Health, with a total of 25
grower/processor licenses potentially issuable pursuant to the
legislation. Although in its very early stages, as of early March, more
than 21,000 patients were registered to participate in the medical
cannabis program. In recognition of the large market potential, the
strong support of the state's residents and the significant range of
qualifying medical conditions under the program, ArcView Market Research
projects Pennsylvania's total medical-use cannabis spending to grow
rapidly, with $227 million in sales by 2021.

"We are very pleased to close on this third transaction with Vireo
Health in Pennsylvania, projected by many to become one of the largest
medical-use cannabis markets in the country," said Ben Regin, Director
of Investments and Finance of the Company. "We believe our transactions
with Vireo Health clearly illustrate the value of our platform,
partnering long-term with our tenants to opportunistically unlock the
value of their real estate and redeploy that capital into their
expanding operations."

"Innovative Industrial Properties has proven to be a great real estate
partner in addressing our capital needs, allowing us to move forward
effectively and efficiently with our expansion plans through our series
of real estate transactions with them," said Kyle Kingsley, M.D.,
Chairman and Chief Executive Officer of Vireo Health. "We are thrilled
to execute on this latest transaction in Pennsylvania with IIP, and look
forward to watching the momentum build for the Pennsylvania market and
expansion of the program to serve our patients."

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland
corporation focused on the acquisition, ownership and management of
specialized industrial properties leased to experienced, state-licensed
operators for their regulated medical-use cannabis facilities.
Innovative Industrial Properties, Inc. intends to elect to be taxed as a
real estate investment trust. Additional information is available at

About Vireo Health

Vireo Health is a physician-led company dedicated to providing patients
with best-in-class cannabis-based products and high-quality care. Vireo
Health is the parent company of two vertically integrated, seed-to-sale,
medical-cannabis subsidiaries — Vireo Health of New York and Minnesota
Medical Solutions. Vireo Health also runs Pennsylvania Medical
Solutions, a cultivation, manufacturing and wholesale medical cannabis
distribution company that has just begun operations in the Keystone
State. Additional information is available at

Innovative Industrial Properties
Forward-Looking Statements

This press release contains statements that the Company believes to
be "forward-looking statements" within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. All
statements other than historical facts, including, without limitation,
statements regarding the lease of the Pennsylvania property, Vireo
Health and the Pennsylvania medical-use cannabis market, are
forward-looking statements. When used in this press release, words such
as we "expect," "intend," "plan," "estimate," "anticipate," "believe" or
"should" or the negative thereof or similar terminology are generally
intended to identify forward-looking statements. Such forward-looking
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those expressed in, or implied
by, such statements.
Investors should not place undue reliance
upon forward-looking statements. The Company disclaims any obligation to
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.

View Comments and Join the Discussion!