If you are looking for a cannabis-related asset that pays dividends and doesn’t have to do much to maintain its revenues, you might want to check out Innovative Industrial Properties (IIPR).
Innovative Industrial Properties is a real estate investment trust, or REIT. Their business model consists of buying greenhouses in the US used for medical cannabis growers and leasing them out to medical cannabis companies for a 15-year period.
Currently, they own seven facilities: The Pharm (AZ), Holistic Industries (MD), PharmaCann (MA), Vireo Health (MN), PharmaCann (NY), Vireo Health (NY), and Vireo Health (PA).
For their first quarter earnings, the company raked-in $42.1 million in cash on hand in addition to $48.9 million in short-term investments. They are also purportedly viewing up to $100 million worth of properties for further expansion/acquisition.
What makes their business model favorable is that cash flow is expected to remain consistent and predictable. Given the 15-year lease and a relatively low-cost model, the company’s growth prospects remain at the forefront of seeking competitive property acquisitions.
Innovative Industrial Properties also returns most of its operating income to shareholders via nearly 3% dividend. Not only might this be a plus for investors, it also works out as a tax advantage for the company as REITs generally receive favorable tax status.
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