4Front Ventures Corp (FFNTF)

[JohnCM]

IIPR, 4Front Ventures Ink Another Sale-Leaseback Deal Totaling $51.5M

by Jelena Martinovic
March 16, 2021
Benzinga

IIPR, 4Front Ventures Ink Another Sale-Leaseback Deal Totaling $51.5M
Innovative Industrial Properties Inc. (NYSE: IIPR) has agreed to purchase a cannabis cultivation site in Illinois for $6.5 million.

The REIT also secured $45 million in financing to complete a buildout of the facility, which will subsequently be leased back to 4Front Ventures Corp. (CSE:FFNT) (OTCQX:FFNTF) as part of a 20-year agreement with two five-year extension options.

Phoenix-based 4Front will fund some of the construction.

The deal totals some $51.5 million.

The first phase of construction includes the construction of roughly 258,000 square feet of a building, 65,000 square feet of flowering canopy and roughly 70,000 square feet of production space.

More than 240 employees are expected to get hired for the cultivation and production teams.

A 'Simple' Thesis

The "simple" thesis, according to 4Front CEO Leo Gontmakher, is to “bring tried-and-true cultivation and manufacturing methods from Washington State to large adult-use markets like Massachusetts, Illinois and California."

For over a year and a half, the company has been transitioning its three cultivation and manufacturing facilities in Illinois and Massachusetts into the "Washington Way," Gontmakher continued.

Last year, 4Front opted to shake up its management and corporate teams, as evidenced by a series of layoffs in March 2020, to reach positive cash flow.

The company also sold its non-core retail licenses in Maryland and Pennsylvania for $18 million in cash in May to repay down debts to New York-based private equity firm Gotham Green Partners.

Sale Leasebacks

This isn't the first time 4Front has opted for a sale-leaseback deal with IIPR. In December, the two companies finalized a $33 million deal when 4Front sold cultivation and production facilities in Georgetown, Massachusetts and Olympia, Washington.

The property totaled some 181,000 square-feet of industrial space.

Those proceeds were also utilized to pay senior secured debt to Gotham Green Partners.

IIPR is a frequent sale-leaseback dealmaker. Under the helm of CEO Paul Smithers, the San Diego-based firm has orchestrated similar transactions with Columbia Care Inc. (OTCQX:CCHWF), Holistic Industries Inc. and Green Thumb Industries (OTCQX:GTBIF).

IIPR went public on the New York Stock Exchange in 2016. Last June, it raised $225 million through a public offering of its common stock.

Including today's 4Front acquisition, IIPR's portfolio now includes more than 6 million square feet across 17 states.

Benzinga editor Anthony Noto contributed to this report.