Cannabis Property Funds Control Over $4.5B: Are Investors Missing Out On High Dividend Stocks?
With increasing state-level legalizations, real estate investment trusts (REITs) such as Innovative Industrial Properties, Inc. (NYSE: IIPR) NewLake Capital Partners, Inc. (OTCQX: NLCP) and Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI) are funds that provide capital, navigating the dissonance between state and federal laws.
Brad Thomas, real estate analyst and author of “REITs For Dummies,” discusses the valuation of these stocks and the role REITs play in the cannabis industry.
The aggregate financial engagement (considering committed capital and equivalent significant activities) between Innovative Industrial Properties and Chicago Atlantic is approximately $4.5 billion.
Industrial Cannabis Properties Growth
Thomas explained Innovative Industrial Properties expanded its property count from 11 to 108 from 2018 to 2023. The company specializes in long-term, triple-net lease agreements and increased its committed capital from $167.4 million to $2.4 billion during this period.
Its FFO increased by 31% in 2021 and 24% in 2022, yet the P/FFO ratio is currently 13.07x, compared to the industrial average of 17.42x.
This means that despite the cannabis real estate fund showing strong financial performance with significant growth in Funds From Operations (FFO), it is …