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Real estate is still a major challenge for cannabis operators. Many landlords are unwilling to rent to marijuana companies because of the restrictions on locations in legal markets. Real estate investment trusts have helped overcome this obstacle by helping to find the right location.

According to data from Cannabiz Media. According to deal value, Innovative Industrial Properties (NYSE : IIPR) is the clear winner. Its deal value is $2.2 billion.

NewLake Capital Partners follows with $400 million of booked deals. AFC Gamma, NASDAQ: AFCG, is a distant third with a deal value of $100 million.

IIP is also the leader in terms of number of deals with 65. NewLake Partners maintains its second-place standing with 25 deals. Power REIT, however, jumps ahead of AFC Gamma by 15 deals to five.

Cannabiz Media reported that there were no deals in the fourth quarter 2023 or the first quarter 2024. NewLake Capital Partners ended this drought in the second half of 2024, with a deal worth $16 million. AFC Gamma announced in August that it had closed a senior secured credit facility with a private company.

A closer look

Innovative Industrial Properties

IIP has 30 clients in 19 states. It is the only REIT listed on the New York Stock Exchange to provide real estate capital for cannabis companies. The top three states for the company are:

• Michigan, 14 properties
• Massachusetts, 10
• Pennsylvania, 10

PharmaCann is the largest tenant, leasing 697,000 square foot for $48,000,000 in annualized base rental (ABR). Ascend Wellness leases 624,000 sq ft for $30 million ABR while Green Thumb Industries offers $21 million ABR on 664,000 sq ft.

IIP’s last earnings announcement told investors that despite the positive statistics its clients were not immune to the pressures of the industry. These included a strong illegal market, increased labor cost and a decline in cannabis prices. IIP reported an increase in rental income this past quarter, but also noted a loss of rent on a property it had to return.

The REIT has amended its leases with 4Front Ventures this year due to construction delays occurring in Illinois. It also reduced the base rental for the company. PharmaCann, Battle Green Holdings and other companies also received amendments. It also signed long-term leases for Gold Flora and Lume Cannabis.

IIP reported a compound annual growth rate of 54% for its adjusted funds generated from operations (AFFO), per diluted share, between 2017 and 2023. The average AFFO payout was 85%.

NewLake Capital Partners

According to the latest investor presentation of NewLake Capital Partners, it has 32 properties in twelve states that are 100% leased. The top three states for NewLake Capital Partners are, in order: Pennsylvania, Florida, and Illinois.

The top three clients of NewLake are Curaleaf (23,8%), which has 462,000 sq. ft. leased, Cresco Labs (13,6%), with a lease covering 222,455 sq. ft., and Trulieve (11,6%), with a lease covering 144 602 sq. ft. The Cannbist is another NewLake customer with five leases, but only 83,188 sq. ft.

Rental income for six months ending on June 30 increased by about $2 million to $24.4million, compared with $22.3million for the same period of 2023.

Despite the fact that the company had previously reported some problematic clients, it appears that they have been eliminated from the system. Clients appear to be more stable in 2024.

AFC Gamma

AFC Gamma (also known as Advanced Flower Capital) operates in 15 states and has 12 loans to clients. The company is very selective in its clientele and has rejected 795 deals. However, it did not say why.

The company does disclose its client base. Instead, it uses generic descriptions like Private Company A. AFC Gamma also does not provide AFFO information.

August is the month of August. AFC Gamma closed AFC announced that it had committed $11million, with $4.3million funded at closing, to a senior secured loan facility for the company. The company holds a Class 2-cannabis license.

AFC also announced that it had committed an additional $5 million to the expansion of BeLeaf’s facility, and held the entire $26.1-million expanded credit facility. AFC announced that it had committed an extra $1.8 million to the expansion of Sunburn’s credit facility, and held the entire $36.5 Million expanded credit facility.