Ganja REIT Specializing In Financing Marijuana Farms Becomes The Best Performing REIT In The USA
Innovative Industrial Properties Inc. specializes in financing Ganja related properties. The company has tapped into a niche market conservative Wall Street has traditionally run from. Yet, Innovative’s Ganja REIT has become the best-performing real estate investment trust in the United States.
The potential of the marijuana industry has transformed Innovative into the best-performing American based REIT in the past 12 months. Shares have risen as much as 5.3% in the past 12 months.
Innovative also offers America’s only publicly traded Ganja REIT. The company owns properties in eight states where its tenants produce cannabis products.
The federal government classifies Marijuana as a Schedule I controlled substance as it does with heroin. However, marijuana it’s legal under state law everywhere Innovative operates.
That often means growers can’t find space with regular landlords. Therefore, Innovative has little competition and can charge higher rents.
Innovative is technically an industrial REIT. It is exempt from paying taxes as long as it passes most of its profits on to shareholders.
The Risks Involved In Investing In A Ganja REIT
Innovative Industrial Properties Inc. warns investors in its regulatory filings of the risks involved in investing in a Ganja REIT.
The company warns investors that the U.S. Justice Department could decide to go after cannabis-related businesses. They also warn the IRS could question the company’s REIT status.
These warnings would give pause to even the boldest investors.
Yet, none of that has deterred investors. Innovative has returned a 117% ROI in the last 12 months. The company’s REITs also yield an average of 15.7% across its nine properties. The San Diego-based company just had its fourth funding round in October and had its initial public offering, raising $119.6 million, with the bulk of that coming from retail investors.
Innovative stated that the company has not requested and doesn’t intend to request a ruling from the IRS on its REIT status.
Innovative CFO Catherine Hastings told Bloomberg:
The interest keeps improving over time but we’re still technically breaking federal law. There are a lot of institutional investors when looking at their risk criteria that are still hesitant to invest even though we’re on the New York Stock Exchange.