UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement.
On December 11, 2020, IIP-NY 1 LLC (“Landlord”), a wholly owned subsidiary of IIP Operating Partnership, LP (the “Operating Partnership”), the operating partnership subsidiary of Innovative Industrial Properties, Inc. (the “Company”), entered into an amended and restated lease (the “Amended Lease”) with PharmaCann Inc. (“PharmaCann”), as tenant, for the property located at 14 Hudson Crossing Drive in Hamptonburgh, New York (the “Property”).
The Amended Lease, among other things, (i) extends the term to December 31, 2040, with two options to extend the term of the Amended Lease for two additional five-year periods; (ii) adjusts the base rent as set forth in Exhibit F of the Amended Lease; and (iii) increases the security deposit from $2,112,474 to $2,151,875, subject to phase in based on reimbursements of costs under the Development Agreement (as defined below). The Amended Lease also terminates the guaranties previously executed by subsidiaries of PharmaCann and eliminates the obligation that any affiliate entities of PharmaCann execute additional guaranties during the term of the Amended Lease; provided however, that in connection with any “permitted transfer” (as defined in the Amended Lease) of the Amended Lease, the ultimate parent company of the “permitted transferee” (as defined in the Amended Lease) shall be required to execute a guaranty of the Amended Lease. The Amended Lease continues to provide that Tenant is responsible for paying all structural repairs and replacements, maintenance expenses, insurance and taxes related to the Property.
Also on December 11, 2020, PharmaCann, Landlord and the Operating Partnership entered into a Development Agreement (the “Development Agreement”), pursuant to which Tenant is responsible for the construction of certain improvements for the cultivation and processing facility on the Property. Pursuant to the Development Agreement, Landlord is obligated to reimburse Tenant for costs of the improvements of up to $31.0 million, subject to the satisfaction of certain conditions contained therein.
Also on December 11, 2020, each of IIP-IL 3 LLC, IIP-MA 1 LLC, IIP-OH 1 LLC and IIP-PA 4 LLC, as landlord and a wholly owned subsidiary of the Operating Partnership, entered into an amendment of the lease with PharmaCann or a subsidiary of PharmaCann, as tenant, for certain properties located in Illinois, Massachusetts, Ohio and Pennsylvania, respectively (collectively, the “Lease Amendments”). Pursuant to each of the Lease Amendments, (i) PharmaCann continues to be a guarantor of the lease where PharmaCann is not the tenant; and (ii) the guaranties previously executed by subsidiaries of PharmaCann are terminated and the obligation that any affiliate entities of PharmaCann execute additional guaranties during the term of the lease is eliminated; provided however, that in connection with any “permitted transfer” (as defined in the lease) of the applicable lease, the ultimate parent company of the “permitted transferee” (as defined in the lease) shall be required to execute a guaranty of the lease.
The foregoing descriptions of the Amended Lease, the Development Agreement and the Lease Amendments do not purport to be complete and are qualified in their entirety by reference to the complete text of the Amended Lease, the Development Agreement and the Lease Amendments, which are filed as exhibits to this report and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: December 14, 2020 | INNOVATIVE INDUSTRIAL PROPERTIES, INC. | |
| By: | /s/ Catherine Hastings | |
| Name: | Catherine Hastings | |
| Title: | Chief Financial Officer, Chief Accounting Officer and Treasurer | |