The Treehouse Real Estate Investment Trust, Inc., a.k.a the Treehouse REIT, was formed in fall of 2018 to capitalize on the acquisition, ownership, and management of regulated adult-use and medical-use cannabis facilities, joining a handful of established marijuana-focused real estate REITS including publicly-traded Innovative Industrial Properties, Inc. (NYSE:IIPR) (FRA:1IK), the private Inception REIT, and more.
“REITS allow anyone to invest in portfolios of real estate assets the same way they invest in other industries – through the purchase of individual company stock or through a mutual fund or exchange traded fund,” according to the National Association of Real Estate Investment Trusts.
Seeded by the purchase of a significant portion of MedMen Enterprises Inc.’s (CSE:MMEN) (OTC:MMNFF) (FRA:A2JM6N) real estate assets, the initial transaction included three properties for over $12.5 million.
Then in March, Treehouse Real Estate Investment Trust, Inc. purchased a retail storefront in Las Vegas, Nevada and a cultivation, manufacturing, and production facility in Desert Hot Springs, California from MedMen for over $33.5 million.
Treehouse leases these properties back to MedMen or its subsidiaries at market rates under long-term leases, providing a win-win situation for both parties.
Over the two transactions, MedMen was able to free up nearly $49 million in capital to reinvest in non-real estate initiatives while Treehouse was able to scoop up some valuable cannabis-zoned real estate and long-term tenants to provide returns for its investors.
Now, to fuel its growth, Treehouse Real Estate Investment Trust, Inc. closed on nearly $16 million in debt financing from a large, federally insured and regulated commercial bank. The commitment carries a 5.6% interest rate and provides for a revolving facility for future notes as Treehouse continues acquiring cannabis-use properties.
“Treehouse is excited to announce that we have successfully procured federally insured commercial bank financing,” said Brian Kabot, Stable Road Capital Chief Investment Officer and Treehouse Board Member. “The capital relationship allows us to continue executing cannabis-related real estate acquisitions in a scaled, non-dilutive manner that is most accretive to our investors. We are witnessing federally regulated lenders enter the cannabis space and we are thrilled to be at the forefront of those efforts.”
Treehouse intends to use the proceeds from the facility to fund additional cannabis real estate acquisitions across the United States, which is estimated to generate $80 billion in cannabis sales by 2030 according to Cowen.
More specifically, the company will seek to continue acquiring real estate across several recreational and medical cannabis states, including Arizona, California, Florida, Illinois, Massachusetts, Michigan, New York, and Nevada, with a focus on retail space.
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