Parallel Sells Pittsburgh Warehouse in $68M Sale-Leaseback Transaction

Parallel, a multi-state cannabis operator, sold its Pittsburgh warehouse to an affiliate of Innovative Industrial Properties in a sale-leaseback transaction.

Parallel entered into a long-term lease agreement with Innovative Industrial Properties as part of the deal, valued at approximately $68 million.

This is the fourth sale-leaseback transaction, totaling approximately $195 million in deal value that Parallel has completed with IIP.

“The collaboration with IIP supports our growth in Florida, Texas, and now Pennsylvania and helps us advance our mission to improve the quality of life through cannabinoids,” said William Wrigley Jr., Chairman and CEO for Parallel, in a prepared statement. “Completion of our growing and processing facility is an important step as we enter the growing Pennsylvania cannabis market.”

Parallel says it will use the proceeds from the transaction to complete the initial build-out of a warehouse in Pittsburgh. That facility will be used as Pennsylvania’s cannabis growing and processing facility for its retail brand, goodblend, when it is expected to begin operations in mid-2021.

After phase one of the renovation is completed, the Pittsburgh warehouse will have approximately 124,000 square feet of usable space, with an additional 36,000 square feet available for future expansion.

This year, goodblend, one of eight vertically integrated clinical registrants in Pennsylvania, intends to open its growing and processing facility. It also wants to open two approved retail facilities in Pittsburgh and Erie, and will work to identify and open four additional allowed retail locations. The state’s medical marijuana program has more than 425,000 registered patients.

The medical marijuana space offers significant upside for net lease investors, according to a recent commentary that Will Wamble, first vice president of SRS Real Estate Partners’ National Net Lease Group, wrote for GlobeSt.com.

According to Wamble, the legal cannabis market grew about 45 percent in 2020, and US cannabinoid sales are expected to top $24 billion in 2021, according to BDSA, a cannabis market research firm. His team sold multiple properties occupied by medical marijuana tenants.

“When marketing these assets, what many of the potential buyers are surprised to learn is that for the most part, retail operators in the cannabis industry are sophisticated companies with in excess of 100 retail locations—and some are publicly traded on the Canadian stock exchange,” Wamble wrote.