Target Capital (CBi2) has launched Industrial Lifestyle Properties Real Estate Investment Trust (iLP), a newly formed, self-advised, open-ended REIT focused on the acquisition, development, ownership and management of specialized cultivation facilities, industrial properties and real estate for the legal cannabis industry.
CBi2 will provide iLP with up to $1 million of capital through an equity commitment, and iLP will use the proceeds to make strategic deposits on property acquisitions and for working capital and general corporate purposes. Prior to, or concurrent with, acquiring its first cannabis property, iLP is expected to become publicly listed.
At present, cannabis market participants have limited access to traditional forms of asset-based financing and have primarily raised capital by way of equity issuances at the expense of diluting existing shareholders. iLP will provide non-dilutive capital to the cannabis market through sales-leaseback transactions and plans to secure contracts with tenants and properties under triple-net lease terms. iLP’s structure will allow cannabis operators to unlock capital and redeploy it into higher return activities and will provide cannabis investors yield underpinned by a secured cash flow profile.
CBi2 has a detailed business plan, developed in consultation with a national law firm with expertise in real estate investment trusts. Management believes there is significant demand for this type of structure within the cannabis industry — both among cannabis operators and cannabis investors.
CBi2’s team has knowledge and experience designing state-of-the-art cultivation facilities and navigating the industry’s licensing process and regulatory framework. CBi2 is expected to encourage deal flow and evaluate transaction opportunities on behalf of iLP. Leading iLP’s senior management team will be David McGorman as the company’s managing partner. McGorman is currently a managing director with Black Spruce Merchant Capital and, previously, was president and CEO of Jennings Capital. McGorman has more than 25 years of investment banking experience and, during his tenure with The Chase Manhattan Bank, was also involved in a number of real estate transactions. Together with CBi2, McGorman will build out a complete team of legal, finance and real estate professional to manage iLP’s operations.
CBi2’s investment in iLP presents its shareholders with a material equity position in a start-up cannabis real estate investment trust — the first of its kind in Canada. This transaction was built off the strength of CBi2’s merchant banking skills and provides CBi2’s investors a unique position in the cannabis space. As early entrants into the marketplace, CBi2 expects this transaction to deliver superior returns that are consistent with its overall investment strategy.
