Cannabis Real Estate Investment Trusts to Watch in November 2023
In 2023, the cannabis industry and marijuana stocks continue their remarkable growth trajectory, offering investors an enticing landscape of opportunities. As this burgeoning sector evolves, Cannabis Real Estate Investment Trusts (REITs) have emerged as a compelling avenue for investors seeking long-term stability and growth in their portfolios. In addition, these Cannabis REITs, which primarily focus on leasing properties to cannabis operators, have quickly established themselves as key players in this green revolution.
Cannabis REITs hold significant promise for investors looking to harness the potential of the cannabis industry. With the rapid expansion of both medical and recreational cannabis markets, these REITs have positioned themselves as robust income generators. They offer investors a unique opportunity to partake in the industry’s growth while benefiting from steady cash flow through rental income, a key feature for long-term investors. Additionally, the importance of dividend stocks in diversified portfolios cannot be overstated, as they provide a reliable income stream and the potential for capital appreciation. Also, as the cannabis sector matures, Cannabis REITs are poised to play an increasingly influential role, making them a compelling choice for those eyeing sustainable growth and dividend income in the years to come.
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Cannabis REIT Leaders for November 2023
- Innovative Industrial Properties, Inc. (NYSE: IIPR)
- AFC Gamma, Inc. (NASDAQ: AFCG)
- Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI)
Innovative Industrial Properties, Inc.
Innovative Industrial Properties, Inc. is a cannabis-focused real estate investment company in the United States. The company will soon have 8.7 million square feet of rentable space after receiving an extra 2.5 million square feet. Additionally, with an average lease duration of 16.4 years, most of these buildings are fully leased. The organization currently has 111 locations spread throughout 19 states. IIP had already spent $2.4 billion on property improvements by April. In addition to the estimated $227.1 million in rent payments. The company forecasts a significant growth in portfolio size in 2022 as a result of ongoing real estate acquisitions in Pennsylvania and Massachusetts.
Second Quarter 2023 Financial Results
- Generated total revenues of approximately $76.5 million in the quarter, representing an 8% increase from the prior year’s quarter.
- Recorded net income attributable to common stockholders of approximately $40.9 million for the quarter, or $1.44 per diluted share.
- Recorded adjusted fund from operations (AFFO) of approximately $64.0 million, or $2.26 per diluted share, increases of 6% and 5% from the prior year’s quarter, respectively.
- Paid a quarterly dividend of $1.80 per common share on July 14, 2023 to stockholders of record as of June 30, 2023. The common stock dividends declared for the twelve months ended June 30, 2023 of $7.20 per common share represent an increase of $0.70, or 11%, over dividends declared for the twelve months ended June 30, 2022.
IIPR Stock Performance
On October 31st, IIPR stock closed at $71.83, down 5.06% in the last month of trading. In this case, the stock is trading in a 52-week price range of $63.36-$125.38, down 29.13% year to date.
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AFC Gamma, Inc.
Well-known cannabis ancillary AFC Gamma, Inc. efficiently handles its cash flow and capacity. The company was founded in 2020 and specializes in supply and demand theories, markets for real estate security, and other collateral kinds. First-lien loans, mortgage loans, construction loans, bridge financings, and other unusual kinds of financing are some of AFCG’s specialties. AFC Gamma has recently concentrated its marketing efforts on the rapidly expanding cannabis market. The company granted a $250 million credit line and a $100 million option to Verano Holdings Inc. On October 30th, the company announced the appointment of Daniel Neville as its new Chief Executive Officer, effective November 13, 2023. Most recently, Mr. Neville was the Chief Financial Officer for Ascend Wellness Holdings, Inc. (“AWH”), a leading multi-state, vertically integrated cannabis operator.
Second Quarter 2023 Financial Highlights
- Second quarter GAAP net income of $12.1 million or $0.59 per basic weighted average common share and Distributable Earnings(1) of $9.9 million or $0.49 per basic weighted average common share
- Declared dividend of $0.48 per common share for second quarter 2023
AFCG Stock Performance
On October 31st, AFCG shares closed at $10.58, a 9.88% decrease from the previous trading month. In this case, the stock, which has a price range of $9.91 to $17.72, is down 32.74% year to date.
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Chicago Atlantic Real Estate Finance, Inc.
Chicago Atlantic Real Estate Finance, Inc. is a market-leading commercial mortgage REIT that originates senior secured loans primarily to state-licensed cannabis operators in limited-license states across the United States. REFI is a member of the Chicago Atlantic platform, which employs more than 50 people and has disbursed more than $1.8 billion in loans.
Second Quarter 2023 Financial Results
In the second quarter of 2023, the company experienced a decrease in net interest income, amounting to approximately $13.7 million, marking an 8.3% decline. This decline was attributed to the timing of early principal repayments and lower average principal outstanding during the quarter. Furthermore, placing one loan on non-accrual status accounted for a $0.6 million decrease. However, some of these losses were offset by approximately $0.6 million in interest income from prepayment fees and a reduction in weighted average borrowings on the revolving credit facility. Total expenses saw a sequential decrease of 5.8%, primarily due to reduced net management and incentive fees, amounting to approximately $3.9 million.
Concurrently, the company’s total reserve for current expected credit losses increased by $1.1 million, reaching $5.2 million, equivalent to about 1.6% of the $318.0 million portfolio principal balance as of June 30, 2023. Distributable earnings for the period amounted to approximately $10.1 million, or $0.55 per weighted average diluted common share, representing an 11.3% sequential decrease. Despite the decrease, the book value per common share increased from $15.04 to $15.06 due to second-quarter distributable earnings exceeding the regular quarterly dividend of $0.47, although offset by the increased provision for current expected credit losses. The company maintained a leverage ratio of approximately 16%, with $43.0 million outstanding on its $100.0 million secured credit facility as of June 30, 2023.
Dividends
On July 14, 2023, Chicago Atlantic paid a regular quarterly cash dividend of $0.47 per share of common stock for the second quarter of 2023 to common stockholders of record on June 30, 2023.
REFI Stock Performance
On October 31st, REFI stock closed at $14.09, down 4.28% in the last month of trading. In this case, the stock is currently trading in a 52-week price range of $12.91-$16.50, down 6.50% year to date.
Stay Informed: Cannabis REITs Worth Tracking in November 2023
In conclusion, the cannabis industry is undergoing an exciting transformation. As we enter November 2023, Cannabis Real Estate Investment Trusts (REITs) are poised for a significant role in this landscape. With a focus on property leasing to cannabis operators, these REITs offer investors an avenue into the industry’s growth. At the same time, they enjoy steady income streams through rental revenue. As highlighted in our list of the “Top Cannabis REITs to Watch in November 2023,” real estate investment trusts allow investors to participate in the flourishing cannabis sector, making them a prime choice for those seeking long-term stability and dividend income.
In an era where diversification and the importance of dividend stocks are paramount. Cannabis REITs present a blend of growth potential and financial security. Overall, as you explore these top picks for November 2023, remember that the cannabis industry’s evolution offers significant investment potential. Also, Cannabis REITs are positioning to be players in this thriving market. Whether you’re a seasoned investor or beginning your journey, REITs represent an opportunity to align your portfolio with one of the most dynamic industries of our time.
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