Canadian LP. Acquisition of State-of-the-Art Cannabis Cultivation and Processing Facility Announced

LOS ANGELES– After months of negotiations, a purchase agreement has been signed for the acquisition of a prominent indoor cannabis cultivation and processing facility from a public Canadian LP. The facility is considered one of the largest and most advanced of its kind, boasting an impressive 1.7 million square feet in total, comprising 1.4 million square feet of advanced light deprivation greenhouses and an additional 300,000 square feet of warehouse space. It comes equipped with a 50-megawatt power station, with the potential to expand to 100 megawatts. The facility is strategically designed to accommodate 38 bays, each spanning 30,000 square feet and capable of producing an estimated 10,000 pounds of flower annually.

Having invested over $200 million USD into the development of this facility, the company plans to operationalize the first six bays, which are nearing completion, with the objective of generating cash flow within the initial 10-12 months. Following this, they intend to construct an additional 18 bays out of the total 38 and lease the remaining space. The facility underwent an appraisal last year, valuing it at $66 million USD. However, recent changes in cap rates have led the appraiser to believe that the unfinished facility’s current value is close to $88 million USD. Once fully operational and occupied, the facility is estimated to be worth between $120 million and $130 million USD.

The purchase price is considerably below the appraised value, providing a lucrative investment opportunity. As the acquisition includes the company that owns the real estate, the buyers will also gain access to more than $200 million in carry-forward losses, which can be used to offset future tax liabilities, further adding to the potential upside of this real estate investment. The transaction is seeking equity investors to raise $10 million for the closing, offering a 70% stake in RealCo to investors, along with a 7% annual cap rate (approximately $2.5 million in income) once debt service commences in the second year.

The company expects to finalize the deal within the next 30 days, having been working diligently with legal teams from both the United States and Canada for the past 11 months. A video showcasing the scale and magnitude of the facility has been made available for investors to gain insights into this promising venture.