AYR Wellness Expands Florida Operations with Strategic Real Estate Partnership
The TDR Three Key Takeaways regarding AYR Wellness:
- AYR Wellness, partnering with Innovative Industrial Properties, has entered into a triple-net lease agreement for a 16-acre property in Ocala, Florida.
- AYR is leasing a 145,000-square-foot industrial space from IIP, with plans to redevelop 98,000 square feet into a state-of-the-art cannabis cultivation facility.
- Anthony Varrell stated that the facility should be operational by mid-2025, which aligns well with potential adult-use legalization in Florida.
AYR Wellness Inc. (CSE: AYR.A, OTCQX: AYRWF), a U.S. multi-state cannabis operator, has secured a major real estate financing deal for its Florida indoor cultivation facility. Partnering with Innovative Industrial Properties, Inc. (NYSE: IIPR), AYR has entered into a triple-net lease agreement for a 16-acre property in Ocala, Florida. This signifies a significant step in AYR’s strategic expansion, enhancing its capacity to meet growing market demands.
Under the terms of the agreement, AYR Wellness is leasing a 145,000-square-foot industrial space from IIP, with plans to redevelop 98,000 square feet into a state-of-the-art cannabis cultivation facility. IIP has committed up to $30 million for the construction, alleviating the financial burden on AYR’s capital expenditure budget. “It’s a lease back on a 145,000-square-foot property of which 98,000 square feet is going to be redeveloped into an indoor grow with IIPR allocating up to $30 million in TI,” stated Anthony Varrell, co-host of the “Trade to Black” podcast. This funding ensures AYR can focus on its core operations without diverting resources to construction costs.
The construction is expected to be completed by mid-2025, aligning perfectly with the anticipated vote on adult-use cannabis legalization in Florida in November 2024. Should the initiative pass, AYR Wellness will be well-positioned to capitalize on the expanded market. “This facility should come online mid-2025, which, if we get adult use in the state of Florida, lines up perfectly with those timelines as they should start producing flowers from it shortly thereafter,” Varrell noted. This timing is crucial as the company aims to cater to the expected surge in demand.
Florida represents the largest medical-use cannabis market in the United States, with regulated sales reaching $2.6 billion in 2023. As of May 2024, the state has over 880,000 qualified patients and more than 2,300 qualified physicians participating in the medical cannabis program. The potential legalization of adult-use cannabis, requiring a 60% approval in the upcoming vote, could further increase the market. AYR’s proactive steps to expand its infrastructure reflect a strategic move to leverage these opportunities.
AYR Wellness operates in eight states, with 18 production facilities and 91 dispensary locations. In Florida alone, the company runs 64 dispensaries and has 745,000 square feet of existing production capacity. This latest expansion underscores AYR’s commitment to strengthening its market presence and enhancing its service offerings. Varrell emphasized the strategic nature of this expansion, saying, “This is needed. I wouldn’t be surprised if you see several other players in Florida bolster their infrastructure ahead of adult use.”
AYR Wellness’s partnership with IIPR secures necessary funding for its Florida cultivation facility and strategically positions the company for potential growth in the adult-use cannabis market. As Varrell aptly said, “IIPR is one of the best in the space.” This collaboration marks a significant milestone in AYR’s ongoing expansion. Want to be updated on all things Psychedelic, Cannabis, AI, and Crypto? Subscribe to our Daily Baked in Newsletter!
