Quarterly report pursuant to Section 13 or 15(d)

Real Estate

v3.22.2.2
Real Estate
9 Months Ended
Sep. 30, 2022
Real Estate [Abstract]  
Real Estate Real Estate
As of September 30, 2022, the Company owned 31 properties located in 12 states. The following table presents the Company's real estate portfolio as of September 30, 2022 (dollars in thousands):
Tenant Market Site Type Land Building and Improvements Total Real Estate Accumulated Depreciation Net Real Estate
Acreage Connecticut Dispensary $ 395  $ 534  $ 929  $ (53) $ 876 
Acreage Massachusetts Cultivation 481  9,310  9,791  (816) 8,975 
Acreage Pennsylvania Cultivation 952  9,209  10,161  (778) 9,383 
Ayr Wellness, Inc. Nevada Cultivation 1,002  12,577  13,579  (109) 13,470 
Ayr Wellness, Inc. Pennsylvania Cultivation 2,964  11,565  14,529  (116) 14,413 
Bloom Medicinal Missouri Cultivation 598  11,167  11,765  (50) 11,715 
Calypso Enterprises Pennsylvania Cultivation 1,486  28,514  30,000  (167) 29,833 
Columbia Care California Dispensary 1,082  2,692  3,774  (133) 3,641 
Columbia Care Illinois Dispensary 162  1,053  1,215  (50) 1,165 
Columbia Care Illinois Cultivation 801  10,560  11,361  (508) 10,853 
Columbia Care Massachusetts Dispensary 108  2,212  2,320  (118) 2,202 
Columbia Care Massachusetts Cultivation 1,136  12,690  13,826  (809) 13,017 
Cresco Labs Illinois Cultivation 276  50,456  50,732  (3,921) 46,811 
Curaleaf Connecticut Dispensary 184  2,748  2,932  (141) 2,791 
Curaleaf Florida Cultivation 388  75,595  75,983  (3,626) 72,357 
Curaleaf Illinois Dispensary 69  525  594  (28) 566 
Curaleaf Illinois Dispensary 65  959  1,024  (53) 971 
Curaleaf Illinois Dispensary 606  1,128  1,734  (61) 1,673 
Curaleaf Illinois Dispensary 281  3,072  3,353  (161) 3,192 
Curaleaf North Dakota Dispensary 779  1,395  2,174  (80) 2,094 
Curaleaf Ohio Dispensary 574  2,788  3,362  (170) 3,192 
Curaleaf Pennsylvania Dispensary 877  1,041  1,918  (71) 1,847 
Curaleaf Pennsylvania Dispensary 216  2,011  2,227  (105) 2,122 
Greenlight
'(1)
Arkansas Dispensary 238  1,919  2,157  (101) 2,056 
Mint Arizona Cultivation 2,400  9,032  11,432  —  11,432 
Mint Massachusetts Cultivation 380  1,569  1,949  —  1,949 
Organic Remedies Missouri Cultivation 204  20,615  20,819  (825) 19,994 
PharmaCann Massachusetts Dispensary 411  1,701  2,112  (158) 1,954 
PharmaCann Pennsylvania Dispensary 44  1,271  1,315  (61) 1,254 
Revolutionary Clinics Massachusetts Cultivation 926  41,934  42,860  (1,559) 41,301 
Trulieve Pennsylvania Cultivation 1,061  43,209  44,270  (1,929) 42,341 
Total Real Estate $ 21,146  $ 375,051  $ 396,197  $ (16,757) $ 379,440 
(1) GL Partners, Inc. (Greenlight) took over as tenant however Curaleaf remains the guarantor subject to certain conditions in the lease agreement.
Real Estate Acquisitions
During the nine months ended September 30, 2022, the Company invested approximately $65.4 million to acquire four cultivation facilities. The following table presents the real estate acquisitions for the nine months ended September 30, 2022 (in thousands):
Tenant Market Site Type Closing Date Real Estate Acquisitions
Bloom Medicinal Missouri Cultivation April 1, 2022 $ 7,301 
(1)
Ayr Wellness, Inc. Pennsylvania Cultivation June 30, 2022 14,529 
Ayr Wellness, Inc. Nevada Cultivation June 30, 2022 13,579 
Calypso Enterprises Pennsylvania Cultivation August 5, 2022 30,000 
(2)
Total $ 65,409 
(1)Includes $5.0 million of TI funded at closing of the property.
(2)The Company entered into a $30.0 million mortgage loan on October 29, 2021, which converted to a 20-year sale-leaseback on August 5, 2022.

Tenant Improvements Funded
During the nine months ended September 30, 2022, the Company funded approximately $43.5 million of tenant improvements. The following table presents the tenant improvements funded for the nine months ended September 30, 2022 (in thousands):
Tenant Market Site Type Closing Date TI Funded Unfunded Commitments
Curaleaf Florida Cultivation August 4, 2020 $ 20,983 
(1)
$ — 
Mint Massachusetts Cultivation April 1, 2021 349  — 
(4)
Mint Arizona Cultivation June 24, 2021 5,906 
(2)
3,063 
PharmaCann Massachusetts Dispensary March 17, 2021 25  — 
Trulieve Pennsylvania Cultivation March 17, 2021 7,046 
(3)
— 
Organic Remedies Missouri Cultivation December 20, 2021 4,745  282 
Bloom Medicinal Missouri Cultivation April 1, 2022 4,464  752 
(5)
Ayr Wellness, Inc. Pennsylvania Cultivation June 30, 2022 —  750 
$ 43,518  $ 4,847 
(1)On June 16, 2022, the Company funded the expansion of an existing property.
(2)The tenant has been paying rent on the remaining commitment since July 2022 in accordance with the lease agreement.
(3)The tenant had been paying rent on the TI since December 2021 in accordance with the lease agreement. As of May 2022, the TI had been fully funded.
(4)Does not include approximately $2.7 million of commitments that the Company was released from its' commitment to fund subsequent to September 30, 2022.
(5)The $0.8 million of unfunded commitments does not include a $16.5 million option but not obligation to acquire an adjacent property from an existing tenant.
Disposal of Real Estate
On March 21, 2022, the Company sold one of our PharmaCann Massachusetts properties for approximately $0.8 million. The Company recognized a loss on sale of the property of $60 thousand. The Company continues to collect the rent that would have been received from the PharmaCann Massachusetts property through increased lease payments from each of the remaining properties operated by PharmaCann in our portfolio.
Construction in Progress
Construction in progress was $10.6 million and $13.1 million on September 30, 2022 and December 31, 2021, respectively, and is included in "Buildings and Improvements" in the accompanying consolidated balance sheet.
Depreciation and Amortization
Depreciation expense for the three months ended September 30, 2022 and 2021, was $3.1 million and $2.0 million, respectively and for the nine months ended September 30, 2022 and 2021 it was $7.6 million and $4.5 million, respectively.
Amortization of the Company’s acquired in-place lease intangible assets for the three months ended September 30, 2022 and 2021 was approximately $0.5 million and $0.5 million, respectively and was approximately $1.5 million and $1.1 million, respectively, for the nine months ended September 30, 2022 and 2021. The acquired in-place lease intangible assets have a weighted average remaining amortization period of 11.4 years.
Depreciation and Amortization
The following table presents the future amortization of the Company’s acquired in-place leases as of September 30, 2022 (in thousands):
Year Expense
2022 (three months ending December 31, 2022) $ 503 
2023 2,013 
2024 2,013 
2025 2,013 
2026 2,013 
Thereafter 13,937 
Total $ 22,492 
The following table presents the future contractual minimum rent under the Company’s operating leases as of September 30, 2022 (in thousands):
Year Rent
2022 (three months ending December 31, 2022) $ 12,014 
2023 48,858 
2024 50,153 
2025 51,447 
2026 52,774 
Thereafter 610,900 
Total $ 826,146 
Concentration of Credit Risk
The ability of any of our tenants to honor the terms of its lease are dependent upon the economic, regulatory, competitive, natural and social factors affecting the community in which that tenant operates.
The following table presents the tenants in our portfolio that represented the largest percentage of our total rental income for each of the periods presented:

For the Three Months Ended September 30,
2022 2021
Number of Leases Percentage of Rental Income Number of Leases Percentage of Rental Income
Curaleaf 10 24  % 11 29  %
Cresco Labs 1 14  % 1 19  %
Revolutionary Clinics 1 11  % 1 16  %
Trulieve 1 11  % 1 12  %
Columbia Care 5 % 5 13  %
Acreage 3 % 3 %
Organic Remedies 1 % N/A N/A
AYR 2 % N/A N/A
Calypso 1 % N/A N/A
For the Nine Months Ended September 30,
2022 2021
Number of Leases Percentage of Rental Income Number of Leases Percentage of Rental Income
Curaleaf 10 24  % 11 34  %
Cresco Labs 1 16  % 1 24  %
Revolutionary Clinics 1 13  % 1 %
Trulieve 1 13  % 1 10  %
Columbia Care 5 10  % 5 11  %
Acreage 3 % 3 11  %
Organic Remedies 1 % N/A N/A
Impairment
The Company reviewed tenant activities and changes in the business condition of all of its properties and did not identify the existence of any triggering events or impairment indicators. Accordingly, as of September 30, 2022 and December 31, 2021 no impairment losses were recognized.