The Property was acquired all cash on September 17th, 2024. Rainbow’s total consideration for the property purchase, reserves and tenant improvements was up to $2,300,000. The first year’s rent on the 15-year lease represents an unlevered 14% cap rate to Rainbow. The absolute triple-net lease has 3% annual rent bumps. In the future Rainbow may seek leverage against the Property, to further enhance its unlevered returns.
The Tenant at the Property is a licensed cannabis cultivator in the state of New Jersey who has been occupying the Property since 2019. The Tenant has invested more than $1,000,000 into retrofitting the Property with high-tech cannabis cultivation equipment, including a brand-new power upgrade. Due to constrained supply in New Jersey, wholesale marijuana prices are some of the highest in the country.
Kyle Shenfeld, Rainbow Realty Group CEO, stated: “We are pleased to close another core real estate transaction occupied by a well-positioned cannabis company. The Property, located in Ewing, NJ, is suitable for a wide variety of industrial users. Rainbow’s Tenant – a savvy women-owned operation – has invested significant capital into upgrading the Property for cannabis cultivation. Due to the limited number of high-quality indoor cultivators in the state of New Jersey, our Tenant will be able to sell high-quality craft cannabis at an excellent price point.”
Rainbow Realty Group IV, LLC (“Fund IV”) is Rainbow’s fourth fund in the nascent market of cannabis-related real estate finance. Fund IV held its first closing in June and is currently earning a blended 18% cash on cash return, on an unlevered basis. Fund IV has funded three transactions thus far (including the Property above), with several more in its upcoming pipeline. Fund IV will be taking on new investors through the end of 2024. To learn more about Fund IV, please review the Fund IV Offering Information or email jack@rainbowrg.com.
About Rainbow Realty Group
Rainbow Realty Group and its affiliates have deployed $160 million in cannabis-related retail and industrial real property throughout the United States. Rainbow offers sale-leaseback and mortgage financing, with an existing portfolio of 62 properties across 12 states. Rainbow’s largest investor and operating partner, Gould Investors L.P., (“Gould”) has invested in the real estate industry for 64 years and currently manages $2B+ in assets. Gould is a significant shareholder in BRT Apartments and One Liberty Properties. For additional information, please visithttps://rainbowrg.com/
