Q4 2019 Earnings Call

We will open.

And up the line for questions after our prepared remarks. I will now turn the call over to Alan.

Thank you, Brian and welcome everyone today. We look forward to recapping what has really been a transformational year for our company first. Please remember that 2019 wage represented just or third year of operations at the end of 2018. We started with a base of 11 properties. We then acquired 35 new properties in 2019 month in addition to five properties and the first two months of 2020 these transactions represented both follow-on transactions with our existing tended Partners to facilitate their continued expansion and new tenant relationships from January 1st, 2019 through today. We have grown or total portfolio in terms of committed Investments by well over 300%

As of today, we own fifty-one properties in 15 states, totaling 3.2 million square feet which are 99% leased on a long-term basis to high-quality Choice cannabis operators Blended yield on these properties is 13.3% with a weighted average remaining lease term of 15.6 years. You've been Regan or vice president of investments will discuss our recent acquisitions in more detail and our overall portfolio.

We paid accordingly common stock dividend of a dollar per share to stockholders on January fifteen representing 186% increase over a fourth quarter. 2018. This is a testament to our portfolios operating performance and our confidence in the strength of our existing portfolio and our pipeline of acquisitions.

This dividend was also supported by our tremendous 250% growth year-over-year in rental Revenue. Net income and a f f o during the fourth quarter month which to note only partially reflects the 15 Acquisitions completed during the quarter and does not take into account at all. The five Acquisitions be completed in the first two months wage 2020 which together with lease amendments for additional 10 improvements at existing properties during that time represent over three hundred million dollars of additional Investments.

Catherine Hastings or

CFO will also provide more detail regarding our financial results.

The medical use cannabis industry continues to experience tremendous growth and change and Paul Smithers. Our CEO will provide some detail on the industry wage regulatory Trends in our call today.

Finally as announced in December we continue to make great additions to our team most recently with the appointment of Mary current as a member of our board of directors Mary brings a wealth of experience in executive leadership positions in the finance industry, and we are thrilled to bring her insight and perspective into our boardroom. In addition to our membership on the board's audit nominating committees. We continue to be very optimistic about the future of this nation industry and our ability to deliver results for our stakeholders and enduring value to our tenant partners by providing tailored Real Estate Solutions that make key operational and capital needs now with that. I'd like to turn the call over to Paul Paul.

Thanks. Allen has with.

Calls will try to provide as effective and overview as we can focusing in on two main topics one the current regulatory environment and to the Dynamics of the industry wage developments that we continue to monitor closely first regarding the current federal regulatory environment and legislative developments, of course cannabis remains is schedule one controlled substance, which generally prohibits all cannabis use in cannabis-related commercial activity in the United States that said Congress has continued to enact spending Bill since 2014 with a project that has been interpreted by courts as preventing the Department of Justice from using funds to interfere with the implementation of State Medical used cannabis laws that provision was again in clubs in this year's Congressional spending bill passed in late December which carries through to September 30th 2020.

In addition as we reported earlier the secure and fair enforcement Banking Act also known as the safe Banking Act was passed by the house in late September with resounding support, you know, both of 321-2103. The legislation is now with the Senate Banking Committee where it has been for some months and facing more opposition.

As We Know

Previously the state Banking Act. If it became law would provide greater Federal Protection to Banks servicing state license and plant operators and may also result in Banks being more open to walk in debt Capital to these operators.

In other Congressional developments the house Judiciary Committee in November approved the marijuana opportunity reinvestment and expungement act or the more act by a vote of 24 to 10 off. The more would be schedule cannabis from the Controlled Substances Act require federal courts to expunge prior cannabis-related convictions and establish a federal sales tax on cannabis projects with proceeds to fund certain social justice initiatives. The more Act is the ambitious in scope and if it does reach the house for a full boat and passes we expect them to meet with very significant opposition in the Senate as you can see the movement continues forward regarding Federal legalization and addressing key concerns at the industry.

Now from a state level.

No perspective currently 33 states have legalized cannabis for medical use with 11 states having introduced adult use programs.

At the outset 2020 has the potential to be another year of significant development for the industry in the remaining States. According to New Frontier data as 2020 began with nineteen states were actively debating reform policies eleven states with active medical cannabis programs were considering introducing regulated adult use programs and another eight stage. We're considering adoption of medical use cannabis programs. We are following these legislative and ballot initiatives closely and are and are excited to see the continued momentum of the industry wage and state authorities moving in the direction of the clear will of the constituents with poles of US citizens indicating 90% plus support for medical cannabis legalization and not support for adult use cannabis legalization.

I also want to touch on.

And other industry developments that are we are monitoring closely vaping as we discuss on our call and November there have been a large number of reported lung injury cases associated with vaping products reported it to the CDC 2758 cases as of February 4th, the FDA and CDC have made some progress in in identifying the causes of the lung injuries citing that vitamin E acetate is strongly linked to the lung injury cases the CDC further noted that findings indicate that The Vaping products containing THC particularly. Those obtained illicitly were linked to most of the cases the CDC further noted that after a sharp rise in cases in August wage and teaching in September of last year. There has been a gradual but persistent decline since then signing a few potential driving factors, including the removal of vitamin E.

from some products

And enhanced law enforcement actions related to a list of products. We remain hopeful that authorities will be able to definitively identify the source of these injuries as soon as possible for the protection of the public and move quickly to remove those products from the market and that this will further push the industry away from illicit potential unsafe products to the regulated cannabis markets where products are generally subject to robust Laboratory Testing and quality and safety requirements as we discussed previously as well states have taken different approaches to addressing this page concerned for example in Massachusetts state authorities initiated a temporary ban in September on all vaping products and then decided to lift the ban for cannabis bath products and December with stipulations requiring additional testing for substances such as Vitamin acetate.

We continue to monitor the situation closely and we are in contact with our tenants regarding the impacts of baking bands and other related restrictions have had and are having on their businesses off on a macro-level aren't you estimated that monthly regulated cannabis Vape sales declined from an all-time high of $160 in August to about 119 million dollars in October, but then stabilized somewhat through the balance of 2019.

Capital Market

Gets we also addressed on our last call our views of the current capital raising environment for the regulated cannabis industry noting certain headwinds facing the industry including vaping concerning challenges in Canada with respect to the rule out of its adult used cannabis program and public Equity markets pull back for cannabis companies.

Based on data from Meridian Capital through a total of 530 Capital raises in 2019 for private and public cannabis operators raising approximately 11.3 billion dollars compared to 609 Capital raises in 2018 raising fourteen point two billion dollars 2019. Also witnessed a decline a m&a activity with 294 public and private m&a transactions completed in 2019 versus 325 transactions completed in 2018.

As we discussed on our last call.

We do expect the Cannabis industry to remain Capital constrained as we progress through 2020. But of course remained firm Believers in the tremendous growth opportunities and long-term Outlook off an industry that is still in its very early stages. We remain steadfast in our commitment as a long-term real estate Capital provider to Aid our tenant Partners as they grow their companies. We would also note that even faced with these headwinds the US regulated cannabis industry continues, its tremendous growth trajectory with 34% year-over-year growth in 2019 with 2/12 billion dollars in revenues consolidation month.

We've also been monitoring the continued consolidation of the Cannabis industry as larger multi-state operators continue to acquire new licenses and businesses in addition to mergers between a multi-state operators themselves. We believe this trend will continue if not accelerate as companies with strong capital resources and a national footprint seek to continue to wage their businesses and team with smaller operators with complementary Brands and Footprints. The consolidation is also likely to be driven by Capital markets and constraints as operators looking to achieve further efficiencies of scale in their operations through combinations and certain operators with depressed valuations become attractive targets for better capitalized companies.

at the same time we do continue to see ample space for

Smaller independent operators with strong ties to local communities to continue to thrive in the industry. Then we'll discuss our recent acquisitions and leasing activity where we continue to partner with some of them leading multi-state operators in the nation. I'll now turn the call over to Ben will walk you through our recent acquisitions been.

Thanks, Paul. Allen alluded to our acquisition momentum continued to accelerate in the fourth quarter of 2019 and into this year capping off a truly transformational 2019 for our company. That's October 1st. We have acquired 20 properties in eight states and executed five lease amendments with tenants that existing properties as it continued to build further capacity to meet demand for their products off of today. We own 51 properties across fifteen States representing approximately 3.2 million square feet including approximately 871000 square feet under development or Redevelopment.

Consistent with our prior call. I plan to touch on each of our recent acquisitions by state and also provide some information about each tenant and our portfolio overall in that state.

Starting with Illinois. We were very active over the last four months originally entering the state with our acquisition and least to ascend Wellness in late 2018. And then further amending our lease with them in September to provide an additional eight million in capital for tenant improvements at the property which is partially and anticipation of required additional capacity to meet demand for the Illinois adult used cannabis program that commenced same last month as discussed on our last call as well in October. We acquired two more properties in Illinois. Totally ninety thousand square feet of industrial space and entered into long-term leases for each property with Cresco Labs with our total investment in the acquisition and tenant improvements at the properties expected to be 46.6 billion in the aggregate.

Cresco Labs is one of the largest vertically integrated cannabis operators in the United States last month Cresco executed on a senior secured Term Loan for an initial principal amount of a hundred million dollars off and closed on its acquisition of origin house making Cresco one of the largest Wholesale Distributors in California selling into over 575 dispensaries, representing approximately 65% of California storefront dispensaries.

in October, we acquired a 70,000 square-foot industrial property in Illinois and entered into a long-term lease with Grassroots with our total investment in the acquisition and tenant improvements at the property including a plan the 50,000 square foot expansion expected to be about twenty eight point two million dollars Grassroots is one of the leading multi-state cannabis operators with operations and eleven States and signed a definitive agreement last year to be acquired by curaleaf, which is expected to close in the spring of this year according to curaleaf

Finally in October. We acquired a 48,000 square-foot industrial property in Illinois and entered into a long-term lease with Pharma can with our total investment in the acquisition and tenant improvements at the property including a planned 18,000 square foot expansion expected to be twenty-five million dollars, as you know, our first acquisition in 2016 with a sale leaseback transaction with Pharma can for their cultivation and processing facility in New York are transaction with Pharma Canton, Illinois marks r v property acquisition and lease with them including transactions for their license cannabis cultivation and processing facilities to chusetts New York, Ohio and Pennsylvania are total investment in properties least two pharmacann including commitments to fund future tenant improvements or construction is 130000.5 million.

as of today

We own five properties in Illinois in our total investment including committed funding for future tenant improvements is over $115, which does not include the additional 15.9 million which may be requested by Grassroots at our Litchfield property. We are very pleased with this group of strong multi-state operators and are excited for the future of the regulated cannabis industry in Illinois. But the medical cannabis program expanding rapidly through the relaxation of certain regulations and introduction of new qualifying medical conditions. In addition, Illinois had first sales of adult used cannabis at the beginning of the year registering sales on the first day under the regulated program of nearly three point two million dollars marketing a truly tremendous start.

We now move on to Pennsylvania in November. We acquired a property in Pennsylvania and entered into a long-term lease with green thumb Industries representing a total expected investment by us off an allowance for improvements to the property to significantly enhance production capacity of approximately 39.6 million dollars. This marked our first transaction the GTI, a multi-state operator that operates 13 cannabis manufacturing facilities in ninety-six retail locations across 12 us markets. We are thrilled to be a long-term real estate Capital Partner the GTI, and we followed this transaction with another transaction for gti's cannabis processing facility in Ohio, which I will touch on later.

In December, we expanded our relationship with Grassroots through the acquisition of a 72,000 square-foot cultivation and processing facility with our total investment expected to be approximately 25.1 million month including an allowance for additional tenant improvements at the property this marked our third transaction with Grassroots having acquired Grassroots, Illinois facility in October as I discussed and Grassroots North Dakota facility concurrently with this acquisition. I will touch on later.

And in January we executed a lease Amendment with our tenant Bureau Health to provide an additional four point five million in tenant improvements headed Scranton cultivation and processing facility to further enhance production capacity.

As of today, we own six properties in Pennsylvania and our total investment in the market including committed allowance for future tenant improvements is 140 million Pennsylvania's medical use cannabis wage has grown tremendously in a very short period of time with first sales commencing in 2018 as we've seen with other states that program has also expanded its reach over time including condition of five new qualifying conditions in just its first two years of operations. Pennsylvania's medical cannabis program generated more than five hundred million dollars in sales according to State data.

in addition

Governor Tom Wolf is in favor of legalizing cannabis for adult use consumption, which is in line with a large majority of pennsylvanians.

In February, we also executed a lease Amendment with our tenant and my treatment is signals to provide an additional $6 and tenant improvements as Pittsburgh area cultivation and processing facility referral build out of production capacity moving on to Michigan in October. We acquired a hundred fifty-six thousand square foot industrial property and entered into a long-term lease with live well with total investment in the acquisition and Redevelopment of the property expected to be approximately 42 million dollars.

Established in 2009 Live Well is one of the preeminent licensed cannabis operators in Colorado with 18 dispensary locations employing over seven hundred employees in addition to operations team on Michigan Puerto, Rico and Canada. We further expanded our relationship with live alone February acquiring to dispensary locations in Colorado, which I will discuss later.

In October and November we completed the Acquisitions and leases of six dispensary locations in Michigan for a total of 11.3 million including reimbursement for certain future tenant improvements entered into long-term leases with Green Peak Innovations for each location.

Required green Peaks cultivation and processing facility in mid development in 2018 and together with these dispensary locations are total investment in properties least two Green Peak is approximately $20,000 including commitments to fund future tenant improvements.

As of today, we own 10 properties in Michigan and our total investment in the market including committed funding for future tenant improvements is $99 Michigan's medical use cannabis program is one of the largest in the country in sales under Michigan's regulated adult used cannabis program started on December 1st of last year. The adult used cannabis rollout was limited in scope with only five five retail Cannabis stores open the first week. However demand that those stores was tremendous registering one point six million dollars and adult used cannabis sales in just the first eight days of the program those five stores.

as

More and more stores come online. We expect the regulated adult use program to experience tremendous growth. In fact adult used cannabis sales Rose 40% from December to January along with increases in medical practice sales.

Moving to Ohio in January, we acquired a property comprising approximately fifty thousand square feet of industrial space and entered into a long-term lease with Cresco Labs marking our third investment with chrome go as our tenant partner after closing on two of Cresco, Illinois cultivation and processing facilities in October as I described earlier our total investment in the acquisition and tenant improvements at the property would expect it to be twelve point five million dollars.

Also in January we acquired a property in Ohio and executed a long-term lease with GTI marking our second transaction with GTI following our Pennsylvania sale-leaseback transaction completed in November of our total investment in the property including reimbursement for ten improvements is expected to be 7.2 million dollars. As of today. We own four properties in Ohio and our total investment in the market including committed funding for future tenant improvements is 43 million dollars medical use cannabis dispensaries in Ohio made their first sales in 2019. And as of the end of December nearly eighty thousand patients in over 8,000 caregivers have been registered for the state's medical cannabis program generating approximately sixty million dollars in this first year of sales.

with 50% of those

Is coming in the last quarter of 2019?

And as we alluded to on our last call, we entered the Florida Market in October completing the acquisition of a property for $17 comprising approximately 120000 square feet of industrial space and energy into a long-term lease with trulieve together with our Massachusetts property, assuming the full funding of the additional $36 million available to truly there are total investment in properties least to truly is suspected to be sixty point five million dollars this month, true leaves one of just 22 vertically-integrated licensees in the state opened its 45th medical use cannabis dispensary in Florida and captures 50% of all sales in the state.

Florida represents one of the largest in one of the fastest growing medical use cannabis markets in the United States with over three hundred thousand qualified patients is at the end of January.

In January, we also marked our entry into the Virginia market with the acquisition of a property expected to comprise approximately 82000 square feet of industrial space upon completion of development. Our total investment in the property is expected to be 19.8 million including funding for completion of development. We executed a long-term lease with Green Leaf Medical and the property will be utilized for medical use of cannabis cultivation processing and dispensing.

This is our second Transit.

Action with Green Leaf Medical having executed a sale-leaseback transaction in 2019 for their Pennsylvania cultivation and processing facility to gather with our Pennsylvania property. Our total expected investment properties least two green leaf is 32.8 million dollars.

Greenleaf holds one of five vertically-integrated licenses to cultivate process and dispense medical cannabis in Virginia as we indicated in our press release announcing the transaction the Virginia medical cannabis wage, isn't it start-up phase with first dispensary sales expected later this year.

As previously noted we acquired in North Dakota property and executed a lease with Grassroots and December for a 33,000 square-foot industrial facility with our total investment including reimbursement for tenant improvements expected to be 12.2 million dollars.

Together with our Illinois and Pennsylvania properties are total expected investment. Assuming full reimbursement for tenant improvements in properties lease to Grassroots is 65.5 million dollars.

North Dakota's medical use cannabis program is in its early stages. However, we are encouraged by the steps that North Dakota regulatory authorities have taken over time to expand patient access including the package option of a dozen additional qualifying medical conditions. In addition. We note that Grassroots is one of only two license cannabis cultivation and processing operators in the state of North Dakota somewhat similar to our tenant vireos position is one of only two licensed operators in the state of Minnesota.

moving to Colorado has no

The previously earlier this month we acquired to dispensary locations in Colorado in sale leaseback transactions with Live Well, marketing our second and third transactions with Live Well, after acquiring their Michigan cultivation and processing facility are total expected investment including reimbursement for tenant improvements is expected to be approximately four point two million dollars together with our Michigan property off total expected investment in properties least to live well is 46.2 million finally to note. We amended leases with pharmacann earlier this week which had the effect of moving four million dollars of available improvements from Far McCann's lease in Pennsylvania to our lease with them and Massachusetts is important to reiterate that when we invest in properties with multi-state operators, which is a very large portion of our own new tenant base. We focus on securing a corporate level least guarantee, which allows us to underwrite not just the specific operations at the location or within the particular state, but the tenants overall wage

Channel operations

Turn the call over to Catherine. We'll talk about our Capital raising activity and financial results for the fourth quarter and full-year 2019, Catherine.

Thanks been it's been a very busy year capping off a tremendous year of growth for our company, which is reflected in our financial results for the fourth quarter and full-year. We generated total revenues of accidentally 17.7 million in queue for an increase of nearly two hundred and seventy percent from the prior Year's fourth quarter and 44.7 million for the full year in increase of 202% from 2018. The increases in both periods were driven primarily by the acquisition of leasing of new properties additional tenant Improvement allowance has provided to a Genesis certain properties that resulted in base rent adjustments and contractual rent escalations that certain properties.

As strong as this growth was please note as well that this reflects only partial quarters of revenues from the numerous Acquisitions and leases executed during the fourth quarter and no Re-Use, of course for the five leases and five lease amendments. We executed after the end of the quarter our revenues for the quarter also impacted by rent abatements or deferrals under certain Lisa Smith expected to burn off in the next few months as we continue to account for all of our leases on a cash basis for the 3 months ended December 31st, 2019. We require net income of approximately 9.6 million dollars funds from operations, which adds back property depreciation to net income was 13.1 million adjusted funds from operations, which adds back non-cash stock-based compensation expense and non-cash interest expense related to our exchangeable senior notes was 14.3 million.

for the three months ended

December 31st, 2019 adjusted funds from operations nearly tripled from the prior year. For the year. We recorded net income of 22.1 million funds from operations of 30.7 million and adjusted funds from operations of 34.9 million adjusted funds from operations for the year increased by 659% from 2018 as Alan mentioned on January 15th. We paid our quarterly dividend of a dollar per share to Common stockholders of record as of December 31st, the Q4 2019 common stock dividend reflects a 28% increase from the prior quarter and a 186% increase from the prior Year's fourth-quarter this serves as a reflection of our strong growth and operational performance over the past year and our confidence in our acquisition pipeline including the post December thirty first acquisition birth.

completed that then

discussed earlier

And with respect to financing activity in September 2019, we established an at the market Equity offering program or ATM program with three sales agents and raised net proceeds under the program through today of about $185 million dollars and last month. We completed an underwritten public offering of common stock raising gross proceeds of 250 million long as we previously reported taking into account that's financing activity. As of today. We have over 17 million shares of common stock outstanding. We are truly grateful for all of our stakeholders continued support and we are focused exclusively on investing the proceeds from a recent Equity raises with the best tenants. And with that. I'll turn it back to Alan Alan.

Thanks Catherine. We had a truly remarkable 2019 far outpacing our expectations with that. We are very excited about the opportunity to come in this past Thursday industry, and we remain focused on executing our business plan. I want to personally thank the team for their outstanding work and dedication and most importantly our stockholders for your continued support as we aim to continue to create sustainable and long-term value for you with that. I'd like to open it up for questions operator. Could you please open the call up for questions. Thank you. We will now begin the question-and-answer session to ask you a question. You may press * then 1 on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys if it anytime your question has been addressed and you would like to withdraw your question, please press star then to our first question will come from Tom catherwood with btig wage.

Go ahead. Thank you.

Morning, everyone. So, you know Strong finish to 2019 in terms of Acquisitions and and one Q 20 looks strong as well. Then on top of that. It looks like yields picked up maybe a hundred plus basis points between 4 and one Q. How is your pipeline sizing up for the balance of $20 and how sustainable are the higher yields?

Well, you know, you know, I think we had just an unbelievably strong 2019 and and it it it was a very exciting year and the team was performed extremely well 2020 looks to be as strong as as nineteen or even stronger and so our pipeline is has very is very large it can we continue to have very strong growth prospects within the pipeline once again being able to think that we're going to be able to provide between 16 and 70% of our Capital to our existing Growers and the balance going to potentially some new Growers that are are that are looking to join our our tenant base keeping in mind that we have a tenant based right now of about twenty different, uh, very large and strong Growers.

Gotcha, gotcha. And then then in terms of yields then that kind of pick up from 4 to 1 Q. That's kind of how 2020 is shaping up so far at least yeah, I mean, I think we can get it stabilized the in the sense that the increase increase from mid last year of about a hundred a hundred fifty basis points is what we're is what we've been able to achieve and and I believe will be able to maintain the that going forward given where we are with the financial markets and in the industry today.

Understood and then no this is about the Canadian markets which are very different from your markets. But you know up in Canada. There's this kind of persistent fear of oversupply. It hasn't necessarily played out that way yet, but it's a real concern. What's the status of supply and demand in in your States and have you seen any early indicators of oversupply that give you some concerns about

you know, I think from our perspective we are not seeing anything that approaches an oversupply condition other than perhaps maybe in in California a little bit with the other states that are that are new to the program. Obviously. There's there's still a lot of of growth happening. We're seeing year-over-year growth in the states and just end the demand well over 30% So oversupply is not is not been the issue. It's just a matter of fact been the opposite gotcha. What about but outdoor grows, I think Arizona maybe Colorado and California allow them are they allowed in in your states that have the limited license provisions and could that impact pricing do to lower production costs?

so keep

We are we are focused on licensed medical cannabis Growers and in the concept of an outdoor grow just doesn't work with trying to providing a consistent pure product or high quality product. That that can't can't be done with an in an outdoor grow and Outdoors situation can be contaminated with pesticides and fungus and and pests from a variety of other crops and off which which requires that the the high-quality medical cannabis product and even high quality adult use product be grown indoors in a controlled environment which drives a long-term value of our real estate.

Got it. Got it. And then the last one for me Paul your commentary on on the Cannabis Capital markets was very helpful and along those lines yesterday's press release noted that the tenant at your asset had ceased paying rent in January and February you provide an update on the progress of working through that lease month and maybe more generally are there any other tenants that pose near-term credit risks in your portfolio?

Yeah, thanks.

So, um with regard to Dime, you know, the the process continues to move forward. We are still getting a lot of interest from other operators that look at the same location of the assets and think that's a very valuable piece of property specified distribution. So the process and receivership continues.

I'm sorry. What was the second part of your question? Oh just beyond just the any changes in credit profiles or any other credit risks that you're seeing in your portfolio the near-term. Yeah, sometimes you know, we keep a close eye on all of our tenants and you know, we look at their financials at least on a quarterly basis and we continue to be very happy with the performance of the portfolio up to date.

Got it. All right. Thanks everyone. Thank you. Tom. Our next question will come from Scott, please. Go ahead.

Hey Scott, how are you doing?

Mr. Port on your line is open.

So I good morning and thank you for the call. Sorry about that. I want to touch base real quick on kind of competition where we're seeing a little more in the Cannabis industry some competitors coming out for what's your sense of them? Looking at industrial versus retail side of things and how that might affect the the yields going forward. Are you seeing competitive threats here. So at at this time, we you know, we we believe that we're in a very strong position. As you know, that we are the the only Newark stock exchange-listed public entity in in in the country and matter of fact, we're the only company with a US based listing of Thursday the we have seen the formation of you know up to, you know, four or five other new private type entities that have tried to log

lunch and raise capital

Initially, they've been able to raise private Capital but have since you know deployed that capital and and are are not able to obtain a listing in in in the US market the most newest the newest entrant is company by the name of subversive which raised a couple of hundred million dollars. And as you know, we're we're probably ten times or or at least five times the size of that company and the the so we're not seeing a competition driving down yields in our in our market for say we think the primary competition for our capital is other income coming from private Equity family offices and friends and family of of those Growers and we believe our capital is dead.

fairly priced

And fairly attractive to to The Growers today as evidenced by a very strong pipeline we have over of our of a pipeline today. We have not seen it as large ever as we have seen it in in in today.

Okay, thank you for that color covering a lot of these different candidates names and talking to management team. Obviously. This is a high priority for them with with the capital markets that you have a very strong portfolio off of the top-end out there. How do you look at kind of diversification or or different exposure from a geographic side or or a different exposure off from percentage side of the portfolio and just want one of the questions is looking to give a little bit more in the retail strategy versus just grows on the industrial side of that strategy there and let me let me address the retail versus the the industrial growth or grow facilities. I mean, we we have in our portfolio took the dispensaries and we'll continue to look at and dispensaries with our existing or Growers. We believe that dispensaries are a unique wage.

and interesting part of the of the real estate cuz

Component but we believe that the that our our team based on our teams size and the efficiency of doing larger-scale type transactions that are we are best suited to continue to focus on the the larger industrial grow type facilities.

So with that that that's where we are as to diversification, we're fairly we're pretty well diverse Diversified already. We have 51 properties in 15 different states. We have 20 different Growers. We continue to believe that adding one to two or three Growers per year is the the right way to do it with our with our strong straightforward business model because our business model is focused on making sure that we are there as a as a very strong partner for existing mso's that are in the in a growth mode is off and growing. We we believe that there are going to be new States as Paul has indicated and the prepared remarks. There are new states that are coming online and we're really excited about a couple of those new States. We're very excited about continue to grow in our existing States, including uh, Florida if if we can

yes to our our largest tennis concentration still is

With pharmacann. We're very excited about far McCann's prospects and and their business and we've we've worked very carefully at reducing that I'm not sure and we believe that will be able to continue to do that as we grow over time.

Okay. Thanks for the color. I will jump back in the queue.

Our next question will come from John masako with Lautenberg Feldman, please go ahead good morning and your guys in. Hey Jonathan gone. So you talked a little bit about competing Capital but one of the things that was kind of out there particular the end of last year was some of the larger msos doing debt deals. Are you seeing increased kind of debt opportunities out there for your tenants kind of competing with you in terms of your sale leaseback Solutions. So I think what you're referring to is some of the convertible that type of transactions that the some of the large msos were able to access and if if you know, they were dead if the true cost of capital was was identified by the those and those msos or those are individual company.

they would see that there cause that that

That cost of that debt was very comparable or even actually higher than than what doing a a standard sale-leaseback with us would have entailed Thursday. We don't we don't take any ownership in any of the of any of the entities we so as opposed to a a convertible debt type structure where Thursday are giving up a piece of their company to raise that kind of capital. Okay, and then maybe switching to the pipeline. What's the mix between maybe larger public M shows in smaller kind of single-state operators?

You know, so, you know as they described we have 20/20 different Growers to their mso's or in our portfolio today over 80% of them are the very large large type entities and and and they are continue to perform extremely extremely well.

Okay, and then kind of lastly you touched on it briefly that you were kind of excited about some of the potential progress and states on the regulatory front. But are there any specific kind of catalyst you see out there that maybe over the longer-term could help kind of keep the pipeline growing if you will. Well, I mean, I think as Paul described over a thousand different states are contemplating, uh new programs and if you know just to be the you know, if you do you do a math and you do I mean, I'm not even saying that the state sure you're going to be just doing this type of you know issuance of of state licenses, but if all those eleven States and let's say there was only ten of them that actually got it approved if ten States I am approved it and and they had 10 new licenses and each one of those new states are in new licenses required fifty million dollars of additional Capital that's over five billion dollars of birth.

additional Capital needed in the industry just as

No States alone. Not to mention the the existing existing States and the potential for addition for additional licenses associated with recreational use the demand for capital in this industry is rather large growing and the Catalyst that I think that you're really referring to is the fact that the us over over ninety percent of the world's population is very excited a very positive about medical cannabis. And and the majority of the population is is in a has a positive view of recreational cannabis.

Okay, very helpful color that is it for me. Thank you as a reminder. If you would like to ask you a question, please press star and then one.

At this time, there are no further questions, and I would like to turn the conference back over to Alan Gould for any closing remarks. Thank you. Thank you all for joining us here today. And again, I want to thank them for their dedication and and gray work in producing. What what was what was a phenomenal 2019 and what is looking to be to be a very strong 2020 and also to thank our stockholders for your they're your continued support, but that will end the call. Thank you.

Difference is now concluded. Thank you for attending today's presentation and you may now disconnect.

Thursday Thursday

Thursday

dead dead dead dead dead.

Dead dead dead dead dead.