Arizona-based real estate development firm for emerging and highly regulated industries including legalized cannabis, Zoned Properties, Inc., announced an amendment to the lease agreement with its significant tenant related to its marijuana cultivation facility located in Chino Valley, Arizona.
“The increasing demand for regulated marijuana cultivation space and consumer products in Arizona has gone far beyond initial projections as the result of the recently approved and implemented adult-use marijuana program,” said Bryan McLaren, Chief Executive Officer of Zoned Properties. “Industry experts are estimating consumer demand in Arizona could increase above $1 billion in the next few years, which will require increased cultivation capacity and square footage of entitlement and properly zoned properties such as Chino Valley.”
- Over $8 million of capital has been invested to-date by the Company’s Significant Tenants at the Chino Valley Cultivation Facility. The Company’s Significant Tenant will maintain the master rights to the property and facilities through the remainder of the Lease Agreement.
- Effective September 1, 2021, operational square footage will increase from 40,000 square feet to 67,512 square feet, and the new base rental payments at the facility will increase 68% from $32,800 per month to $55,195 per month including three out of four new building structures in the phase one expansion that are now fully completed and operational.
- The fourth additional building site is in completion stages for technology and operational packages along with compliance inspections. The parties expect that, upon final completion, they will enter into another lease amendment reflecting the increased operational square footage and increased base rental payments. Operational square footage would increase from 67,512 square feet to 97,512 square feet, and base rental payments at the facility would increase an additional 69% from $55,195 per month to $79,795 per month reflecting the entirety of the phase one expansion.
- Upon completion of the entirety of the phase one expansion, the annualized base rental payments will increase to $957,550 reflecting an increase of 143% from previous annualized base rental payments of $393,600.
- The Chino Valley property also includes an approved master plan for a phase two expansion of operational and rentable square footage that is construction ready and may proceed at the Tenant’s election. If the Tenant elects to proceed with phase two, the additional square footage of operational and rentable building space could include another 60,000 square feet for a total of 157,512 square feet of operational and rentable building space at the facility, which would equate to an annualized rental rate of $1,549,918 plus additional rental payments under the triple-net lease.