Sometimes it’s hard to believe that just 10 short years ago, adult-use cannabis legalization began in Colorado and Washington. As I’m writing this, 36 states and four territories have approved cannabis for medicinal use, with 18 states, two territories, and the District of Columbia legalizing non-medical adult use. Our industry evolves at what feels like lightning speed, and I speak with many investors who have concerns about keeping up with available opportunities. At Pelorus Equity Group, we understand these concerns and make it our mission to help our investors and borrowers stay at the forefront of cannabis real estate.
One way we do this is through our use of data. A generalized dataset won’t inform decisions and deliberations when the cannabis real estate market is anything but generalist. Without robust analytical processes that are specific to the industry, data collection is useless. We recognized early on how much of a game changer having access to the most up-to-date information would be, yet when we looked for a technology solution that could provide this, we realized it didn’t exist. So, we built our own Data Project tool that tracks and analyzes in real time the intricacies of the supply dynamics of cannabis-related property across the U.S.
The insights this tool gives us into the nuances of the sector have been well worth the investment. It creates significant advantages for us over other fund managers in deal flow origination, pricing and risk management. One such example is our recent provision of $16.975M of non-dilutive real estate debt financing to Royal Emerald Pharmaceuticals (“Royal Emerald”) for the purchase of a new facility location in Desert Hot Springs, California. The existing facility will be undergoing extensive renovations and remodeling to become a 94,000 sq. ft. high-tech cannabis cultivation and medical research facility (the “Desert Hot Springs Facility”). The Royal Emerald team are trailblazers, and we are excited to be to working with those that are leading the way.
Our technology innovation also helped us become the first fund in the cannabis sector to secure a line of credit up to $20M with a Federally Chartered FDIC insured bank. This line of credit had a rate of 4.75% and no non-usage fees. Additionally, it helped us receive an Investment Grade BBB+ rating from Egan-Jones Ratings Company; a first-of-its-kind win for the cannabis sector. [link to release] We believe these ratings are not just reflective of our innovation, but also reflect confidence in our fiscal stewardship, robust portfolio, corporate governance and financial strength.
As the cannabis industry continues to grow at a lightning pace, and expand into uncharted waters, we will need to move with it, and I believe our team is well equipped for the journey. We intend to continue leading from the front of this dynamic market, identifying and capitalizing on the multitude of investment opportunities that are certain to arise.
Note: Figures in this blog were correct at the time of publishing. Please read our latest press releases for the most up-to-date news and figures.
About Pelorus Equity Group
Pelorus Equity Group (“Pelorus”), the leading provider of value-add bridge commercial real estate loans to cannabis businesses and owners with cannabis-related real estate, and its Pelorus Fund, a private mortgage real estate investment trust (“mREIT”), are changing the commercial real estate lending landscape in the cannabis sector. Pelorus Fund offers a range of innovative transactional solutions to address the diverse needs of real estate investors and portfolio managers, and its flexible acquisition and bridge lending programs are the direct result of the firm’s involvement in more than 5,000 transactions of varying size and complexity. Since 1991, Pelorus’ principals quickly understand an opportunity, structure a logical solution and execute a timely close and have participated in more than $5B of real estate investment transactions using both debt and equity solutions. To date, Pelorus has completed 63 commercial real-estate loan transactions and deployed more than $350 million to cannabis businesses and real estate owners, comprising of more than 3,200,000 sq. ft. in eight states across the U.S. With the ability to fund approved construction draws for reimbursement in an average of one to three days and a single agreement covering the financing of the entire project, the Pelorus Fund helps to stabilize cash flow for its clients, so they are able to remain focused on their core business goals and objectives.
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