Rainbow Realty Group Acquires Industrial Building in Sacramento for $4.0 Million and Closes on $5.85 Million Bank Loan

Rhea-AI Summary

Rainbow Realty Group and MJ Real Estate Investment Trust have acquired a 21,600 square foot industrial building in Sacramento for $4.0 million. The tenant has entered into a 15-year lease and will consolidate its operations in the property. Rainbow has also closed a $5.85 million bank loan secured by a portfolio of retail properties in Missouri.

NEW YORK, Aug. 9, 2023 /PRNewswire/ -- Rainbow Realty Group, LLC and Rainbow Realty Group II, LLC (collectively "Rainbow") and MJ Real Estate Investment Trust ("MJ REIT"), nationwide owners and lenders of real estate to the US cannabis industry, today announced that it acquired, in a sale-leaseback, a 21,600 square foot modern concrete industrial building located in Sacramento for $4.0 million.  The going-in unlevered cap rate on the transaction is 12.6%.

At closing, the tenant entered into a 15-year absolute net lease.  The Tenant, who has been a profitable operator in California since 2019, is consolidating its operations into the subject property and further improving the facility for cultivation, distribution, and manufacturing operations.  Rainbow will also fund up to $420,000 in Tenant Improvements subject to certain construction milestones being reached.

Additionally, Rainbow announces the closing of a $5.85 million bank loan which is secured by a 5-unit portfolio of owned retail properties in Missouri.  The 10-year loan has a fixed rate of 7.53%.

Kyle Shenfeld, President of Rainbow, remarked: "We are excited to add yet another high-quality industrial property to our growing portfolio at an unlevered 12.6% cap rate.  The closing of the bank loan, at a 7.53% fixed interest rate, is at an excellent cost of capital considering the financing challenges that exist within the cannabis industry.  Both transactions reinforce our initial business strategy of providing above market risk-adjusted returns on down-side-protected real estate collateral, which is usable by both cannabis and non-cannabis operators." 

About Rainbow Realty Group:

Rainbow Realty Group and its affiliates are real estate companies focused on retail, industrial and greenhouse properties with cannabis companies in the United States. Rainbow offers sale-leaseback and mortgage financing with a portfolio consisting of 50 properties across 8 states. Rainbow's parent co, Gould Investors L.P., has been in the real estate industry for 60+ years. Gould is a significant shareholder of NYSE:BRT and NYSE:OLP. For additional information please visit: https://rainbowrg.com/

About MJ REIT

MJ REIT is a hybrid real estate investment trust focused on acquiring, owning, leasing, and providing mortgages to properties across the United States. MJ REIT has a thematic emphasis on state-legal cannabis markets with a focus on industrial and retail commercial real estate. For more information, please visit https://mj-reit.com/

Press contacts:
Tyler Gilliam
Tyler@rainbowrg.com

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SOURCE Rainbow Realty Group, LLC; Rainbow Realty Group II, LLC; MJ Real Estate Investment Trust

FAQ

Who acquired the industrial building in Sacramento?

Rainbow Realty Group and MJ Real Estate Investment Trust.

How much did the building cost?

$4.0 million.

What is the cap rate on the transaction?

12.6%.

What type of lease did the tenant enter into?

A 15-year absolute net lease.

What is Rainbow's initial business strategy?

Providing above market risk-adjusted returns on real estate collateral usable by both cannabis and non-cannabis operators.

What is the interest rate on the bank loan?

7.53% fixed rate.

What is the purpose of the bank loan?

To finance a portfolio of retail properties in Missouri.