Cannabis Grow Facility as an Investment - Cap Rates??
Curious if anybody has seen listings / comps on cannabis grow facilities with a solid, leading grower. Have seen some REITs looking to buy or finance at 10-15% caps. Does that sound right?

Guessing this is because financing with a federally insured bank is impossible?
[{"id": "hopn92t", "text": "Yeah those caps are around the range I\u2019ve seen in Denver. My friend does acquisitions for a REIT and said it\u2019s pretty competitive now, so probably on the lower end.", "replies": [{"id": "hopoz1r", "text": "Gotcha. Thinking about renting a larger class B warehouse to one of these guys but that's a pretty big hit on the cap vs the extra rent they have offered.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hopndom", "text": "Just easier to buy symbol AFCG, AFC Gamma currently yields 8.42% and easy to get in and out. They just raised the dividend today; declares $0.50/share quarterly dividend, 16.3% increase from prior dividend of $0.43 with a forward yield of 9.75%. Good luck and remember to diversify \ud83d\udc8e", "replies": [{"id": "hopp3g2", "text": "Interesting... near 52wk low! Will take a close look.", "replies": [{"id": "hoppcn2", "text": "Full disclosure, I am long AFCG currently and have no intent on selling this position for many years as management grows their business.", "replies": [], "depth": 3}], "depth": 2}, {"id": "hoq18x5", "text": "I hold IIPR which is a direct hard asset owner, has done very well. I like the space and being as all the complications owning direct I feel like this is the way to go until deregulated by the Fed for the banks. Possible that you get some pullback on IIRP after deregulation but I would see it as a buying opportunity since they would only get stronger in the long term that way.", "replies": [{"id": "hoq276k", "text": "I bought IIPR common and preferred equity on the IPO. Great company and not selling it either, I just like the yield and valuation on AFCG right now better", "replies": [{"id": "hoq2o0k", "text": "Very nice! You're sitting pretty then. I picked it up about 2 years ago so still some nice growth since then.", "replies": [], "depth": 4}, {"id": "hoqn26d", "text": "[https://www.reddit.com/r/ChoosingBeggars/comments/rg8z2h/im\\_a\\_influencer\\_so\\_do\\_you\\_want\\_exposure\\_from/](https://www.reddit.com/r/ChoosingBeggars/comments/rg8z2h/im_a_influencer_so_do_you_want_exposure_from/)\n\nLooks like you probably didn't buy anything...  But cool story.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hopuv0r", "text": "Keep in mind that cannabis facility landlords have to receive rent in cash and can\u2019t deposit any rent proceeds into the fed banking system (unless they want to risk it being seized).  A lot of institutional buyers don\u2019t want to deal with that so they don\u2019t look at any cannabis real estate.  That shrinks the buyer pool significantly which raises the cap rates compared to non-cannabis real estate.", "replies": [], "depth": 1}, {"id": "hopx6ud", "text": "I was previously a grow warehouse LL. Bought at a 14 cap and sold at ~9. Last I saw in Denver advertised caps were 8-9, but I've not looked in over a year.\n\nA few thoughts: (1) These tenants are inherently risky due to challenging/shifting regulatory and compliance, not to mention federal risk. A mold infestation could cause them to lose their entire crop; a lost permit might not be regained or be transferrable should the tenant go under. I would not front cannabis-specific TI's.\n\n(2) Eventually federal legalization will occur. How will this impact your tenant and the local market for shitty, high power 10-20k sq ft buildings?\n\n(3) You will find hard money lenders but with rates more or less at cap you're not gaining much if any leverage, just adding risk.", "replies": [{"id": "hopyvjw", "text": "Great points. Classic \"is the juice worth the squeeze\" scenario. \n\nI was thinking Fed de-regulation would allow more buyers w/ leverage to compress cap rates but who knows what lending &amp; cap rates will be 5-7 yrs down the road anyway. I would be looking to flip ASAP.\n\nI forgot about paying rent in cash... that alone might be the deal killer. These are big players so it didn't even cross my mind. Will have to see if they can pay in crypto!", "replies": [{"id": "hoq0rct", "text": "I added a 5% cash handling fee to the lease. Mine paid in grocery store money orders- even those were max $1000 so I'd get a fat envelope every month.\n\nIt's a good point that you could finance if deregulated. My concern is that the tobacco companies will enter the market and built a row of million square foot greenhouses somewhere. Some existing would survive on quality, but the bulk of existing growers will eventually be crushed by the scale and sophistication of corporate growers, IMO.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hoqpwpj", "text": "Its too competitive for the amount of risk now. Like 4 years ago there was a lot of growth potential but now its all risk of one bad law and litte upside.", "replies": [], "depth": 1}]