Acreage Holdings Enters Sale Leaseback Arrangements in Multiple States for $72.3 Million

Acreage Holdings (CSE: ACRG.u) announced this morning that the firm has entered a number of sale leaseback agreements as a means of continuing to fund its operations. The sale of property includes assets across several states, including Florida, Massachusetts, and Pennsylvania, with additional assets in Illinois and Connecticut expected to close within the next thirty days.

Sale leaseback arrangements has quickly become an extremely popular option for cannabis operators, particularly in the United States. With funding being extremely restricted, operators have little other means of cash infusion during a time in which they are working towards cash flow positive operations. The capital intensive nature of the sector has thus resulted in firms obtaining funding by any means possible. Numerous operators, including Cresco Labs, Curaleaf, and Trulieve have all obtained financing through this method recently.

The sale of the properties in Florida, Massachusetts, and Pennsylvania will bring additional cash of $18.3 million to Acreage in the near term. Meanwhile, additional asset sales in Illinois and Connecticut are expected to bring in an additional $10.1 million. Additionally, the purchaser, GreenAcreage, has agreed to provide up to $43.9 million for construction commitments at the recently acquired facilities. The funding will allow Acreage Holdings to further develop the assets it is now leasing.

Acreage Holdings took a long, hard look at our portfolio of real estate holdings and made a strategic decision to rationalize our business strategy. We are in the business of bringing to market the best cannabis products possible and making them accessible to as wide an audience of patients and adult use consumers as is viable. Acreage Holdings never intended to be a real estate company, and as the cannabis industry is a capital intensive business, tying up capital that can be deployed elsewhere is not in our shareholders best interest.

Glen Leibowitz, Chief Financial Officer of Acreage Holdings

Acreage Holdings last reported US$84.5 million in cash as of June 30, 2019. However the firm is currently running a capital intensive operation, with monthly operational expenditures having a negative cash flow of approximately -$6.1 million. The multi state operator posted revenues of $17.7 million last quarter, with a net operating loss of $37.8 million.

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Acreage Holdings last traded at US$5.60 on the Canadian Securities Exchange.

Information for this briefing was found via Sedar and Acreage Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.