Innovative Industrial Properties, Inc. (IIPR) Q3 2019 Earnings Report, Transcript and Summary

Good day, and welcome to the Innovative Industrial Properties, Inc. Third Quarter 2019 Earnings Conference Call and Webcast. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Mr. Brian Wolfe, General Counsel. Mr. Wolf, the floor is yours, sir.

Thank you for joining the call. Presenting today are Alan Gold, Executive Chairman; Paul Smithers, President and Chief Executive Officer; Catherine Hastings, Chief Financial Officer; and Ben Regin, Director of Investments. Before we begin, I'd like to remind everyone that statements made during today's conference call may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995, and actual results may differ materially due to a variety of risks, uncertainties and other factors.For a detailed discussion of some of the ongoing risks and uncertainties of the company's business, I refer you to the news release issued yesterday and filed with the SEC on Form 8-K as well as the company's reports filed periodically with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.Before I hand the call over to Alan, I want to mention that we have limited time for the call today, but we will answer as many questions as we can after our prepared remarks. Alan?

Thank you, Brian, and welcome, everyone. Today, based on the exciting third quarter and subsequent to the quarter acquisition activity, we have chosen to host a call today to share our financial results for the third quarter plus year-to-date 2019 and provide our updated perspective on the business and the industry from our most recent call in August. Now into our third year of operations. The momentum of our business has been tremendous. To recap briefly, in 2019 year-to-date, we acquired 30 properties in 9 states and amended leases with our existing tenants for additional property improvements, collectively representing over $380 million of investments, which included both follow-on transactions with our existing tenant partners to facilitate their continued expansion and new tenant relationships.Ben Regin, our Director of Investments will discuss our recent acquisitions in more detail and overall portfolio, including the addition of several top-performing, multistate operators in the industry.As of today, we own 41 properties in 13 states, totaling 2.8 million square feet, which are 100% leased on a long-term basis to high-quality, licensed cannabis operators. Our current blended yield on these properties is 13.8%, with a weighted average remaining lease term of 15.5 years. In addition, we paid a quarterly stock dividend of $0.78 per share to stockholders on October 15th, representing a 123% increase over our third quarter 2018 dividend and a testament to our property portfolio's operating performance and confidence in our pipeline of acquisitions.This dividend was also supported by our tremendous 200% plus growth year-over-year in rental revenue, net income and AFFO, which to note, does not take into account at all the 10 acquisitions we completed after quarter end, constituting over $150 million of additional investments. Catherine will also provide more detail regarding our financial results. The medical-use cannabis industry continues to experience tremendous growth and change, and Paul will provide some detail on industry and regulatory trends in our call today. Finally, as announced earlier this week, we continue to make great additions to our team, most recently with the appointment of Tracie Hager as Vice President, Asset Management; and Kelly Spicher as Senior Real Estate Counsel. Tracie brings nearly 3 decades of leadership in institutional property management and Kelly with over 16 years of experience advising clients on a variety of complex real estate matters. We are thrilled to have them join the IIP team. We continue to be very optimistic about the future of this nascent industry and our ability to deliver results for our stakeholders and enduring value to our tenant partners by providing tailored real estate solutions that meet key operational and capital needs.With that, I'd like to turn the call over to Paul. Paul?

Thanks, Alan. As with prior calls, we'll try to provide as an effective an overview as we can with the short time we have today, focusing in on 2 main topics: one, the current regulatory environment, and two, the dynamics of the industry and developments that we continue to monitor closely. First, regarding the current federal regulatory environment and legislative developments. Of course, cannabis remains a Schedule I controlled substance, which generally prohibits all cannabis use and cannabis-related commercial activity in the United States. That said, Congress has continued to enact spending bills since 2014 with a provision that has been interpreted by courts as preventing the Department of Justice from using funds to interfere with the implementation of state medical-use cannabis laws. That provision was again included in this year's congressional spending bill passed earlier this year, which carries through to November 21st of this year as part of the stop gap spending bill passed on September 27. Importantly, the Senate Appropriations Committee has also approved this provision again for the fiscal year 2020 spending bill in late September.As we reported earlier in June, the house voted 267 to 165 to approve a broader provision that would have included these protections for the regulated adult-use cannabis programs as well. But the Senate Appropriations Committee did not include similar language in its proposed legislation. As a result, the provision protecting medical-use cannabis programs is expected to continue as it has since 2014, but will not include the additional similar protection for states, adult-use cannabis programs. In addition, as I am sure you're all aware, the Secure and Fair Enforcement Banking Act, also known as the SAFE Banking Act, was passed by the house in late September with resounding support in a vote of 321 to 103. The legislation now moves on to the Senate where it is likely to face more opposition and to be amended.As we noted previously, the SAFE Banking act if it came law, would provide greater federal protection to banks servicing state licensed compliant operators and may also result in banks being more open to providing debt capital to these operators.Finally, we note that in late September, 21 state attorneys general sent a letter urging congressional leaders to pass the States Act, which would exempt state legal cannabis activity from the Federal Controlled Substances Act. As you can see, the movement continues forward regarding federal legalization and addressing key concerns of the industry.I also want to touch on other industry developments that we're monitoring closely. Vaping. As you no doubt are aware, there has been a large number of reported lung injury cases associated with the vaping products reported to the CDC. The FDA and CDC have not identified the causes of the lung injuries other than identifying the commonality that all patients reported the use of vaping products. The CDC further noted that findings indicate that the vaping products containing THC, particularly those obtained illicitly, were linked to most of the cases. Officials in Illinois and Wisconsin also conducted in-depth interviews with 86 patients, with the vast majority reporting using illicit THC containing prefilled vape cartridges purchased from unregulated sources. We are hopeful that authorities will be able to definitively identify the source of these injuries as soon as possible for the protection of the public and that this will further push the industry away from illicit, potentially, unsafe products to the regulated cannabis markets where products are generally subject to robust laboratory testing and quality and safety requirements.Consolidation. We have also been monitoring the continued consolidation of the Cannabis industry as larger multistate operators continue to acquire new licenses and businesses in addition to mergers between large multistate operators themselves. We believe this trend will continue, if not accelerate, as companies with strong capital resources and a national footprint seek to continue to grow their businesses and team with smaller operators with complementary brands and footprints. At the same time, we do continue to see ample space for smaller, independent operators with strong ties to local communities to continue to thrive in the industry. Ben will discuss our recent acquisition and leasing activity, which includes leases with some of the leading, multistate operators in the nation.Capital markets. Vaping concerns in addition to challenges in Canada on a number of fronts in connection with the rollout of the nationwide adult-use cannabis program has significantly negatively impacted stock price valuations for many of the publicly traded cannabis companies and have also impacted both public and private capital markets for operators of all sizes.That said, according to Marijuana Business Daily, there were 38 closed capital raises in August of this year, 1 fewer than in August of 2018. but the amount raised totaled $973 million compared with $369 million from the prior year's month, an increase of over 160%. Despite the recent equity market's pullback and the headwinds we note, we continue to be firm believers in the tremendous long-term growth potential of the regulated cannabis industry. By 2023, Marijuana Business Daily projects total regulated cannabis sales in the United States will reach between $25 billion and $30 billion annually, a more than threefold increase from estimated 2018 annual sales. This is still an industry in its very early stages, and there will certainly be more headwinds that emerge from time to time, but we see an amazing, long-term future for the industry and look forward to continuing to be the key real estate capital provider for our operator tenants for many years to come.I'll now turn the call over to Ben, who will walk you through our recent acquisitions. Ben?

Thanks, Paul. The last 4 months, July through October, have been by far the busiest four months in our company's history in terms of acquisition activity. Since July 1st, we have acquired 20 properties in 8 states and executed 4 lease amendments with tenants at existing properties as they continue to build additional capacity to meet the demand for their products. As of today, we own 41 properties across 13 states, representing approximately 2.8 million square feet, including approximately 903,000 square feet under development or redevelopment. I plan to touch on each of our acquisitions by state and also provide some information about each tenant and our portfolio overall in the state.Starting with Illinois. We were very active over the last 4 months, originally entering the state with our acquisition and leased to Ascend Wellness late last year. In September, we amended our lease with Ascend to provide an additional $8 million for tenant improvements at the property, which resulted in a corresponding adjustment to base rents and is expected to significantly increase production capacity at the property.Ascend is a vertically integrated multistate operator that has raised over $100 million in capital to date. In October, we acquired two more properties in Illinois totaling 90,000 square feet of industrial space and entered into long-term leases for each property with Cresco Labs, with our total investment in the acquisition and tenant improvements at the properties expected to be $46.6 million in the aggregate. Cresco Labs was founded in 2013 and is one of the largest vertically integrated companies in the United States with licensed operations in 9 states and pending transactions in 3 states. Including its pending acquisitions, Cresco has 23 licensed cannabis production facilities, 66 retail cannabis licenses and 34 operational cannabis dispensaries.Also in October, we acquired a 70,000 square foot industrial property in Illinois and entered into a long-term lease with Grassroots with our total investment in the acquisition and tenant improvements at the property, including a planned 50,000 square foot expansion expected to be about $28.2 million. Grassroots is one of the leading multistate cannabis operators with operations in 11 states and signed a definitive agreement earlier this year to be acquired by Curaleaf.Finally, in October, we acquired a 48,000 square foot industrial property in Illinois and entered into a long-term lease with PharmaCann with our total investment in the acquisition and tenant improvements at the property, including a planned 18,000 square foot expansion, expected to be $25 million. As you know, our first acquisition in 2016 was a sale-leaseback transaction with PharmaCann for their cultivation and processing facilities in New York. Our transaction with PharmaCann in Illinois marks our fifth property acquisition and lease with them, including transactions for their licensed cannabis cultivation and processing facilities in Massachusetts, Ohio and Pennsylvania.We are proud to be PharmaCann's go to long-term real estate partner as they continue their multistate expansion. Our total investment in properties leased to PharmaCann, including commitments to fund future tenant improvements or construction is $127.5 million, not including an additional $4 million, which may be requested by PharmaCann at the Pennsylvania property.As of today, we own 5 properties in Illinois, and our total investment, including committed funding for future tenant improvements is over $115 million which does not include the additional $17.7 million, which may be requested by Grassroots at our Litchfield property. We are very pleased with this group of strong multistate operators and are excited for the future of the regulated cannabis industry in Illinois with the medical cannabis program expanding rapidly through the relaxation of certain regulations and introduction of new qualifying medical conditions and the adult-use cannabis program being introduced next year.Now for Michigan. In July, we acquired 145,000 square foot industrial property and entered into a long-term lease with Ascend, with our total investment in the acquisition and redevelopment of the property expected to be approximately $19.8 million. Including our Illinois property, our total investment with properties leased to Ascend, including commitments to fund future tenant improvements is $52.8 million. In October, we acquired 156,000 square foot industrial property in Michigan and entered into a long-term lease with LivWell with our total investment in the acquisition and redevelopment of the property expected to be $42 million. Established in 2009, LivWell is one of the preeminent licensed cannabis operators in Colorado with 18 dispensary locations, employing over 700 employees, in addition to operations in Oregon, Michigan, Puerto Rico and Canada.Also in October, we completed the acquisition and leases of 4 dispensary relocations in Michigan for a total investment of $9 million, including reimbursement for certain future tenant improvements and entered into long-term leases with Green Peak Innovations for each location. We acquired Green Peak's cultivation and processing facility in mid development in 2018. And together with these dispensary relocations, our total investment in properties leased to Green Peak is $40 million, including commitments to fund future tenant improvements.As of today, we own 8 properties in Michigan, and our total investment in the market, including committed funding for future tenant improvements is $111.8 million.Michigan's medical-use cannabis program is one of the largest in the country and it is expected that sales under Michigan's regulated, adult-use cannabis program will occur starting in the first quarter of next year.Now on to California. In July, we acquired a 35,000 square foot industrial property in California and entered into a long-term lease with DionyMed Brands or DYME with our total investment in the acquisition and redevelopment of the property expected to be $15 million. We note, as has been publicly disclosed that, DYME been placed into receivership by its senior lender though it has paid in full its rent owed to us to date, and we are in close contact with them. We believe the property is well-located and offers a very good value for cannabis distribution access to the greater Los Angeles area for both DYME and another operator, should there be a need to find a replacement tenant.As a reminder, DYME's base rent represents 2.6% of our stabilized base rent factoring in our acquisitions to date. In September, we completed the acquisition of a 4-property portfolio in Southern California for a $17.3 million total purchase price, comprising approximately 79,000 square feet of industrial space in the aggregate and entered into long-term leases with Vertical for continued operation as licensed cannabis cultivation, extraction, manufacturing and distribution facilities.As of today, we own 10 properties in California, and our total investment in the market, including committed allowances for future tenant improvements is almost $71 million. According to Arcview, California is expected to generate $3.1 billion in regulated cannabis sales in 2019 and $7.2 billion in 2024 and making it 40% larger than Canada as a whole. We are hopeful that California will continue to adapt its regulations to promote the continued transition from the illicit market to the regulated market, which by itself would be a very significant driver of growth of the regulated market for years to come.We now move to Pennsylvania. In August, we acquired a property in Pennsylvania and entered into a long-term lease with PharmaCann for 2 industrial and greenhouse facilities that are expected to comprise a total of 54,000 square feet upon completion of development, with our total investment in the acquisition and development of the property expected to be $26 million, plus up to an additional $4 million, which PharmaCann may request. As of today, we own 4 properties in Pennsylvania and our total investment in the market, including committed allowance for future tenant improvements is $64.9 million. Pennsylvania's medical-use cannabis program has grown tremendously in a very short period of time, with over 180,000 patients as of August 2019 and first sales commencing just last year.Now we come to Massachusetts. In July, we acquired 150,000 square foot industrial property and entered into a long-term lease with Trulieve, with an initial purchase price of $3.5 million and an additional commitment by us to fund up to $40 million for redevelopment of the property, which funding is subject to reduction at Trulieve's option within the first 6 months of the lease term. Trulieve is one of the leading multistate operators in the country and the preeminent operator in Florida employing approximately 2,700 people. In September, we amended our lease with Holistic at 1 of our Massachusetts properties to provide up to $2 million for tenant improvements at the property with a corresponding adjustment to base rent upon funding. In addition to the Massachusetts property, Holistic is a tenant at our Maryland property, which we acquired in 2017. Holistic is a multistate operator with over 400 employees and just closed on a $55 million equity financing in October.Also in September, we amended our lease with PharmaCann at 1 of our Massachusetts properties to provide an additional $8 million for tenant improvements at the property. As of today, we own 3 properties in Massachusetts, and our total investment in the market is $42.8 million, not including the future funding that may be requested by Trulieve or Holistic.And on to a new state for us, Florida. In October, we completed the acquisition of a property in Florida for $17 million, comprising approximately 120,000 square feet of industrial space and entered into a long-term lease with Trulieve. Together with our Massachusetts property, assuming the full funding of the additional $40 million available to Trulieve there, our total investment in properties leased to Trulieve is expected to be $60.5 million. Trulieve recently opened its 38th medical-use cannabis dispensary in Florida and captures nearly 50% of all sales in the state. Florida represents one of the largest and one of the fastest-growing medical-use cannabis markets in the United States, with over 270,000 qualified patients as of mid-October.Moving on. We also acquired our first property in Nevada. In July, we acquired a 43,000 square foot industrial property and entered into a long-term triple-net lease with MJardin, with our total investment in the acquisition and redevelopment of the property expected to be $9.6 million. In Arizona, we acquired a dispensary location for a total investment of $2.5 million, including reimbursement for completion of development and entered into a long-term lease with Sunday Goods, an affiliate of The Pharm who also leases our medical Canada cultivation and processing facility in Arizona.Finally, in Minnesota, we amended our lease with Vireo Health to provide an additional $2.6 million for tenant improvements at the property, which resulted in a corresponding adjustment to base rent. It is important to note that when we invest in properties with multistate operators, which is a very large portion of our overall tenant base, we focus on securing a corporate-level lease guarantee, which allows us to underwrite not just the specific operations at the location or within the particular state, but the operator tenant's overall national operations.I'll now turn the call over to Catherine, who will talk about our capital raising activity and financial results for the third quarter of 2019. Catherine?

Thanks, Ben. It has been a busy quarter, which is reflected in our financial results for the third quarter and 9 months year-to-date. We generated rental revenues of approximately $11.2 million and $26.1 million for the 3 and 9 months ended September 30, 2019, respectively. The increases in both periods were driven primarily by the acquisition and leasing of new properties, additional tenant improvement allowances provided to tenants at certain properties that resulted in base rent adjustments and contractual rent escalations at certain properties.Importantly, this revenue growth reflects only partial quarters of revenues from the numerous acquisitions and leases executed during the year. And no revenue, of course, from the 10 leases we executed after the end of the quarter. Our revenues for the quarter were also impacted by rent abatements or deferrals under certain leases that are expected to burn off in the next few months as we continue to account for all of our leases on a cash basis. Notwithstanding all of this, our Q3 rental revenues more than tripled year-over-year from Q3 of 2018.For the three months ended September 30, 2019, we recorded net income of $6.2 million, funds from operations, which adds back property depreciation to net income was $8.4 million. Adjusted funds from operations, which adds back noncash, stock-based compensation expense and noncash interest expense related to our exchangeable senior notes was $9.5 million. For the 3 months ended September 30, 2019, adjusted funds from operations for Q3 grew 270% from the prior period.For the 9 months ended September 30, 2019, we recorded net income of $12.6 million, funds from operations of $17.6 million, and adjusted funds from operations of $20.6 million. For the 9 months ended September 30, 2019, adjusted funds from operations increased by 238% from the prior period.As Alan mentioned, on October 15th, we paid our quarterly dividend of $0.78 per share to common stockholders of record as of September 30th. The Q3 2019 common stock dividend reflects a 30% increase from the prior quarter and a 123% increase from the prior year's third quarter. This serves as a reflection of our strong growth and operational performance over the past year and our confidence in our acquisition pipeline, including the post-September 30th acquisitions completed that Ben discussed earlier.And with respect to financing activity, in July 2019, we completed a follow-on public offering of common stock, raising net proceeds of about $180 million, including the exercise in full of our underwriters' option to purchase additional shares. In September 2019, we established an aftermarket equity offering program or ATM program with 3 sales agents and raised net proceeds under the program in September and October of about $47 million. We are truly grateful for all of our stakeholders' continued support, and we are focused exclusively on investing the proceeds from our recent equity raises with the best tenants. And with that, I'll turn it back to Alan. Alan?

Thanks, Catherine. We've had a tremendous year-to-date for acquisitions, far outpacing our expectations. With that, we are very excited about the opportunities to come in this fast-growing industry and are singularly focused on executing our business plan. I want to personally thank our stockholders for your continued support as we aim to continue to create sustainable and long-term value for you.With that, I'd like to open it up to questions.Operator, could you please open the call up for questions.

[Operator Instructions]. And the first question we have will come from Tom Catherwood of BTIG.

When it comes to investment yields, it seems like recently, there's been a wider dispersion than normal with Trulieve and Cresco, both larger operators around 11% and then some of the more recent yields are closer to your blended average. Have you changed your underwriting in terms of investment hurdle rates? And kind of what are your expectations for investment yields over the next 9 to 12 months?

Sure. Yes, that was a great question, Tom. First, the normal, I guess, it's hard to say what's normal, given how fast the industry is growing and how relatively nascent the industry is and the fact that we've only been in the acquisition market doing these sale-leaseback transactions over the last 3 years. But yes, you have seen a greater dispersion in acquisition yields going all the way down to an 11% for some of the most highest quality growers and that's done on purpose. We focused on increasing our -- the quality and the size and the number of the top name growers in the industry on purpose. And have added those -- several of those players to -- or those growers to our tenant roster, which we're very excited about. It's a very strong roster. The -- where we are today, we are seeing increased acquisition yields, higher acquisition yields than we saw even as of mid last year or early this year. And we are now projecting our acquisition yields to be ranging anywhere from 12% to north of 15%, and that's a 100 to 200 basis points increase in our acquisition yields just in the most recent time period.

Got it. I appreciate that. And then this might not be the right way to think of it. But when it comes to investment opportunities, do you have a sense of the aggregate volume that you typically underwrite, and of that kind of how much do you tend to pursue? And then what's your hit rate been on what you tend to pursue? Is that even a proper way to think about it for your business?

I guess, I could have been, perhaps go down that path. But keeping in mind that we focus on a -- our tenant growers -- our tenant roster. And as you can see from the acquisitions, probably over 75% of our most recent acquisitions are actually repeat business with our existing growers. And if -- I think, Ben, if we talked about our pipeline, you would say, what percentage is with the existing growers today?

Yes. I'd say going forward, it's anywhere from 50% to 75% depending on the pipeline at the time.

Right. So given the fact that we've already underwritten these growers, and we're highly focused on being a very strong capital partner for these growers. We see -- we tend to be -- we tend to move forward on a greater percentage with those growers. Although I do know that some of the growers have proposed some transactions that just haven't recently fit our new acquisition yields and have chosen to go with other capital providers. On top of that, perhaps more directly to answer your question, we have -- we do consistently receive a lot of inquiries from growers that just aren't in the -- don't fit our underwriting criteria today. We do stay in contact with them as they continue to move forward on their business plan. And then hopefully, they get large enough to become part of our tenant roster at some point in the future.

Got it. It makes a lot of sense. And then I appreciate the color on DionyMed. Moving beyond them, though, are there any other of your tenants that you have on any kind of a watch list? And what kind of steps would you take? Or could you even take if you had a challenged tenant?

Well, we watch all of our tenants, we are.

Very fair.

And we do believe that this is still a nascent industry, and there is still a lot of moving things -- moving parts going on in the industry. There isn't any single tenant right now that we're watching more closely than any other tenant. Obviously, we are in direct contact with DionyMed and looking to see how the receivership process is going to play out with them. We think it's -- we think that -- we've underwritten that asset correctly. We think that, that asset has tremendous long-term value. We think that -- we've been contacted by several other MSOs who are -- have indicated interest because -- interest in the site, given that they -- given how public the issues that DionyMed is going through. So then, when we underwrite, we absolutely look for MSOs with multi -- with a lot of operations. We think that the assets themselves, given the fact that they are closely tied or linked to licenses have tremendous value. And it's obviously proving out in the DionyMed situation.So we think that -- should we end up in that situation, one, we have security deposits that we could use and draw down on should we need them. Two, we believe the growers themselves have -- or have cash balances and will support the most valuable, most mission-critical aspect of their business, which is their grow facilities, or their ability to generate revenue from. Three, the licenses are tied to it, creating a tremendous value to the real estate itself. And four, the industry is continuing to grow. And there are -- I mean, the year-over-year growth rate of sales in the industry is still exceeding the -- or approaching the 30-plus percent year-over-year in sales that we've seen over the last several years. And so we believe that there are a tremendous number of growers that are interested -- or people interested in getting into the business and all of those become factors that help protect the value of the asset and the longevity of the cash flow that we anticipate.

Got it. I appreciate the background color, Alan. And then last one for me. Ben you had mentioned the Trulieve facility in Massachusetts. So I think they have until the end of January to finalize their plans, pricing and decide kind of what kind of budget they're looking for and what your reimbursement is. Do you have any kind of sense on timeline there? Is it going to happen before January? Is it something we might see this year? Or should we just -- is that a 2020 event?

Yes, thanks, Tom. I think that's likely to be in 2020. We're remaining in close contact with Trulieve and working with them as they continue to finalize their plans and their budget for their facility, and we'll support them on the amount that's ultimately needed for the build-out of the property.

Next, we have John Massocca of Ladenburg Thalman.

John. So just following up on that last question, maybe a little bit more philosophically, as you think about the potential funding you have out there for tenants that can kind of draw down that capital at their choice, how do you think about matching that with kind of cash on hand. I mean is that something where given you have the ATM in place today, you can kind of match that at the time of the draw? Or is it much like some of the stuff where you've kind of committed to TI dollars that you know the tenant kind of has to take, the tenant is going to pay rent for anyway. Even though that cash hasn't gone out the door today, you still want to have it on hand given the fact that you don't have access to a credit facility or something like that. So is it similar to that type of money? Or is it something where you feel you can fund that later when you get the actual decision from the tenant?

Well, certainly, all those options are available to us to consider and think through. And I'm going to have Cat kind of run through where we are on a cash basis just so that -- so that's clear. But the -- when we make a commitment to our tenant growers, we're making a commitment and that -- and the capital needs to be available for them based on that commitment. There's -- these aren't -- it's not at our option to provide it. If they desire it and demand it, we need to make sure that we have it available for them. So we take those commitments extremely seriously and retain cash on our balance sheet for that -- for those commitments. But Cat, why don't you go through where we are -- where we stand on a cash basis today.

Yes, John, I think what Alan said is extremely important. I mean that's one of our big differentiators, I think, between us and the other players out there who are doing what we're doing is that we have capital available and when we've committed it to those operators, we make sure that we have it raised and held in reserve. We do monitor the construction and the development plans of the various operators and understand kind of timing of when they're actually going to be requesting those draws and so that also enables us to understand that timeline of when that cash needs to be available and paid out to them. And that's why you do see the large $140 million commitment that is unfunded to date. And we do manage that with the cash that we have on balance sheet as well.So if you look at what we've raised to date with capital and including the ATM proceeds, we've raised about $634 million to date and have funded $410 million of that with unfunded commitments of about $140 million.

And the unfunded commitments, does that include the stuff that's at the tenant's option such as Trulieve and one of the PharmaCann assets?

No. We've excluded that since they have the ability to turn a portion of that back.

So if you include all of that, let's say, that's fully executed, where would that leave you versus kind of cash today.

We're at about $20 million to $30 million of cash today. We're extremely happy to have the additional capacity on that ATM to continue to grow with our growing pipeline that we have as well. We also are very happy to have other options like the common follow-on raises as well as the convertible debt options because we see incredible opportunity to continue to raise capital and be able to place it. I think when we did the July common raise, we said we wanted to be able to place that capital that we raised within 6 to 9 months. And you can see from the pace of the acquisitions that we have been ahead of that pace.

Okay, that makes sense. And then switching gears a little bit. Given you completed your first dispensary acquisitions in Q3 '19, Q4 '19, what is the opportunity to complete more transactions for dispenser real estate and what made the retail assets you did buy attractive?

So we've always indicated that we would look at a portfolio of retail-type assets with a strong grower. And we believe that we continue to go down the path of supporting our growers and their capital needs when appropriate and the opportunity to work with Green Peak Industries for -- in Michigan with their -- for their dispensaries made sense for us. The -- we think supporting Green Peak and their ability to generate tremendous amount of revenues from a very exciting Michigan market was appropriate. Keeping in mind that we aren't interested in one-off type transactions with -- on retail dispensaries, just given the size and the complexity of underwriting any transaction, let alone a small retail-located transaction.

Very helpful color. And then what kind of -- was there anything specific do you think that drove some of these lease amendments to kind of give additional funding to like existing properties? It just feels like this quarter and subsequent to -- sorry, 3Q and kind of subsequent to 3Q is the first time we saw a lot of additional funding to existing buildings? Is it just the demand is so high, that they need money to continue to expand their facilities? Or is it just maybe the natural kind of CapEx requirement to kind of keep the buildings functioning -- or not necessary functioning, but as efficient as possible for their operations? Just any color there would be helpful.

Right. So there's a combination of factors occurring. One, when we enter into the transaction, the initial transaction, the tenants are still finalizing their development plans and -- for the individual projects. And as they go through them, they sometimes come to the situation where they would like more capital provided to fully build out a facility, especially with how quickly some of these state programs are moving and progressing in a positive way. And so with that, we have worked with our growers to amend the leases and provide additional capital, keeping in mind that that does not stop rent from the original -- from any original funding that was started and more than likely -- not more than likely, and most often, the leases are amended and extended and the -- when we do add additional tenant improvements. So you have that. And then you do have the fact that when -- like -- as what's happened in Illinois, the program has changed, not only going from the medical cannabis focus that we're primarily focused on, but these growers also then have the ability to participate in the adult-use program. And when that occurs, there's also additional demand for improvement dollars at our facilities.

And just to kind of add-on to that, John, many of our facilities do have expansion capacity within the buildings as well, especially when a new license -- when a new program rolls out in a state, the operators will get up and running within a portion of the building that supports that market. But then as that market continues to grow and add on, as Alan was indicating, they're able to grow into different portions of the building and add infrastructure which we support through the amendment tenant improvement.

[Operator Instructions].

All right. It appears, operator, that there are no more questions. So with that, we'd certainly like to thank all our stakeholders for their support. And I'd love to thank the team for just a fantastic quarter. And thank you all for your hard and dedicated work. With that, we'll sign off. Thank you, operator.

And we thank you, sir, also and to the rest of the management team for your time. Again, the conference call is now concluded. At this time, you may disconnect your lines. Thank you again, everyone, take care, and have a great day.