Fersko: Real estate investment opportunities - NJ Cannabis Media
Real estate is a prime area of interest for investors as New Jersey continues to inch toward adult-use legalization of cannabis and expansion of the medical marijuana program.
Jack Fersko, the head of Greenbaum Rowe Smith & Davis LLP’s cannabis practice group, offered advice during an interview with National Real Estate Investor, including identifying properties for potential cannabis operations.
“Once recreational use is legalized, owners can get a premium for these assets,” he said, noting that this is especially true for industrial assets.
After Governor Phil Murphy’s announcement earlier this year that adult-use cannabis would be legal within the first days of his administration – as we know that still hasn’t happened – investors sought industrial properties that would suit the industry. One client offered to pay $300,000 above asking price for one asset, Fersko said.
Obsolete class-B and -C industrial and office buildings in less desirable locations are a good fit for cannabis operations, he said, in what is a tight industrial market in the state.
He cautioned that issues surrounding site selection include: title, insurance, ventilation systems, power requirements and the extensive security required for marijuana operations.
Richard Acosta, CEO and managing partner of Beverly Hills, Calif.-based Inception Real Estate Investment Trust (I-REIT), said that legalization will have a significant impact on the New Jersey real estate market due to already high property values and the anticipated size of the cannabis end-user market.
“Those owners in the right zoning areas of New Jersey will make a lot of money overnight,” Acosta said.
Funded with capital from family office and high-net-worth individuals, I-REIT is a new funding platform focused on providing real estate debt and equity capital solutions to the rapidly growing U.S. medicinal and adult-use cannabis industry.
Acosta said that rents paid by cannabis operators are generally two to three times higher as those paid by tenants in other industries.