Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Dec. 31, 2020
Deferred Rents Receivable  



The Company is the lessor under several operating leases which contain rent holidays, escalating rents over time, options to renew, requirements to pay property taxes, insurance and/or maintenance costs, and contingent rental payments based on a percentage of monthly tenant revenues. The Company is not the lessor under any finance leases.


The Company recognizes fixed rental receipts from such lease agreements on a straight-line basis over the expected lease term. Differences between amounts received and amounts recognized are recorded under Deferred Rents Receivable on the balance sheet. Contingent rentals are recognized only after tenants’ revenues are finalized and if such revenues exceed certain minimum levels.


The Company leases the following owned properties:


  Delaware – a 45,000 square foot facility purchased in September 2016 and developed into a cannabis cultivation, processing, and dispensary facility which is leased to a cannabis-licensed client under a triple net lease that commenced in 2017 and expires in 2035.
  Maryland – a 180,000 square foot former manufacturing facility purchased in January 2017 and developed by the Company into a cultivation and processing facility which is leased to a licensed cannabis client under a triple net lease that commenced 2018 and expires in 2037.
  Massachusetts – a 138,000 square foot industrial property of which approximately half of the available square footage is leased to a non-cannabis manufacturing company under a lease that commenced in 2017 and expires in 2022.
  Illinois – two 3,400 square foot free-standing retail dispensaries in the cities of Anna and Harrisburg and leased to the KPGs, each under a 20-year lease that commenced in 2018. With the acquisition of the KPGs as disclosed in Note 3 – Acquisitions, this lease was eliminated upon the consolidation of the KPGs in October 2019. Accordingly, the rental receipts on such leases have been removed from the table of future minimum rental receipts below.


The Company subleases the following property:


  Delaware – 4,000 square feet of retail space in a multi-use building space which the Company developed into a cannabis dispensary and is subleased to its cannabis-licensed client under a under a triple net lease expiring in 2021 with a five-year option to extend.


As of December 31, 2020 and 2019, cumulative fixed rental receipts under such leases approximated $13.9 million and $9.5 million, respectively, compared to revenue recognized on a straight-line basis of approximately $15.8 million and $11.3 million. Accordingly, the deferred rents receivable balances at December 31, 2020 and 2019 approximated $1.9 million and $1.8 million, respectively.


Future minimum rental receipts for non-cancelable leases and subleases as of December 31, 2020 were:

2021   $ 4,667,497  
2022     4,590,656  
2023     4,292,769  
2024     4,348,027  
2025     4,412,299  
Thereafter     39,578,055  
Total   $ 61,889,303  


In February 2021, the Company entered into a five-year lease agreement for a 12,000 square foot premises located in Wilmington, DE which the Company intends to develop into a cannabis production facility with offices, and sublease to its cannabis-licensed client in this state. The lease contains an option to negotiate an extension at the end of the lease term.