Rainbow Realty rescues cannabis businesses with low-cost financial and real estate support – Brt Realty Trust (BRT)

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One of the main obstacles to the growth of the cannabis industry is access to capital. Several companies in space have lamented the uneven playing field in terms of access to money to grow their businesses.

Due in part to the lack of a legal framework to support the cannabis industry, businesses are unable to borrow at the favorable rates at which traditional banks lend to non-cannabis businesses. This has been a bane of the industry for years.

These challenges mean that much remains to be done for the cannabis market to reach $ 70.6 billion in monetary terms by 2028, experts predict.

Companies and individuals keep their fingers crossed and hope that Safe Banking Law of 2021, currently under review by the US Senate. Many believe the Law will fix financial transactions and legal problems that could prevent the industry from realizing its full potential in the long term.

Inexpensive Rainbow Realty Funding

Photo: Flower One – Las Vegas

In terms of access to capital, several companies are doing their best to lend to cannabis-related businesses. One company that stands out from the crowd is LLC “Rainbow Realty Group”

Rainbow is a real estate owner, lender and investment company specializing in the US cannabis industry. The New York-based company provides the necessary capital access and support that renters and borrowers have dreamed of.

It serves as a lifesaver for businesses at a time when open stock markets in the cannabis industry have dried up and even the largest and most experienced operators are looking for new ways to finance their business expansion.

For some time, access to investment capital has diminished significantly due to market conditions resulting from grow at any cost the approach that many operators have preferred to implement. This led to the fact that most operators were unable to find capital to expand their activities.

And, since traditional financing is inadequate, Rainbow is striking a series of deals with operators to help them at a time when growth is critical to capitalizing on market opportunities.

The company’s investment provides capital to operators through sale and leaseback transactions and high-profile secure mortgages, giving cannabis companies the ability to leverage their existing assets at market rates with flexible structures tailored to the operator’s specific needs.

The Rainbow team has over 60 years of experience in real estate development and management, as well as 10 years of experience in the cannabis market. The company currently owns real estate in California, New Jersey, Nevada, Colorado, Iowa, Oregon and Michigan.

Insufficient capital

Photo: Holistic Industries – San Francisco

Kyle Schoenfeld, President of Rainbow Realty Group, speaking exclusively with Benzinga, noted that there are not enough competitors to meet the needs of the industry.

“New states are going online, which means new opportunities and more operators need capital, but you don’t see changes in federal legislation, which means institutional investors are not coming and banks are not really coming. So, although some competitors have, demand really exceeds supply. “

Schönfeld was a real estate attorney at Herrick Feinstein, LLP from 2013 to 2016. He subsequently joined Gould Investors, and in 2018, along with CEO Matt Gould, he co-founded the Rainbow Realty Group. As President, Schoenfeld leads Rainbow’s fundraising and creation activities.

The company provides clients with two products: sale and leaseback, in which an existing property is purchased and then leased to cannabis companies, and mortgage financing secured by real estate or existing property, which allows operators to retain ownership of their property. …

Schönfeld added: “For example, a company has the option to buy a property, but they don’t want to invest all the money, so we lend them most of the money to buy it, or they are almost done with their construction and we lend them some of the money to finish his “.

Sale and leaseback is longer term – it is a 10 or 15 year lease with options, and a mortgage is a short term product for 2 to 4 years with a prepayment option.

Two key things set Rainbow apart from others in the industry. Other companies guarantee the value of cannabis versus traditional property values ​​and therefore do justice to large improvement budgets that are not in the mainstream real estate industry. Rainbow, on the other hand, provides loans based on the value of reusable (non-cannabis) real estate and is therefore more immune to loss.

“We analyze the downside, that is, we guarantee the non-cannabis property value or the typical property value for a given building. As a result, we lend or buy at a lower price per foot than our competitors. We can do this by keeping rates low and flexible, which means we can rent back or mortgages and our mortgages can be paid in advance, ”Schönfeld said.

Sharing a brief comment on the Safety Law and what the cannabis industry can get, he said: “Even if the Safety Law is passed, this is unlikely to solve the problem. I predict that the Security Law will allow banks to act as custodians – holders of money, but not financiers – creditors. ”

Rainbow products and reputation

Photo: Glorious – Orion Township

RRG prides itself on being honest with its clients, which is really rare in the cannabis industry.

“The cannabis companies we work with really value honesty. We honor our word on the terms of the deal and do not commit ourselves to deals that we cannot finance. The industry is filled with people who make deals and then call people like us to co-invest with them. There are many syndications, ”added Schoenfeld.

Rainbow, which started the business with financial support from mostly friends and family, recently completed a $ 47 million fundraiser. Of this amount, more than $ 16 million was received from the Gould / Schönfeld family. The company is currently raising a second fund with a goal of $ 100 million.

Affiliated companies

Rainbow Realty Group, with its subsidiaries, is a close-knit family business offering expertise in a variety of investment areas. The company draws on the experience of a number of general partners with a proven track record in managing development and property management companies. Rainbow is associated with the following successful companies.

Gould Investors LP

Gould Investors is a limited liability partnership that owns and operates a diversified portfolio of real estate assets located throughout the United States. Unlike many other real estate investors, Gould is more focused on long-term value than short-term value. IRR returns. Gould Investors is Rainbow’s largest investor, and several of its members sit on the Rainbow Investment Committee. Matt Gould, CEO of Gould Investors, is also the CEO and CIO of Rainbow.

BRT Apartments Corp.

BRT Apartments Corp. (formerly known as BRT Realty Trust) is a real estate investment fund (REIT) traded on the New York Stock Exchange (NYSE):BRT). It focuses on investing directly and through joint ventures, acquiring existing apartment buildings, and, to a limited extent, building apartment buildings from scratch.

BRT Apartments has a 24-year history of lending to high temperature mezzanines. Since 1983, Gould has been the largest investor and manager of BRT Apartments (and its predecessor, BRT Realty Trust).

One Liberty Properties, Inc.

One Liberty Properties (NYSE:OLP) acquires, owns and operates a diversified portfolio of net leased assets in the United States. In a net lease, the tenant is responsible for paying property taxes, insurance, and ongoing maintenance and repairs.

One Liberty Properties owns 121 properties in 31 states, approximately 60% of which are industrial properties and the rest primarily retail.

Majestic Property Management Corp.

Majestic Property Management Corp. is a privately owned real estate organization specializing in management, contracting and renting.

Low risk investments

Schoenfeld noted that the cannabis industry is an incredibly growing industry with many private opportunities.

He noted that there are several ways to make huge profits in the industry, but “on the other hand – 280E the tax is still in place – and it is really difficult for these companies to make a net profit after taxes. “

While some people may be too careful to take risks in the cannabis industry, Rainbow offers access to the industry with a lower risk profile. Due to demand, Rainbow is raising a second fund. For questions please contact tyler@rainbowrg.com

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