Pelorus Equity Group, a provider of commercial real estate loans for the cannabis sector, closed its $45.5 million debt financing agreement with TerrAscend, and its subsidiaries, TerrAscend NJ and HMS Hagerstown. TerrAscend is a North American cannabis operator with operations in Pennsylvania, New Jersey, Maryland, Michigan and California, as well as licensed production in Canada. Proceeds from the loan, which closed Oct. 11, will support TerrAscend’s ongoing growth initiatives.
“With this agreement, we are excited to help fuel TerrAscend’s growth and long-term business goals,” Dan Leimel, CEO of Pelorus Equity Group and manager of the Pelorus Fund, said. “Our investment and lending philosophy is focused on being honest, upfront and doing what we say we’re going to do for both our borrowers and our investors. As the demand for capital continues to increase in tandem with the growth of the cannabis industry, we plan to deliver even more innovative, flexible lending solutions and stabilized loans like this one to meet the needs of a wide range of clients, including MSOs, SSOs and ancillary businesses.”
“We are pleased to announce this non-dilutive financing at attractive terms given the current market environment,” Jason Wild, executive chairman of TerrAscend, said. “The Pelorus team has been a pleasure to work with, delivering exactly what they promised. We look forward to a long successful partnership as we continue to grow.”
Under the terms of the agreement, Pelorus has issued a floating rate loan currently bearing interest of 12.77% based on prevailing Secured Overnight Financing Rate (SOFR), with a 2.5% SOFR floor. The duration of the loan is 60 months, with a minimum earned interest period of 36 months. The loan is secured by the borrowers real estate assets in New Jersey and Maryland and is subject to customary covenants and requirements.
“We really enjoyed working with the TerrAscend team on our first deal together – they were great throughout the entire process,” Travis Goad, managing partner of Pelorus Equity Group, said. “As the largest privately held commercial real estate lender in cannabis, we are seeing an increase in deals coming through our pipeline, and are strategically closing on them – even during this time of market volatility. With the longest history in the space of deploying capital successfully and seeing it returned, we spend a lot of time underwriting the company we’re working with, the real estate and the projections prior to making any loans. As more states come online and transition from medical to adult use, we remain excited about new opportunities in expanding markets like Maryland and New Jersey, and we are also closely following emerging markets like Alabama and Mississippi and will continue to look for strong sponsors, great projects and attractive markets.”
