Our Approach
Rainbow Realty Group does not invest directly in cannabis equities. Rainbow Realty Group is a real estate financier who works with cannabis tenants and borrowers in the U.S. Rainbow underwrites retail and industrial real estate based on its non-cannabis value. Rainbow will purchase or mortgage real property, depending on the operator’s needs. When reviewing potential deals, our analysts focus on LOCATION, BUSINESS, PRICE & TEAM.
Fundamentals
Patience
Rainbow Realty Group has been operating in the real estate industry since 1962 and in the cannabis industry since 2018. The organization is extremely selective when deploying capital. Rainbow Realty Group has flourished during the last 3 years - the most challenging times that the cannabis industry has faced - due to its careful underwriting standards. Our team has reviewed thousands of opportunities, but we have closed on less than 30 transactions. Simply put, RRG is the tortoise in the race.
Diligence
When reviewing any potential deal, our team conducts rigorous diligence to best quantify the risk and opportunity. We consult local real estate brokers who know the market, and we speak to cannabis industry insiders that know the counterparty. Our real estate valuations are based on market non-cannabis rents for traditional retail and industrial users in the given location. Rainbow Realty Group does not finance ground up construction. This standard diligence and underwriting practice has kept Rainbow Realty Group safe. RRG has recorded 0 losses on 57 properties financed since inception.
Selectivity
Rainbow Realty Group has taken a very conservative approach to the industry. 95% of opportunities we review do not make it past step one, which is the real estate evaluation. Once we are satisfied that the real estate bid/ask is market non-cannabis for the area, we will then dissect the counterparty’s business model to ensure we believe in the plan and viability of the counterparty. Once satisfied with the real estate and the counterparty, our investment team will formally present to our investment committee, which has over 210 years of combined real estate experience.
Flexibility
Rainbow Realty Group purchases real property and Rainbow Realty Group mortgages real property. The dual offering allows RRG to work with potential borrowers and tenants to craft a deal that works. Sometimes cannabis companies don’t know what they want or need. RRG’s flexibility is a huge advantage, in an industry where the demand for capital far exceeds the capital available.
Sale- Leasebacks
Senior Mortgage
Case Studies
Full list of repaid loans and completed sales here
Case Study - Repaid Loan
In October 2023, Fund I was refinanced out of a loan it made in June 2021.
Counterparty
Location
Type
Cannabis grower, cultivator, & distributer
Detroit, Michigan
Loan
$10,500,000
Loan Size
27 Months
Hold Period
1.34x
Equity Multiple
14.53%
Actual Unlevered Deal XIRR
Case Study - Completed Sale
In early 2022, Fund I completed a sale of 5 assets it purchased in 2019.
Counterparty
Location
Type
Cannabis Cultivation and Dispensaries
Denver, Colorado
Sale-Leaseback
$3,400,000
Acquisition Price
Hold Period
$4,750.000
Sale Price
33%
Actual Unlevered Deal IRR
Case Study - Repaid Loan
In March 2024, our tenant in Ravenna, Ohio, purchased the building and paid off the loan that was made in 2022.
Counterparty
Location
Type
Cannabis Dispensary
Ravenna, Ohio
Loan
33%
Profit Participation Interest
17 Months
Hold Period
1.69x
Equity Multiple
52.16%
Actual Unlevered Deal IRR
Contact Us
420 Lexington Avenue
New York, NY 10170
investors@rainbowrg.com
jack@rainbowrg.com
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