Although Innovative Industrial Properties, Inc. (IIPR) released quarterly financial results that showed impressive growth when compared to the same period last year, the market responded negatively to the announcement and pulled back after reporting earnings.
During the quarter, the NYSE traded cannabis real estate investment trust (REIT) recoded impressive growth and we want to highlight some of the most important data points from the quarterly financial report (for the period that ended on December 31st):
- Generated $27.1 million of revenue
- Recorded $21 million of net income
- Reported approx. $32.4 million of adjusted funds from operations (AFFO)
- Since October 1st, the company acquired 5 properties (California, Florida, Massachusetts and Washington) and executed seven lease amendments to make improvements at properties in Massachusetts, Michigan, NY, Ohio and Pennsylvania.
- Included in the acquisition of the five properties are four new properties and additional land to expand an existing property
- The cost associated with the 5 acquisitions, 7 lease amendments and a new lease at its Los Angeles property was $254.1 million in aggregate (consisting of purchase prices and commitments to fund future development and tenant improvements, but excluding transaction costs).
- As a result of the acquisitions, Innovative Industrial Properties has established new tenant relationships with leading United States multi-state-operators (MSOs)
There are several reasons for our bullish long-term view on Innovative Industrial Properties and we have highlighted a few key reason below:
- As of February 24, 2021, Innovative Industrial Properties owned 67 properties (have approx. 5.8 million rentable square feet) which were 100% leased with a weighted-average remaining lease term of approx. 16.7 years.
- As of December 31st, the cannabis real estate company has approx. $126 million of cash/cash equivalents and approx. $619.3 million of short-term investments. The company has a strong balance sheet and is well positioned to capitalize on the US cannabis real estate market
- From a geographic standpoint, we are favorable on the diversity of the assets that are owned by Innovative Industrial Properties. By focusing on limited license markets, the company is well positioned to benefit from medical and recreational cannabis markets in the US
- Since November, Innovative Industrial Properties has sold 1,762,500 shares from an at-the-market offering program and has generated approx. $262.9 million of net proceeds. The company expects to use the net proceeds to invest in specialized industrial real estate assets that support the regulated medical-use cannabis cultivation and processing industry.
- By strengthening the balance sheet and by forming strategic relationships with leading US MSOs, Innovative Industrial Properties is well positioned to record strong growth and improvements on a series of important financial metrics. The company has been steadily strengthening its balance sheet and can easily tap capital markets if it needs additional capital.
After Innovative Industrial Properties released fourth quarter financial results, the market initially responded negatively to the announcement and the shares are trading lower in the pre-market. We continue to believe that Innovative Industrial Properties represents an acquisition target for large REITs that want to enter the cannabis real estate industry.
If you are interested in learning more about the potential for Innovative Industrial Properties, please send an email to email@example.com with the subject “Innovative Industrial Properties” to be added to our distribution list.