SAN DIEGO — Innovative Industrial Properties Inc., the first and only real estate company on the New York Stock Exchange focused on the regulated U.S. cannabis industry, reported results for the fourth quarter and year ended December 31, 2024.
Full Year 2024
- Total revenues of $308.5 million.
- Net income attributable to common stockholders of $159.9 million, or $5.52 per share (all per share amountsare reported on a diluted basis unless otherwise noted).
- Adjusted funds from operations (AFFO) of $256.1 million, or $8.98 per share, and normalized funds from operations (normalized FFO) of $231.0 million, or $8.10 per share.
- Declared dividends to common stockholders totaling $7.52 per share, increasing IIP’s common stock dividends declared each year since its inception in 2016.
- Committed over $70 million for the payment of purchase prices and funding of qualifying building infrastructure improvements for two property acquisitions and lease amendments for three properties.
- Released 530,000 square feet totaling ~6% of the total portfolio’s rentable square feet.
- Improved liquidity by increasing IIP’s revolving credit facility capacity from $30.0 million at December 31, 2023 to $87.5 million at December 31, 2024.
- At year-end, IIP’s portfolio totaled $2.5 billion of invested / committed capital and was comprised of 109 properties totaling 9 million rentable square feet in 19 states.
Financial Results and Dividend
- Total revenues of $76.7 million for the quarter.
- Net income attributable to common stockholders of $39.5 million for the quarter, or $1.36 per share.
- AFFO of $63.4 million, or $2.22 per share.
- Paid a quarterly dividend of $1.90 per common share on January 15, 2025 to stockholders of record as of December 31, 2024.
Financing Activity
In November, upsized IIP’s revolving credit facility from $50.0 million to $87.5 million, which remains undrawn as of today.
Balance Sheet Highlights (at December 31, 2024)
- 11% debt to total gross assets, with $2.6 billion in total gross assets.
- Total liquidity was $238.7 million as of December 31, 2024, consisting of cash and cash equivalents and short-term investments (each as reported in IIP’s consolidated balance sheet as of December 31, 2024) and availability under IIP’s revolving credit facility.
- No debt maturities until May 2026.
- Debt service coverage ratio of 16.8x (calculated in accordance with IIP’s 5.50% Unsecured Senior Notes due 2026).
Portfolio – New Investment, Leasing and Development
In October, acquired a 23,000 square foot Maryland property for $5.6 million and executed a long-term lease with a subsidiary of Maryland Cultivation and Processing, L.L.C. (MCP) for use as a regulated cannabis processing facility.
In November, leased 160,000 square feet at IIP’s New Beaver Avenue property in Pittsburgh, Pennsylvania to Tri-Mountain Pure, a licensed Pennsylvania grower-processor.
In November, leased 6,000 square feet at IIP’s North Anza Road and Del Sol Road property in Palm Springs, California to a non-cannabis tenant.
Property Portfolio Statistics (as of December 31, 2024)
Total property portfolio comprises 109 properties across 19 states, with 9.0 million RSF (including 666,000 RSF under development / redevelopment), consisting of:
Operating portfolio: 106 properties, representing 8.5 million RSF.
Under development / redevelopment portfolio consists of three properties expected to comprise 491,000 RSF at completion and are as follows:
236,000 square feet located at 63795 19th Avenue in Palm Springs, California (pre-leased)
192,000 square feet located at Inland Center Drive in San Bernardino, California
12-acre development site located at Leah Avenue in San Marcos, Texas
Operating portfolio:
- 98.3% leased.
- Weighted-average remaining lease term: 13.7 years.
- Total invested / committed capital per square foot: $281.
- By annualized base rent (excluding non-cannabis tenants that comprise less than 1% of annualized base rent in the aggregate):
- No tenant represents more than 17% of annualized base rent.
- No state represents more than 15% of annualized base rent.
- Multi-state operators (MSOs) represent 90% of annualized base rent.
- Public company operators represent 62% of annualized base rent.
- Industrial (cultivation and/or processing), retail (dispensing) and combined industrial/retail represent 92%, 2% and 6% of the operating portfolio, respectively.
Year-to-Date 2025
Investment Activity
Under contract for a 20,000 square foot Maryland property for $7.8 million. Closing remains subject to diligence and closing conditions.
Senior Leadership Promotions
In January, Tracie Hager was appointed Senior Vice President, Asset Management after previously serving as Vice President, Asset Management. Ms. Hager has been with the company since October 2019.
In January, Kelly Spicher was appointed Senior Vice President, Real Estate Counsel after previously serving as Vice President, Real Estate Counsel. Ms. Spicher has been with the company since September 2019.
PharmaCann Resolution
As previously reported on January 30, 2025, IIP reached an agreement to resolve the existing lease defaults with PharmaCann Inc. and its affiliates \under leases for eleven properties that the Company owns. Key terms of the agreement between PharmaCann and IIP are as follows:
Fully utilized security deposits to cover the defaulted rent in full for December 2024 and January 2025, along with certain penalties.
Amended leases for nine properties located in New York, Illinois, Pennsylvania, Ohio and Colorado by reducing cumulative total base rent from $2.8 million per month to $2.6 million per month, with cash rent payments commencing February 1, 2025. Total required security deposits were also increased.
PharmaCann will work with IIP to transition two cultivation properties in Michigan and Massachusetts to new tenant(s) by contributing the licenses, subject to regulatory requirements, and providing other support as requested by IIP. If the properties have not been transitioned to new tenant(s) by August 1, 2025, IIP will regain full control and PharmaCann will have no further obligations under the Leases for these properties. Monthly base rent of $1.3 million will be abated in full effective February 1, 2025.
In consideration for IIP entering into these amendments:
Additional equity capital is being contributed to PharmaCann by certain of PharmaCann’s current investors
PharmaCann issued an interest-bearing, secured promissory note to IIP (the “Note”), which matures February 1, 2035 (or earlier upon a change of control or certain other events). The Note is junior to PharmaCann’s existing senior secured facility and is secured by all of PharmaCann’s assets, including licenses, where allowed by law.
PharmaCann agreed that, except for refinancing the existing senior secured credit facility and the additional equity investments, it may not incur additional indebtedness without IIP’s consent until full repayment of the Note or its cancellation.
If PharmaCann is not able to refinance its existing senior secured credit facility maturing June 30, 2025, all modifications to the Leases described herein will immediately be null and void and the Leases will revert to the terms in effect as of January 1, 2025 and the Note will be cancelled.
Select Financial Results
For the three months ended December 31, 2024, IIP generated total revenues of $76.7 million, compared to $79.2 million for the same period in 2023, a decrease of 3%. This decrease was primarily related to certain properties we took back possession of or sold since 2023, lease amendments that adjusted and deferred rent for certain properties, partial payment of rent by certain tenants and two leases that were classified as sales-type leases starting in January 2024 where rental revenue collected is recognized as a deposit liability and is included in other liabilities in our consolidated balance sheet as of December 31, 2024. The decrease was offset by amendments to leases for additional improvement allowances at existing properties that resulted in adjustments to rent, revenue from the two properties acquired in 2024 and contractual rent escalations on our other existing properties.
For the three months ended December 31, 2024, IIP applied $5.7 million of security deposits for payment of rent on properties leased to five tenants. For the three months ended December 31, 2023, IIP applied $0.8 million of security deposits for payment of rent on a property leased to one tenant.
While IIP has re-leased several properties that we regained possession of, the rent commencement on certain of these properties is contingent on the tenants obtaining the requisite approvals to operate. IIP has also granted temporary rent abatements in certain instances as tenants transition into the properties and commence operations. As a result, IIP does not expect to recognize rental revenue from those properties until such events have occurred.
For the year ended December 31, 2024, IIP generated total revenues of $308.5 million, compared to $309.5 million for 2023, a decrease of under 1%. The decrease in total revenues was primarily related to certain properties we took back possession of or sold since 2023, lease amendments that adjusted and deferred rent for certain properties, partial payment of rent by certain tenants and two leases that were classified as sales-type leases starting in January 2024 where rental revenue collected is recognized as a deposit liability and is included in other liabilities in our consolidated balance sheet as of December 31, 2024. The decrease was partially offset by the $3.9 million disposition-contingent lease termination fee that was received in connection with the sale of our property in Los Angeles, California, amendments to leases for additional improvement allowances at existing properties that resulted in adjustments to rent, revenue from the two properties we acquired in 2024 and contractual rent escalations on our other existing properties.
IIP paid a quarterly dividend of $1.90 per common share on January 15, 2025 to stockholders of record as of December 31, 2024, representing an annualized dividend of $7.60 per common share and an AFFO payout ratio of 86% (calculated by dividing the common stock dividend declared per share by IIP’s AFFO per common share for the fourth quarter). The common stock dividends declared for the twelve months ended December 31, 2024 totaled $7.52 per common share. IIP has increased its common stock dividends declared each year since its inception in 2016.
About Innovative Industrial Properties
Innovative Industrial Properties Inc. is a real estate investment trust (REIT) focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated cannabis facilities.
