Marijuana REIT Innovative Industrial Properties Q1 FY23 Revenue Grows 18% YoY To $76.1M

Innovative Industrial Properties, Inc., the first and only real estate company on the New York Stock Exchange IIPR focused on the regulated U.S. cannabis industry, released results for the first quarter ended March 31, 2023, revealing total revenues of approximately $76.1 million, compared to approximately $64.5 million for the same period in 2022, an increase of 18%.

Q1 2023 Financial Highlights

• Rental revenues for the three months ended March 31, 2023 also included approximately $4.2 million of security deposits applied for payment of rent for IIP’s leases with Green Peak, Parallel and Holistic. Total revenues for the three months ended March 31, 2023 and 2022 included approximately $5.2 million and $1.9 million, respectively, of tenant reimbursements for property insurance premiums and property taxes.

• Net income attributable to common stockholders of approximately $40.8 million, or $1.43 per diluted share; funds from operations (diluted) of approximately $57.5 million, or $2.04 per diluted share; normalized FFO of approximately $58.1 million, or $2.06 per diluted share; and adjusted funds from operations of approximately $63.4 million, or $2.25 per diluted share.

• IIP paid a quarterly dividend of $1.80 per common share on April 14, 2023 to stockholders of record as of March 31, 2023, equal to an annualized dividend of $7.20 per share. IIP’s AFFO payout ratio was 80%. The common stock dividends declared for the twelve months ended March 31, 2023, of $7.15 per common share represent an increase of $1.00, or 16%, over dividends declared for the twelve months ended March 31, 2022.

• Rent collection for IIP’s operating portfolio was 98%

  • Rent collection percentage for the quarter includes approximately $1.1 million of security deposits applied in connection with previously disclosed amendments with Holistic Industries Inc. at a California property and a Michigan property, pursuant to which 100% of base rent at the two properties will be paid through application of security deposits until September 30, 2023, with pro rata payback of those security deposits over twelve months starting in January 2024.

  • Rent collection percentage for the quarter also includes approximately $3.1 million of security deposits applied in connection with non-payment of rent by certain tenants, as previously disclosed (two affiliates of SH Parent, Inc. (Parallel) for a Texas property and a Pennsylvania property, and Green Peak Industries, Inc. for one property in Michigan). As of March 31, 2023, all security deposits for these properties were fully applied.

  • Contractual rent not collected totaled approximately $1.6 million (approximately $1.1 million relating to defaulted tenants Parallel and Green Peak for rent in excess of IIP’s security deposits and approximately $470,000 for rent prior to the sale of the Vertical portfolio).

Balance Sheet Statistics (as of March 31, 2023)

• 12% debt to total gross assets, with approximately $2.6 billion in total gross assets.

• Total quarterly fixed cash interest obligation of approximately $4.2 million.

• No secured debt.

• No debt maturities until May 2026, other than $4.4 million principal amount of 3.75% exchangeable senior notes in 2024.

• Debt service coverage ratio of 16.2x (calculated in accordance with the company’s 5.50% unsecured senior notes due 2026).

• Photo: Benzinga edit with photo by Kindel Media on Pexels

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