Cannabis REIT Giant IIPR Reports Q3 $39.7M Profit Despite Rent Delays In Sector

Innovative Industrial Properties, Inc. IIPR, a real estate investment trust (REIT) focused on cannabis released its Q3 2024 results Wednesday afternoon, reporting solid profitability despite tenant-related rent delays.

Key Financial Highlights

• Revenue: $76.5 million, down 1.7% from Q3 2023 due to tenant-related adjustments.
• Net Income: $39.7 million, or $1.37 per share, a 6% decrease year-over-year.
• Adjusted Funds from Operations (AFFO): $64.3 million, or $2.25 per share, down 2% from Q3 2023.
• Dividend: Distributed $1.90 per share on October 15, with an AFFO payout ratio of 84%.

Managing Rent Delays

The company reported a net income of $1.37 per share for Q3 2024, which fell short of the anticipated earnings per share (EPS) of $2.29. This discrepancy is primarily due to tenant-related rent delays and adjustments. According to the release, some of IIP's revenue challenges stemmed from rent delays and adjustments linked to specific tenants.

Since June 2023, IIP has regained possession of certain properties, resulting in a $3.0 million revenue dip for Q3.

Additionally, IIP experienced a $1.3 million reduction in rent due to reclassification of two leases and $1.3 million in uncollected rent and management fees.

To mitigate these impacts, IIP applied security deposits for rent on properties leased to companies like 4Front Ventures, TILT Holdings and Emerald Growth Holdings, helping to maintain cash flow.

Additionally, several re-leased properties have rent start dates contingent upon tenants securing necessary operational approvals. In certain cases, IIP has also provided temporary rent abatements to new tenants during their transition.

Get Benzinga’s exclusive analysis and the top news about the cannabis industry and markets daily in your inbox for free. Subscribe to our newsletter here. If you’re serious about the business, you can’t afford to miss out.

Read Also: A Glimpse of Innovative Ind Props’s Earnings Potential

Portfolio Expansion And Financial Stability

IIP continued expanding, acquiring a 23,000-square-foot facility in Maryland and completing 104,000 square feet of cultivation space in Michigan.

The company's portfolio spans 108 properties across 19 states, with an average lease term of 14 years and a 95.7% occupancy rate.

With $2.6 billion in assets, an 11% debt ratio and $222.4 million in liquidity, IIP remains financially robust.

IIPR Stock Price Action

The stock for IIPR suffered today, closing at $123, a 7,3% decrease during Wednesday’s trading session. The downturn in the stocks comes amid a general downturn in the cannabis sector, which might be explained by the changing political scenario that added selling pressure on cannabis stocks.

• Read Next: $2.6B In Assets, 11% Debt Ratio And Dividend Boost: IIPR Cannabis Real Estate Stock Reports Q2 Results

COVER: IA generated image