John SchroyerNovember 1, 2023
Rent collections for the REIT remained strong at 97%.
IIP Archives - Green Market Report
John SchroyerNovember 1, 2023
Debra BorchardtAugust 3, 2023
After the market closed on Wednesday, Innovative Industrial Properties, Inc. (IIP) (NYSE: IIPR) announced results for the second quarter ended June 30, 2023.
The cannabis REIT delivered total revenues of approximately $76.5 million in the quarter, representing an 8% increase from the prior year’s quarter. The company also reported net income of approximately $40.9 million for the quarter, or $1.44 per diluted share.
The company attributed the increase in revenue to activity in prior periods for the acquisition and leasing of new properties, additional building infrastructure allowances provided to tenants at certain properties that resulted in increases to base rent, tenant reimbursements and contractual rental escalations at certain properties.
The adjusted fund from operations (AFFO) of approximately $64.0 million, or $2.26 per diluted share, demonstrated increases of 6% and 5% from the prior year’s quarter, respectively.
Rent
IIP noted that rent collections for its clients were at 97%. However, the default from Parallel Cannabis represented $2.1 million in uncollected rent.
The company did manage to sign a lease on a building associated with another problem child, Kings Garden. IIP said it has a new tenant at the location in Cathedral City, CA.
IIP said in a statement that rental revenues in the quarter also included approximately $1.5 million of security deposits applied for payment of rent for IIP’s leases with Holistic and Temescal. Total revenues for the quarter included approximately $5.4 million of tenant reimbursements for property insurance premiums and property taxes.
John SchroyerMay 8, 2023
100% of the company's properties are leased.
Debra BorchardtMarch 21, 2023
Investor claims IIP lied about due diligence for Kings Garden.
StaffJanuary 30, 2023
The Daily Hit is a recap of the top financial news stories for January 30, 2023.
On the Site
IIP
An investor group is suing Innovative Industrial Properties (IIP) (NYSE: IIPR) for not doing proper due diligence in its Kings Garden investment. Investor Michael Mallozzi originally sued IIP in April 2022, when the Blue Orca Capital report came out. He was then joined by investors Alejandro Handal and Stephen Forrester. They are claiming IIP mislead investors, was incompetent, and broke securities laws. In December, IIP asked the court to dismiss the case, but the latest brief asks the court to deny that request to dismiss because IIP was aware that Kings Garden was a Ponzi scheme while telling investors everything was OK. Read more here.
Akerna
Akerna Corp. (Nasdaq: KERN) said on Friday afternoon that it will merge with a bitcoin mining company and offload its software business to POSaBIT Systems Corporation (CSE: PBIT) (OTC: POSAF) for stock and cash, respectively. Akerna will sell its MJ Freeway business units, including MJ Platform and Leaf Data System brands, and Ample Organics to POSaBIT for $4 million in cash. The company said it plans to use the proceeds of the transaction, after expenses, to pay its remaining outstanding accounts payable and pay down any remaining principal balance on its outstanding senior secured convertible notes, in addition to net cash requirements associated with the proposed merger between Akerna and Gryphon. Read more here.
Flora Growth
Flora Growth Corp. (NASDAQ: FLGC) released its revenue guidance for the fiscal year 2023 as the company forecasted a range of $90 million to $105 million. Flora said that its estimates reflect expected organic growth in the House of Brands division and expansion of the Commercial & Wholesale division capabilities. The stock was jumping 18% in early trading on the news and was lately selling at 31 cents. However, it still has a long way to go to regain the Nasdaq’s minimum $1.00 bid price requirement. Read more here.
Ayr Wellness
The acquisition of Chicago marijuana retailer Dispensary 33 went up in smoke amid a cash crunch caused by a steep decline in cannabis stocks and a sharp increase in interest rates. Miami-based Ayr Wellness (OTC: AYRWF) said on Jan. 27 it’s not going to complete the $55 million acquisition of D33, a popular independent marijuana retailer. The deal was announced in November 2021, about a year after Ayr went public. Read more here.
Okay Cannabis
The Chicago restaurant group behind West Town Bakery is teaming up with a new dispensary that’s opening in suburban Wheeling next month, and it’ll be part bakery and cafe, part marijuana shop. The store, called Okay Cannabis, will essentially have a West Town Bakery Cafe & Lounge operating alongside the marijuana shop. The shop will serve Dark Matter coffee, pastries, sandwiches, and cocktails, and it will have an outdoor patio that seats more than 100 people. Instead of staging customers in a waiting area like most dispensaries do, the idea is to let them hang out at the cafe, said Scott Weiner, co-owner of Fifty/50 Restaurant Group. Read more here.
In Other News
IM Cannabis Corp. (NASDAQ: IMCC) (CSE: IMCC)has closed a third tranche of its previously announced non-brokered private placement offering of units of the company. An aggregate of 1,162,000 Units at a price of $1.25 per Unit for aggregate gross proceeds of $1,452,500 was issued and sold under the third tranche of the LIFE Offering. To date, the company has also closed during the first and second tranches for aggregate gross proceeds of $3,024,153. Read more here.
CBD of Denver, Inc. (OTC Pink: CBDD) announced the successful completion of its acquisition of Libra 9 GMBH. The company is in the process of relocating its operations to the Libra 9 campus in Berlin, Germany. Libra 9 has the necessary infrastructure in place to scale up manufacturing and warehousing, enabling the company to immediately expand its sales throughout the rest of Europe. Read more here.
Debra BorchardtJanuary 19, 2023
Innovative Industrial Properties, Inc. (IIP)(NYSE: IIPR) announced that its rent collections have dropped from 100% at this time last year to just 92% for the month ending January 31, 2023. The company said it had collected 97% of its rent at the end of December. The company’s stock was plunging by over 14% on the news to lately sell at $94. This is a huge drop from the 52-week high of $211.
The cannabis REIT (Real Estate Investment Trust) outlined the various cannabis companies that have slipped in their rent payments.
Missed Rent Payments
IIP reported that SH Parent, Inc. also known as Parallel was in default on its obligations to pay rent at one of IIP’s Pennsylvania properties (approximately 2.9% of invested/committed capital). However, IIP did note that rent was paid in full through January 31, 2023, on all other IIP properties leased by Parallel.
In addition to Parallel, Green Peak Industries, Inc. (Skymint) was in default on its obligations to pay rent at one of IIP’s Michigan properties under construction (approximately 2.7% of invested/committed capital). However, rent was paid in full through January 31, 2023, on all other IIP properties leased by Skymint.
In California, Affiliates of Medical Investor Holdings, LLC (Vertical) were in default on their obligations to pay rent at IIP’s California properties (approximately 0.7% of invested/committed capital).
Lease Adjustments
IIP also made changes to some lease agreements to include cross-default provisions and/or extend lease terms in exchange for limited base rent deferrals. One California property and one Michigan property leased by Holistic (approximately 1.8% of invested/committed capital in the aggregate) have used security deposits in order to pay the leases. In addition to that, one Missouri property leased by Calyx Peak, Inc. (approximately 1.2% of invested/committed capital) received a 100% base rent deferral through March 31, 2023, with pro-rata payback over the following 12 months and an extended term of the lease, with no other adjustments to lease terms.
There is also trouble with the Kings Garden, which has said it is looking for a merger. For now Kings Garden is paying rent for the four properties in California that it continues to occupy, including rent on the capital invested in the expansion project which is a part of the lease of one of the properties. However, there are two properties that were leased to Kings Garden and it seems the company is trying to get leave. The San Bernardino property (approximately 192,000 rentable square feet), which IIP said it is actively evaluating alternative non-cannabis uses for the property due to market conditions in California and changes in the zoning of the property. The Cathedral City property (approximately 23,000 rentable square feet), which IIP said it has executed a letter of intent to lease the property and is negotiating lease terms with the potential tenant. However, IIP said there can be no assurance that it will lease the property on the terms anticipated, or at all.
Portfolio
IIP says it now owns 110 properties located in 19 states, representing a total of approximately 8.7 million rentable square feet (including approximately 1.9 million rentable square feet under development/redevelopment). The company states that no tenant represents more than 14% of the total portfolio and no state represents more than 16% of the total portfolio. Parallel accounted for 10% of the company’s rental revenues and PharmaCann accounted for 12%. As Parallel defaulted on its debts, many were wondering if the company was continuing to pay rent on its properties and now that question has been answered. Multi-state operators (MSOs) represent 85% of the operating portfolio and public company operators represent 55% of the operating portfolio.
With regard to the balance sheet, the company stated the following:
- 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 $6.4 million principal amount of 3.75% Exchangeable Senior Notes in 2024.
StaffMay 5, 2022After the market closed on Wednesday, Innovative Industrial Properties, Inc. (IIP) (NYSE: IIPR) announced results for the first quarter ending March 31, 2022. The cannabis REIT delivered total revenues of approximately $64.5 million in the quarter, representing a 50% increase from the prior year’s quarter. However, it missed the Yahoo Finance Average analyst estimate for revenues of $67 million.
IIP said that the increase was driven primarily by the acquisition and leasing of new properties, additional improvement allowances, and construction funding at existing properties resulting in adjustments to base rent, and contractual rental escalations at certain properties.
IIP recorded net income attributable to common stockholders and net income attributable to common stockholders per diluted share of approximately $34.7 million and $1.32, respectively. This also missed the average analyst estimate for earnings of $1.41.
The funds from operations (FFO) (diluted) and FFO per diluted share of approximately $48.9 million and $1.86, respectively; normalized FFO, which adds back to FFO acquisition-related expense and the loss on exchange of a portion of the Exchangeable Senior Notes during the three months ended March 31, 2022 (Normalized FFO).
Plus a Normalized FFO per diluted share of approximately $49.1 million and $1.87, respectively; and AFFO and AFFO per diluted share of approximately $53.8 million and $2.04, respectively. For the three months ended March 31, 2022, FFO (diluted), Normalized FFO, AFFO and FFO, Normalized FFO and AFFO per diluted share include the dilutive impact of the assumed full exchange of the Exchangeable Senior Notes for shares of common stock.
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