Innovative Indus SEC Filings

Innovative Industrial Properties, Inc. completed the initial closing of a previously announced preferred equity investment in IQHQ REIT on September 30, 2025 through its subsidiary IIP Life Science Investments LLC. The subsidiary purchased Series G-1 Preferred Stock at $1,000 per share for a total investment of approximately $5.0 million and received a warrant exercisable for common equity units equal to 1.5% of fully diluted IQHQ Holdings, LP. On the same date, IIP Life Science funded a committed loan of $100.0 million to IQHQ OP, bringing total funded amounts under the related reserve credit facility to $400.0 million. The Company also obtained a contractual right of first offer on certain IQHQ real estate assets. The report lists related agreements and a press release as exhibits and is signed by CFO David Smith.

Innovative Industrial Properties, through its operating partnership IIP OP, agreed to a multi-part strategic investment in IQHQ entities consisting of up to $170.0 million to purchase cumulative redeemable preferred stock and a $100.0 million committed lender role in a revolving credit facility. The preferred shares carry a 10.0% cash dividend and an initial 5.0% PIK dividend, with PIK step-ups and certain penalty mechanics tied to Trigger Events.

The transaction includes equity warrants (initial 1.5% and subsequent 3.5% coverage at $0.01 exercise price), a contractual right of first offer on IQHQ real estate sales, the right to appoint a voting director (intended to be CEO Paul Smithers), and customary closing conditions, timing limits and default/penalty provisions.

IIPR’s Q2-25 results show weakening fundamentals amid tenant stress. Rental revenue fell 21% YoY to $62.9 m as PharmaCann and other operators struggled, driving net income down 38% to $26.0 m and diluted EPS to $0.86 (vs $1.44).

Cash flow from operations remained positive at $102.7 m but slipped 24% YoY; cash on hand dropped to $99.7 m after funding $22.9 m of investments, repurchasing $20.1 m of common stock and paying $108.7 m in common dividends ($1.90/sh each quarter). Dividends now exceed cumulative earnings, pushing “dividends in excess of earnings” to –$264 m.

Balance-sheet leverage is modest (liabilities $425 m vs equity $1.88 b), yet the $291 m 5.5% notes maturing May 2026 loom large. Management admits current liquidity is insufficient and intends to refinance, assuming access to capital markets.

Tenant concentration remains high: top five operators generated 49% of rental revenue; PharmaCann defaulted in March, nullifying rent concessions, while two leases shifted to sales-type accounting with cash payments booked as deposits. An impairment of $3.5 m was recorded in Q1 and one California asset was sold for $1.8 m at book value.

The company issued 559 k Series A preferred shares via its ATM for $13.2 m and increased preferred outstanding to 1.56 m shares; early bond repayments of $8.8 m trimmed debt. Multiple securities-law class actions remain pending.