Innovative Industrial Properties Q2 earnings miss as the REIT works to reclaim properties

Innovative Industrial Properties (NYSE:IIPR) Q2 earnings and revenue missed Wall Street consensus estimates on Wednesday, as the medical cannabis REIT continues its efforts to replace poorly performing tenants with more stable operations.

Q2 normalized FFO per share of $1.56, missing the average analyst estimate of $1.57, fell from $1.84 in Q1 and $2.06 in last year’s Q2.

Q2 revenue of $62.9M, trailing the $63.9M consensus, decreased from $71.7M in the previous quarter and $79.8M a year ago. The Y/Y decrease was primarily driven by tenant defaults totaling $15.8M related to properties leased to PharmaCann, Gold Flora, TILT and 4Front.

Expenses of $34.0M dropped from $37.8M in Q1 and were essentially flat with Q2 2024.

Innovative Industrial Properties (NYSE:IIPR) stock rose 0.2% in after-hours trading.

In April, the company sold a property in Michigan for $9.0M and provided an interest only, secured loan for $8.5M to the buyer. In June, it sold a property in Palm Springs, California, for $1.8M net proceeds.

In March 2025, Innovative Industrial (IIPR) started actions to improve long-term financial performance by replacing certain underperforming tenants with more financially stable operators. As part of that effort, it declared several tenants, including 4Front Ventures, Gold Flora, and TILT Holdings, in default for nonpayment of rent and is pursuing its legal rights, which may include evictions.

Additionally, PharmaCann previously defaulted on 11 leases and IIPR has started legal proceedings to regain possession of the properties they continue to occupy and re-leased one property in Warren, Michigan, to Berry Green. Innovative Industrial (IIPR) is working to recover amounts due from those tenants and to re-lease vacated properties.

For the three months ended June 30, 2025, the company applied $18K of security deposits for payment of rent on one property leased to Emerald Growth, which was sold during Q2 2025. For the three months ended June 30, 2024, IIP applied $0.6M of security deposits for payment of rent on properties leased to two tenants.

Conference call on Aug. 7 at 12:00 PM ET.

Earlier, Innovative Industrial Properties FFO of $1.56 misses by $0.01, revenue of $62.89M misses by $0.96M