How Fear Is Boosting Innovative Industrial Properties’ Upside

Summary:

• IIPR has dropped nearly 50%, creating a compelling opportunity with a 10.8% dividend yield.
• Defaulting on 16.5% of ABR, but high-growth states like New York offer quick re-leasing potential.
• Trading at 8x P/AFFO, significantly below historical levels, making IIPR an attractive play for value investors.
• Cannabis rescheduling to Schedule III alleviates tax burdens, boosting tenant stability and long-term profitability.
• 17.3% of ABR remains tied to financially unstable tenants, highlighting ongoing portfolio concentration risks and potential revenue gaps.

Investment Thesis

Since our last coverage, Innovative Industrial Properties (NYSE:IIPR) has crashed nearly 50%, with recent tenant issues, including PharmaCann’s bankruptcy, erasing gains and turning performance negative for the year. Despite this, the long-term case remains strong. Tenant

Analyst’s Disclosure: I/we have a beneficial long position in the shares of IIPR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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