Innovative Industrial Properties Reports Q4 and Full-Year 2025 Results: Strategic Portfolio Moves, Tenant Resolutions, and Robust Capital Activity

Key Financial Highlights

• Total Revenues: \$266.0 million for FY2025 (Q4: \$66.7 million), down from \$308.5 million in FY2024.
• Net Income Attributable to Common Stockholders: \$114.4 million (\$3.93 per diluted share) for FY2025, compared to \$159.9 million (\$5.52 per diluted share) in FY2024.
• Adjusted Funds from Operations (AFFO): \$205.4 million (\$7.24 per share) for FY2025, compared to \$256.1 million (\$8.98 per share) in FY2024.
• Normalized Funds from Operations (Normalized FFO): \$193.5 million (\$6.82 per share) for FY2025.
• Quarterly Dividend: \$1.90 per share for Q4 2025, contributing to a total FY2025 dividend of \$7.60 per share, marking continued annual increases since 2016 inception.

Strategic Portfolio and Capital Initiatives

• Raised \$146 Million in Debt and Preferred Equity Since October 2025: This includes \$45.4 million from preferred stock issuances and the closing of a new \$100 million secured revolving credit facility with an interest rate of one-month SOFR + 200 basis points.
• Life Science Investment: Announced a strategic, diversifying investment of up to \$270 million in IQHQ, Inc., a premier life science real estate platform. As of year-end, \$150 million was funded (\$100 million in a revolving credit facility and \$50 million in preferred equity), with up to an additional \$120 million in preferred equity to be funded through Q2 2027.
• Leasing Activity: Executed new leases totaling 337,000 square feet in Q4 2025 and into Q1 2026, including:
  • 70,000 square feet in North Palm Springs, CA
  • 58,000 square feet in Holliston, MA
  • 204,000 square feet in Desert Hot Springs, CA (Gramlin)

  These new leases represent 4% of the total portfolio’s rentable square feet.

Tenant Resolutions and Recoveries

• Collections from Defaulted Tenants:
  • Gold Flora: \$3.7 million collected in Q4 2025 and \$1.5 million in Q1 2026, resolving all remaining unpaid administrative rents due from receivership.
  • PharmaCann: \$242,000 in Q4, and \$1.5 million in Q1 2026. Notably, the company regained possession of its 66,000 square foot Illinois cultivation property and signed an LOI with a new tenant. \$1.3 million was released from escrow by an Ohio court in January 2026 for rent payments previously held during PharmaCann’s default period. The company is actively working to regain possession of remaining PharmaCann cultivation assets in PA, OH, and NY.
  • 4Front: The company has executed LOIs with new tenants for several properties, including a 250,000 square foot Illinois cultivation property and additional properties in MA and WA, pending the closeout of receivership sales.

Balance Sheet and Liquidity

• Low Leverage: Debt to total gross assets stands at 14% with \$2.7 billion in total gross assets.
• Strong Liquidity: \$107.6 million in total liquidity (cash, equivalents, and revolver capacity) as of December 31, 2025.
• Debt Service Coverage Ratio: 10.4x, reflecting substantial cushion for debt obligations.

Capital Markets and Shareholder Returns

• Dividend Track Record: IIP has declared and increased common stock dividends every year since inception, paying more than \$1.1 billion in dividends to shareholders to date. The annualized dividend for 2025 is \$7.60 per share.
• Preferred Stock Issuances: 1,016,852 shares of 9.00% Series A Preferred Stock issued during FY2025, raising \$24.1 million, with further issuances in Q4 and Q1 2026 totaling \$45.4 million in net proceeds.

Risks and Ongoing Challenges

• Revenue Decline: The company’s total revenue and net income declined compared to 2024, primarily due to tenant defaults including PharmaCann, TILT, and 4Front. The company did not apply any security deposits to rent in Q4 2025, compared to \$5.7 million applied in Q4 2024.
• Tenant Concentration and Defaults: Tenant-related matters continue to impact performance. The company is actively resolving defaulted leases and seeking new tenants for affected properties, but ongoing risks remain regarding tenant credit and property re-leasing.
• Forward-Looking Statements: The company cautions that statements regarding future transactions, leasing activity, and tenant resolutions are subject to risks, uncertainties, and closing contingencies. Investors should be mindful of these risks, which may impact future performance and share value.

Summary & Potential Share Price Drivers

Innovative Industrial Properties, Inc. delivered resilient results in a challenging environment, demonstrating proactive management of tenant defaults and a continued commitment to shareholder returns through robust dividends. The company’s strategic investments in life science real estate (IQHQ), new lease executions, and strengthened capital structure via debt and preferred equity raise its profile as a diversified REIT. However, the decline in revenues and net income, as well as ongoing tenant risk, remain key factors for investors.

The ability to re-lease defaulted properties, the performance of the new IQHQ investment, and the continued growth in preferred equity may all be share price catalysts. Conversely, any further tenant defaults or operational setbacks could pressure the share price.

Upcoming Events

• Q4 and Full Year 2025 results conference call and webcast: February 24, 2026, at 9:00 a.m. PT/12:00 p.m. ET.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consult regulatory filings and their financial advisors before making any investment decisions. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed herein.

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