$368.6 Million of New Investments in First Nine
Months of 2022 Drives 30%+ Increase Year-Over-Year in Q3 Total
Revenues
Innovative Industrial Properties, Inc. (IIP), the first and only
real estate company on the New York Stock Exchange (NYSE: IIPR)
focused on the regulated U.S. cannabis industry, announced today
results for the third quarter ended September 30, 2022.
Third Quarter 2022 and Subsequent Event Highlights
- Generated total revenues of approximately $70.9 million in the
quarter, representing a 32% increase from the prior year’s
quarter.
- Recorded net income attributable to common stockholders of
approximately $37.3 million for the quarter, or $1.32 per diluted
share, and AFFO of approximately $60.1 million, or $2.13 per
diluted share.
- Paid a quarterly dividend of $1.80 per common share on October
14, 2022 to stockholders of record as of September 30, 2022, equal
to an annualized dividend of $7.20 per share. The common stock
dividends declared for the twelve months ended September 30, 2022,
of $6.80 per common share represent an increase of $1.34, or 25%,
over dividends declared for the twelve months ended September 30,
2021.
- Acquired a Massachusetts industrial property, fully built out
and operational as a regulated cannabis cultivation and processing
facility, in a sale-leaseback transaction with a subsidiary of
Curaleaf Holdings, Inc. for $21.5 million (approximately $207 per
square foot).
- Subsequent to quarter-end, sold a Pennsylvania industrial
property leased to a subsidiary of Maitri Holdings, LLC for $23.5
million (approximately $461 per square foot).
Year-To-Date 2022 Highlights
- Generated total revenues of $205.9 million during the nine
months ended September 30, 2022, representing a 41% increase from
the prior year’s period.
- Recorded net income attributable to common stockholders of
approximately $111.9 million for the nine months ended September
30, 2022, or $4.06 per diluted share, and AFFO of approximately
$174.1 million, or $6.33 per diluted share.
- In the nine months ended September 30, 2022, acquired nine
properties and executed nine lease amendments at existing
properties to provide funding for additional improvements at
properties representing an aggregate additional investment by IIP
of approximately $368.6 million (consisting of purchase prices and
commitments to fund draws related to future development and
improvements, but excluding transaction costs).
- Rent collection for IIP’s operating portfolio (calculated as
base rent and property management fees collected over contractually
due amounts and excluding the impact of any security deposits
applied for nonpayment of rent by Kings Garden Inc.) was 97% for
the nine months ended September 30, 2022.
Balance Sheet Statistics (as of September 30, 2022)
- 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 2026, other than $6.4 million
principal amount of 3.75% Exchangeable Senior Notes in 2024.
- Debt service coverage ratio of 15.6x (calculated in accordance
with the Company’s 5.50% Unsecured Senior Notes due 2026).
Property Portfolio Statistics (as of September 30,
2022)
- Total property portfolio comprises 111 properties across 19
states, with approximately 8.7 million rentable square feet
(including approximately 2.0 million rentable square feet under
development / redevelopment), consisting of:
- Operating portfolio: 109 properties, representing approximately
8.3 million rentable square feet.
- Construction in progress: two properties (not leased) and an
expansion project at a property where Kings Garden continues to
occupy the property, representing approximately 395,000 rentable
square feet.
- Operating portfolio:
- 100% leased (triple-net).
- Weighted average lease length: 15.5 years.
- Total invested / committed capital per square foot: $272.
- By invested / committed capital:
- No tenant represents more than 14% of the total portfolio.
- No state represents more than 17% of the total portfolio.
- Multi-state operators (MSOs) represent 85% of the operating
portfolio.
- Public company operators represent 55% of the operating
portfolio.
- Industrial (cultivation and/or processing), retail (dispensing)
and combined industrial/retail represents 90%, 3% and 7% of
operating portfolio, respectively.
Financial Results
For the three months ended September 30, 2022, IIP generated
total revenues of approximately $70.9 million, compared to
approximately $53.9 million for the same period in 2021, an
increase of 32%. The increase was driven primarily by the
acquisition and leasing of new properties, additional building
infrastructure allowances provided to tenants at certain properties
that resulted in adjustments to base rent, and contractual rental
escalations at certain properties. During the quarter, IIP did not
collect contractual rents totaling $5.7 million (including $5.3
million of contractual base rents and property management fees and
$369,000 for tenant reimbursements for property insurance premiums
and property taxes) from two tenants in California, Kings Garden
Inc. and affiliates of Medical Investor Holdings, LLC (Vertical);
however, IIP did apply approximately $2.6 million from security
deposits held by the company for defaults by Kings Garden in its
obligations to pay rent to partially offset this decrease. Total
revenues for the three months ended September 30, 2022 and 2021
included approximately $2.7 million and $1.4 million, respectively,
of tenant reimbursements for property insurance premiums and
property taxes.
For the nine months ended September 30, 2022, IIP generated
total revenues of approximately $205.9 million, compared to
approximately $145.6 million for the same period in 2021, an
increase of 41%. The increase was driven primarily by the
acquisition and leasing of new properties, additional building
infrastructure allowances provided to tenants at certain properties
that resulted in adjustments to base rent, and contractual rental
escalations at certain properties. Total revenues for the nine
months ended September 30, 2022 and 2021 included approximately
$7.1 million and $2.6 million, respectively, of tenant
reimbursements for property insurance premiums and property
taxes.
For the three months ended September 30, 2022, IIP recorded net
income attributable to common stockholders and net income
attributable to common stockholders per diluted share of
approximately $37.3 million and $1.32, respectively; funds from
operations (FFO) (diluted) and FFO per diluted share of
approximately $53.3 million and $1.89, respectively; normalized
FFO, which adds back to FFO acquisition-related expense,
litigation-related expense and financing expense during the three
months ended September 30, 2022 (Normalized FFO), and Normalized
FFO per diluted share of approximately $55.4 million and $1.97,
respectively; and AFFO and AFFO per diluted share of approximately
$60.1 million and $2.13, respectively.
For the nine months ended September 30, 2022, IIP recorded net
income attributable to common stockholders and net income
attributable to common stockholders per diluted share of
approximately $111.9 million and $4.06, respectively; FFO (diluted)
and FFO per diluted share of approximately $157.3 million and
$5.72, respectively; Normalized FFO and Normalized FFO per diluted
share of approximately $159.9 million and $5.82, respectively; and
AFFO and AFFO per diluted share of approximately $174.1 million and
$6.33, respectively.
For the three and nine months ended September 30, 2022 and 2021,
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.
IIP paid a quarterly dividend of $1.80 per common share on
October 14, 2022 to stockholders of record as of September 30,
2022, equal to an annualized dividend of $7.20 per share. IIP’s
AFFO payout ratio was 84.5% (calculated by dividing the common
stock dividend declared per share by IIP’s AFFO per common share –
diluted for the quarter). The common stock dividends declared for
the twelve months ended September 30, 2022, of $6.80 per common
share represent an increase of $1.34, or 25%, over dividends
declared for the twelve months ended September 30, 2021.
FFO, Normalized FFO and AFFO are supplemental non-GAAP financial
measures used in the real estate industry to measure and compare
the operating performance of real estate companies. A complete
reconciliation containing adjustments from GAAP net income
attributable to common stockholders to FFO, Normalized FFO and AFFO
and definitions of terms are included at the end of this
release.
Supplemental Information
Supplemental financial information is available in the Investor
Relations section of the IIP’s website at
www.innovativeindustrialproperties.com.
Teleconference and Webcast
Innovative Industrial Properties, Inc. will conduct a conference
call and webcast at 10:00 a.m. Pacific Time (1:00 p.m. Eastern
Time) on Thursday, November 3, 2022 to discuss IIP’s financial
results and operations for the third quarter ended September 30,
2022. The call will be open to all interested investors through a
live audio webcast at the Investor Relations section of IIP’s
website at www.innovativeindustrialproperties.com, or live by
calling 1-877-328-5514 (domestic) or 1-412-902-6764 (international)
and asking to be joined to the Innovative Industrial Properties,
Inc. conference call. The complete webcast will be archived for 90
days on IIP’s website. A telephone playback of the conference call
will also be available from 12:00 p.m. Pacific Time on Thursday,
November 3, 2022 until 12:00 p.m. Pacific Time on Thursday,
November 10, 2022, by calling 1-877-344-7529 (domestic),
855-669-9658 (Canada) or 1-412-317-0088 (international) and using
access code 7112999.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised
Maryland corporation focused on the acquisition, ownership and
management of specialized properties leased to experienced,
state-licensed operators for their regulated cannabis facilities.
Innovative Industrial Properties, Inc. has elected to be taxed as a
real estate investment trust, commencing with the year ended
December 31, 2017. Additional information is available at
www.innovativeindustrialproperties.com.
This press release contains statements that IIP believes to be
“forward-looking statements” within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
All statements other than historical facts are forward-looking
statements. When used in this press release, words such as IIP
“expects,” “intends,” “plans,” “estimates,” “anticipates,”
“believes” or “should” or the negative thereof or similar
terminology are generally intended to identify forward-looking
statements. Such forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ
materially from those expressed in, or implied by, such statements.
Investors should not place undue reliance upon forward-looking
statements. IIP disclaims any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
INNOVATIVE INDUSTRIAL
PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands, except share and
per share amounts)
September 30,
December 31,
Assets
2022
2021
Real estate, at cost:
Land
$
140,187
$
122,386
Buildings and improvements
1,261,651
979,417
Tenant improvements
712,983
620,301
Construction in progress
60,546
—
Total real estate, at cost
2,175,367
1,722,104
Less accumulated depreciation
(124,786
)
(81,938
)
Net real estate held for investment
2,050,581
1,640,166
Construction loan receivable
17,698
12,916
Cash and cash equivalents
76,943
81,096
Restricted cash
1,580
5,323
Investments
239,674
324,889
Right of use office lease asset
1,831
1,068
In-place lease intangible assets, net
9,320
9,148
Other assets, net
33,107
9,996
Total assets
$
2,430,734
$
2,084,602
Liabilities and stockholders’
equity
Exchangeable senior notes, net
$
6,369
$
32,232
Notes due 2026, net
294,794
293,860
Tenant improvements and construction
funding payable
35,195
46,274
Accounts payable and accrued expenses
13,140
7,718
Dividends payable
50,841
38,847
Rent received in advance and tenant
security deposits
61,488
52,805
Other liabilities
1,992
1,167
Total liabilities
463,819
472,903
Stockholders’ equity:
Preferred stock, par value $0.001 per
share, 50,000,000 shares authorized: 9.00% Series A cumulative
redeemable preferred stock, $15,000 liquidation preference ($25.00
per share), 600,000 shares issued and outstanding at September 30,
2022 and December 31, 2021
14,009
14,009
Common stock, par value $0.001 per share,
50,000,000 shares authorized: 27,973,694 and 25,612,541 shares
issued and outstanding at September 30, 2022 and December 31, 2021,
respectively
28
26
Additional paid-in capital
2,060,936
1,672,882
Dividends in excess of earnings
(108,058
)
(75,218
)
Total stockholders’ equity
1,966,915
1,611,699
Total liabilities and stockholders’
equity
$
2,430,734
$
2,084,602
INNOVATIVE INDUSTRIAL
PROPERTIES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
For the Three and Nine Months
Ended September 30, 2022 and 2021
(Unaudited)
(In thousands, except share and
per share amounts)
For the Three Months
Ended
For the Nine Months
Ended
September 30,
September 30,
2022
2021
2022
2021
Revenues:
Rental (including tenant
reimbursements)
$
70,345
$
53,856
$
204,454
$
145,608
Other revenue
538
—
1,444
—
Total revenues
70,883
53,856
205,898
145,608
Expenses:
Property expenses
2,823
1,365
7,232
2,617
General and administrative expense
10,804
5,307
28,288
16,511
Depreciation and amortization expense
15,900
10,891
45,001
29,571
Total expenses
29,527
17,563
80,521
48,699
Income from operations
41,356
36,293
125,377
96,909
Interest and other income
773
110
1,411
325
Interest expense
(4,513
)
(6,309
)
(13,783
)
(11,874
)
Loss on exchange of Exchangeable Senior
Notes
—
—
(125
)
—
Net income
37,616
30,094
112,880
85,360
Preferred stock dividends
(338
)
(338
)
(1,014
)
(1,014
)
Net income attributable to common
stockholders
$
37,278
$
29,756
$
111,866
$
84,346
Net income attributable to common
stockholders per share:
Basic
$
1.33
$
1.24
$
4.10
$
3.51
Diluted
$
1.32
$
1.20
$
4.06
$
3.41
Weighted-average shares outstanding:
Basic
27,938,568
23,890,537
27,144,953
23,889,903
Diluted
28,157,934
26,260,704
27,496,151
26,257,504
INNOVATIVE INDUSTRIAL
PROPERTIES, INC.
CONDENSED CONSOLIDATED FFO,
NORMALIZED FFO AND AFFO
For the Three and Nine Months
Ended September 30, 2022 and 2021
(Unaudited)
(In thousands, except share and
per share amounts)
For the Three Months
Ended
For the Nine Months
Ended
September 30,
September 30,
2022
2021
2022
2021
Net income attributable to common
stockholders
$
37,278
$
29,756
$
111,866
$
84,346
Real estate depreciation and
amortization
15,900
10,891
45,001
29,571
FFO attributable to common stockholders
(basic)
53,178
40,647
156,867
113,917
Cash and non-cash interest expense on
Exchangeable Senior Notes
72
1,885
474
5,636
FFO attributable to common stockholders
(diluted)
53,250
42,532
157,341
119,553
Acquisition-related expense
15
—
110
19
Financing expense
14
—
118
—
Litigation-related expense
2,112
—
2,231
—
Loss on exchange of Exchangeable Senior
Notes
—
—
125
—
Normalized FFO attributable to common
stockholders (diluted)
55,391
42,532
159,925
119,572
Stock-based compensation
4,379
2,191
13,195
6,424
Non-cash interest expense
316
299
934
417
Above-market lease amortization
23
—
69
—
AFFO attributable to common stockholders
(diluted)
$
60,109
$
45,022
$
174,123
$
126,413
FFO per common share – diluted
$
1.89
$
1.62
$
5.72
$
4.55
Normalized FFO per common share –
diluted
$
1.97
$
1.62
$
5.82
$
4.55
AFFO per common share – diluted
$
2.13
$
1.71
$
6.33
$
4.81
Weighted average common shares outstanding
– basic
27,938,568
23,890,537
27,144,953
23,889,903
Restricted stock and RSUs
118,567
98,093
115,445
95,527
PSUs
—
78,582
—
78,582
Dilutive effect of Exchangeable Senior
Notes
100,799
2,193,492
235,753
2,193,492
Weighted average common shares outstanding
– diluted
28,157,934
26,260,704
27,496,151
26,257,504
FFO and FFO per share are operating performance measures adopted
by the National Association of Real Estate Investment Trusts, Inc.
(NAREIT). NAREIT defines FFO as the most commonly accepted and
reported measure of a REIT’s operating performance equal to net
income, computed in accordance with accounting principles generally
accepted in the United States (GAAP), excluding gains (or losses)
from sales of property, depreciation, amortization and impairment
related to real estate properties, and after adjustments for
unconsolidated partnerships and joint ventures.
Management believes that net income, as defined by GAAP, is the
most appropriate earnings measurement. However, management believes
FFO and FFO per share to be supplemental measures of a REIT’s
performance because they provide an understanding of the operating
performance of IIP’s properties without giving effect to certain
significant non-cash items, primarily depreciation expense.
Historical cost accounting for real estate assets in accordance
with GAAP assumes that the value of real estate assets diminishes
predictably over time. However, real estate values instead have
historically risen or fallen with market conditions. IIP believes
that by excluding the effect of depreciation, FFO and FFO per share
can facilitate comparisons of operating performance between
periods. IIP reports FFO and FFO per share because these measures
are observed by management to also be the predominant measures used
by the REIT industry and industry analysts to evaluate REITs and
because FFO per share is consistently reported, discussed, and
compared by research analysts in their notes and publications about
REITs. For these reasons, management has deemed it appropriate to
disclose and discuss FFO and FFO per share.
IIP computes Normalized FFO by adjusting FFO, as defined by
NAREIT, to exclude certain GAAP income and expense amounts that
management believes are infrequent and unusual in nature and/or not
related to IIP’s core real estate operations. Exclusion of these
items from similar FFO-type metrics is common within the equity
REIT industry, and management believes that presentation of
Normalized FFO and Normalized FFO per share provides investors with
a metric to assist in their evaluation of IIP’s operating
performance across multiple periods and in comparison to the
operating performance of other companies, because it removes the
effect of unusual items that are not expected to impact IIP’s
operating performance on an ongoing basis. Normalized FFO is used
by management in evaluating the performance of its core business
operations. Items included in calculating FFO that may be excluded
in calculating Normalized FFO include certain transaction-related
gains, losses, income or expense or other non-core amounts as they
occur.
Management believes that AFFO and AFFO per share are also
appropriate supplemental measures of a REIT’s operating
performance. IIP calculates AFFO by adjusting Normalized FFO for
certain non-cash items.
For the periods presented, 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.
For the three and nine months ended September 30, 2022, the
performance share units (“PSUs”) granted to certain employees were
not included in dilutive securities as the performance thresholds
for vesting of the PSUs were not met as measured as of September
30, 2022. For the three and nine months ended September 30, 2021,
78,582 shares issuable upon vesting of PSUs granted to certain
employees in January 2021 were included in dilutive securities, as
the performance thresholds for the vesting of these PSUs were met
as measured as of September 30, 2021.
IIP’s computation of FFO, Normalized FFO and AFFO may differ
from the methodology for calculating FFO, Normalized FFO and AFFO
utilized by other equity REITs and, accordingly, may not be
comparable to such REITs. Further, FFO, Normalized FFO and AFFO do
not represent cash flow available for management’s discretionary
use. FFO, Normalized FFO and AFFO should not be considered as an
alternative to net income (computed in accordance with GAAP) as an
indicator of IIP’s financial performance or to cash flow from
operating activities (computed in accordance with GAAP) as an
indicator of IIP’s liquidity, nor is it indicative of funds
available to fund IIP’s cash needs, including IIP’s ability to pay
dividends or make distributions. FFO, Normalized FFO and AFFO
should be considered only as supplements to net income computed in
accordance with GAAP as measures of IIP’s operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221102006053/en/
Catherine Hastings Chief Financial Officer Innovative Industrial
Properties, Inc. (858) 997-3332
Innovative Industrial Pr... (NYSE:IIPR)
Historical Stock Chart
From Mar 2024 to Apr 2024
Innovative Industrial Pr... (NYSE:IIPR)
Historical Stock Chart
From Apr 2023 to Apr 2024