Acquisitions Drive 155% Q2 Rental Revenue,
155% Q2 Net Income and 176% Q2 AFFO Growth Year-over-Year
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 quarter ended June 30, 2019.
Second Quarter 2019 Highlights
Financial Results and Financing Activity
- IIP generated rental revenues of approximately $8.3 million in
the quarter, representing a 155% increase from the prior year’s
second quarter.
- IIP recorded net income available to common stockholders of
approximately $3.1 million for the quarter, or $0.30 per diluted
share, and adjusted funds from operations (“AFFO”) of approximately
$5.8 million, or $0.59 per diluted share. AFFO represented an
increase of 176% from the prior year’s second quarter.
- IIP paid a quarterly dividend of $0.60 per share on July 15,
2019 to common stockholders of record as of June 28, 2019,
representing an approximately 33% increase from IIP’s first quarter
2019 dividend and a 140% increase over the second quarter 2018’s
dividend.
- Subsequent to the end of the quarter, IIP completed an
underwritten public offering of 1,495,000 shares of common stock,
including the exercise in full of the underwriters’ option to
purchase an additional 195,000 shares, resulting in gross proceeds
of approximately $188.4 million.
Investments
- In April, IIP acquired five industrial properties in southern
California totaling approximately 102,000 square feet for
approximately $27.1 million in the aggregate (excluding transaction
costs), and entered into a long-term triple-net lease for each of
those properties with a licensed operator.
- In April, IIP acquired a 51,000 square foot industrial property
in Pennsylvania and entered into a long-term triple-net lease with
Maitri Genetics, LLC (“Maitri”), which intends to operate the
facility for medical-use cannabis cultivation and processing upon
completion of redevelopment, with IIP’s total investment in the
acquisition and redevelopment of the property expected to be
approximately $16.3 million (excluding transaction costs).
- In May, IIP acquired an 11,000 square foot industrial property
in Ohio and entered into a long-term triple-net lease with a
subsidiary of Vireo Health International, Inc., which intends to
operate the facility for medical-use cannabis processing upon
completion of redevelopment, with IIP’s total investment in the
acquisition and redevelopment of the property expected to be
approximately $3.6 million (excluding transaction costs).
- In May, IIP acquired a 266,000 square foot industrial property
in Pennsylvania for $13.0 million (excluding transaction costs) and
entered into a long-term triple-net lease with a subsidiary of
Green Leaf Medical, LLC (“Green Leaf”) for operation as a
medical-use cannabis cultivation and processing facility.
- In June, IIP amended its lease with Green Peak Industries, LLC
(“GPI”) for one of its Michigan properties, making available an
additional $18.0 million to fund, among other improvements, an
additional 55,000 square foot cannabis cultivation facility at the
property; assuming full payment of the additional funding, IIP’s
total investment in the property will be $31.0 million.
- In June, IIP acquired a 45,000 square foot industrial property
in Michigan and entered into a long-term triple-net lease with an
affiliate of Emerald Growth Partners L.L.C. (“EGP”), which intends
to operate the facility for medical-use cannabis cultivation and
processing upon completion of redevelopment, with IIP’s total
investment in the acquisition and redevelopment of the property
expected to be approximately $10.0 million (excluding transaction
costs).
- Subsequent to the end of the quarter, in July, IIP acquired a
145,000 square foot industrial property in Michigan and entered
into a long-term triple-net lease with a subsidiary of Ascend
Wellness Holdings, LLC (“AWH”), which intends to operate the
facility for medical-use cannabis cultivation and processing upon
completion of redevelopment, with IIP’s total investment in the
acquisition and redevelopment of the property expected to be
approximately $19.8 million (excluding transaction costs).
- Subsequent to the end of the quarter, in July, IIP acquired a
43,000 square foot industrial property in Nevada and entered into a
long-term triple-net lease with a subsidiary of MJardin Group, Inc.
(“MJardin”) for continued use as a regulated cannabis cultivation
and processing facility, with IIP’s total investment in the
acquisition and redevelopment of the property expected to be $9.6
million (excluding transaction costs).
- Subsequent to the end of the quarter, in July, IIP acquired a
35,000 square foot industrial property in California and entered
into a long-term triple-net lease with DionyMed Brands, Inc.
(“DYME”) for continued use as a regulated cannabis cultivation and
processing facility and dispensary, with IIP’s total investment in
the acquisition and redevelopment of the property expected to be
$15.0 million (excluding transaction costs).
- Subsequent to the end of the quarter, in July, IIP acquired a
150,000 square foot industrial property in Massachusetts and
entered into a long-term triple-net lease with a subsidiary of
Trulieve Cannabis Corp. (“Trulieve”), which intends to operate the
facility for regulated cannabis cultivation and processing upon
completion of redevelopment, with an initial purchase price of $3.5
million (excluding transaction costs) and an additional commitment
by IIP to fund up to $40 million for redevelopment of the property,
which funding is subject to reduction at Trulieve’s option within
the first six months of the lease term.
Portfolio Update
Since January 1, 2019, IIP has acquired 15 properties in six
states and committed additional investments at existing properties,
representing an aggregate investment of approximately $167.3
million, which includes committed capital that IIP expects to
deploy for the completion of development, redevelopment or tenant
improvements at certain properties (but excluding amounts that may
be funded in the future pursuant to IIP’s lease with Trulieve at
the Massachusetts property). IIP entered into new tenant
relationships with DYME, EGP, Green Leaf, Maitri, MJardin, Trulieve
and two licensed operators in California, while expanding its
tenant relationships with AWH, GPI, Vireo and PharmaCann as each
tenant continues to execute on its multi-state growth
initiatives.
As of August 7, 2019, IIP owned 26 properties located in
Arizona, California, Colorado, Illinois, Maryland, Massachusetts,
Michigan, Minnesota, New York, Nevada, Ohio and Pennsylvania,
totaling approximately 2.0 million rentable square feet (including
approximately 631,000 rentable square feet under
development/redevelopment), which were 100% leased with a
weighted-average remaining lease term of approximately 15.5 years.
As of August 7, 2019, IIP had invested approximately $263.2 million
in the aggregate (excluding transaction costs) and had committed an
additional approximately $71.4 million to reimburse certain tenants
and sellers for completion of construction and tenant improvements
at IIP’s properties. IIP’s average current yield on invested
capital is approximately 14.6% for these 26 properties, calculated
as (a) the sum of the current base rents (after the expiration of
applicable base rent abatement or deferral periods), supplemental
rent (with respect to the lease with PharmaCann LLC at one of IIP’s
New York properties) and property management fees, divided by (b)
IIP’s aggregate investment in these properties (excluding
transaction costs and including aggregate potential
development/redevelopment funding and tenant reimbursements of
approximately $71.4 million). These statistics do not include any
amounts that may be funded in the future pursuant to IIP’s lease
with Trulieve at the Massachusetts property.
Financing Activity
Subsequent to the end of the quarter, in July 2019, IIP
completed an underwritten public offering of 1,495,000 shares of
common stock, including the exercise in full of the underwriters’
option to purchase an additional 195,000 shares, resulting in gross
proceeds of approximately $188.4 million. IIP expects to use the
proceeds from the offering to invest in specialized industrial real
estate assets that support the regulated cannabis cultivation and
processing industry and for general corporate purposes.
Financial Results
IIP generated rental revenues of approximately $8.3 million and
$14.9 million for the three and six months ended June 30, 2019,
respectively, and rental revenues of approximately $3.2 million and
$5.9 million for the three and six months ended June 30, 2018,
respectively. The increase for both periods was driven primarily by
the acquisition and leasing of new properties, additional tenant
improvement allowances provided to tenants at certain properties
that resulted in base rent adjustments, and contractual rental
escalations at certain properties.
For the three months ended June 30, 2019, IIP recorded net
income and net income per diluted share of approximately $3.1
million and $0.30, respectively; funds from operations (“FFO”) and
FFO per diluted share of approximately $4.7 million and $0.48,
respectively; and AFFO and AFFO per diluted share of approximately
$5.8 million and $0.59, respectively. For the three months ended
June 30, 2019, AFFO and AFFO per diluted share increased by
approximately 176% and 90% from the prior year period,
respectively.
For the six months ended June 30, 2019, IIP recorded net income
and net income per diluted share of approximately $6.4 million and
$0.64, respectively; FFO and FFO per diluted share of approximately
$9.2 million and $0.94, respectively; and AFFO and AFFO per diluted
share of approximately $11.1 million and $1.13, respectively. For
the six months ended June 30, 2019, AFFO and AFFO per diluted share
increased by approximately 215% and 105% from the prior year
period, respectively.
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 and AFFO and definitions of terms are included
at the end of this release.
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, August 8, 2019 to discuss IIP’s financial
results and operations for the second quarter ended June 30, 2019.
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, August
8, 2019 until 12:00 p.m. Pacific Time on Thursday, August 15, 2019,
by calling 1-877-344-7529 (domestic), 855-669-9658 (Canada) or
1-412-317-0088 (international) and using access code 10133811.
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 medical-use 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)
Assets
June 30, 2019
December 31, 2018
Real estate, at cost:
Land
$
28,493
$
20,475
Buildings and improvements
183,226
109,425
Tenant improvements
27,642
14,732
Construction in progress
―
6,298
Total real estate, at cost
239,361
150,930
Less accumulated depreciation
(6,404
)
(3,571
)
Net real estate held for investment
232,957
147,359
Cash and cash equivalents
47,432
13,050
Restricted cash
10,022
―
Short-term investments, net
138,731
120,443
Other assets, net
1,579
614
Total assets
$
430,721
$
281,466
Liabilities and stockholders'
equity
Exchangeable senior notes, net
$
133,668
$
―
Tenant improvements and construction
funding payable
8,823
2,433
Accounts payable and accrued expenses
3,583
1,968
Dividends payable
6,223
3,759
Rent received in advance and tenant
security deposits
12,236
9,014
Total liabilities
164,533
17,174
Commitments and contingencies
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 June 30, 2019
and December 31, 2018
14,009
14,009
Common stock, par value $0.001 per share,
50,000,000 shares authorized: 9,809,171 and 9,775,800 shares issued
and outstanding at June 30, 2019 and December 31, 2018,
respectively
10
10
Additional paid-in capital
266,356
260,540
Dividends in excess of earnings
(14,187
)
(10,267
)
Total stockholders' equity
266,188
264,292
Total liabilities and stockholders'
equity
$
430,721
$
281,466
INNOVATIVE INDUSTRIAL
PROPERTIES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
For the Three and Six Months
Ended June 30, 2019 and 2018
(Unaudited)
(In thousands, except share and
per share amounts)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2019
2018
2019
2018
Revenues:
Rental
$
8,280
$
3,246
$
14,856
$
5,923
Tenant reimbursements
337
68
584
155
Total revenues
8,617
3,314
15,440
6,078
Expenses:
Property expenses
337
68
584
155
General and administrative expense
2,593
1,474
4,511
2,951
Depreciation expense
1,615
536
2,833
1,012
Total expenses
4,545
2,078
7,928
4,118
Income from operations
4,072
1,236
7,512
1,960
Interest and other income
1,172
306
2,165
527
Interest expense
(1,832
)
―
(2,624
)
―
Net income
3,412
1,542
7,053
2,487
Preferred stock dividend
(338
)
(338
)
(676
)
(676
)
Net income attributable to common
stockholders
$
3,074
$
1,204
$
6,377
$
1,811
Net income attributable to common
stockholders per share:
Basic
$
0.31
$
0.18
$
0.64
$
0.28
Diluted
$
0.30
$
0.17
$
0.64
$
0.27
Weighted average shares outstanding:
Basic
9,667,079
6,635,651
9,665,933
6,261,708
Diluted
9,807,503
6,783,674
9,802,616
6,406,466
Dividends declared per common share
$
0.60
$
0.25
$
1.05
$
0.50
INNOVATIVE INDUSTRIAL
PROPERTIES, INC.
CONDENSED CONSOLIDATED FFO AND
AFFO
For the Three and Six Months
Ended June 30, 2019 and 2018
(Unaudited)
(In thousands, except share and
per share amounts)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2019
2018
2019
2018
Net income attributable to common
stockholders
$
3,074
$
1,204
$
6,377
$
1,811
Real estate depreciation
1,615
536
2,833
1,012
FFO available to common stockholders
4,689
1,740
9,210
2,823
Stock-based compensation
623
363
1,186
693
Non-cash interest expense
484
—
692
—
AFFO available to common stockholders
$
5,796
$
2,103
$
11,088
$
3,516
FFO per share — basic
$
0.49
$
0.26
$
0.95
$
0.45
FFO per share — diluted
$
0.48
$
0.26
$
0.94
$
0.44
AFFO per share — basic
$
0.60
$
0.32
$
1.15
$
0.56
AFFO per share — diluted
$
0.59
$
0.31
$
1.13
$
0.55
Weighted average shares outstanding —
basic
9,667,079
6,635,651
9,665,933
6,261,708
Weighted average shares outstanding —
diluted
9,807,503
6,783,674
9,802,616
6,406,466
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, plus 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 important 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 by 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.
Management believes that AFFO and AFFO per share are also
appropriate supplemental measures of a REIT’s operating
performance. IIP calculates AFFO by adding to FFO certain non-cash
and infrequent or unpredictable expenses which may impact
comparability, consisting of non-cash stock-based compensation
expense and non-cash interest expense.
IIP’s computation of FFO and AFFO may differ from the
methodology for calculating FFO and AFFO utilized by other equity
REITs and, accordingly, may not be comparable to such REITs.
Further, FFO and AFFO do not represent cash flow available for
management’s discretionary use. 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 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/20190807005823/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