0001677576--12-312022Q3false6000006000002797369425612541P3Y27973694600000http://fasb.org/us-gaap/2022#OtherLiabilities0001677576us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001677576us-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-300001677576us-gaap:CommonStockMember2021-01-012021-09-300001677576us-gaap:OverAllotmentOptionMember2022-04-012022-04-300001677576us-gaap:CommonStockMember2022-07-012022-09-300001677576us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2022-09-300001677576us-gaap:AdditionalPaidInCapitalMember2022-09-300001677576iipr:DividendInExcessOfEarningMember2022-09-300001677576us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2022-06-300001677576us-gaap:AdditionalPaidInCapitalMember2022-06-300001677576iipr:DividendInExcessOfEarningMember2022-06-3000016775762022-06-300001677576us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2021-12-310001677576srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2021-12-310001677576srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberiipr:DividendInExcessOfEarningMember2021-12-310001677576us-gaap:AdditionalPaidInCapitalMember2021-12-310001677576srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-12-310001677576iipr:DividendInExcessOfEarningMember2021-12-310001677576us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2021-09-300001677576us-gaap:AdditionalPaidInCapitalMember2021-09-300001677576iipr:DividendInExcessOfEarningMember2021-09-300001677576us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2021-06-300001677576us-gaap:AdditionalPaidInCapitalMember2021-06-300001677576iipr:DividendInExcessOfEarningMember2021-06-300001677576us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2020-12-310001677576us-gaap:AdditionalPaidInCapitalMember2020-12-310001677576iipr:DividendInExcessOfEarningMember2020-12-310001677576us-gaap:CommonStockMember2022-09-300001677576us-gaap:CommonStockMember2022-06-300001677576us-gaap:CommonStockMember2021-12-310001677576us-gaap:CommonStockMember2021-09-300001677576us-gaap:CommonStockMember2021-06-300001677576us-gaap:CommonStockMember2020-12-310001677576srt:MaximumMemberiipr:TwoThousandSixteenPlanMember2022-09-300001677576iipr:TwoThousandSixteenPlanMember2022-01-012022-09-300001677576us-gaap:RestrictedStockUnitsRSUMember2022-03-310001677576us-gaap:RestrictedStockMember2022-03-310001677576us-gaap:RestrictedStockUnitsRSUMember2021-12-310001677576us-gaap:RestrictedStockMember2021-12-310001677576us-gaap:RestrictedStockUnitsRSUMember2022-04-012022-09-300001677576us-gaap:RestrictedStockMember2022-04-012022-09-300001677576us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001677576us-gaap:RestrictedStockMember2022-01-012022-03-310001677576us-gaap:OtherAssetsMember2022-09-300001677576us-gaap:LandMember2022-09-300001677576us-gaap:BuildingAndBuildingImprovementsMember2022-09-300001677576iipr:RestrictedCashMember2022-09-300001677576iipr:KingsGardenLawsuitMemberiipr:KingsGardenLeasesInSouthernCaliforniaMemberus-gaap:ScenarioAdjustmentMemberus-gaap:ConstructionInProgressMember2022-09-300001677576srt:MinimumMemberiipr:OfficeEquipmentAndFurnitureAndFixturesMember2022-01-012022-09-300001677576srt:MaximumMemberiipr:OfficeEquipmentAndFurnitureAndFixturesMember2022-01-012022-09-300001677576us-gaap:BuildingAndBuildingImprovementsMember2022-01-012022-09-3000016775762022-04-012022-04-300001677576srt:ScenarioForecastMemberus-gaap:SeriesAPreferredStockMember2022-10-190001677576us-gaap:SeriesAPreferredStockMember2022-09-300001677576us-gaap:SeriesAPreferredStockMember2021-12-310001677576us-gaap:SeriesAPreferredStockMember2021-01-012021-12-310001677576iipr:AtMarketOfferingsMember2022-01-012022-09-300001677576us-gaap:SubsequentEventMember2022-10-142022-10-1400016775762022-07-152022-07-1500016775762022-04-142022-04-140001677576iipr:KingsGardenLawsuitMember2022-01-012022-09-300001677576iipr:CommitmentsRelatedToTenantImprovementAllowancesMember2022-09-300001677576iipr:CommitmentsRelatedToConstructionLoanMember2022-09-300001677576us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001677576us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001677576us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001677576us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001677576iipr:PropertiesAcquiredIn2022Member2022-01-012022-09-300001677576iipr:PropertiesAcquiredIn2021Member2021-01-012021-09-300001677576iipr:DerivativeActionLawsuitMember2022-09-300001677576iipr:ClassActionLawsuitMember2022-09-300001677576iipr:AmendedClassActionLawsuitMember2022-09-3000016775762021-11-3000016775762018-12-3100016775762019-01-012019-01-010001677576us-gaap:AccountsPayableAndAccruedLiabilitiesMemberus-gaap:UnsecuredDebtMember2022-09-300001677576us-gaap:AccountsPayableAndAccruedLiabilitiesMemberus-gaap:SeniorNotesMember2022-09-300001677576us-gaap:AccountsPayableAndAccruedLiabilitiesMemberus-gaap:UnsecuredDebtMember2021-12-310001677576us-gaap:AccountsPayableAndAccruedLiabilitiesMemberus-gaap:SeniorNotesMember2021-12-310001677576iipr:RestrictedStockAndRestrictedStockUnitsRsusMember2022-07-012022-09-300001677576iipr:RestrictedStockAndRestrictedStockUnitsRsusMember2022-01-012022-09-300001677576iipr:RestrictedStockAndRestrictedStockUnitsRsusMember2021-07-012021-09-300001677576iipr:RestrictedStockAndRestrictedStockUnitsRsusMember2021-01-012021-09-300001677576iipr:KingsGardenLawsuitMember2022-09-300001677576us-gaap:AboveMarketLeasesMember2022-09-300001677576us-gaap:LeasesAcquiredInPlaceMember2021-12-310001677576us-gaap:AboveMarketLeasesMember2021-12-310001677576us-gaap:PerformanceSharesMember2022-09-300001677576us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001677576us-gaap:RestrictedStockMember2022-01-012022-09-300001677576us-gaap:RestrictedStockUnitsRSUMember2022-09-300001677576us-gaap:RestrictedStockMember2022-09-300001677576iipr:DividendInExcessOfEarningMember2022-07-012022-09-300001677576iipr:DividendInExcessOfEarningMember2022-01-012022-09-300001677576iipr:DividendInExcessOfEarningMember2021-07-012021-09-300001677576iipr:DividendInExcessOfEarningMember2021-01-012021-09-300001677576iipr:OtherRevenueMember2022-07-012022-09-300001677576iipr:OtherRevenueMember2022-01-012022-09-3000016775762021-07-012021-09-300001677576iipr:RedeemedPriorToFebruary252026Memberus-gaap:UnsecuredDebtMember2022-01-012022-09-300001677576iipr:RedeemedOnOrAfterFebruary252026Memberus-gaap:UnsecuredDebtMember2022-01-012022-09-300001677576us-gaap:UnsecuredDebtMember2021-05-050001677576us-gaap:UnsecuredDebtMember2022-09-300001677576us-gaap:SeniorNotesMember2022-09-300001677576us-gaap:UnsecuredDebtMember2021-12-310001677576us-gaap:SeniorNotesMember2021-12-310001677576us-gaap:SeniorNotesMemberus-gaap:CommonStockMember2022-09-300001677576srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate202006Member2021-12-310001677576us-gaap:SeniorNotesMemberus-gaap:CommonStockMember2022-01-012022-09-3000016775762022-09-152022-09-1500016775762022-06-152022-06-1500016775762022-03-142022-03-140001677576srt:MaximumMember2022-09-3000016775762020-12-310001677576us-gaap:MoneyMarketFundsMember2022-09-300001677576us-gaap:MoneyMarketFundsMember2021-12-310001677576us-gaap:LeasesAcquiredInPlaceMember2022-07-012022-09-300001677576us-gaap:AboveMarketLeasesMember2022-07-012022-09-300001677576us-gaap:AboveMarketLeasesMember2022-01-012022-09-300001677576us-gaap:LeasesAcquiredInPlaceMember2021-07-012021-09-300001677576us-gaap:LeasesAcquiredInPlaceMember2021-01-012021-09-300001677576us-gaap:PerformanceSharesMember2022-07-012022-09-300001677576us-gaap:PerformanceSharesMember2022-01-012022-09-300001677576us-gaap:PerformanceSharesMember2021-07-012021-09-300001677576us-gaap:PerformanceSharesMember2021-01-012021-09-300001677576us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-3000016775762022-07-012022-09-300001677576us-gaap:LeasesAcquiredInPlaceMember2022-01-012022-09-300001677576iipr:SubsidiaryOfFourFrontVenturesCorpMembersrt:MinimumMemberiipr:IllinoisPropertiesMemberus-gaap:SubsequentEventMember2022-10-272022-10-270001677576iipr:SubsidiaryOfFourFrontVenturesCorpMembersrt:MaximumMemberiipr:IllinoisPropertiesMemberus-gaap:SubsequentEventMember2022-10-272022-10-270001677576iipr:HolisticIndustriesInc.Memberiipr:MassachusettsPropertiesMemberus-gaap:SubsequentEventMember2022-10-252022-10-250001677576iipr:SozoHealthInc.Memberiipr:MichiganPropertiesMember2022-06-012022-06-300001677576iipr:GreenThumbIndustriesInc.Memberiipr:PennsylvaniaPropertiesMember2022-06-012022-06-300001677576iipr:CuraleafHoldingsInc.Memberiipr:PennsylvaniaPropertiesMember2022-06-012022-06-300001677576iipr:CuraleafHoldingsInc.Memberiipr:IllinoisPropertiesMember2022-06-012022-06-300001677576iipr:PharmaCannLLCMemberiipr:NewYorkPropertiesMember2022-04-012022-04-300001677576iipr:HolisticAtMassachusettsMemberiipr:MichiganPropertiesMember2022-03-012022-03-310001677576iipr:AscendWellnessHoldingsLlcMemberiipr:MichiganPropertiesMember2022-03-012022-03-310001677576iipr:AscendWellnessHoldingsLlcMemberiipr:MassachusettsPropertiesMember2022-03-012022-03-310001677576iipr:GreenPeakIndustriesLlcMemberiipr:MichiganPropertiesMember2022-02-012022-02-280001677576iipr:SozoHealthInc.Memberiipr:MichiganPropertiesMember2022-06-300001677576iipr:GreenThumbIndustriesInc.Memberiipr:PennsylvaniaPropertiesMember2022-06-300001677576iipr:CuraleafHoldingsInc.Memberiipr:PennsylvaniaPropertiesMember2022-06-300001677576iipr:CuraleafHoldingsInc.Memberiipr:IllinoisPropertiesMember2022-06-300001677576iipr:PharmaCannLLCMemberiipr:NewYorkPropertiesMember2022-04-300001677576iipr:HolisticAtMassachusettsMemberiipr:MichiganPropertiesMember2022-03-310001677576iipr:AscendWellnessHoldingsLlcMemberiipr:MichiganPropertiesMember2022-03-310001677576iipr:AscendWellnessHoldingsLlcMemberiipr:MassachusettsPropertiesMember2022-03-310001677576iipr:GreenPeakIndustriesLlcMemberiipr:MichiganPropertiesMember2022-02-280001677576us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001677576us-gaap:CommonStockMember2022-01-012022-09-300001677576us-gaap:PerformanceSharesMember2022-01-310001677576us-gaap:PerformanceSharesMember2021-01-310001677576us-gaap:PerformanceSharesMember2022-01-012022-01-310001677576iipr:PennsylvaniaIndustrialPropertyLeasedToSubsidiaryOfMaitriHoldingsLlcMemberus-gaap:SubsequentEventMember2022-11-012022-11-010001677576iipr:VeranoPaMember2022-01-012022-09-300001677576iipr:TiltMaMember2022-01-012022-09-300001677576iipr:TexasOriginalTxMember2022-01-012022-09-300001677576iipr:McpMdMember2022-01-012022-09-300001677576iipr:KingsGardenCaMember2022-01-012022-09-300001677576iipr:HarvestAzMember2022-01-012022-09-300001677576iipr:FourFrontMaMember2022-01-012022-09-300001677576iipr:CuraleafMaMember2022-01-012022-09-300001677576iipr:AscendNjMember2022-01-012022-09-300001677576iipr:TexasOriginalTxMemberus-gaap:OtherAssetsMember2022-09-300001677576iipr:KingsGardenCaMemberiipr:RestrictedCashMember2022-09-300001677576iipr:VeranoPaMember2022-09-300001677576iipr:TiltMaMember2022-09-300001677576iipr:McpMdMember2022-09-300001677576iipr:HarvestAzMember2022-09-300001677576iipr:FourFrontMaMember2022-09-300001677576iipr:AscendNjMember2022-09-3000016775762022-02-020001677576iipr:KingsGardenCaMember2022-09-300001677576iipr:CuraleafMaMember2022-09-300001677576srt:MinimumMemberus-gaap:PerformanceSharesMember2021-01-012021-01-310001677576srt:MaximumMemberus-gaap:PerformanceSharesMember2021-01-012021-01-310001677576iipr:IipOperatingPartnershipLpMember2022-09-300001677576us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-09-300001677576us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-09-3000016775762021-09-300001677576iipr:TrulieveCannabisCorpMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-07-012022-09-300001677576iipr:ShParentInc.ParallelMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-07-012022-09-300001677576iipr:PharmaCannLLCMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-07-012022-09-300001677576iipr:GreenThumbIndustriesInc.Memberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-07-012022-09-300001677576iipr:AscendWellnessHoldingsLlcMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-07-012022-09-300001677576iipr:TrulieveCannabisCorpMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-09-300001677576iipr:ShParentInc.ParallelMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-09-300001677576iipr:PharmaCannLLCMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-09-300001677576iipr:KingsGardenInc.Memberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-09-300001677576iipr:AscendWellnessHoldingsLlcMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-09-300001677576iipr:ShParentInc.ParallelMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-07-012021-09-300001677576iipr:PharmaCannLLCMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-07-012021-09-300001677576iipr:KingsGardenInc.Memberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-07-012021-09-300001677576iipr:GreenThumbIndustriesInc.Memberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-07-012021-09-300001677576iipr:AscendWellnessHoldingsLlcMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-07-012021-09-300001677576iipr:ShParentInc.ParallelMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-09-300001677576iipr:PharmaCannLLCMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-09-300001677576iipr:KingsGardenInc.Memberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-09-300001677576iipr:CrescoLabsInc.Memberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-09-300001677576iipr:AscendWellnessHoldingsLlcMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-09-300001677576iipr:KingsGardenLawsuitMemberiipr:KingsGardenLeasesInSouthernCaliforniaMember2022-07-130001677576us-gaap:PerformanceSharesMember2021-01-012021-01-310001677576iipr:AtMarketOfferingsMember2022-09-300001677576iipr:KingsGardenLawsuitMemberiipr:KingsGardenLeasesInSouthernCaliforniaMember2022-09-300001677576iipr:KingsGardenLawsuitMemberiipr:KingsGardenLeasesInSouthernCaliforniaMember2021-12-310001677576us-gaap:UnsecuredDebtMember2021-05-250001677576us-gaap:LeasesAcquiredInPlaceMember2022-09-300001677576srt:MinimumMemberus-gaap:UnsecuredDebtMember2021-05-252021-05-250001677576srt:MaximumMemberus-gaap:UnsecuredDebtMember2021-05-252021-05-2500016775762022-09-3000016775762021-12-3100016775762021-06-300001677576iipr:NetRealEstateHeldForInvestmentMemberus-gaap:GeographicConcentrationRiskMember2022-01-012022-09-300001677576iipr:NetRealEstateHeldForInvestmentMemberus-gaap:GeographicConcentrationRiskMember2021-01-012021-12-310001677576us-gaap:UnsecuredDebtMember2022-07-012022-09-300001677576us-gaap:SeniorNotesMember2022-07-012022-09-300001677576us-gaap:UnsecuredDebtMember2022-01-012022-09-300001677576us-gaap:SeniorNotesMember2022-01-012022-09-300001677576us-gaap:UnsecuredDebtMember2021-07-012021-09-300001677576us-gaap:SeniorNotesMember2021-07-012021-09-300001677576us-gaap:UnsecuredDebtMember2021-01-012021-09-300001677576us-gaap:SeniorNotesMember2021-01-012021-09-300001677576iipr:AscendWellnessHoldingsLlcMembersrt:MaximumMember2022-09-300001677576iipr:TexasOriginalTxMember2022-09-3000016775762021-01-012021-09-300001677576us-gaap:SeriesAPreferredStockMember2022-01-012022-09-300001677576us-gaap:CommonStockMember2022-01-012022-09-3000016775762022-11-0900016775762022-01-012022-09-30iipr:segmentxbrli:sharesiso4217:USDxbrli:pureiipr:propertyiipr:leaseiipr:tenantiipr:entityiso4217:USDxbrli:sharesutr:sqft

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________

Commission file number: 001-37949

Innovative Industrial Properties, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Maryland

81-2963381

(State or other jurisdiction of incorporation or

(I.R.S. Employer Identification No.) 

organization) 

1389 Center Drive, Suite 200

Park City, UT 84098

(858) 997-3332

(Address of principal executive offices)

(Registrant’s telephone number)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbols (s)

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

 

IIPR

 

New York Stock Exchange

Series A Preferred Stock, par value $0.001 per share

 

IIPR-PA

 

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes      No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

 

 

 

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 9, 2022 there were 27,972,947 shares of common stock outstanding.

INNOVATIVE INDUSTRIAL PROPERTIES, INC.

FORM 10-Q – QUARTERLY REPORT

SEPTEMBER 30, 2022

TABLE OF CONTENTS

PART I

Item 1.

Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets

3

 

Condensed Consolidated Statements of Income

4

 

Condensed Consolidated Statements of Stockholders’ Equity

5

 

Condensed Consolidated Statements of Cash Flows

6

 

Notes to the Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38

Item 4.

Controls and Procedures

38

PART II

Item 1.

Legal Proceedings

40

Item 1A.

Risk Factors

40

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

40

Item 3.

Defaults Upon Senior Securities

40

Item 4.

Mine Safety Disclosures

40

Item 5.

Other Information

41

Item 6.

Exhibits

41

2

PART I

ITEM 1. FINANCIAL STATEMENTS

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

Commitments and contingencies (Notes 6 and 11)

 

  

 

  

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

See the accompanying notes to the condensed consolidated financial statements.

3

Innovative Industrial Properties, Inc.

Condensed Consolidated Statements of Income

(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

 

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 (Note 8):

 

 

 

 

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

See accompanying notes to the condensed consolidated financial statements.

4

Innovative Industrial Properties, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share amounts)

Three Months Ended September 30, 2022

Three Months Ended September 30, 2021

Series A

Shares of

Additional

Dividends in

Total

Series A

Shares of

Additional

Dividends in

Total

Preferred

Common

Common

Paid-In-

Excess of

Stockholders’

Preferred

Common

Common

Paid-In

Excess of

Stockholders’

    

Stock

    

Stock

    

Stock

    

Capital

    

Earnings

    

Equity

    

Stock

    

Stock

    

Stock

    

Capital

    

Earnings

    

Equity

Balances at beginning of period

$

14,009

 

27,973,429

$

28

$

2,056,568

$

(94,833)

$

1,975,772

$

14,009

23,928,304

$

24

$

1,559,908

$

(58,774)

$

1,515,167

Net income

37,616

37,616

30,094

30,094

Exchange of Exchangeable Senior Notes

265

17

17

Payment of common stock offering costs

(28)

(28)

Preferred stock dividend

(338)

(338)

(338)

(338)

Common stock dividend

(50,503)

(50,503)

(35,983)

(35,983)

Stock-based compensation

4,379

4,379

2,191

2,191

Balances at end of period

$

14,009

 

27,973,694

$

28

$

2,060,936

$

(108,058)

$

1,966,915

$

14,009

23,928,304

$

24

$

1,562,099

$

(65,001)

$

1,511,131

Nine Months Ended September 30, 2022

Nine Months Ended September 30, 2021

Series A

Shares of

Additional

Dividends in

Total

Series A

Shares of

Additional

Dividends in

Total

Preferred

Common

Common

Paid-In

Excess of

Stockholders’

Preferred

Common

Common

Paid-In

Excess of

Stockholders’

    

Stock

    

Stock

    

Stock

    

Capital

    

Earnings

    

Equity

    

Stock

    

Stock

    

Stock

    

Capital

    

Earnings

    

Equity

Balances at beginning of period

$

14,009

25,612,541

$

26

$

1,672,882

$

(75,218)

$

1,611,699

$

14,009

23,936,928

$

24

$

1,559,059

$

(48,120)

$

1,524,972

Adjustment to opening balance upon adoption of ASU 2020-06 (Note 2)

(1,340)

728

(612)

Net income

112,880

112,880

85,360

85,360

Issuance of unvested restricted stock, net of forfeitures

15,174

(2,441)

(2,441)

(8,624)

(3,384)

(3,384)

Exchange of Exchangeable Senior Notes

413,166

26,682

26,682

Net proceeds from sale of common stock

1,932,813

2

351,958

351,960

Preferred stock dividend

(1,014)

(1,014)

(1,014)

(1,014)

Common stock dividend

(145,434)

(145,434)

(101,227)

(101,227)

Stock-based compensation

13,195

13,195

6,424

6,424

Balances at end of period

$

14,009

 

27,973,694

$

28

$

2,060,936

$

(108,058)

$

1,966,915

$

14,009

23,928,304

$

24

$

1,562,099

$

(65,001)

$

1,511,131

See accompanying notes to the condensed consolidated financial statements.

5

Innovative Industrial Properties, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

For the Nine Months Ended

September 30, 

    

2022

    

2021

    

Cash flows from operating activities

Net income

$

112,880

$

85,360

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

 

45,001

 

29,571

Loss on exchange of Exchangeable Senior Notes

125

Other non-cash adjustments

158

97

Stock-based compensation

 

13,195

 

6,424

Amortization of discounts on short-term investments

 

(1,068)

 

(283)

Amortization of debt discount and issuance costs

 

1,017

 

2,011

Changes in assets and liabilities

Other assets, net

 

(6,555)

 

(3,598)

Accounts payable, accrued expenses and other liabilities

 

5,339

 

4,308

Rent received in advance and tenant security deposits

 

8,683

 

17,069

Net cash provided by operating activities

 

178,775

 

140,959

Cash flows from investing activities

Purchases of investments in real estate

 

(150,090)

 

(130,853)

Funding of draws for tenant improvements and construction

 

(316,469)

 

(254,182)

Funding of construction loan and other investments

(21,360)

(12,077)

Deposits in escrow for acquisitions

 

(100)

 

(1,500)

Purchases of short-term investments

 

(278,717)

 

(499,862)

Maturities of short-term investments

 

365,000

 

565,000

Net cash used in investing activities

 

(401,736)

 

(333,474)

Cash flows from financing activities

Issuance of common stock, net of offering costs

 

351,960

 

Gross proceeds from issuance of Notes due 2026

 

 

300,000

Payment of deferred financing costs from issuance of Notes due 2026

(6,824)

Dividends paid to common stockholders

 

(133,440)

 

(94,971)

Dividends paid to preferred stockholders

 

(1,014)

 

(1,014)

Taxes paid related to net share settlement of equity awards

 

(2,441)

 

(3,384)

Net cash provided by financing activities

 

215,065

 

193,807

Net (decrease) increase in cash, cash equivalents and restricted cash

 

(7,896)

 

1,292

Cash, cash equivalents and restricted cash, beginning of period

 

86,419

 

126,006

Cash, cash equivalents and restricted cash, end of period

$

78,523

$

127,298

Supplemental disclosure of cash flow information:

Cash paid during the period for interest

$

8,997

$

5,391

Supplemental disclosure of non-cash investing and financing activities:

Accrual for draws for tenant improvements and construction funding

$

35,195

$

61,674

Deposits applied for acquisitions

25

200

Accrual for common and preferred stock dividends declared

 

50,841

 

36,321

Exchange of Exchangeable Senior Notes for common stock

26,682

Operating lease liability for obtaining right of use asset

1,017

See accompanying notes to the condensed consolidated financial statements.

6

Innovative Industrial Properties, Inc.

Notes to the Condensed Consolidated Financial Statements

September 30, 2022

(Unaudited)

1. Organization

As used herein, the terms “we”, “us”, “our” or the “Company” refer to Innovative Industrial Properties, Inc., a Maryland corporation, and any of our subsidiaries, including IIP Operating Partnership, LP, a Delaware limited partnership (our “Operating Partnership”).

We are an internally-managed real estate investment trust (“REIT”) focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated cannabis facilities. We have acquired and intend to continue to acquire our properties through sale-leaseback transactions and third-party purchases. We have leased and expect to continue to lease our properties on a triple-net lease basis, where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, real estate taxes and insurance.

We were incorporated in Maryland on June 15, 2016. We conduct our business through a traditional umbrella partnership real estate investment trust, or UPREIT structure, in which our properties are owned by our Operating Partnership, directly or through subsidiaries. We are the sole general partner of our Operating Partnership and own, directly or through subsidiaries, 100% of the limited partnership interests in our Operating Partnership.

2. Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements

Basis of Presentation. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements.

This interim financial information should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Any references to square footage or occupancy percentage, and any amounts derived from these values in these notes to the condensed consolidated financial statements, are outside the scope of our independent registered public accounting firm’s review.

Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2022.

Variable Interest Entities. From time to time, the Company may acquire properties utilizing a reverse like-kind exchange under Section 1031 of the Internal Revenue Code (“Reverse 1031 Exchange”) in order to defer taxable gains on the subsequent sale of real estate properties. During the nine months ended September 30, 2022, the Company acquired four properties for a total purchase price of approximately $82.3 million, excluding transaction costs, as part of Reverse 1031 Exchanges. The acquired properties are in the possession of limited liability companies whose legal equity interests are owned by a qualified intermediary engaged to execute the Reverse 1031 Exchanges until the Reverse 1031 Exchanges are completed or terminated. The limited liability companies were deemed to be variable interest entities (“VIEs”) for which the Company is deemed to be the primary beneficiary as the Company has the ability to direct the activities of the entity that most significantly impact its economic performance and the Company has all of the risks and rewards of ownership. As such, the VIEs, including the acquired properties, are included in the Company’s condensed consolidated financial statements as a consolidated VIE until legal title is transferred to the Company upon the completion of the Reverse 1031 Exchanges. There were four consolidated VIEs on the Company’s condensed consolidated financial statements as of September 30, 2022.

Federal Income Taxes. We believe that we have operated our business so as to qualify to be taxed as a REIT for U.S. federal income tax purposes. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income, we generally will not be required to pay federal corporate income taxes on such income. The income taxes recorded on our condensed consolidated statements of income represent amounts paid for city and state income and franchise taxes and are included in general and administrative expenses in the accompanying the condensed consolidated statements of income.

7

Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from these estimates and assumptions.

Reportable Segment. We are engaged in the business of providing real estate for the regulated cannabis industry. Our properties are similar in that they are leased to the state-licensed operators on a long-term triple-net basis, consist of improvements that are reusable and have similar economic characteristics. Our chief operating decision maker reviews financial information for our entire consolidated operations when making decisions related to assessing our operating performance. We have aggregated the properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities, including the fact that they are operated using consistent business strategies. The financial information disclosed herein represents all of the financial information related to our one reportable segment.

Acquisition of Real Estate Properties. Our investment in real estate is recorded at historical cost, less accumulated depreciation. Upon acquisition of a property, the tangible and intangible assets acquired and liabilities assumed are initially measured based upon their relative fair values. We estimate the fair value of land by reviewing comparable sales within the same submarket and/or region. We estimate the fair value of buildings and improvements and tenant improvements as if the property was vacant, taking into consideration current replacement costs and other relevant market rate information and may engage third-party valuation specialists. Acquisition costs are capitalized as incurred. All of our acquisitions to date were recorded as asset acquisitions.

The fair value of acquired in-place leases is derived based on our assessment of estimated lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased. The amounts recorded for acquired in-place leases are reflected as in-place lease intangible assets, net on our condensed consolidated balance sheets and are amortized on a straight-line basis as a component of depreciation and amortization expense over the remaining term of the applicable leases.

The fair value of the above-market component of an acquired in-place operating lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining non-cancellable lease term and (ii) our estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition measured over the remaining non-cancellable term of the lease. The amount recorded for one above-market operating lease is included in other assets, net on our condensed consolidated balance sheets and is amortized on a straight-line basis as a reduction of rental revenues over the remaining term of the applicable lease.

Cost Capitalization and Depreciation. We capitalize costs associated with development and redevelopment activities and tenant improvements when we are considered to be the accounting owner of the resulting assets. The development and redevelopment activities may be funded by us pursuant to the lease. We are generally considered the accounting owner for such improvements that are attached to or built into the premises, which are required under the lease to be surrendered to us upon the expiration or earlier termination of the lease. Typically, such improvements include, but are not limited to, ground up development, and enhanced HVAC, plumbing, electrical and other building systems.

Amounts capitalized are depreciated over estimated useful lives determined by management. We depreciate buildings and improvements and tenant improvements based on our evaluation of the estimated useful life of each specific asset, not to exceed 40 years. For the three months ended September 30, 2022 and 2021, we recognized depreciation expense of approximately $15.7 million and $10.9 million, respectively, which is included in depreciation and amortization expense in our condensed consolidated statements of income. For the nine months ended September 30, 2022 and 2021, we recognized depreciation expense of approximately $44.4 million and $29.6 million, respectively, which is included in depreciation and amortization expense in our condensed consolidated statements of income. We depreciate office equipment and furniture and fixtures over estimated useful lives ranging from three to seven years. We depreciate the leasehold improvements at our corporate office over the shorter of the estimated useful lives or the remaining lease term.

Determining whether expenditures meet the criteria for capitalization and the assignment of depreciable lives requires management to exercise significant judgment. Project costs that are clearly associated with the acquisition and development or redevelopment of a real estate project, for which we are the accounting owner, are capitalized as a cost of that project. Expenditures that meet one or more of the following criteria generally qualify for capitalization:

the expenditure provides benefit in future periods; and
the expenditure extends the useful life of the asset beyond our original estimates.

8

We define redevelopment properties as existing properties for which we expect to spend significant development and construction costs that are not reimbursements to tenants for improvements at the properties. When existing properties are determined to be redevelopment properties, the net carrying value of the buildings and improvements and tenant improvements are transferred to construction in progress while the redevelopment activities are in process. Costs capitalized to construction in progress related to redevelopment properties are transferred to buildings and improvements and tenant improvements at historical cost of the properties as the redevelopment project or phases of projects are placed in service. During the nine months ended September 30, 2022, we reclassified the net carrying value of buildings and improvements and tenant improvements totaling approximately $59.0 million to construction in progress in connection with the default by Kings Garden Inc. (“Kings Garden”) and the related litigation (see Note 11 “Commitments and Contingencies — Litigation — Kings Garden Lawsuit”).

Provision for Impairment. On a quarterly basis, we review current activities and changes in the business conditions of all of our properties prior to and subsequent to the end of each quarter to determine the existence of any triggering events or impairment indicators requiring an impairment analysis. If triggering events or impairment indicators are identified, we review an estimate of the future undiscounted cash flows for the properties, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration.

Long-lived assets are individually evaluated for impairment when conditions exist that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Impairment indicators or triggering events for long-lived assets to be held and used are assessed by project and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations, current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, construction costs, available market information, current and historical operating results, known trends, current market/economic conditions that may affect the property, and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount to its estimated fair value. We may adjust depreciation of properties that are expected to be disposed of or redeveloped prior to the end of their useful lives. No impairment losses were recognized during the nine months ended September 30, 2022 and 2021.

Revenue Recognition. Our leases are triple-net leases, an arrangement under which the tenant maintains the property while paying us rent. We account for our current leases as operating leases and record revenue for each of our properties on a cash basis due to the uncertain regulatory environment in the United States pertaining to the regulated cannabis industry, the limited operating history of certain tenants and the resulting uncertainty of collectability of lease payments from each tenant over the duration of the lease term. Contractually obligated reimbursements from tenants for recoverable real estate taxes, insurance and operating expenses are included in rental revenues in the period when such costs are reimbursed by the tenants. Contractually obligated real estate taxes that are paid directly by the tenant to the tax authorities are not reflected in our condensed consolidated financial statements.

Construction Loan. In June 2021, we executed a construction loan agreement with a developer, pursuant to which we agreed to lend up to $18.5 million for the development of a regulated cannabis cultivation and processing facility in California. We have an option to purchase the property, and may execute a negotiated lease with an affiliate of the developer or with another third party, if we determine to exercise our purchase option. The developer is required to complete construction by December 1, 2022, subject to extension in certain circumstances. Interest on the construction loan is payable at maturity, which is December 25, 2022. As of September 30, 2022, we had funded approximately $17.7 million of the construction loan.

Cash and Cash Equivalents. We consider all highly-liquid investments with original maturities of three months or less to be cash equivalents. As of September 30, 2022 and December 31, 2021, approximately $66.5 million and $72.0 million, respectively, were invested in short-term money market funds, obligations of the U.S. government and certificates of deposit with an original maturity at the time of purchase of less than or equal to three months.

Restricted Cash. Restricted cash relates to cash held in escrow accounts for future draws for improvements for tenants in accordance with certain lease agreements.

Investments. Investments consist of obligations of the U.S. government and certificates of deposit with an original maturity at the time of purchase of greater than three months. Investments are classified as held-to-maturity and stated at amortized cost.

Exchangeable Notes. The liability and equity components of exchangeable debt instruments that may be settled in cash upon exchange, including partial cash settlement, are required to be separately accounted for in a manner that reflects the issuer’s nonexchangeable debt borrowing rate. The initial proceeds from the sale of our Exchangeable Senior Notes (as defined below) were

9

allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonexchangeable debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the Exchangeable Senior Notes as of the date of issuance. We measured the estimated fair value of the debt component of our Exchangeable Senior Notes as of the date of issuance based on our estimated nonexchangeable debt borrowing rate with the assistance of a third-party valuation specialist as we do not have a history of borrowing arrangements and there is limited empirical data available related to the Company’s industry due to the regulatory uncertainty of the cannabis market in which the Company’s tenants operate. The equity component of our Exchangeable Senior Notes was reflected within additional paid-in capital on our condensed consolidated balance sheets, and the resulting debt discount was amortized over the period during which the Exchangeable Senior Notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense.

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models, and convertible debt proceeds, unless issued with a substantial premium or an embedded conversion feature, will no longer be allocated between debt and equity components. ASU 2020-06 also updates the earnings per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares. We adopted ASU 2020-06 on January 1, 2022 and recognized a cumulative-effect adjustment of approximately $728,000 to the opening balance of retained earnings and derecognized approximately $1.3 million of the remaining equity component relating to the outstanding principal balance of our Exchangeable Senior Notes at the date of adoption.

Deferred Financing Costs. The deferred financing costs that are included as a reduction in the net book value of the related liability on our condensed consolidated balance sheets reflect issuance and other costs related to our debt obligations. These costs are amortized as non-cash interest expense using the effective interest method over the life of the related obligations.

Stock-Based Compensation. Stock-based compensation for equity awards is based on the grant date fair value of the equity awards and is recognized over the requisite service or performance period. If awards are forfeited prior to vesting, we reverse any previously recognized expense related to such awards in the period during which the forfeiture occurs and reclassify any non-forfeitable dividends and dividend equivalents previously paid on these awards from retained earnings to compensation expense. Forfeitures are recognized as incurred. Certain equity awards are subject to vesting based upon the satisfaction of various market conditions. Forfeiture of share awards with market-based restrictions does not result in a reversal of previously recognized share-based compensation expense.

Lease Accounting. We adopted Topic 842 effective as of January 1, 2019 using the effective date method and elected the package of practical expedients that allows an entity not to reassess upon adoption (i) whether an expired or existing contract contains a lease, (ii) whether a lease classification related to expired or existing lease arrangements, and (iii) whether costs incurred on expired or existing leases qualify as initial direct costs, and as a lessor, the practical expedient not to separate certain non-lease components, such as common area maintenance, from the lease component if  the timing and pattern of transfer are the same for the non-lease component and associated lease component, and the lease component would be classified as an operating lease if accounted for separately. We also elected the lessor practical expedient, allowing us to continue to amortize previously capitalized initial direct leasing costs incurred prior to the adoption of Topic 842.

As lessee, we recognized a liability to account for our future obligations and a corresponding right-of-use asset related to our corporate office lease. The lease liability was initially measured based on the present value of the future lease payments discounted using the estimated incremental borrowing rate of 7.25%, which was the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. In November 2021, we amended the lease to extend the term from April 2025 to January 2027 in connection with an expansion of the leased space which did not commence until February 2022. As a result of the lease amendment, we re-measured the lease liability relating to the existing leased space and measured the lease liability relating to the expansion space based on the present value of the respective future lease payments (excluding the extension option that we are not reasonably certain to exercise), discounted using the estimated incremental borrowing rate of 5.5%, which was the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Subsequently, the lease liability is accreted by applying a discount rate established at the lease commencement date to the lease liability balance as of the beginning of the period and is reduced by the payments made during the period.

The right-of-use asset is measured based on the corresponding lease liability. We did not incur any initial direct leasing costs and any other consideration exchanged with the landlord prior to the commencement of the lease. Subsequently, the right-of-use asset is amortized on a straight-line basis during the lease term. For the three months ended September 30, 2022 and 2021, we recognized

10

office lease expense of approximately $121,000 and $57,000, respectively, which are included in general and administrative expense in our condensed consolidated statements of income. For the nine months ended September 30, 2022 and 2021, we recognized office lease expense of approximately $344,000 and $171,000, respectively, which are included in general and administrative expense in our condensed consolidated statements of income. For the nine months ended September 30, 2022 and 2021, amounts paid and classified as operating activities in our condensed consolidated statements of cash flows for the office lease were approximately $282,000 and $176,000, respectively.

As lessor, for each of our real estate transactions involving the leaseback of the related property to the seller or affiliates of the seller, we determine whether these transactions qualify as sale and leaseback transactions under the accounting guidance. For these transactions, we consider various inputs and assumptions including, but not necessarily limited to, lease terms, renewal options, discount rates, and other rights and provisions in the purchase and sale agreement, lease and other documentation to determine whether control has been transferred to the Company or remains with the lessee. A transaction involving a sale leaseback will be treated as a purchase of a real estate property if it is considered to transfer control of the underlying asset from the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control and will be classified as a sales-type lease if control of the underlying asset is transferred to the lessee. Otherwise, the lease is treated as an operating lease. These criteria also include estimates and assumptions regarding the fair value of the leased facilities, minimum lease payments, the economic useful life of the facilities, the existence of a purchase option, and certain other terms in the lease agreements. The lease accounting guidance requires accounting for a transaction as a financing in a sale leaseback when the seller-lessee is provided an option to purchase the property from the landlord at the tenant’s option. Substantially all of our leases continued to be classified as operating leases and we continue to record revenue for each of our properties on a cash basis. Our tenant reimbursable revenue and property expenses continue to be presented on a gross basis as rental revenues and as property expenses, respectively, on our condensed consolidated statements of income. Property taxes paid directly by the lessee to a third party continue to be excluded from our condensed consolidated financial statements.

Lease amendments are evaluated to determine if the modification grants the lessee an additional right-of-use not included in the original lease and if the lease payments increase commensurate with the standalone price of the additional right-of-use, adjusted for the circumstances of the particular contract. If both conditions are present, the lease amendment is accounted for as a new lease that is separate from the original lease.

Our leases generally contain options to extend the lease terms at the prevailing market rate or at the expiring rental rate at the time of expiration. Certain of our leases provide the lessee with a right of first refusal or right of first offer in the event we market the leased property for sale.

Concentration of Credit Risk. As of September 30, 2022, we owned 111 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia and Washington. The ability of any of our tenants to honor the terms of their leases is dependent upon the economic, regulatory, competition, natural and social factors affecting the community in which that tenant operates.

11

The following table sets forth the five tenants in our portfolio that represented the largest percentage of our total rental revenues for the three and nine months ended September 30, 2022 and 2021, including tenant reimbursements:

For the Three Months Ended

September 30, 2022

Percentage of

    

Number of 

    

  Rental 

    

    

Leases

    

Revenue

    

PharmaCann Inc. ("PharmaCann")

 

11

14

%

SH Parent, Inc. ("Parallel")

4

10

%

Ascend Wellness Holdings, Inc. ("Ascend")

 

4

10

%

Green Thumb Industries, Inc. ("Green Thumb")

3

8

%

Trulieve Cannabis Corp. ("Trulieve")

 

6

7

%

For the Nine Months Ended

 

September 30, 2022

Percentage of

    

Number of 

    

 Rental 

 

    

Leases

    

Revenue

PharmaCann

 

11

14

%

Parallel

4

10

%

Ascend

 

4

9

%

Kings Garden(1)

6

7

%

Trulieve

 

6

7

%

For the Three Months Ended

September 30, 2021

    

    

Percentage of 

    

 

Number of 

 

Rental 

 

    

Leases

    

Revenue

    

Parallel

4

12

%

PharmaCann

5

12

%

Kings Garden(1)

5

8

%

Ascend

3

8

%

Green Thumb

3

7

%

For the Nine Months Ended

 

September 30, 2021

Percentage of

    

Number of 

    

 Rental 

 

    

Leases

    

Revenue

PharmaCann

 

5

13

%

Parallel

4

10

%

Ascend

 

3

9

%

Cresco Labs Inc.

5

8

%

Kings Garden(1)

 

5

7

%

(1)On July 13, 2022, Kings Garden defaulted on its obligations to pay rent at all of the properties it leases with us, and pursuant to a confidential, conditional settlement agreement executed on September 11, 2022 between us and Kings Garden, we terminated the leases for two properties that were in development or redevelopment as of September 30, 2022 and regained possession of those properties. We have recovered $10.0 million of funds paid to Kings Garden. See Note 11 “Commitments and Contingencies — Litigation — Kings Garden Lawsuit” to our condensed consolidated financial statements for more information.

In each of the tables above, these leases include leases with affiliates of each entity, for which the entity has provided a corporate guaranty.

As of September 30, 2022 and December 31, 2021, none of our properties individually represented more than 5% of our net real estate held for investment.

12

We have deposited cash with a financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of September 30, 2022, we had cash accounts in excess of FDIC insured limits. We have not experienced any losses in such accounts.

3. Common Stock

As of September 30, 2022, the Company was authorized to issue up to 50,000,000 shares of common stock, par value $0.001 per share, and there were 27,973,694 shares of common stock issued and outstanding.

In April 2022, we issued 1,815,790 shares of common stock in an underwritten public offering, including the exercise in full of the underwriters’ option to purchase an additional 236,842 shares, resulting in net proceeds of approximately $330.9 million.

We are party to equity distribution agreements with certain sales agents, pursuant to which we may offer and sell from time to time through an “at-the-market” offering program (the “ATM Program”) up to $500.0 million in shares of our common stock. During the nine months ended September 30, 2022, we sold 117,023 shares of our common stock for net proceeds of approximately $21.1 million under the ATM Program, which includes the payment of approximately $434,000 to one sales agent as commission for such sales.

During the three and nine months ended September 30, 2022, we issued 265 and 413,166 shares, respectively, of our common stock upon exchange by holders of approximately $17,000 and $26.9 million, respectively, of outstanding principal amount of our Exchangeable Senior Notes.

4. Preferred Stock

As of September 30, 2022, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $0.001 per share, and there were issued and outstanding 600,000 shares of 9.00% Series A Cumulative Redeemable Preferred Stock, $0.001 par value per share (the “Series A Preferred Stock”). Generally, the Company is not permitted to redeem the Series A Preferred Stock prior to October 19, 2022, except in limited circumstances relating to the Company’s ability to qualify as a REIT and in certain other circumstances related to a change of control/delisting (as defined in the articles supplementary for the Series A Preferred Stock). On or after October 19, 2022, the Company may, at its option, redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends on such Series A Preferred Stock up to, but excluding the redemption date. Holders of the Series A Preferred Stock generally have no voting rights except for limited voting rights if the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances.

5. Dividends

The following table describes the dividends declared by the Company during the nine months ended September 30, 2022:

    

    

Amount

    

    

Dividend

    

Dividend

Declaration Date

Security Class

Per Share

Period Covered

Paid Date

Amount

 

(In thousands)

March 14, 2022

Common stock

$

1.75

January 1, 2022 to March 31, 2022

April 14, 2022

$

45,830

March 14, 2022

Series A preferred stock

$

0.5625

January 15, 2022 to April 14, 2022

April 14, 2022

$

338

June 15, 2022

Common stock

$

1.75

April 1, 2022 to June 30, 2022

July 15, 2022

$

49,101

June 15, 2022

Series A preferred stock

$

0.5625

April 15, 2022 to July 14, 2022

July 15, 2022

$

338

September 15, 2022

Common stock

$

1.80

July 1, 2022 to September 30, 2022

October 14, 2022

$

50,503

September 15, 2022

Series A preferred stock

$

0.5625

July 15, 2022 to October 14, 2022

October 14, 2022

$

338

13

6. Investments in Real Estate

Acquisitions

The Company acquired the following properties during the nine months ended September 30, 2022 (dollars in thousands):

Rentable 

 Square

 Purchase

Transaction

Property

    

Market

    

Closing Date

    

Feet(1)

    

 Price

    

 Costs

    

Total

4Front MA

 

Massachusetts

January 28, 2022

 

57,000

$

16,000

$

20

$

16,020

(2)

Ascend NJ

 

New Jersey

February 10, 2022

 

114,000

 

35,400

 

8

 

35,408

(3)

Verano PA

 

Pennsylvania

March 23, 2022

 

3,000

 

2,750

 

68

 

2,818

Kings Garden CA

California

March 25, 2022

23,000

8,158

11

8,169

(4)

MCP MD

Maryland

April 13, 2022

84,000

25,000

290

25,290

(5)

Harvest AZ

Arizona

April 27, 2022

17,000

5,238

11

5,249

(5)

TILT MA

Massachusetts

May 16, 2022

104,000

40,000

32

40,032

(5)

Texas Original TX

Texas

June 14, 2022

85,000

12,040

25

12,065

(5)(6)

Curaleaf MA

Massachusetts

September 1, 2022

104,000

21,500

25

21,525

(7)

Total

 

591,000

$

166,086

$

490

$

166,576

(8)

(1) Includes expected rentable square feet at completion of construction of certain properties.
(2) The acquisition of the property did not satisfy the requirements for sale-leaseback accounting and therefore, the transaction is recognized as a note receivable and is included in other assets, net on our condensed consolidated balance sheet.
(3) The tenant is expected to complete improvements at the property, for which we agreed to provide funding of up to $4.6 million.
(4) The purchase price includes $1.8 million holdback held in an escrow account, which is subject to distribution to the seller upon seller’s completion of certain improvements at the property. As of September 30, 2022, we have distributed approximately $1.4 million of the holdback. The remaining approximately $400,000 is included in restricted cash on our condensed consolidated balance sheet.
(5) The acquisitions of the MCP MD, Harvest AZ, TILT MA and Texas Original TX properties were made through consolidated VIEs utilizing Reverse 1031 Exchanges that were entered into at the time each of the properties was acquired. See Note 2 “Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements – Variable Interest Entities” for more information regarding the Company’s Reverse 1031 Exchanges and consolidation of VIEs.
(6) The tenant is expected to complete improvements at the property, for which we agreed to provide funding of up to approximately $10.0 million. The purchase price includes approximately $908,000 attributable to the property which did not satisfy the requirements for sale-leaseback accounting; therefore, this amount is recognized as a note receivable and is included in other assets, net on our condensed consolidated balance sheet.
(7) The purchase price includes approximately $1.0 million held in an escrow account, which is subject to distribution to the seller upon seller’s completion of certain improvements at the property and is included in restricted cash on our condensed consolidated balance sheet.
(8) Approximately $16.9 million was included in other assets; $2.8 million was included in restricted cash; approximately $14.5 million was allocated to land; approximately $131.5 million was allocated to building and improvements; and approximately $798,000 was allocated to in-place leases.

The properties acquired during the nine months ended September 30, 2022 generated approximately $6.6 million of rental revenues (including tenant reimbursements) and approximately $4.8 million of net operating income after deducting property and depreciation expenses. The properties acquired during the nine months ended September 30, 2021 generated approximately $11.9 million of rental revenue (including tenant reimbursements) and approximately $10.0 million of net operating income after deducting property and depreciation expenses.

During the three and nine months ended September 30, 2022, the acquisition of the properties which did not satisfy the requirements for sale-leaseback accounting generated approximately $538,000 and $1.4 million of interest revenue, respectively, which is included in other revenue on our condensed consolidated statements of income.

In addition, we acquired additional land adjacent to one of our existing properties in Pennsylvania on February 2, 2022. In connection with the acquisition, we amended the lease for the existing property to incorporate this land into the leased area and reduced the existing improvement allowance under the lease by an amount equal to the purchase price for the land, which was approximately $3.3 million.

14

Acquired In-Place Lease Intangible Assets

In-place lease intangible assets and related accumulated amortization as of September 30, 2022 and December 31, 2021 is as follows (in thousands):

    

September 30, 2022

    

December 31, 2021

In-place lease intangible assets

$

9,979

$

9,181

Accumulated amortization

 

 

(659)

 

(33)

In-place lease intangible assets, net

$

9,320

$

9,148

Amortization of in-place lease intangible assets classified in depreciation and amortization expense in our condensed consolidated statements of income was approximately $215,000 and $626,000 for the three and nine months ended September 30, 2022, respectively. No amortization expense was recognized for three and nine months ended September 30, 2021. The remaining weighted-average amortization period of the value of acquired in-place leases was approximately 10.9 years, and the estimated annual amortization of the value of the acquired in-place leases as of September 30, 2022 is as follows (in thousands):

Year

    

Amount

2022 (three months ending December 31)

$

215

2023

 

860

2024

 

860

2025

 

860

2026

 

860

Thereafter

 

5,665

Total

$

9,320

Above-Market Lease

The above-market lease and related accumulated amortization included in other assets, net on our condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 is as follows (in thousands):

    

September 30, 2022

    

December 31, 2021

Above-market lease

$

1,054

$

1,054

Accumulated amortization

 

 

(73)

 

(4)

Above-market lease, net

$

981

$

1,050

The above-market lease is amortized on a straight-line basis as a reduction to rental revenues over the remaining lease term of approximately 10.6 years. For the three and nine months ended September 30, 2022, the amortization of the above-market lease was approximately $23,000 and $69,000, respectively.

Additional Improvement Allowances

In February 2022, we amended our lease with Green Peak Industries, Inc. at one of our Michigan properties, increasing the improvement allowance under the lease by $18.0 million to a total of approximately $47.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

In March 2022, we amended our lease with Holistic Industries Inc. (“Holistic”) at one of our Michigan properties, increasing the improvement allowance under the lease by $3.5 million to a total of $22.3 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

In March 2022, we amended our lease with a subsidiary of Ascend at one of our Michigan properties, increasing the improvement allowance under the lease by $4.4 million to a total of $19.4 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

In March 2022, we amended our lease with a subsidiary of Ascend at one of our Massachusetts properties, increasing the improvement allowance under the lease by $14.9 million to a total of approximately $37.2 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

15

In April 2022, we amended our lease and development agreement with PharmaCann at one of our New York properties, increasing the construction fund by $45.0 million to a total of approximately $78.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

In June 2022, we amended our lease with a subsidiary of Curaleaf Holdings, Inc. (“Curaleaf”) at one of our Illinois properties, increasing the improvement allowance under the lease by approximately $10.9 million to a total of $29.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

In June 2022, we amended our lease with Sozo Health, Inc. (“Sozo”) at one of our Michigan properties, increasing the improvement allowance by approximately $1.2 million to a total of approximately $7.0 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

In June 2022, we amended our lease with a subsidiary of Curaleaf at one of our Pennsylvania properties, increasing the improvement allowance by $35.0 million to a total of approximately $47.4 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

In June 2022, we amended our lease with a subsidiary of Green Thumb at one of our Pennsylvania properties, increasing the improvement allowance by $55.0 million to a total $74.3 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

Including all of our properties, during the nine months ended September 30, 2022, we capitalized costs of approximately $303.9 million and funded approximately $316.5 million relating to improvements and construction activities at our properties.

Future contractual minimum rent (including base rent and property management fees) under the operating leases as of September 30, 2022 for future periods is summarized as follows (in thousands):

Year

    

Contractual Minimum Rent

2022 (three months ending December 31)

$

69,460

2023

 

287,080

2024

 

295,416

2025

 

304,199

2026

 

313,276

Thereafter

 

4,418,742

Total

$

5,688,173

7. Debt

Exchangeable Senior Notes

As of September 30, 2022, our Operating Partnership had outstanding approximately $6.4 million principal amount of 3.75% Exchangeable Senior Notes due 2024 (the “Exchangeable Senior Notes”). The Exchangeable Senior Notes are senior unsecured obligations of our Operating Partnership, are fully and unconditionally guaranteed by us and our Operating Partnership’s subsidiaries and are exchangeable for cash, shares of our common stock, or a combination of cash and shares of our common stock, at our Operating Partnership’s option, at any time prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date. The exchange rate for the Exchangeable Senior Notes at September 30, 2022 was 15.86813 shares of our common stock per $1,000 principal amount of Notes and the exchange price at September 30, 2022 was approximately $63.02 per share of our common stock. The exchange rate and exchange price are subject to adjustment in certain circumstances. The Exchangeable Senior Notes will pay interest semiannually on March 15 and September 15 of each year at a rate of 3.75% per annum and will mature on February 21, 2024, unless earlier exchanged or repurchased in accordance with their terms. Our Operating Partnership will not have the right to redeem the Exchangeable Senior Notes prior to maturity, but may be required to repurchase the Exchangeable Senior Notes from holders under certain circumstances. At September 30, 2022, the if-exchanged value of the Exchangeable Senior Notes exceeded the principal amount by approximately $2.6 million.

During the three and nine months ended September 30, 2022, we issued 265 and 413,166 shares, respectively, of our common stock upon exchanges by holders of approximately $17,000 and $26.9 million, respectively, of outstanding principal amount of our Exchangeable Senior Notes. For the nine months ended September 30, 2022, we recognized a loss on the exchange totaling approximately $125,000, resulting from the difference between the fair value and carrying value of the debt as of the date of the exchange. The issuance of the shares pursuant to the exchanges resulted in a non-cash increase to our additional paid-in capital account of approximately $17,000 and $26.7 million for the three and nine months ended September 30, 2022, respectively.

16

The following table details our interest expense related to the Exchangeable Senior Notes (in thousands):

For the Three Months Ended September 30, 

For the Nine Months Ended September 30, 

    

2022

    

2021

    

2022

    

2021

Cash coupon

  

$

60

  

$

1,348

  

$

391

  

$

4,042

Amortization of debt discount

  

  

288

  

  

855

Amortization of issuance cost

  

12

  

249

  

83

  

739

Total interest expense

  

$

72

  

$

1,885

  

$

474

  

$

5,636

The following table details the carrying value of our Exchangeable Senior Notes (in thousands):

    

September 30, 2022

    

December 31, 2021

Principal amount

  

$

6,436

  

$

33,373

Unamortized discount

  

 

  

(612)

Unamortized issuance cost

  

 

(67)

  

(529)

Carrying value

  

$

6,369

  

$

32,232

Accrued interest payable for the Exchangeable Senior Notes as of September 30, 2022 and December 31, 2021 was approximately $10,000 and $365,000, respectively, and is included in accounts payable and accrued expenses on our condensed consolidated balance sheets.

Notes due 2026

On May 25, 2021, our Operating Partnership issued $300.0 million aggregate principal amount of its 5.50% Senior Notes due 2026 (the “Notes due 2026”). The Notes due 2026 are senior unsecured obligations of our Operating Partnership, are fully and unconditionally guaranteed by us and our Operating Partnership’s subsidiaries and rank equally in right of payment with all of the Operating Partnership’s existing and future senior unsecured indebtedness, including the Exchangeable Senior Notes. However, the Notes due 2026 are effectively subordinated to any of the Company’s, the Operating Partnership’s and the Operating Partnership’s subsidiaries’ future secured indebtedness to the extent of the value of the assets securing such indebtedness. Interest at a rate of 5.50% per year is payable on May 15 and November 15 of each year, beginning on November 15, 2021, until the stated maturity date of May 25, 2026. The terms of the Notes due 2026 are governed by an indenture, dated May 25, 2021, among the Operating Partnership, as issuer, the Company and the Operating Partnership’s subsidiaries, as guarantors, TMI Trust Company, as trustee (as successor-in-interest to GLAS Trust Company LLC), and Securities Transfer Corporation, as registrar (as successor-in-interest to GLAS Trust Company LLC). The terms of the indenture provide that if the debt rating on the Notes due 2026 is downgraded or withdrawn entirely, interest on the Notes due 2026 will increase to a range of 6.0% to 6.5% based on such debt rating.

In connection with the issuance of the Notes due 2026, we recorded approximately $6.8 million of issuance costs, which are being amortized using the effective interest method and recognized as non-cash interest expense over the term of the Notes due 2026.

The following table details our interest expense related to the Notes due 2026 (in thousands):

For the Three Months Ended September 30, 

For the Nine Months Ended September 30, 

    

2022

2021

    

2022

2021

Cash coupon

$

4,125

$

4,125

$

12,375

$

5,821

Amortization of issuance cost

 

316

299

934

417

Total interest expense

$

4,441

$

4,424

$

13,309

$

6,238

The following table details the carrying value of our Notes due 2026 (in thousands):

    

September 30, 2022

    

December 31, 2021

Principal amount

  

$

300,000

  

$

300,000

Unamortized issuance cost

  

 

(5,206)

  

(6,140)

Carrying value

  

$

294,794

  

$

293,860

17

The Operating Partnership may redeem some or all of the Notes due 2026 at its option at any time at the applicable redemption price. If the Notes due 2026 are redeemed prior to February 25, 2026, the redemption price will be equal to 100% of the principal amount of the Notes due 2026 being redeemed, plus a make-whole premium and accrued and unpaid interest thereon to, but excluding, the applicable redemption date. If the Notes due 2026 are redeemed on or after February 25, 2026, the redemption price will be equal to 100% of the principal amount of the Notes due 2026 being redeemed, plus accrued and unpaid interest thereon to, but excluding, the applicable redemption date.

The terms of the indenture for the Notes due 2026 require compliance with various financial covenants, including minimum level of debt service coverage and limits on the amount of total leverage and secured debt maintained by the Operating Partnership. Management believes that it was in compliance with those covenants as of September 30, 2022.

Accrued interest payable for the Notes due 2026 as of September 30, 2022 and December 31, 2021 was approximately $6.2 million and $2.1 million, respectively, and is included in accounts payable and accrued expenses on our condensed consolidated balance sheets.

The following table summarizes the principal payments on our outstanding indebtedness as of September 30, 2022 (in thousands):

Payments Due

by Year

    

Amount

2022 (three months ended December 31)

$

2023

2024

6,436

2025

2026