Innovative Industrial Properties Reports Fourth Quarter and Full-Year 2019 ResultsPosted by On

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SAN DIEGO–()–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 fourth quarter and year ended December 31, 2019, the third full year since IIP commenced real estate operations and completed its initial public offering in December 2016.

Fourth Quarter 2019 and Year-to-Date Highlights

Financial Results and Financing Activity

  • IIP generated total revenues of approximately $17.7 million in the quarter, representing a 269% increase from the prior year’s quarter.
  • IIP recorded net income available to common stockholders of approximately $9.6 million for the quarter, or $0.78 per diluted share, and adjusted funds from operations (“AFFO”) of approximately $14.3 million, or $1.18 per diluted share. AFFO and AFFO per diluted share represented increases of 293% and 211% from the prior year’s quarter, respectively.
  • IIP paid a quarterly dividend of $1.00 per common share on January 15, 2020 to stockholders of record as of December 31, 2019, representing a 186% increase from the prior year’s quarter and a 28% increase from IIP’s third quarter 2019 dividend of $0.78 per common share.
  • In September, IIP established an “at-the-market” equity offering program, issuing shares of common stock from September through today for net proceeds totaling approximately $184.8 million.
  • Subsequent to the end of the quarter, in January, IIP completed an underwritten public offering of 3,412,969 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 445,170 shares, resulting in gross proceeds of approximately $250.0 million.

Investment Activity

  • From October 1, 2019 through today, IIP acquired 20 properties, totaling approximately 1.0 million rentable square feet (including expected rentable square feet upon completion of properties under development), located in Colorado, Florida, Illinois, Michigan, North Dakota, Ohio, Pennsylvania and Virginia, and executed five lease amendments to provide additional tenant improvements at properties located in Arizona, California, Massachusetts and Pennsylvania.
  • These 20 properties and five lease amendments represented an aggregate investment by IIP of approximately $308.4 million (consisting of purchase prices and development / tenant reimbursement commitments, but excluding transaction costs).
  • In these transactions, IIP established new tenant relationships with Cresco Labs Inc., GR Companies Inc. (Grassroots), Green Thumb Industries Inc. (GTI) and LivWell Holdings, Inc., while expanding existing tenant relationships with Green Leaf Medical, LLC, Green Peak Industries LLC, Maitri Genetics, LLC, PharmaCann LLC, The Pharm, LLC, Trulieve Cannabis Corp. and Vireo Health, Inc.
  • From January 1, 2019 through today, IIP has grown its property portfolio from eleven properties comprising approximately 1.0 million rentable square feet in nine states, to 51 properties comprising approximately 3.2 million rentable square feet in 15 states. Also since January 1, 2019, IIP’s total investment in its property portfolio has increased by 307% from $167.4 million to $680.7 million (consisting of purchase prices and development / tenant reimbursement commitments, but excluding transaction costs and approximately $51.5 million in the aggregate, which represents funds that tenants at certain properties may not elect to have IIP disburse to them and pay IIP the corresponding base rent on).

Board of Directors

  • IIP expanded its board of directors to six members, and appointed Mary Allis Curran, a former senior banking executive, as the sixth member; with Ms. Curran also appointed to serve on the board’s audit committee and nominating and corporate governance committee.

Portfolio Update and Acquisition Activity

Portfolio Update

IIP acquired the following properties and made the following additional funds available to tenants for improvements at IIP’s properties during the period from October 1, 2019 through February 26, 2020 (dollars in thousands):

State

 

Closing Date

 

Rentable

Sq. Ft.(1)

 

Purchase

Price(2)

 

Additional

Investment

 

Total

Investment

 

Michigan

 

October 9, 2019

 

 

156,000

 

$

19,000

 

$

23,000

 

$

42,000

(3)

Illinois

 

October 22, 2019

 

 

39,000

 

 

20,700

 

 

250

 

 

20,950

(4)

Illinois

 

October 22, 2019

 

 

51,000

 

 

12,100

 

 

13,500

 

 

25,600

(5)

Florida

 

October 23, 2019

 

 

120,000

 

 

17,000

 

 

 

 

17,000

 

Michigan

 

Various

 

 

31,000

 

 

10,042

 

 

1,245

 

 

11,287

(6)

Illinois

 

October 30, 2019

 

 

66,000

 

 

18,000

 

 

7,000

 

 

25,000

(7)

Illinois

 

October 30, 2019

 

 

120,000

 

 

10,500

 

 

17,725

 

 

28,225

(8)

Pennsylvania

 

November 12, 2019

 

 

148,000

 

 

20,300

 

 

19,300

 

 

39,600

(9)

Pennsylvania

 

December 20, 2019

 

 

72,000

 

 

14,220

 

 

10,880

 

 

25,100

(10)

North Dakota

 

December 20, 2019

 

 

33,000

 

 

9,910

 

 

2,280

 

 

12,190

(11)

Pennsylvania

 

January 14, 2020

 

 

N/A

 

 

N/A

 

 

4,500

 

 

4,500

(12)

Virginia

 

January 15, 2020

 

 

82,000

 

 

11,740

 

 

8,010

 

 

19,750

(13)

Arizona

 

January 16, 2020

 

 

N/A

 

 

N/A

 

 

2,000

 

 

2,000

(14)

Ohio

 

January 24, 2020

 

 

50,000

 

 

10,600

 

 

1,945

 

 

12,545

(15)

California

 

January 28, 2020

 

 

N/A

 

 

N/A

 

 

1,250

 

 

1,250

(16)

Ohio

 

January 31, 2020

 

 

21,000

 

 

2,900

 

 

4,300

 

 

7,200

(17)

Colorado

 

Various

 

 

8,000

 

 

3,300

 

 

850

 

 

4,150

(18)

Pennsylvania

 

February 19, 2020

 

 

N/A

 

 

N/A

 

 

6,000

 

 

6,000

(19)

Massachusetts

 

February 24, 2020

 

 

N/A

 

 

N/A

 

 

4,000

 

 

4,000

(20)

 

 

Totals

 

 

997,000

 

$

180,312

 

$

128,035

 

$

308,347

 

 

(1)

Includes expected rentable square feet at completion of construction.

(2)

Excludes transaction costs.

(3)

The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to $23.0 million. As of February 26, 2020, IIP funded approximately $11.2 million of the reimbursement.

(4)

The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $250,000. As of February 26, 2020, IIP funded approximately $244,000 of the reimbursement.

(5)

The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $13.5 million. As of February 26, 2020, IIP funded approximately $9.4 million of the reimbursement.

(6)

The portfolio consists of six retail properties, with one property closing on October 25, 2019, three properties closing on November 4, 2019, one property closing on November 8, 2019 and one property closing on November 25, 2019. The tenant is expected to complete tenant improvements at certain of the properties, for which IIP agreed to provide reimbursement of up to approximately $1.2 million. As of February 26, 2020, IIP had funded approximately $312,000 of the tenant improvement allowance.

(7)

The tenant is expected to perform construction at the property, for which IIP agreed to provide reimbursement of up to $7.0 million. As of February 26, 2020, IIP funded approximately $2.0 million of the reimbursement.

(8)

The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $17.7 million, of which $10.7 million and $7.0 million are subject to reduction at the tenant’s option before April 30, 2020 and July 30, 2020, respectively. As of February 26, 2020, IIP had funded approximately $1.9 million of the tenant improvement allowance.

(9)

The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to $19.3 million. As of February 26, 2020, IIP had funded approximately $1.0 million of the tenant improvement allowance.

(10)

The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $10.9 million. As of February 26, 2020, IIP had funded approximately $1.0 million of the tenant improvement allowance.

(11)

The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $2.3 million. As of February 26, 2020, IIP had funded approximately $1.2 million of the tenant improvement allowance.

(12)

The amount relates to a lease amendment which increased the tenant improvement allowance under a lease at one of IIP’s Pennsylvania…

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