Innovative Industrial Properties Reports Fourth Quarter and Full-Year 2024 Results

About this update from Innovative Industrial Properties, Inc.

2024 Leasing Activity of 530,000 Square Feet, or 6% of Total Portfolio SAN DIEGO, February 19, 2025 --( BUSINESS WIRE )--Innovative Industrial Properties, Inc. (NYSE: IIPR) ("IIP" or the "Company"), the first and only real estate company on the New York Stock Exchange focused on the regulated U.S. cannabis industry, announced today results for the fourth quarter and year ended December 31, 2024. Full Year 2024 Fourth Quarter 2024 Financial Results and Dividend Financing Activity Balance Sheet Highlights (at December 31, 2024) Portfolio – New Investment, Leasing and Development Property Portfolio Statistics (as of December 31, 2024) Year-to-Date 2025 Investment Activity Senior Leadership Promotions PharmaCann Resolution Select Financial Results For the three months ended December 31, 2024, IIP generated total revenues of $76.7 million, compared to $79.2 million for the same period in 2023, a decrease of 3%. This decrease was primarily related to certain properties we took back possession of or sold since 2023, lease amendments that adjusted and deferred rent for certain properties, partial payment of rent by certain tenants and two leases that were classified as sales-type leases starting in January 2024 where rental revenue collected is recognized as a deposit liability and is included in other liabilities in our consolidated balance sheet as of December 31, 2024. The decrease was offset by amendments to leases for additional improvement allowances at existing properties that resulted in adjustments to rent, revenue from the two properties acquired in 2024 and contractual rent escalations on our other existing properties. For the three months ended December 31, 2024, IIP applied $5.7 million of security deposits for payment of rent on properties leased to five tenants. For the three months ended December 31, 2023, IIP applied $0.8 million of security deposits for payment of rent on a property leased to one tenant. While IIP has re-leased several properties that we regained possession of, the rent commencement on certain of these properties is contingent on the tenants obtaining the requisite approvals to operate. IIP has also granted temporary rent abatements in certain instances as tenants transition into the properties and commence operations. As a result, IIP does not expect to recognize rental revenue from those properties until such events have occurred. For the year ended December 31, 2024, IIP generated total revenues of $308.5 million, compared to $309.5 million for 2023, a decrease of under 1%. The decrease in total revenues was primarily related to certain properties we took back possession of or sold since 2023, lease amendments that adjusted and deferred rent for certain properties, partial payment of rent by certain tenants and two leases that were classified as sales-type leases starting in January 2024 where rental revenue collected is recognized as a deposit liability and is included in other liabilities in our consolidated balance sheet as of December 31, 2024. The decrease was partially offset by the $3.9 million disposition-contingent lease termination fee that was received in connection with the sale of our property in Los Angeles, California, amendments to leases for additional improvement allowances at existing properties that resulted in adjustments to rent, revenue from the two properties we acquired in 2024 and contractual rent escalations on our other existing properties. IIP paid a quarterly dividend of $1.90 per common share on January 15, 2025 to stockholders of record as of December 31, 2024, representing an annualized dividend of $7.60 per common share and an AFFO payout ratio of 86% (calculated by dividing the common stock dividend declared per share by IIP’s AFFO per common share for the fourth quarter). The common stock dividends declared for the twelve months ended December 31, 2024 totaled $7.52 per common share. IIP has increased its common stock dividends declared each year since its inception in 2016. Supplemental Information Supplemental financial information is available in the Investor Relations section of IIP’s website at www.innovativeindustrialproperties.com . Teleconference and Webcast Innovative Industrial Properties, Inc. will conduct a conference call and webcast at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) on Thursday, February 20, 2025 to discuss IIP’s financial results and operations for the year ended December 31, 2024. 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, February 20, 2025 until 12:00 p.m. Pacific Time on Thursday, February 27, 2025, by calling 1 (877) 344-7529 (domestic), 855-669-9658 (Canada) or 1 (412) 317-0088 (international) and using access code 8588807. About Innovative Industrial Properties Innovative Industrial Properties, Inc. is a 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. 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. FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (NAREIT). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to net income, computed in accordance with accounting principles generally accepted in the United States (GAAP), excluding gains (or losses) from sales of property, depreciation, amortization and impairment related to real estate properties, and after adjustments for unconsolidated partnerships and joint ventures. IIP also excludes from FFO any disposition-contingent lease termination fee received in connection with a property sale. Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO and FFO per share to be supplemental measures of a REIT’s performance because they provide an understanding of the operating performance of IIP’s properties without giving effect to certain significant non-cash items, primarily depreciation expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. IIP believes that by excluding the effect of depreciation, FFO and FFO per share can facilitate comparisons of operating performance between periods. IIP reports FFO and FFO per share because these measures are observed by management to also be the predominant measures used by the REIT industry and industry analysts to evaluate REITs and because FFO per share is consistently reported, discussed, and compared by research analysts in their notes and publications about REITs. For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share. IIP computes Normalized FFO by adjusting FFO to exclude certain GAAP income and expense amounts that management believes are infrequent and unusual in nature and/or not related to IIP’s core real estate operations. Exclusion of these items from similar FFO-type metrics is common within the equity REIT industry, and management believes that presentation of Normalized FFO and Normalized FFO per share provides investors with a metric to assist in their evaluation of IIP’s operating performance across multiple periods and in comparison to the operating performance of other companies, because it removes the effect of unusual items that are not expected to impact IIP’s operating performance on an ongoing basis. Normalized FFO is used by management in evaluating the performance of its core business operations. Items included in calculating FFO that may be excluded in calculating Normalized FFO include certain transaction-related gains, losses, income or expense or other non-core amounts as they occur. Management believes that AFFO and AFFO per share are also appropriate supplemental measures of a REIT’s operating performance. IIP calculates AFFO by adjusting Normalized FFO for certain cash and non-cash items. For all periods presented other than the three months ended December 31, 2024, FFO (diluted), Normalized FFO, AFFO and FFO, Normalized FFO and AFFO per diluted share include the dilutive impact of the assumed full exchange of the Exchangeable Senior Notes for shares of common stock. For the three months and years ended December 31, 2024 and 2023, the performance share units ("PSUs") granted to certain employees were not included in dilutive securities as the performance thresholds for vesting of the PSUs were not met as measured as of the respective periods. IIP’s computation of FFO, Normalized FFO and AFFO may differ from the methodology for calculating FFO, Normalized FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such REITs. Further, FFO, Normalized FFO and AFFO do not represent cash flow available for management’s discretionary use. FFO, Normalized FFO and AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of IIP’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of IIP’s liquidity, nor is it indicative of funds available to fund IIP’s cash needs, including IIP’s ability to pay dividends or make distributions. FFO, Normalized FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of IIP’s operations. View source version on businesswire.com: https://www.businesswire.com/news/home/20250219562996/en/ Contacts Company Contact: David Smith Chief Financial Officer Innovative Industrial Properties, Inc. (858) 997-3332

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