IIPR: Is Innovative Industrial Properties a Buy After Earnings?

Cannabis investors got great news earlier in the week, as GW Pharmaceuticals (GWPH) posted better than expected earnings results. This was followed up by Innovative Industrial Properties’ (IIPR) spectacular results on Thursday morning. The market was obviously excited as the stock proceeded to hit an all-time high of $156.42 during the day and finished with a gain of 16.7%.

IIPR’s revenue almost tripled on a year over year basis to hit $34.3 million. Analysts were expecting $26.6 million. Its net income and adjusted funds from operations (AFFO) climbed 205% and 192%, respectively. Since GWPH is a REIT, it pays out a dividend, and last month it paid out a dividend of $1.17, the highest in its history.

The company has been expanding its portfolio of medical-use cannabis facilities over the past year. In the past quarter, in particular, IIPR acquired five properties, totaling approximately 448,000 rentable square feet located in Florida, Michigan, and New Jersey.

In July, IIPR completed an underwritten public offering of 3,085,867 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 402,504 shares, resulting in net proceeds of approximately $248.2 million.

Then in September, IIPR issued 474,000 shares of common stock for net proceeds of approximately $58.1 million under its “at-the-market” equity offering program. This was not the first time IIPR has raised capital, but what sets them apart from their competition, or a traditional cannabis company. is the fact that they are able to put the money to use right away.

IIPR has a very efficient business model that allows them to grow revenues with the capital they raise, which usually translates into a direct impact on future revenues. The certainty and proven results of their business model make investors less concerned about dilution.

IIPR targets the United States medical cannabis market which is generally viewed as more stable than the consumer market. Investors might want to keep their eyes on IIPR if they are looking for a highly diversified dividend growth stock with plenty of potential for expansion.

With state legalization gaining traction, I anticipate IIPR will have plenty of room to grow as the United States market continues to open up. This marks another fantastic quarter for the cannabis stock and I look forward to its continued expansion.

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IIPR shares closed at $152.38 on Friday, down $-3.49 (-2.24%). Year-to-date, IIPR has gained 107.70%, versus a 10.35% rise in the benchmark S&P 500 index during the same period.

About the Author: Aaron Missere

Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...