Despite the bearish sentiment that has persisted in the cannabis sector, Innovative Industrial Properties (IIPR) has been one of the top-performing cannabis stocks.
Since hitting lows of $40 per share back in March the stock has more than doubled to about $84. Despite the difficult economic environment, IIPR has continued to execute on its long term acquisition strategy to drive profitability for shareholders. The company reported massive revenue growth this past quarter and this week IIPR announced yet again another capital raise in the form of a public offering of common stock.
On Wednesday, May 27th IIPR announced the upsizing and pricing of an underwritten public offering of 1,348,389 shares of its common stock for gross proceeds of approximately $100.0 million. The offering is expected to close on or about May 29, 2020, subject to customary closing conditions. The Company has also granted the underwriter a 30-day option to purchase up to an additional 202,259 shares of its common stock. All of the shares are being sold by the Company.
IIPR plans to use the capital from its offering to invest in specialized industrial real estate assets that support the regulated cannabis cultivation and processing industry that are consistent with its investment strategy, and for general corporate purposes. BTIG LLC will be acting as the sole underwriter on this deal.
This is not the first time IIPR has raised capital to fund their acquisition strategy and overall we believe that the market now accepts their additional needs for capital. Initially, when IIPR first started raising money, we saw the stock sell-off quite fiercely as the market feared dilution. Back in June when shares peaked at almost $140 per share it was smart for them to raise capital.
IIPR’s business model is much different compared to a licensed producer or multistate operator. IIPR acquires properties from existing cannabis companies, leases them back on a long term triple net lease, and grows its revenues.
The company continues to execute on its long term acquisition successfully amidst the global pandemic which has caused economic growth to plummet.
And IIPR attracts both growth investors and income-oriented investors, due to their hefty 4% dividend yield.
Due to the simplicity of their business model combined with proven results so far, we believe that this capital raise will only help IIPR to grow and continue to dominate the cannabis REIT sector.
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IIPR shares were trading at $84.77 per share on Thursday morning, up $0.52 (+0.62%). Year-to-date, IIPR has gained 13.13%, versus a -4.57% 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...
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