After the closing bell yesterday Innovative Industrial Properties (IIPR) reported Q1 earnings.  IIPR shares are trading down about 4% today.  

The company went on a spree of acquisitions which drove a 210% increase in revenues for Q1 to $21.1 million. The company also reported a 249% increase in Q1 Net Income to $11.5 million and a 236% increase in Q1 adjusted funds from operations Growth Year-over-Year to $17.8 million.

IIPR continued to pay its quarterly dividend of $1.00 per share on April 15, 2020, to common stockholders of record as of March 31, 2020. This dividend represents a 122% increase over the first quarter of 2019’s dividend. 

Earlier in the year, IIPR completed an underwritten public offering of 3,412,969 shares of common stock. This public offering allowed IIPR to raise approximately $239.6 million to fund their recent spree of operations.

On top of this public offering, in January IIPR issued shares of common stock for net proceeds of approximately $78.2 million in an “at-the-market” equity offering program. Despite the aggressive capital raises and tremendous issuance of shares, the company has managed to grow into its valuation and put the capital to work right away. 

IIPR has taken the initiative regarding the current COVID-19 situation by holding in-depth discussions with each of its tenants in March and April. IIPR worked with 3 of its 21 tenants and provided rent deferral as they continue to assist these companies during these tough economic times. 

Due to the rent deferral, a total of $743,000 of security deposits that IIPR holds in cash were applied to the payment of rent for April. Also, $1.5 million in rent was deferred for May and June. Both amounts combined ($2.3 million) equates to approximately 3% of IIPR’s total revenues as reported for the three months ended March 31, 2020.

Alan Gold who is Executive Chairman of IIPR had some positive remarks on the quarter, “We remain steadfast in our support of this industry and its bright long-term future, and are working every day through this crisis with our tenant partners toward continuing to build a tremendous future forward of growth and strength for many years to come. When we overcome this crisis through the collective ingenuity of our top medical professionals and researchers, the regulated cannabis industry will continue to thrive and be one of the top drivers of growth and good jobs across the country.”

Despite the tough market conditions, IIPR was still able to grow revenues substantially and increase its dividend. The company seems to be managing the challenging economic conditions caused by the Covid-19 crisis, as we see that rent deferrals have only accounted for 3% of their total revenues for this quarter.

We look forward to watching IIPR continue to execute on its growth strategy for the remainder of 2020.

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IIPR shares were trading at $75.48 per share on Thursday morning, down $2.63 (-3.37%). Year-to-date, IIPR has gained 0.73%, versus a -9.90% 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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