8-K
INNOVATIVE INDUSTRIAL PROPERTIES INC (IIPR)
UNITED STATES
SECURITIES ANDEXCHANGE COMMISSION
WASHINGTON,D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant toSection 13 or 15(d)
of the SecuritiesExchange Act of 1934
Date ofReport (Date of earliest event reported): May 4, 2022
Innovative IndustrialProperties, Inc.
(Exact nameof registrant as specified in its charter)
| Maryland | 001-37949 | 81-2963381 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission<br><br> <br>File No.) | (I.R.S. Employer<br><br> <br>Identification No.) |
1389 CenterDrive, Suite 200
Park City, Utah84098
(Address ofprincipal executive offices, including zip code)
Registrant’s
telephone number, including area code: (858) 997-3332
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ¨ | Pre-commencement communications pursuant<br> to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under<br>the Exchange Act (17 CFR 240.13e-4(c)) |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities Registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.001 per share | IIPR | New York Stock Exchange |
| Series A Preferred Stock, par value $0.001 per share | IIPR-PA | New York Stock Exchange |
Item 2.02Results of Operations and Financial Condition.
On May 4, 2022, Innovative Industrial Properties, Inc. issued a press release regarding its financial results for the first quarter ended March 31, 2022. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
The information contained in this Current Report, including Exhibit 99.1 referenced herein, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Such information shall not be incorporated by reference into any filing of Innovative Industrial Properties, Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01Financial Statements and Exhibits.
(d) Exhibits
| Exhibit<br> Number | Description of Exhibit |
|---|---|
| 99.1 | Press release issued by Innovative Industrial Properties, Inc. on May 4, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: May 5, 2022 | INNOVATIVE INDUSTRIAL PROPERTIES, INC. | |
|---|---|---|
| By: | /s/ Catherine Hastings | |
| Name: | Catherine Hastings | |
| Title: | Chief Financial Officer |
Exhibit 99.1
Innovative Industrial Properties Reports FirstQuarter 2022 Results
Generated Q1 2022 YOY Growth of 50% in TotalRevenues, 36% in Net Income and 40% in AFFO
SAN DIEGO, CA – May 4, 2022 – 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 first quarter ended March 31, 2022.
First Quarter 2022 and Year-to-Date Highlights
Financial Results and Capital Activity
| • | Generated total revenues of approximately $64.5 million in the quarter, representing a 50% increase from the prior year’s quarter. |
|---|---|
| • | Recorded net income attributable to common stockholders of approximately $34.7 million for the quarter, or $1.32 per diluted share,<br>and AFFO of approximately $53.8 million, or $2.04 per diluted share (including the dilutive impact of the assumed full exchange of the<br>3.75% Exchangeable Senior Notes due 2024 (the Exchangeable Senior Notes)). |
| --- | --- |
| • | Paid a quarterly dividend of $1.75 per common share on April 14, 2022 to stockholders of record as of March 31, 2022, representing<br>a 17% increase over the fourth quarter 2021 dividend and a 33% increase over the prior year’s first quarter, equal to an annualized<br>dividend of $7.00 per share. |
| --- | --- |
| • | Exchanged approximately $26.9 million principal amount of the Exchangeable Senior Notes, leaving approximately $6.5 million principal<br>amount of Exchangeable Senior Notes outstanding as of today. |
| --- | --- |
| • | Raised net proceeds of approximately $21.1 million pursuant to sales under IIP’s “at-the-market” equity offering<br>program (ATM Program). |
| --- | --- |
| • | Subsequent to March 31, 2022, completed an underwritten public offering of common stock, including the exercise in full of the<br>underwriters’ option to purchase additional shares, resulting in gross proceeds of approximately $345.0 million. |
| --- | --- |
Investment and Leasing Activity
| • | From January 1, 2022 through today, made six acquisitions for properties located in Arizona, California, Maryland, Massachusetts,<br>New Jersey and Pennsylvania, and executed five lease amendments to provide additional improvements at properties located in Massachusetts,<br>Michigan and New York. |
|---|---|
| • | These transactions represented an aggregate additional investment by IIP of approximately $182.9 million (consisting of purchase prices<br>and commitments to fund future development and improvements, but excluding transaction costs). |
| --- | --- |
| • | In these transactions, IIP established new tenant relationships with Maryland Cultivation and Processing, LLC (MCP) and Verano<br>Holdings Corp., while expanding existing relationships with 4Front Ventures Corp., Ascend Wellness Holdings, Inc., Green Peak Industries, Inc.<br>(Skymint), Holistic Industries Inc., Kings Garden, Inc., PharmaCann Inc. and Trulieve Cannabis Corp. |
| --- | --- |
Balance Sheet Highlights (at March 31, 2022)
| • | 14% debt to total gross assets, with approximately $2.2 billion in total gross assets, representing a total annual fixed cash interest<br>obligation of approximately $16.9 million, with no debt maturing in 2022 or 2023. |
|---|
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Portfolio Update and Acquisition Activity
Acquisitions
IIP acquired the following properties from January 1, 2022 through May 4, 2022 (dollars in thousands, except for per square foot (PSF) statistics):
| State | Closing Date | Rentable Sq. Ft.^(1)^ | Purchase Price^(2)^ | Additional<br> Investment | Total<br> Investment | Total Investment PSF^(3)^ | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Massachusetts | January 28, 2022 | 57,000 | $ | 16,000 | $ | — | $ | 16,000 | $ | 281 | ||
| New Jersey | February 10, 2022 | 114,000 | 35,400 | 4,600 | ^(4)^ | 40,000 | 351 | |||||
| Pennsylvania | March 23, 2022 | 3,000 | 2,750 | — | 2,750 | 917 | ||||||
| California | March 25, 2022 | 23,000 | 8,158 | — | 8,158 | 355 | ||||||
| Maryland | April 13, 2022 | 84,000 | 25,000 | — | 25,000 | 298 | ||||||
| Arizona | April 27, 2022 | 17,000 | 5,238 | — | 5,238 | 308 | ||||||
| Totals | 298,000 | $ | 92,546 | $ | 4,600 | $ | 97,146 | 326 | ||||
| (1) | Includes expected rentable square feet at completion of construction for certain properties. | |||||||||||
| --- | --- | |||||||||||
| (2) | Excludes transaction costs. | |||||||||||
| (3) | Calculated as IIP’s total investment divided by the rentable square feet. | |||||||||||
| (4) | The tenant is expected to complete future building improvements at the property, for which IIP agreed to provide reimbursement of<br>up to $4.6 million. |
Additional Investments for Building Improvements at Existing Properties
IIP committed additional capital at certain existing properties for future building improvements (reflected in the “Additional Investment” column below), each of which resulted in a corresponding adjustment to the base rent at the applicable property, from January 1, 2022 through May 4, 2022 (dollars in thousands, except for PSF statistics):
| State | Date of<br> <br>Additional Capital Commitment | Rentable Sq. Ft.^(1)^ | Existing Investment^(2)^ | Additional<br> Investment | Total<br> Investment | Total Investment PSF^(3)^ | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Michigan | February 4, 2022 | 201,000 | $ | 45,000 | $ | 18,000 | $ | 63,000 | $ | 313 | |
| Michigan | March 1, 2022 | 63,000 | 25,000 | 3,500 | 28,500 | 452 | |||||
| Michigan | March 23, 2022 | 145,000 | 19,750 | 4,400 | 24,150 | 167 | |||||
| Massachusetts | March 23, 2022 | 199,000 | 49,000 | 14,900 | 63,900 | 321 | |||||
| New York | April 27, 2022 | 225,000 | 63,500 | 45,000 | 108,500 | 482 | |||||
| Totals | 833,000 | $ | 202,250 | $ | 85,800 | $ | 288,050 | 346 | |||
| (1) | Includes expected rentable square feet at completion of construction for certain properties. | ||||||||||
| --- | --- | ||||||||||
| (2) | Excludes transaction costs. | ||||||||||
| (3) | Calculated as IIP’s total investment divided by the rentable square feet. |
As of May 4, 2022, IIP owned 109 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia and Washington, representing a total of approximately 8.1 million rentable square feet (including approximately 2.4 million rentable square feet under development / redevelopment), with a weighted-average remaining lease term of approximately 16.4 years. As of May 4, 2022, IIP had invested approximately $2.0 billion across its portfolio (consisting of purchase price and construction funding and improvements reimbursed to tenants, but excluding transaction costs) and had committed an additional approximately $237.2 million to reimburse certain tenants and sellers for completion of construction and improvements at IIP’s properties (assuming full reimbursement for these improvements, IIP’s total investment in its portfolio equates to approximately $269 per square foot). These statistics do not include an $18.5 million loan from IIP to a developer for construction of a regulated cannabis cultivation and processing facility in California and up to $55.0 million that may be funded between June 15, 2022 and July 31, 2022 pursuant to IIP’s lease with a tenant at one of IIP’s Pennsylvania properties, as the tenant at that property may not elect to have IIP disburse those funds and pay IIP the corresponding base rent on those funds.
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Capital Markets Activity
From January 1, 2022 through today, holders of an aggregate of approximately $26.9 million of IIP’s Exchangeable Senior Notes submitted their Exchangeable Senior Notes for exchange, and IIP issued a total of 412,901 shares of common stock to these holders in accordance with the terms of the indenture governing the Exchangeable Senior Notes. As of May 4, 2022, approximately $6.5 million aggregate principal amount of the Exchangeable Senior Notes remains outstanding.
From January 1, 2022 through May 4, 2022, IIP sold 117,023 shares of its common stock pursuant to the ATM Program, raising net proceeds, after sales commissions, fees and expenses, of approximately $21.1 million. As of May 4, 2022, the remaining amount available to be sold under the ATM Program is approximately $209.9 million.
On April 5, 2022, IIP completed an underwritten public offering of 1,578,948 shares of common stock, and on April 6, 2022, IIP completed the issuance of an additional 236,842 shares of common stock pursuant to the exercise in full of the underwriters’ option to purchase additional shares in the offering, resulting in aggregate gross proceeds of approximately $345.0 million.
IIP expects to use the net proceeds from these offerings to invest in specialized industrial real estate assets that are used in the regulated cannabis industry and for general corporate purposes. As of May 4, 2022, 27,970,618 shares of IIP common stock are outstanding.
Financial Results
IIP generated total revenues of approximately $64.5 million for the three months ended March 31, 2022, compared to approximately $42.9 million for the same period in 2021, an increase of 50%. The increase was driven primarily by the acquisition and leasing of new properties, additional improvement allowances and construction funding at existing properties resulting in adjustments to base rent, and contractual rental escalations at certain properties.
For the three months ended March 31, 2022, IIP recorded net income attributable to common stockholders and net income attributable to common stockholders per diluted share of approximately $34.7 million and $1.32, respectively; funds from operations (FFO) (diluted) and FFO per diluted share of approximately $48.9 million and $1.86, respectively; normalized FFO, which adds back to FFO acquisition-related expense and the loss on exchange of a portion of the Exchangeable Senior Notes during the three months ended March 31, 2022 (Normalized FFO), and Normalized FFO per diluted share of approximately $49.1 million and $1.87, respectively; and AFFO and AFFO per diluted share of approximately $53.8 million and $2.04, respectively. For the three months ended March 31, 2022, 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.
IIP paid a quarterly dividend of $1.75 per common share on April 14, 2022 to stockholders of record as of March 31, 2022, representing a 17% increase over the fourth quarter 2021 dividend and a 33% increase over the prior year’s first quarter, equal to an annualized dividend of $7.00 per share. IIP’s “stabilized” AFFO payout ratio was 79% (calculated by dividing the quarterly dividend by the sum of (1) IIP’s AFFO for the quarter plus (2) approximately $4.4 million of additional lease payments assuming a full quarter of contractual lease payments for leases of properties acquired during the quarter and existing leases after the expiration of any scheduled base rent phase-in periods).
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FFO, Normalized FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income attributable to common stockholders to FFO, Normalized FFO and AFFO and definitions of terms are included at the end of this release.
Teleconference and Webcast
Innovative Industrial Properties, Inc. will conduct a conference call and webcast at 10:00 a.m. Pacific Time (1:00 p.m. Eastern Time) on Thursday, May 5, 2022 to discuss IIP’s financial results and operations for the first quarter ended March 31, 2022. 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, May 5, 2022 until 12:00 p.m. Pacific Time on Thursday, May 12, 2022, by calling 1-877-344-7529 (domestic), 855-669-9658 (Canada) or 1-412-317-0088 (international) and using access code 3390252.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.
This press release contains statements that IIP believes to be “forward-lookingstatements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statementsother 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 statementsare subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, suchstatements. Investors should not place undue reliance upon forward-looking statements. IIP disclaims any obligation to update or reviseany forward-looking statements, whether as a result of new information, future events or otherwise.
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InnovativeIndustrial Properties, Inc.
CondensedConsolidated Balance SheetS
(Unaudited)
(In thousands, except share and per share amounts)
| December 31, | |||||
|---|---|---|---|---|---|
| Assets | 2021 | ||||
| Real estate, at cost: | |||||
| Land | 131,925 | $ | 122,386 | ||
| Buildings and improvements | 1,070,431 | 979,417 | |||
| Tenant improvements | 694,251 | 620,301 | |||
| Total real estate, at cost | 1,896,607 | 1,722,104 | |||
| Less accumulated depreciation | (95,608 | ) | (81,938 | ) | |
| Net real estate held for investment | 1,800,999 | 1,640,166 | |||
| Construction loan receivable | 15,525 | 12,916 | |||
| Cash and cash equivalents | 43,094 | 81,096 | |||
| Restricted cash | 1,930 | 5,323 | |||
| Investments | 209,935 | 324,889 | |||
| Right of use office lease asset | 2,011 | 1,068 | |||
| In-place lease intangible assets, net | 9,215 | 9,148 | |||
| Other assets, net | 25,399 | 9,996 | |||
| Total assets | 2,108,108 | $ | 2,084,602 | ||
| Liabilities and stockholders’ equity | |||||
| Exchangeable senior notes, net | 9,369 | $ | 32,232 | ||
| Notes due 2026, net | 294,167 | 293,860 | |||
| Tenant improvements and construction funding payable | 43,802 | 46,274 | |||
| Accounts payable and accrued expenses | 8,990 | 7,718 | |||
| Dividends payable | 46,168 | 38,847 | |||
| Other liabilities | 2,150 | 1,167 | |||
| Rent received in advance and tenant security deposits | 56,801 | 52,805 | |||
| Total liabilities | 461,447 | 472,903 | |||
| Stockholders’ equity: | |||||
| Preferred stock, par value 0.001 per share, 50,000,000 shares authorized: 9.00% Series A cumulative redeemable preferred stock, 15,000 liquidation preference (25.00 per share), 600,000 shares issued and outstanding at March 31, 2022 and December 31, 2021 | 14,009 | 14,009 | |||
| Common stock, par value 0.001 per share, 50,000,000 shares authorized: 26,107,769 and 25,612,541 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | 26 | 26 | |||
| Additional paid-in capital | 1,718,234 | 1,672,882 | |||
| Dividends in excess of earnings | (85,608 | ) | (75,218 | ) | |
| Total stockholders’ equity | 1,646,661 | 1,611,699 | |||
| Total liabilities and stockholders’ equity | 2,108,108 | $ | 2,084,602 |
All values are in US Dollars.
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InnovativeIndustrial Properties, Inc.
CondensedConsolidated STATEMENTS OF INCOME
For the Three Months Ended March 31, 2022and 2021
(Unaudited)
(In thousands, except share and per share amounts)
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| 2022 | 2021 | |||||
| Revenues: | ||||||
| Rental (including tenant reimbursements) | $ | 64,114 | $ | 42,885 | ||
| Other revenue | 390 | — | ||||
| Total revenues | 64,504 | 42,885 | ||||
| Expenses: | ||||||
| Property expenses | 1,982 | 770 | ||||
| General and administrative expense | 8,777 | 5,600 | ||||
| Depreciation and amortization expense | 13,868 | 8,839 | ||||
| Total expenses | 24,627 | 15,209 | ||||
| Income from operations | 39,877 | 27,676 | ||||
| Interest and other income | 57 | 124 | ||||
| Interest expense | (4,766 | ) | (1,873 | ) | ||
| Loss on exchange of Exchangeable Senior Notes | (118 | ) | — | |||
| Net income | 35,050 | 25,927 | ||||
| Preferred stock dividends | (338 | ) | (338 | ) | ||
| Net income attributable to common stockholders | $ | 34,712 | $ | 25,589 | ||
| Net income attributable to common stockholders per share: | ||||||
| Basic | $ | 1.35 | $ | 1.07 | ||
| Diluted | $ | 1.32 | $ | 1.05 | ||
| Weighted-average shares outstanding: | ||||||
| Basic | 25,620,253 | 23,889,398 | ||||
| Diluted | 26,340,224 | 26,152,551 |
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InnovativeIndustrial Properties, Inc.
CondensedConsolidated FFO, NORMALIZED FFO AND AFFO
For the Three Months Ended March 31, 2022and 2021
(Unaudited)
(In thousands, except share and per share amounts)
| For the Three Months Ended | ||||
|---|---|---|---|---|
| March 31, | ||||
| 2022 | 2021 | |||
| Net income attributable to common stockholders | $ | 34,712 | $ | 25,589 |
| Real estate depreciation and amortization | 13,868 | 8,839 | ||
| FFO attributable to common stockholders (basic) | 48,580 | 34,428 | ||
| Cash and non-cash interest expense on Exchangeable Senior Notes | 334 | 1,873 | ||
| FFO attributable to common stockholders (diluted) | 48,914 | 36,301 | ||
| Acquisition-related expense | 95 | 8 | ||
| Loss on exchange of Exchangeable Senior Notes | 118 | — | ||
| Normalized FFO attributable to common stockholders (diluted) | $ | 49,127 | $ | 36,309 |
| Stock-based compensation | 4,379 | 2,101 | ||
| Non-cash interest expense | 307 | — | ||
| Above-market lease amortization | 23 | — | ||
| AFFO attributable to common stockholders (diluted) | $ | 53,836 | $ | 38,410 |
| FFO per common share – diluted | $ | 1.86 | $ | 1.39 |
| Normalized FFO per common share – diluted | $ | 1.87 | $ | 1.39 |
| AFFO per common share – diluted | $ | 2.04 | $ | 1.47 |
| Weighted average common shares outstanding – basic | 25,620,253 | 23,889,398 | ||
| Restricted stock and RSUs | 110,457 | 92,194 | ||
| PSUs | 102,333 | — | ||
| Dilutive effect of Exchangeable Senior Notes | 507,181 | 2,170,959 | ||
| Weighted average common shares outstanding – diluted | 26,340,224 | 26,152,551 |
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.
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.
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IIP computes Normalized FFO by adjusting FFO, as defined by NAREIT, 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 non-cash items.
For the periods presented, 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 ended March 31, 2022, 102,333 shares issuable upon vesting performance share units (“PSUs”) granted to certain employees were dilutive, as the performance thresholds for vesting of these PSUs were met as measured as of March 31, 2022. For the three months ended March 31, 2021, the performance thresholds for vesting of these PSUs were not met as measured as of March 31, 2021.
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.
Company Contact:
Catherine Hastings
Chief Financial Officer
Innovative Industrial Properties, Inc.
(858) 997-3332
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