Innovative Industrial Properties (NYSE:IIPR), a real estate investment trust (REIT) focused on the cannabis sector, reported powerful third-quarter 2019 results on Wednesday after the market closed, followed by an analyst conference call on Thursday.

The San Diego-based company's revenue soared 201% year over year to $11.2 million, driven heavily by acquisitions. Earnings per share surged 162% to $0.55, and adjusted funds from operations (FFO) -- a key profitability metric for REITs -- jumped 126% to $0.86 per share.  

Earnings releases tell only part of the story. Here are two things you should know from Innovative Industrial Properties' earnings call.

Green road with a cannabis leaf that says Now Entering Florida, with population number listed underneath.

IIP bought its first property in the Sunshine State in October. (Florida's population was about 21.3 million in 2018.) Image source: Getty Images.

Properties and investments by state

Innovative Industrial Properties (IIP) acquired 10 properties during the third quarter and an additional 10 after the quarter ended through the date of the earnings release, Nov. 6. As of this date, it owned 41 properties located in 13 states, totaling about 2.8 million rentable square feet, which were fully leased with a weighted-average remaining lease term of about 15.5 years. Florida and Nevada are new states since the end of Q2.

Ben Regin, director of investments, provided the total number of properties and monetary investments for each state in which the company had activity since the end of Q2. (I filled in the number of properties in states he didn't discuss using data from the company's website.)

State Number of Properties* Total Investment** 
Arizona 2 (1 dispensary) Not provided
California 10  Nearly $71 million
Colorado 1 Not provided
Florida 1 $17 million
Illinois 5 Over $115 million
Maryland 1 Not provided
Massachusetts 3 $42.8 million
Michigan 8 (4 dispensaries) $111.8 million
Minnesota 1 Not provided
New York 2 Not provided
Nevada 1 $9.6 million
Ohio 2 Not provided
Pennsylvania 4 $64.9 million
Total 41 Not provided

Data source: Innovative Industrial Properties. *Unless otherwise indicated, properties are industrial facilities used for growing and processing marijuana. **Includes committed funding for future tenant improvements. 

It's not surprising that IIP is heavily focused on California, Illinois, and Michigan, as these are among the most populous states in the country where medical marijuana is legal. Another reason for the push into these states is that they're all states in which recreational-use cannabis is also already legal (California) or soon will be so. Dispensaries in Illinois and Michigan are expected to begin selling marijuana for recreational use in early 2020.

Investors can nearly bank on the company pursuing more opportunities in Florida, which is the second most populous state in the nation in which medical-use cannabis is legal.

Acquired its first retailing locations 

From Chairman Alan Gold's remarks:

[W]e've always indicated that we would look at a portfolio of retail-type assets with a strong grower. ... We think supporting Green Peak and their ability to generate tremendous [...] revenues from a very exciting Michigan market was appropriate. Keeping in mind that we aren't interested in one-off type transactions on retail dispensaries, just given the size and the complexity of underwriting any transaction, let alone a small retail [one].

Since the end of the second quarter, IIP has acquired five dispensaries -- four in Michigan and one in Arizona. Gold's quote is referring to the four-property transaction in Michigan. As is typical, this was a sale-leaseback transaction. Both the Michigan and Arizona transactions were with marijuana growers in which the company had an existing relationship.

As Gold said in last quarter's earnings call, retail facilities "have different yields typically and different lease terms" relative to industrial facilities that are used to grow and process cannabis. This foray into somewhat lower-yielding retail properties shouldn't concern investors, as the company only plans to purchase retailing facilities "when appropriate," Gold said. We can probably take this to mean that IIP isn't willing to go too low on yields and will only do a retail deal if it makes sense relative to the long-term relationship with a grower.