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Innovative Industrial Properties Is Floating a Roughly $100 Million New Stock Offering

By Eric Volkman - Updated May 28, 2020 at 9:52AM

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The cannabis-industry-focused REIT has upsized its latest share issue by 35%.

In what is by no means the first, and won't be anywhere near the last, round of capital-raising by a marijuana company, Innovative Industrial Properties (IIPR -1.52%) is floating a new stock issue.

The real estate investment trust (REIT), which specializes exclusively in properties used by cannabis companies, said on Wednesday that it will sell just under 1.35 million new shares of its common stock. All told, according to Innovative, the issue should bring in gross proceeds of approximately $100 million. The size of the planned offering has been boosted; on Tuesday, Innovative said its plan was to float an even 1 million shares.

Cannabis flower in a bowl on top of U.S. currency.

Image source: Getty Images.

The REIT has also granted its underwriter, BTIG, a 30-day option to buy up to 202,259 additional shares of stock.

Innovative will use the proceeds "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."

The company said it expects to close the new stock issue on or about this Friday.

Stock issues have been a popular means of supplemental fund-raising for cannabis companies in recent times, as many of them are chronically loss-making and frequently suffer from cash flow difficulties. Innovative is somewhat exceptional in that it is habitually profitable. Nevertheless, as a constant buyer of real estate assets, its capital requirements can be considerable.

Some investors might be worried to varying degrees about share dilution -- according to Yahoo! Finance's latest data, Innovative had just over 17 million shares outstanding. Perhaps this was a factor in the stock's marginal decline in price on Wednesday, against the gains of the broader market.

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