What happened

Shares of marijuana industry focused landlord Innovative Industrial Properties (NYSE:IIPR) rose 19% in December according to data from S&P Global Market Intelligence. That's a pretty heady gain for a one-month span, but it wasn't actually all that surprising for this real estate investment trust (REIT), which was up an incredible 141% in 2020.    

So what

The backstory here is that the marijuana industry continues to expand as more and more states move toward legalizing the drug. Innovative is, at its core, a landlord, owning grow houses and other marijuana related properties. But that's only half the picture, since what it often provides its tenants is access to capital. Using sale/leaseback transactions, Innovative allows companies to get property off their balance sheets, freeing up cash that can be used to pay down debt or to invest in growth initiatives. 

A marijuana leaf in a shopping cart over a credit card and cash.

Image source: Getty Images.

Innovative inked two such deals in December. One was for an expansion at an existing asset that included a rent hike for the lessee. The other was a sale/leaseback deal for two properties with a new tenant. Taken together, they show that Innovative's growth plans remain on track. Adding to the positives in December, the REIT also announced a sequential quarterly dividend increase of 6%, which represented a year over year increase of 24%. No wonder investors remained upbeat on the shares.  

Now what

Innovative Industrial Properties is doing very well right now and Wall Street is rewarding it for that success with a higher share price. December just continued the trend, so the monthly gain makes complete sense. However, income investors need to remember that this is a growth-oriented REIT operating in a very specific niche. It may not be appropriate for everyone.