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Innovative Industrial Properties Misses on Q4 Results

By Eric Volkman - Updated Feb 25, 2021 at 4:20PM

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The stock is being punished for not hitting analyst revenue and earnings estimates.

Formerly one of the more popular marijuana stocks on the market, real estate investment trust (REIT) Innovative Industrial Properties (IIPR 4.94%) isn't making investors too happy. After market close on Wednesday, the company released its fourth-quarter 2020 results, and they fell short of analyst expectations.

For the period, Innovative's total revenue was $37.09 million, more than double the $17.67 million it earned in the same quarter the preceding year. The dynamic was similar for net profit, which rose to just under $21 million, from the year-ago quarterly figure of $9.56 million, or $0.91 per share.

Marijuana flower on fire.

Image source: Getty Images.

Adjusted funds from operations (AFFO), considered a truer measure of profitability for REITs, doubled and then some to roughly $32.4 million.

Prognosticators following the stock, however, were forecasting loftier headline numbers. They had estimated Innovative would post $38.5 million on the top line and $1.07 in per-share net profit.

As a REIT, much of Innovative's growth during the quarter came from new properties in its portfolio. It closed deals on nine properties, in well-established or high-potential marijuana states such as California and Massachusetts.

The company typically purchases real estate in sale-leaseback deals, under which the erstwhile owner remains a tenant. Ideally this is a win-win for Innovative and its counterparty, as the former adds another property to its portfolio, and the latter gets a pile of cash to help fund its operations.

Innovative was quite a dog of a stock on Thursday in the wake of the earnings release. Disappointed investors had pushed its price down by 15% in midafternoon trading; by comparison, the S&P 500 index was only off by 1.8%.

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