Innovative Industrial Properties (IIPR 2.30%), a real estate investment trust (REIT) focused on the medical-use cannabis industry, reported strong first-quarter 2021 results after the market close on Wednesday, May 5.

Shares were little changed in Wednesday's after-hours trading session, rising 0.3%. They have returned 135% over the one-year period through Wednesday's regular trading session, compared to the S&P 500's 49% return over this period.

Innovative Industrial Properties' key numbers


Q1 2021

Q1 2020



$42.9 million $21.1 million 103%

Operating income

$27.7 million  $12.3 million 125%

Net income

$25.6 million $11.5 million  122%

Earnings per share (EPS)

$1.05 $0.72 46%

Adjusted funds from operations (AFFO)*

$38.4 million $17.8 million 116%

AFFO per share

$1.47 $1.12 31%

Data source: Innovative Industrial Properties. *Adjusted funds from operations is a closely watched metric for REITs, as it's the main driver of dividend changes. 

Revenue growth was driven primarily by the "acquisition and leasing of new properties, additional tenant improvement allowances and construction funding at existing properties resulting in adjustments to base rent, and contractual rental escalations at certain properties," the company said in the earnings release.

The per-share data (for EPS and AFFO per share) includes the "dilutive impact of the assumed full exchange of IIP's $143.75 million of exchangeable senior notes for shares of common stock."

Wall Street had been expecting EPS of $0.96 on revenue of $41.9 million, so IIP beat both estimates.

The company ended the period with $122.1 million in cash and cash equivalents and $539.3 million in short-term investments, totaling $661.4 million. It has no debt, other than $143.8 million of unsecured debt.

For context, last quarter (Q4 2020), revenue soared 110% year over year to $37.1 million, EPS rose 17% to $0.91, and AFFO per share increased 9% to $1.29.

A marijuana leaf on a white background.

Image source: Getty Images.

What happened with Innovative Industrial Properties in the quarter (and since the quarter ended through May 5)

  • It paid a quarterly dividend of $1.32 per share on April 15 to stockholders of record as of March 31, representing an increase of about 32% from the year-ago period. Shares are yielding 3.05% as of the market close on Wednesday.
  • During the first quarter, IIP made three acquisitions: one each in Florida, California, and Texas. The California acquisition is land adjacent to an existing property on which the tenant is expected to construct two new buildings; the Florida and Texas acquisitions are buildings. 
  • After the quarter ended, the company acquired one more property (a building), in Michigan.
  • In January, the company entered into a long-term lease with Holistic Industries for IIP's Los Angeles property, bringing the company's property portfolio to 100% leased. The Los Angeles property had been in receivership.

Here's the current snapshot of Innovative Industrial Properties' portfolio, taken from the earnings release:

As of May 5, 2021, IIP owned 69 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia, and Washington [18 states], representing a total of approximately 6.2 million rentable square feet (including approximately 2.3 million rentable square feet under development/redevelopment), which were 100% leased with a weighted-average remaining lease term of approximately 16.7 years. 

Looking ahead

Innovative Industrial Properties (whose stock I recently called one of two top cannabis stocks to buy) turned in another robust quarter.

Management isn't holding a first-quarter earnings call, so investors won't get color on topics such as the company's pipeline of potential deals. Management generally just holds calls after the release of results for the second and fourth quarters.