Innovative Industrial Properties (IIPR -0.82%), a U.S. cannabis industry-focused real estate investment trust (REIT), is slated to report its second-quarter 2021 results after the market close on Wednesday, Aug. 4.
Many investors will probably be approaching the report with more optimism than caution. There has been a near continuous string of news -- both good and bad -- affecting the overall global and U.S. cannabis markets for some time, but Innovative Industrial Properties keeps on churning out robust quarterly earnings reports.
In 2021, its shares are performing in line with the broader market. Through July 23, the stock has returned 17.7%, compared to the S&P 500's 18.4% return.
However, the stock remains a huge winner over the last year and longer periods. It returned 125% over the one-year period through July 23, crushing the broader market's 38.5% return over this period.
Here's what to watch in Innovative Industrial Properties' upcoming report.
Image source: Getty Images.
Innovative Industrial Properties' key numbers
Here are the company's results from the year-ago quarter and Wall Street's estimates to use as benchmarks.
|
Metric |
Q2 2020 Result |
Wall Street's Q2 2020 Consensus Estimate |
Wall Street's Projected Change |
|---|---|---|---|
|
Revenue |
$24.3 million |
$45.9 million |
89% |
|
Earnings per share (EPS) |
$0.73 |
$1.11 | 52% |
|
Adjusted funds from operations (FFO) |
$1.19 | N/A | N/A |
Data sources: Innovative Industrial Properties and Yahoo! Finance. Funds from operations (FFO) is a closely watched metric for companies organized as REITs. It adds depreciation expense back to net income and makes a few other adjustments to net income to reflect a REIT's cash flow.
For context, in the first quarter, Innovative Industrial Properties' net rental revenue soared 103% year over year to $42.9 million. Earnings per share surged 46% to $1.05, and adjusted FFO per share jumped 31% to $1.47. Wall Street had been expecting EPS of $0.96 on revenue of $41.9 million, so both results beat estimates.
The stock rose 4.2% on the day after the release of its Q1 results and jumped 6.7% in the two-day period following the release.
Four properties acquired in Q2
On July 6, the company announced its "operating, investment, and capital markets activity" for the second quarter. So we know it acquired four new properties in the quarter (two facilities in Michigan and one each in Pennsylvania and Massachusetts).
As of both the end of the quarter and the July 6 announcement, Innovative Industrial Properties owned 72 properties in 18 states where marijuana for medical use is legal. All are 100% leased.
This acquisition activity represents a slight pickup from the first quarter, when the company acquired three new properties, though one was just land.
In addition, on June 25, the company "closed on a construction loan with a developer for the construction of a regulated cannabis cultivation and processing facility in California," it said in the press release. The loan is expected to be up to $18.5 million for the approximately 102,000 square foot building. The company has the option to buy the property once completed.
Data by YCharts.
Earnings call on Aug. 5
Innovative Industrial Properties has scheduled an analyst conference call for the day after the earnings release, Thursday, Aug. 5, at 1 p.m. EDT.
These calls are usually extremely informative because management generally only holds them twice a year, after its release of results for the second and fourth quarters (rather than the more customary four times a year).
