Innovative Industrial Properties (IIPR 0.09%), a real estate investment trust (REIT) focused on the U.S. cannabis industry, is slated to report its fourth-quarter and full-year 2021 results after the market close on Wednesday, Feb. 23. A conference call with analysts is scheduled for the following day at 1 p.m. ET. (Yep, that unusual time is correct.) 

The company is heading into its report on a solid note. In each of the three quarters reported so far for 2021, it has beaten Wall Street's earnings expectation. Shares have risen after each of those quarterly reports: 6.7%, 6.8%, and 5.5% in the two-day period following the release of first-, second-, and third-quarter results, respectively.

In 2022, Innovative Industrial Properties stock is down nearly 26% through Feb. 9, while the S&P 500 is down just under 4%. The stock's underperformance this year is likely largely due to market dynamics. With the Federal Reserve poised to begin raising interest rates, some investors have been rotating out of highly valued growth stocks -- and IIPR fits the bill.

That said, the stock -- which outperformed the broader market in 2021 -- remains a big winner over the medium and longer terms. Over the last three years, it's returned 236%, compared to the S&P 500's 78% return.

Here's what to watch in Innovative Industrial Properties' upcoming Q4 report.

Several cannabis plants with blue sky in background.

Image source: Getty Images.

Innovative Industrial Properties' key quarterly numbers

Here are the company's results from the year-ago quarter and Wall Street's estimates to use as benchmarks.

Metric

Q4 2020 Result

Wall Street's Q4 2020 Consensus Estimate

Wall Street's Projected Change (YOY)

Revenue

$37.1 million

$57.9 million

56%

Earnings per share (EPS)

$0.91

$1.24 36%

Adjusted funds from operations (FFO)

$1.29 N/A N/A

Data sources: Innovative Industrial Properties and Yahoo! Finance. YOY= year over year. 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 third quarter, IIP (as the company is often called) posted revenue of $53.9 million, an increase of 57% year over year. Earnings per share jumped 40% to $1.20, and adjusted FFO per share rose 34% to $1.71. Wall Street had been expecting EPS of $1.16 on revenue of $52.5 million, so the company exceeded both estimates.

IIP acquired 29 new properties in the fourth quarter

On Jan. 5, the company announced its "operating, investment, and capital markets activity" for the fourth quarter. So, we know it made 29 acquisitions, including 28 new properties and certain facilities at an existing property. The acquired properties were in California, Colorado, Michigan, North Dakota, and Pennsylvania.

IIP issued a press release in mid-December 2021 following the acquisition of a portfolio of 24 of these properties (in Colorado, Pennsylvania, and North Dakota). That release said these properties were a mix of processing facilities and dispensaries. Based on the total square footage of this portfolio that was provided in the Jan. 5 update, it can probably be assumed that most of these properties are dispensaries (which generally have a much smaller footprint than processing facilities). 

On the earnings call, analysts will likely ask management about the property types. 

As of the Jan. 5 announcement, IIP owned 103 properties located in 19 states where marijuana for medical use is legal: Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia, and Washington.

At the end of the third quarter, the company had properties in 19 states, so it didn't enter any new states during the fourth quarter.