Innovative Industrial Properties (IIPR -1.07%), a real estate investment trust (REIT) focused on the medical-use cannabis industry, reported strong fourth-quarter and full-year 2021 results after the market close on Wednesday, Feb. 23. 

Shares are up 3.4% on Thursday at 3:38 p.m. ET. For context, the S&P 500 is up about 1.2% at this time. This index -- which is a good proxy for the broad U.S. market -- opened down 1.7% on Thursday because of Russia's invasion of Ukraine very early Thursday local time. But it steadily climbed back up throughout the day, as of this writing. 

Interior of a cannabis-growing greenhouse.

Image source: Getty Images.

Innovative Industrial Properties' key quarterly numbers


Q4 2021

Q4 2020



$58.9 million $37.1 million 59%

Operating income

$38.5 million  $22.9 million 68%

Net income

$28.3 million $21.0 million  35%

Earnings per share (EPS)

$1.14 $0.91 25%

Adjusted funds from operations (AFFO)*

$48.6 million $32.5 million 50%

AFFO per share

$1.85 $1.30 42%

Data source: Innovative Industrial Properties. *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.

The company's revenue growth is driven primarily by the acquisition and leasing of new properties, along with contractual rental escalations at certain properties.

Wall Street had been looking for EPS of $1.24 on revenue of $57.9 million. So, IIP (as the company is sometimes called) beat the revenue expectation by $1 million, but fell short on the bottom line. Investors generally care more about the performance of adjusted FFO than that of earnings, so missing the Street's EPS expectation won't usually affect IIPR stock to the same degree that it might affect non-REIT stocks.

The company ended 2021 with $406 million in cash, cash equivalents, and short-term investments. Its debt load is 15% of its total gross assets, which total about $2.2 billion. This represents "a total annual fixed cash interest obligation of approximately $17.8 million, with no debt maturing in 2022 or 2023," the company said in the release.

For context, in the third quarter, IIP's revenue surged 57% year over year to $53.9 million. EPS jumped 40% to $1.20, and adjusted FFO per share rose 34% to $1.71.

What happened with Innovative Industrial Properties in the quarter (and since the quarter ended through Feb. 23):

  • It paid a quarterly dividend of $1.50 per share on Jan. 14, 2022, to stockholders of record as of Dec. 31, 2021, representing an increase of about 21% from the year-ago period. Shares are yielding 3.26% as of Thursday at 3:38 p.m. ET.
  • During the quarter, the company made 29 acquisitions, including 28 new properties and certain facilities at an existing property, as I covered in my earnings preview. The company released this data in early January. These properties were in California, Colorado, Michigan, North Dakota, and Pennsylvania.
  • After the quarter ended through Feb. 23, it made two more property acquisitions: one each in Massachusetts and New Jersey. 

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

As of February 23, 2022, IIP owned 105 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia and Washington [19 states], representing a total of approximately 7.9 million rentable square feet (including approximately 2.4 million rentable square feet under development / redevelopment), with a weighted-average remaining lease term of approximately 16.6 years.

In short, Innovative Industrial Properties turned in another strong quarter and continued its track record of sizable dividend increases, with investors getting a 21% year-over-year dividend hike in the fourth quarter.