Debra Borchardt
Innovative Industrial Properties, Inc. (IIPR) stock fell 4% in aftermarket trading when the cannabis real estate company missed expectations for its first-quarter earnings. The company reported net income of $607,000 or $0.09 per share, while the average analyst estimate for the quarter according to Yahoo Finance was for $0.18, a miss of nine cents.
Rental revenue for the quarter was $2.7 million, an increase of 114% over last year for the same time period, but the average estimate was for revenue of $3.06 million. For the first quarter 2018, funds from operations and FFO per diluted share were approximately $1.1 million and $0.18, respectively; and AFFO and AFFO per diluted share were approximately $1.4 million and $0.23, respectively.
IIPR is one of the rare cannabis companies that pay a dividend and this quarter it paid its fourth consecutive quarterly dividend of $0.25 per common share on April 16 to stockholders of record as of March 29, 2018. According to a company statement, IIPR also completed an underwritten public offering of 3,220,000 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 420,000 shares, resulting in net proceeds of approximately $79.3 million. That money will be used to invest in additional properties.
Portfolio Update
The cannabis company REIT owns six properties located in Arizona, Maryland, Minnesota, New York and Pennsylvania, totaling approximately 706,000 rentable square feet, which were 100% leased with a weighted-average remaining lease term of approximately 14.4 years. In a statement, IIPR said that it had invested approximately $75.4 million in the aggregate and had committed an additional approximately $6.5 million to reimburse certain tenants for tenant improvements at its properties. The company’s average current yield on invested capital is approximately 15.7% for these six properties.
Since the quarter ended it has acquired an 89,000 square foot property in Pennsylvania for approximately $5.8 million that Vireo will use to operate a medical-use cannabis cultivation and processing facility. In addition to that, IIPR has entered into an agreement to purchase one property for a total investment of $3 million and signed three non-binding letters of intent for three properties representing a total expected additional investment by the company of approximately $38 million.
Stock Performance
The stock fell 4% to $32.50 after the earnings announcement and the company did not plan on hosting a conference call. This isn’t too far from the testosterone enanthate 52-week high of $36.88 and way above the year’s low of $15.72. Two analysts follow the stock with an average price target of $33.75.
