What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-05 · 155 added, 264 removed, 293 unchanged (59% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

Real estate, at cost:

1 unchanged sentence

Tenant improvements

Construction in progress

Total real estate, at cost

2 unchanged sentences

Cash and cash equivalents

Restricted cash

Short-term investments, net

Right of use office lease asset

11 unchanged sentences

Preferred stock, par value $ 0.001 per share, 50,000,000 shares authorized:

9.00 % Series A cumulative redeemable preferred stock, $ 15,000 liquidation preference ($ 25.00 per share), 600,000 shares issued and outstanding at September 30, 2020 and December 31, 2019

9.00 % Series A cumulative redeemable preferred stock, $ 15,000 liquidation preference ($ 25.00 per share), 600,000 shares issued and outstanding at March 31, 2021 and December 31, 2020

Common stock, par value $ 0.001 per share, 50,000,000 shares authorized:

22,174,428 and 12,637,043 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

23,926,317 and 23,936,928 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

7 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

September 30,

Rental (including tenant reimbursements)

7 unchanged sentences

Interest expense

Preferred stock dividend

Preferred stock dividends

Net income attributable to common stockholders

5 unchanged sentences

(In thousands, except share amounts)

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

Stockholders’

Three Months Ended March 31, 2021

Stockholders’

Balances at beginning of period

Net proceeds from sale of common stock

Net issuance of unvested restricted stock

Balance, December 31, 2020

Issuance of unvested restricted stock, net of forfeitures

Preferred stock dividend

1 unchanged sentence

Stock-based compensation

Balances at end of period

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019

Stockholders’

Balance, March 31, 2021

Three Months Ended March 31, 2020

Stockholders’

Balances at beginning of period

Equity component of exchangeable senior notes

Issuance of exchangeable senior notes

Balance, December 31, 2019

Net proceeds from sale of common stock

Net issuance of unvested restricted stock

Exchange of exchangeable senior notes

Issuance of unvested restricted stock, net of forfeitures

Preferred stock dividend

1 unchanged sentence

Stock-based compensation

Balances at end of period

Balance, March 31, 2020

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

For the Nine Months Ended

September 30,

For the Three Months Ended

Cash flows from operating activities

3 unchanged sentences

Amortization of discounts on short-term investments

Amortization of debt discounts and issuance costs

Amortization of debt discount and issuance costs

Changes in assets and liabilities

12 unchanged sentences

Issuance of common stock, net of offering costs

Net proceeds from issuance of exchangeable senior notes

Dividends paid to common stockholders

1 unchanged sentence

Taxes paid related to net share settlement of equity awards

Net cash provided by financing activities

Net increase in cash, cash equivalents and restricted cash

Net cash (used in) provided by financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

6 unchanged sentences

Accrual for common and preferred stock dividends declared

Accrual for stock issuance costs

Exchange of exchangeable senior notes

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements

September 30, 2020

March 31, 2021

As used herein, the terms “we”, “us”, “our” or the “Company” refer to Innovative Industrial Properties, Inc., a Maryland corporation, and any of our subsidiaries, including IIP Operating Partnership, LP, a Delaware limited partnership (our “Operating Partnership”).

11 unchanged sentences

Any references to square footage or occupancy percentage, and any amounts derived from these values in these notes to the condensed consolidated financial statements, are outside the scope of our independent registered public accounting firm’s review.

The Company considered the impact of COVID-19 on its assumptions and estimates used and determined that there were no material adverse impacts on the Company's results of operations and financial position at September 30, 2020.

A prolonged outbreak could have a material adverse impact on the financial results and business operations of the Company.

See Note 6 for further discussion.

Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included.

22 unchanged sentences

Depreciation.

We are required to make subjective assessments as to the estimated useful lives of our depreciable assets.

We consider the period of future benefit of the assets to determine the appropriate estimated useful lives.

1 unchanged sentence

We depreciate each of our buildings and improvements over its estimated remaining useful life, generally not to exceed 40 years .

We depreciate tenant improvements at our buildings where we are considered the owner over the estimated useful lives of the improvements, which may not be limited by the terms of the related leases.

We depreciate tenant improvements at our buildings where we are considered the owner over the estimated useful lives of the improvements, not to exceed 40 years .

We depreciate office equipment and furniture and fixtures over estimated useful lives ranging from three to six years .

9 unchanged sentences

We may adjust depreciation of properties that are expected to be disposed of or redeveloped prior to the end of their useful lives.

No impairment losses were recognized during the nine months ended September 30, 2020 and 2019.

No impairment losses were recognized during the three months ended March 31, 2021 and 2020.

Revenue Recognition.

1 unchanged sentence

We account for our current leases as operating leases and record revenue for each of our properties on a cash basis due to the uncertain regulatory environment in the United States relating to the regulated cannabis industry and the uncertainty of collectability of lease payments from each tenant due to its limited operating history.

Contractually obligated reimbursements from tenants for recoverable real estate taxes and operating expenses are included in rental revenue in the period when such costs are reimbursed by the tenants.

Contractually obligated reimbursements from tenants for recoverable real estate taxes, insurance and operating expenses are included in rental revenues in the period when such costs are reimbursed by the tenants.

Contractually obligated real estate taxes that are paid directly by the tenant to the tax authorities are not reflected in our condensed consolidated financial statements.

Cash and Cash Equivalents and Restricted Cash .

Cash and Cash Equivalents .

We consider all highly-liquid investments with original maturities of three months or less to be cash equivalents.

As of September 30, 2020 and December 31, 2019, $ 93.5 million and $ 60.1 million, respectively, were invested in short-term money market funds, obligations of the U.S.

As of March 31, 2021 and December 31, 2020, $ 109.7 million and $ 98.3 million, respectively, were invested in short-term money market funds, obligations of the U.S.

government and certificates of deposit with an original maturity at the time of purchase of less than or equal to three months.

Restricted cash relates to cash held in escrow for the reimbursement of tenant improvements in accordance with various lease agreements.

As of September 30, 2020, all of the cash held was released from restriction.

Investments consist of obligations of the U.S.

12 unchanged sentences

Stock-Based Compensation.

Stock-based compensation for equity awards is based on the grant date fair value of the equity awards and is recognized over the requisite service period.

Stock-based compensation for equity awards is based on the grant date fair value of the equity awards and is recognized over the requisite service or performance period.

If awards are forfeited prior to vesting, we reverse any previously recognized expense related to such awards in the period during which the forfeiture occurs and reclassify any non-forfeitable dividends and dividend equivalents previously paid on these awards from retained earnings to compensation expense.

Forfeitures are recognized as incurred.

Certain equity awards are subject to vesting based upon the satisfaction of various market conditions.

Forfeiture of share awards with market-based restrictions does not result in a reversal of previously recognized share-based compensation expense.

Lease Accounting.

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases;

in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Lease – Targeted Improvements;

and in December 2018, the FASB issued ASU 2018-20, Narrow-Scope Improvements for Lessors.

This group of ASUs is collectively referred to as Topic 842 and was effective for the Company and for its consolidated financial statements for the year ended December 31, 2019.

We adopted Topic 842 effective as of January 1, 2019 using the effective date method and elected the package of practical expedients that allows an entity not to reassess upon adoption (i) whether an expired or existing contract contains a lease, (ii) whether a lease classification related to expired or existing lease arrangements, and (iii) whether costs incurred on expired or existing leases qualify as initial direct costs, and as a lessor, the practical expedient not to separate certain non-lease components, such as common area maintenance, from the lease component if the timing and pattern of transfer are the same for the non-lease component and associated lease component, and the lease component would be classified as an operating lease if accounted for separately.

We also elected the lessor practical expedient, allowing us to continue to amortize previously capitalized initial direct leasing costs incurred prior to the adoption of Topic 842.

As lessee, we recognized a liability to account for our future obligations related to our corporate office lease, which had a remaining lease term of approximately 4.0 years and 4.3 years as of March 31, 2021 and December 31, 2020, respectively, excluding the extension option that we are not reasonably certain to exercise, and a corresponding right-of-use asset.

The lease liability is measured based on the present value of the future lease payments discounted using the estimated incremental borrowing rate of 7.25 %, which is the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments.

Subsequently, the lease liability is accreted by applying a discount rate established at the lease commencement date to the lease liability balance as of the beginning of the period and is reduced by the payments made during the period.

The right-of-use asset is measured based on the corresponding lease liability.

We did not incur any initial direct leasing costs and any other consideration exchanged with the landlord prior to the commencement of the lease.

Subsequently, the right-of-use asset is amortized on a straight-line basis during the lease term.

For the three months ended March 31, 2021 and 2020, we recognized office lease expense of approximately $ 57,000 and $ 58,000 , respectively, which are included in general and administrative expense in our

consolidated statements of income.

For the three months ended March 31, 2021 and 2020, amounts paid and classified as operating activities in our consolidated statements of cash flows for the office lease were approximately $ 59,000 and $ 22,000 , respectively.

As lessor, for each of our real estate transactions involving the leaseback of the related property to the seller or affiliates of the seller, we determine whether these transactions qualify as sale and leaseback transactions under the accounting guidance.

1 unchanged sentence

A transaction involving a sale leaseback will be treated as a purchase of a real estate property if it is considered to transfer control of the underlying asset from the lessee.

A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control.

A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control and will be classified as a sales-type lease if control of the underlying asset is transferred to the lessee.

Otherwise, the lease is treated as an operating lease.

1 unchanged sentence

The lease accounting guidance requires accounting for a transaction as a financing in a sale leaseback when the seller-lessee is provided an option to purchase the property from the landlord at the tenant’s option.

All of our leases are classified as operating leases.

Our tenant reimbursable revenue and property expenses are presented on a gross basis as rental revenue and as property expenses, respectively, on our condensed consolidated statements of income.

Our leases continued to be classified as operating leases and we continue to record revenue for each of our properties on a cash basis.

Our tenant reimbursable revenue and property expenses continue to be presented on a gross basis as rental revenue and as property expenses, respectively, on our consolidated statements of income.

Property taxes paid directly by the lessee to a third party continue to be excluded from our consolidated financial statements.

In April 2020, in response to the coronavirus pandemic and associated severe economic disruption, we amended leases at certain of our properties to provide for temporary base rent and property management fee deferrals through June 30, 2020.

8 unchanged sentences

and (c) an amount equal to our gross investment in the property (including the purchase price at acquisition and any additional investment in the property made by us during the term of the lease), indexed to inflation.

At September 30, 2020, our gross investment in the property with the purchase option was approximately $ 30.5 million.

At September 30, 2020, the purchase option was not exercisable.

At March 31, 2021, our gross investment in the property with the purchase option was approximately $ 30.5 million.

At March 31, 2021, the purchase option was not exercisable.

Our leases generally contain options to extend the lease terms at the prevailing market rate or at the expiring rental rate at the time of expiration.

1 unchanged sentence

Recent Accounting Pronouncements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses, which changes the impairment model for most financial assets and certain other instruments.

For trade and other receivables, held-to-maturity debt securities, loans and other instruments, companies will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses.

In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, which among other updates, clarifies that receivables arising from operating leases are not within the scope of this guidance and should be evaluated in accordance with Topic 842, Leases.

For available-for-sale debt securities with unrealized losses, companies will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities.

These standards were effective for the Company on January 1, 2020 and did not have a material impact on our condensed consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

ASU 2020-06 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models.

ASU 2020-06 also updates the earnings per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, and is to be adopted through a cumulative-effect adjustment to the opening balance of retained earnings either at the date of adoption or in the first comparative period presented.

Early adoption is permitted but only as of the beginning of the fiscal year.

Upon adoption of ASU 2020-06, convertible debt proceeds, unless issued with a substantial premium or an embedded conversion feature, will no longer be allocated between debt and equity components.

Upon our adoption, it will reduce the issue discount and will result in less non-cash interest expense in our consolidated financial statements.

Additionally, ASU 2020-06 will result in the reporting of diluted earnings per share, if the effect is dilutive, in our consolidated financial statements, regardless of our settlement intent.

We will be required to adopt ASU 2020-06 on January 1, 2022.

Concentration of Credit Risk .

As of September 30, 2020, we owned 63 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania and Virginia.

As of March 31, 2021, we owned 68 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.

The ability of any of our tenants to honor the terms of their leases is dependent upon the economic, regulatory, competition, natural and social factors affecting the community in which that tenant operates.

The following table sets forth the tenants in our portfolio that represented the largest percentage of our total rental revenue for each period presented, including tenant reimbursements:

The following table sets forth the five tenants in our portfolio that represented the largest percentage of our total rental revenues for the three months ended March 31, 2021 and 2020, including tenant reimbursements:

For the Three Months Ended

For the Nine Months Ended

September 30, 2020

Percentage of

March 31, 2021

Percentage of

PharmaCann Inc.

Cresco Labs Inc.

Ascend Wellness Holdings, LLC (1)

Holistic Industries Inc.

Cresco Labs Inc.

Curaleaf Holdings, Inc.

Green Thumb Industries, Inc.

SH Parent, Inc.

(Parallel) (1)

For the Three Months Ended

For the Nine Months Ended

September 30, 2019

Percentage of

March 31, 2020

Percentage of

1 unchanged sentence

Ascend Wellness Holdings, LLC (1)

Vireo Health, Inc.

Kings Garden Inc.

Cresco Labs Inc.

Holistic Industries Inc.

Green Peak Industries, LLC

The Pharm, LLC (1)

Vireo Health, Inc.

(1) Includes leases with affiliates of the entity, for which the entity has provided a corporate guaranty.

(2) Curaleaf Holdings, Inc.

acquired GR Companies, Inc.

(“Grassroots”) and executed corporate guaranties for our leases with Grassroots in August 2020.

At September 30, 2020, one of our properties in Michigan accounted for approximately 5 % of our net real estate held for investment.

At December 31, 2019, one of our properties in New York accounted for approximately 6 % of our net real estate held for investment.

As of March 31, 2021 and December 31, 2020, none of our properties individually represented more than 5 % of our net real estate held for investment.

We have deposited cash with a financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 .

As of September 30, 2020, we had cash accounts in excess of FDIC insured limits.

As of March 31, 2021, we had cash accounts in excess of FDIC insured limits.

We have not experienced any losses in such accounts.

As of September 30, 2020, the Company was authorized to issue up to 50,000,000 shares of common stock, par value $ 0.001 per share, and there were 22,174,428 shares of common stock issued and outstanding.

In January 2020, we issued 3,412,969 shares of common stock, including the exercise in full of the underwriters' option to purchase an additional 445,170 shares, resulting in net proceeds of approximately $ 239.6 million.

In May 2020, we issued 1,550,648 shares of common stock, including the exercise in full of the underwriter’s option to purchase an additional 202,259 shares, resulting in net proceeds of approximately $ 114.9 million.

In July 2020, we issued 3,085,867 shares of common stock, including the exercise in full of the underwriters' option to purchase an additional 402,504 shares, resulting in net proceeds of approximately $ 248.2 million.

In September 2019, we entered into equity distribution agreements with three sales agents, pursuant to which we may offer and sell from time to time through an “at-the-market” offering program, or ATM Program, up to $ 250.0 million in shares of our common stock.

During the three months ended September 30, 2020, we sold 474,000 shares of our common stock for net proceeds of approximately $ 58.1 million under the ATM Program, which includes the payment of approximately $ 1.2 million to one sales agent as commission for such sales.

During the nine months ended September 30, 2020, we sold 1,499,382 shares of our common stock for net proceeds of approximately $ 138.4 million under the ATM Program, which includes the payment of approximately $ 2.8 million to one sales agent as commission for such sales.

As of March 31, 2021, the Company was authorized to issue up to 50,000,000 shares of common stock, par value $ 0.001 per share, and there were 23,926,317 shares of common stock issued and outstanding.

Preferred Stock

As of September 30, 2020, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $ 0.001 per share, and there were issued and outstanding 600,000 shares of 9.00 % Series A Cumulative Redeemable Preferred Stock, $ 0.001 par value per share (the “Series A Preferred Stock”).

As of March 31, 2021, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $ 0.001 per share, and there were issued and outstanding 600,000 shares of 9.00 % Series A Cumulative Redeemable Preferred Stock, $ 0.001 par value per share (the “Series A Preferred Stock”).

Generally, the Company is not permitted to redeem the Series A Preferred Stock prior to October 19, 2022, except in limited circumstances relating to the Company’s ability to qualify as a REIT and in certain other circumstances related to a change of control/delisting (as defined in the articles supplementary for the Series A Preferred Stock).

1 unchanged sentence

Holders of the Series A Preferred Stock generally have no voting rights except for limited voting rights if the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances.

The following table describes the dividends declared by the Company during the nine months ended September 30, 2020:

The following table describes the dividends declared by the Company during the three months ended March 31, 2021:

Declaration Date

9 unchanged sentences

April 15, 2021

June 15, 2020

April 1, 2020 to June 30, 2020

July 15, 2020

June 15, 2020

Series A preferred stock

April 15, 2020 to July 14, 2020

July 15, 2020

September 15, 2020

July 1, 2020 to September 30, 2020

October 15, 2020

September 15, 2020

Series A preferred stock

July 15, 2020 to October 14, 2020

October 15, 2020

Investments in Real Estate

The Company acquired the following properties during the nine months ended September 30, 2020 (dollars in thousands):

Green Leaf VA

January 15, 2020

January 24, 2020

The Company acquired the following properties during the three months ended March 31, 2021 (dollars in thousands):

January 22, 2021

LivWell CO - Retail Portfolio

March 6, 2020

March 11, 2020

Massachusetts

April 2, 2020

April 22, 2020

Kings Garden CA

June 10, 2020

Massachusetts

June 30, 2020

July 13, 2020

Columbia Care NJ Cultivation

July 16, 2020

Columbia Care NJ Dispensary

July 16, 2020

September 1, 2020

Parallel FL Lakeland

September 18, 2020

February 5, 2021

March 10, 2021

(1) Includes expected rentable square feet at completion of construction of certain properties.

(2) We agreed to provide reimbursement to the tenant for development at the property of up to approximately $ 8.0 million, all of which we incurred and funded as of September 30, 2020.

(3) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to approximately $ 1.9 million.

In June, we amended the lease, which increased the tenant improvement allowance by $ 1.0 million to a total of approximately $ 2.9 million.

Assuming full payment of the tenant improvement allowance, our total investment in the property will be approximately $ 13.5 million.

As of September 30, 2020, we incurred approximately $ 148,000 of the redevelopment costs, of which none was funded.

(4) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to $ 4.3 million.

Subsequent to September 30, 2020, on October 1, 2020, we amended this lease to increase the tenant improvement allowance by $ 25.0 million to a total of $ 29.3 million.

As of September 30, 2020, we incurred approximately $ 4.4 million of the redevelopment costs, of which we funded approximately $ 4.3 million.

(5) The portfolio consists of two retail properties, with one property closing on February 19, 2020 and one property closing on February 21, 2020.

The tenant is expected to complete tenant improvements at one of the properties, for which we agreed to provide reimbursement of up to $ 850,000 .

As of September 30, 2020, we incurred and funded approximately $ 49,000 of the redevelopment costs.

(6) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to $ 41.0 million.

As of September 30, 2020, we incurred approximately $ 19.6 million of the redevelopment costs, of which we funded approximately $ 18.5 million.

(7) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to $ 8.2 million.

As of September 30, 2020, we incurred approximately $ 3.0 million of the redevelopment costs, of which we funded approximately $ 2.1 million.

(8) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to approximately $ 22.3 million.

As of September 30, 2020, we incurred approximately $ 4.4 million of the redevelopment costs, of which we funded approximately $ 3.0 million.

(9) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to $ 11.0 million.

In June, we amended the lease, which increased the tenant improvement allowance by $ 16.0 million to a total of $ 27.0 million.

As of September 30, 2020, we incurred approximately $ 596,000 of the redevelopment costs, of which no amount was funded.

(10) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to approximately $ 6.4 million.

As of September 30, 2020, we incurred approximately $ 4.0 million of the redevelopment costs, of which we funded approximately $ 2.7 million.

(11) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to $ 21.0 million.

As of September 30, 2020, we incurred approximately $ 59,000 of the redevelopment costs, of which no amount was funded.

(12) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to $ 29.5 million.

As of September 30, 2020, we incurred approximately $ 8.7 million of the redevelopment costs, of which we funded approximately $ 5.4 million.

(13) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to $ 1.6 million.

As of September 30, 2020, we incurred approximately $ 648,000 of the redevelopment costs, of which no amount was funded.

(14) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to $ 18.8 million.

As of September 30, 2020, we incurred approximately $ 628,000 of the redevelopment costs, of which no amount was funded.

(15) The tenant is expected to complete redevelopment of the property for which we agreed to provide reimbursement of up to approximately $ 36.9 million.

As of September 30, 2020, we incurred approximately $ 57,000 of the redevelopment costs, of which no amount was funded.

(16) Approximately $ 19.4 million was allocated to land and approximately $ 163.3 million was allocated to buildings and improvements.

The properties acquired during the three and nine months ended September 30, 2020 generated approximately $ 778,000 and $ 15.2 million of rental revenue (including tenant reimbursements), respectively, and approximately $ 303,000 and $ 11.0 million of net operating income, respectively, after deducting property and depreciation expenses.

The properties acquired during the three and nine months ended September 30, 2019 generated approximately $ 1.7 million and $ 6.6 million of rental revenue (including tenant reimbursements), respectively, and approximately $ 1.4 and $ 5.1 million of net operating income, respectively, after deducting property and depreciation expenses.

Lease Amendments

In January 2020, we amended our lease with Green Peak Industries, LLC (“GPI”) which, among other things, canceled the remaining tenant improvement allowance of approximately $ 15.2 million and adjusted the corresponding base rent.

As of September 30, 2020, our total investment in the property was approximately $ 15.8 million.

In January 2020, we amended our lease with a subsidiary of Vireo Health, Inc.

("Vireo") at one of our Pennsylvania properties, making available an additional $ 4.5 million in funding for tenant improvements at the property.

In April 2020, we amended the lease to decrease the funding for tenant improvements at the property by $ 300,000 .

In August 2020, Vireo transferred its ownership interest in the subsidiary tenant at the property to Jushi Holdings Inc.

("Jushi"), and we amended the lease to increase the funding for tenant improvements at the property by $ 2.0 million.

As a result, the total tenant improvement allowance for the property is approximately $ 10.0 million, and assuming full payment of the allowance, our total investment in the property will be $ 15.8 million.

As of September 30, 2020, we incurred approximately $ 7.6 million of the redevelopment costs, of which we funded approximately $ 7.4 million.

In January 2020, we amended our lease with a subsidiary of The Pharm, LLC at one of our Arizona properties, making available an additional $ 2.0 million in funding for tenant improvements at the property, and making the total tenant improvement allowance $ 5.0 million.

As of September 30, 2020, we incurred and funded the full amount of the redevelopment costs, making our total investment in the property $ 20.0 million.

In January 2020, we amended our lease with the tenant of our Sacramento, California property, making available an additional approximately $ 1.3 million in funding for tenant improvements at the property, and making the total tenant improvement allowance approximately $ 6.0 million.

As of September 30, 2020, we funded the full amount of the redevelopment costs, and our total investment in the property was approximately $ 12.7 million.

In February 2020, we amended our lease with a subsidiary of Maitri Medicinals, LLC ("Maitri") at one of our Pennsylvania properties, making available an additional $ 6.0 million in funding for tenant improvements at the property, and making the total tenant improvement allowance $ 16.0 million.

As of September 30, 2020, we incurred approximately $ 14.3 million of the redevelopment costs, of which we funded approximately $ 13.6 million.

In February 2020, we amended our lease and development agreement with a subsidiary of PharmaCann Inc.

(“PharmaCann”) at one of our Massachusetts properties, making available an additional $ 4.0 million in construction funding at the property, with the total construction funding being $ 27.5 million.

We also canceled the optional commitment to provide construction funding of $ 4.0 million for PharmaCann at one of our Pennsylvania properties.

As of September 30, 2020, we funded the full amount of the construction funding, and our total investment in the Massachusetts property was $ 30.5 million.

In March 2020, we amended our lease with a subsidiary of Holistic Industries Inc.

at our Maryland property, making available a $ 5.5 million tenant improvement allowance at the property.

Assuming full payment of the funding, our total investment in the property will be $ 22.4 million.

As of September 30, 2020, we incurred approximately $ 5.2 million of the redevelopment costs, of which we funded approximately $ 4.4 million.

In April 2020, we amended our leases with two subsidiaries of Vireo for one of our properties in New York and our property in Minnesota, making available an additional approximately $ 1.4 million in funding for tenant improvements at the properties in the aggregate, and making the total tenant improvement allowances approximately $ 10.1 million in the aggregate.

Assuming full payment of the funding, our total investment in the property in New York will be approximately $ 6.8 million and our total investment in the property in Minnesota will be approximately $ 9.7 million.

As of September 30, 2020, we incurred approximately $ 10.1 million of the tenant improvement allowance, of which we funded approximately $ 10.0 million.

In response to the coronavirus pandemic and associated severe economic disruption, in April 2020, we amended leases at certain of our properties to provide for temporary base rent and property management fee deferrals through June 30, 2020.

Each of the tenants remained responsible for the payment of all other costs under the applicable lease during the deferral period.

● We amended each of our leases with GPI in Michigan to apply a part of GPI's security deposit at each property for payment of the April 2020 base rent and property management fee, defer the base rent and property management fee for May and June 2020, and amortize the replenishment of the security deposit and payment of the base rent and property management fee deferral over an 18 month period commencing on July 1, 2020.

● We amended our lease with Maitri in Pennsylvania to apply a part of Maitri's security deposit for payment of the April 2020 base rent and property management fee, defer the base rent and property management fee for May and June 2020, and amortize the replenishment of the security deposit and the base rent and property management fee deferral over an 18 month period commencing on July 1, 2020.

● We amended each of our leases with affiliates of Medical Investor Holdings LLC ("Vertical") in southern California to apply a part of Vertical's security deposit at each property for a partial payment of the March 2020 base rent and property management fee and payment in full of the April 2020 base rent and property management fee, defer the base rent and property management fee for May and June 2020, and amortize the replenishment of the security deposit and payment of the base rent and property management fee deferral over an 18 month period commencing on July 1, 2020.

Pursuant to these amendments, (1) a total of approximately $ 940,000 of security deposits were applied to the payment of base rent, property management fees and associated lease penalties for March and April 2020, including approximately $ 185,000 related to the partial payment of base rent and property management fees by Vertical for March 2020;

(2) a total of approximately $ 743,000 in base rent and property management fees were deferred for May 2020;

(3) a total of approximately $ 781,000 in base rent and property management fees were deferred for June 2020;

and (4) a total of approximately $ 52,000 per month in replenishment of security deposits and approximately $ 85,000 per month in repayments of base rent and property management fee deferrals are required to be paid each month over an 18 month period commencing on July 1, 2020.

In June 2020, we amended our lease and development agreement with a subsidiary of PharmaCann at one of our Illinois properties, making available an additional $ 3.0 million in construction funding at the property, and making the total available construction funding $ 10.0 million.

As of September 30, 2020, we incurred approximately $ 8.8 million of the redevelopment costs, of which we funded approximately $ 8.5 million.

In June 2020, we amended our lease with a subsidiary of Green Leaf Medical, LLC at one of our Pennsylvania properties, making available $ 30.0 million in funding for tenant improvements at the property.

Assuming full payment of the tenant improvement allowance, our total investment in the property will be $ 43.0 million.

As of September 30, 2020, we incurred approximately $ 592,000 of the tenant improvement allowances, of which none was funded.

In August 2020, we amended our lease with a subsidiary of GR Companies, Inc.

(“Grassroots”) at one of our Pennsylvania properties, making available an additional approximately $ 1.5 million in funding for tenant improvements at the property, and making the total tenant improvement allowance approximately $ 12.4 million.

Assuming full payment of the tenant improvement allowance, our total investment in the property will be approximately $ 26.6 million.

As of September 30, 2020, we incurred approximately $ 10.7 million of the tenant improvement allowances, of which we funded approximately $ 10.6 million.

In August 2020, we amended our lease with a subsidiary of Grassroots at one of our Illinois properties, making available an additional $ 844,000 in funding for tenant improvements at the property, and making the total tenant improvement allowance at the property approximately $ 18.6 million.

Assuming full payment of the tenant improvement allowance, our total investment in the property will be approximately $ 29.1 million.

As of September 30, 2020, we incurred approximately $ 11.7 million of the tenant improvement allowance, of which we funded approximately $ 11.2 million.

In August 2020, we amended our lease with a subsidiary of Ascend Wellness Holdings, LLC at one of our Illinois properties, making available an additional $ 18.0 million in funding for tenant improvements at the property, and making the total tenant improvement allowance at the property $ 32.0 million.

Assuming full payment of the additional funding, our total investment in the property will be $ 51.0 million.

As of September 30, 2020, we incurred approximately $ 18.7 million of the tenant improvement allowance, of which we funded approximately $ 14.0 million.

Including all of our properties, during the nine months ended September 30, 2020, we capitalized costs of approximately $ 215.7 million and funded approximately $ 210.1 million relating to tenant improvements and construction activities at our properties.

Future contractual minimum rent (including base rent, supplemental base rent (for one of our properties in New York) and property management fees) under the operating leases as of September 30, 2020 for future periods is summarized as follows (in thousands):

(2) The tenant is expected to complete tenant improvements at the property, for which we agreed to provide reimbursement of up to approximately $ 10.8 million.

(3) The purchase price related to the acquisition of additional land adjacent to one of our existing properties.

In connection with the acquisition, we entered into a lease amendment for the existing property, which provided a tenant improvement allowance that resulted in a corresponding adjustment to the base rent for the lease at the property.

The tenant is expected to complete construction of two new buildings at the property comprising approximately 180,000 square feet in the aggregate, for which we agreed to provide reimbursement of up to approximately $ 51.4 million.

(4) The tenant is expected to construct three buildings at the property, for which we agreed to provide reimbursement of up to $ 24.0 million.

(5) Approximately $ 4.3 million was allocated to land and approximately $ 24.3 million was allocated to building and construction in progress.

The properties acquired during the three months ended March 31, 2021 generated approximately $ 911,000 of rental revenues (including tenant reimbursements) and approximately $ 743,000 of net operating income after deducting property and depreciation expenses, during that period.

The properties acquired during the three months ended March 31, 2020 generated approximately $ 766,000 of rental revenues (including tenant reimbursements) and approximately $ 460,000 of net operating income after deducting property and depreciation expenses, during that period.

New Lease and Lease Amendments

In January 2021, we executed a new lease at our Los Angeles, California property with a subsidiary of Holistic Industries Inc., pursuant to which we agreed to make available up to $ 11.0 million in funding for future tenant improvements at the property.

In February 2021, we amended our lease with a subsidiary of LivWell Holdings, Inc.

at one of our Michigan properties, increasing the tenant improvement allowance under the lease by approximately $ 6.9 million to a total of approximately $ 29.9 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

In February 2021, we amended our lease with PharmaCann Inc.

at one of our New York properties, increasing the tenant improvement allowance under the lease by $ 2.5 million to a total of approximately $ 33.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

Including all of our properties, during the three months ended March 31, 2021, we capitalized costs of approximately $ 93.7 million and funded approximately $ 64.2 million relating to tenant improvements and construction activities at our properties.

Future contractual minimum rent (including base rent, supplemental base rent (for one of our properties in New York) and property management fees) under the operating leases as of March 31, 2021 for future periods is summarized as follows (in thousands):

Contractual Minimum Rent

2020 (three months ending December 31)

2021 (nine months ending December 31)

Exchangeable Senior Notes

In February 2019, our Operating Partnership issued $ 143.75 million of 3.75 % Exchangeable Senior Notes due 2024 (the "Exchangeable Senior Notes") in a private offering, including the exercise in full of the initial purchasers’ option to purchase additional Notes.

As of March 31, 2021, our Operating Partnership had outstanding approximately $ 143.75 million principal amount of 3.75 % Exchangeable Senior Notes due 2024 (the "Exchangeable Senior Notes").

The Exchangeable Senior Notes are senior unsecured obligations of our Operating Partnership, are fully and unconditionally guaranteed by us and our Operating Partnership’s subsidiaries and are exchangeable for cash, shares of our common stock, or a combination of cash and shares of our common stock, at our Operating Partnership’s option, at any time prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date.

The exchange rate for the Exchangeable Senior Notes at September 30, 2020 was 14.94423 shares of our common stock per $ 1,000 principal amount of Notes and the exchange price at September 30, 2020 was approximately $ 66.916 per share of our common stock.

The exchange rate for the Exchangeable Senior Notes at March 31, 2021 was 15.10243 shares of our common stock per $ 1,000 principal amount of Notes and the exchange price at March 31, 2021 was approximately $ 66.215 per share of our common stock.

The exchange rate and exchange price are subject to adjustment in certain circumstances.

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Our Operating Partnership will not have the right to redeem the Exchangeable Senior Notes prior to maturity, but may be required to repurchase the Exchangeable Senior Notes from holders under certain circumstances.

Upon our issuance of the Exchangeable Senior Notes, we recorded an approximately $ 5.8 million discount based on the implied value of the exchange option and an assumed effective interest rate of 4.65 %, as well as approximately $ 5.2 million of initial issuance costs, of which approximately $ 5.0 million and $ 200,000 were allocated to the liability and equity components, respectively, based on their relative fair values.

Upon our issuance of the Exchangeable Senior Notes in February 2019, we recorded an approximately $ 5.8 million discount based on the implied value of the exchange option and an assumed effective interest rate of 4.65 %, as well as approximately $ 5.2 million of initial issuance costs, of which approximately $ 5.0 million and $ 200,000 were allocated to the liability and equity components, respectively, based on their relative fair values.

Issuance costs allocated to the liability component are being amortized using the effective interest method and recognized as non-cash interest expense over the expected term of the Exchangeable Senior Notes.

The following table details our interest expense related to the Exchangeable Senior Notes (in thousands):

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Amortization of debt discount

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The following table details the carrying value of our Exchangeable Senior Notes on our condensed consolidated balance sheets (in thousands):

September 30, 2020

March 31, 2021

December 31, 2020

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Carrying value

Accrued interest payable for the Exchangeable Senior Notes was approximately $ 225,000 as of September 30, 2020 and December 31, 2019, and is included in accounts payable and accrued expenses on our condensed consolidated balance sheets.

In March 2020, we issued 14 shares of our common stock upon exchange by holders of $ 1,000 of outstanding principal amount of our Exchangeable Senior Notes.

Accrued interest payable for the Exchangeable Senior Notes as of March 31, 2021 and December 31, 2020 was approximately $ 225,000 and $ 1.6 million, respectively, and is included in accounts payable and accrued expenses on our condensed consolidated balance sheets.

Net Income Per Share

Grants of restricted stock of the Company and restricted stock units in share-based payment transactions are considered participating securities prior to vesting and, therefore, are considered in computing basic earnings per share under the two-class method.

Grants of restricted stock of the Company and restricted stock units (“RSUs”) in share-based payment transactions are considered participating securities prior to vesting and, therefore, are considered in computing basic earnings per share under the two-class method.

The two-class method is an earnings allocation method for calculating earnings per share when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities.

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Earnings per basic share represents the summation of the distributed and undistributed earnings per share class divided by the total number of shares.

Through September 30, 2020, all of the Company’s participating securities received dividends or dividend equivalents at an equal dividend rate per share or unit.

As a result, distributions to participating securities for the three and nine months ended September 30, 2020 and 2019 have been included in net income attributable to common stockholders to calculate net income per basic and diluted share.

We have considered the dilutive effect of the shares necessary to settle the Exchangeable Senior Notes on the if-exchanged method basis for the three and nine months ended September 30, 2020 and 2019, and as this effect was anti-dilutive for both periods, these shares necessary to settle the Exchangeable Senior Notes were excluded from diluted earnings per share.

Through March 31, 2021, all of the Company’s participating securities received dividends or dividend equivalents at an equal dividend rate per share or unit.

As a result, distributions to participating securities for the three months ended March 31, 2021 and 2020 have been included in net income attributable to common stockholders to calculate net income per basic and diluted share.

The 2,170,959 shares necessary to settle the Exchangeable Senior Notes on the if-exchanged method basis were dilutive for the three months ended March 31, 2021 and were included in the computation of diluted earnings per share.

The 2,117,422 shares necessary to settle the Exchangeable Senior Notes on the if-exchanged method basis were anti-dilutive for the three months ended March 31, 2020 and were excluded from the computation of diluted earnings per share.

Performance share units (“PSUs”) granted to certain employees during the three months ended March 31, 2021 were not included in dilutive securities as of March 31, 2021 as the performance thresholds for vesting of any performance share units were not met (see Note 10 for further discussion of the PSUs).

Computations of net income per basic and diluted share (in thousands, except share data) were as follows:

For the Three Months Ended

For the Nine Months Ended

September 30,

Preferred stock dividend

Preferred stock dividends

Distribution to participating securities

Net income attributable to common stockholders used to compute net income per share

Weighted average common share outstanding:

Net income attributable to common stockholders used to compute net income per share - basic

Dilutive effect of Exchangeable Senior Notes

Net income attributable to common stockholders used to compute net income per share - diluted

Weighted-average common shares outstanding:

Restricted stock and RSUs

Dilutive effect of Exchangeable Senior Notes

Net income attributable to common stockholders per share:

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Level 3—Unobservable inputs that are supported by little or no market activities, therefore requiring an entity to develop its own assumptions.

The following table presents the carrying value in the condensed consolidated financial statements and approximate fair value of financial instruments at September 30, 2020 and December 31, 2019:

September 30, 2020

December 31, 2019

The following table presents the carrying value in the condensed consolidated financial statements and approximate fair value of financial instruments at March 31, 2021 and December 31, 2020:

At March 31, 2021

At December 31, 2020

Carrying Value

Short-term investments (1)

Investments (1)

Exchangeable Senior Notes (2)

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(2) The fair value is determined based upon Level 2 inputs as the Exchangeable Senior Notes were trading in the private market.

At September 30, 2020, cash equivalent instruments consisted of $ 93.5 million in short-term money market funds that were measured using the net asset value per share that have not been classified using the fair value hierarchy.

As of March 31, 2021 and December 31, 2020, cash equivalent instruments consisted of $ 109.7 million and $ 98.3 million, respectively, in short-term money market funds that were measured using the net asset value per share that have not been classified using the fair value hierarchy.

The fund invests primarily in short-term U.S.

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Under the terms of the 2016 Plan, the aggregate number of shares of our common stock subject to options, restricted stock, stock appreciation rights, restricted stock units and other awards, will be no more than 1,000,000 shares.

The 2016 Plan has a term of ten years from the date it was adopted by our board of directors.

The following table summarizes our restricted stock activity under the 2016 Plan:

Any equity awards that lapse, expire, terminate, are canceled or are forfeited (including forfeitures in connection with satisfaction of tax withholdings obligations of the recipient) are re-credited to the 2016 Plan’s reserve for future issuance.

The 2016 Plan automatically terminates on the date which is ten years following the effective date of the 2016 Plan.

A summary of the restricted stock activity under the 2016 Plan and related information for the three months ended March 31, 2021 is included in the table below:

Grant Date Fair

Balance at December 31, 2020

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Balance at March 31, 2021

Balance at June 30, 2020 and September 30, 2020

(1) Shares that were forfeited to cover the employees’ tax withholding obligation upon vesting .

As of September 30, 2020, the remaining unrecognized compensation cost of $ 2.4 million relating to restricted stock awards will be recognized over a weighted-average amortization period of approximately 1.6 years.

The following table summarizes our restricted stock unit activity.

Restricted stock units have the same economic rights as shares of restricted stock under the 2016 Plan:

The remaining unrecognized compensation cost of approximately $ 2.8 million for restricted stock awards is expected to be recognized over a weighted-average amortization period of approximately 2.0 years as of March 31, 2021.

The fair value of restricted stock that vested during the three months ended March 31, 2021 was approximately $ 8.6 million.

The following table summarizes our RSU activity for the three months ended March 31, 2021.

RSUs are issued as part of the Innovative Industrial Properties, Inc.

Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”), which allows a select group of management and our non-employee directors to defer receiving certain of their cash and equity-based compensation.

RSUs are subject to vesting conditions of the Deferred Compensation Plan and have the same economic rights as shares of restricted stock under the 2016 Plan:

Weighted-Average

Grant Date Fair

Balance at December 31, 2020

Balance at March 31, 2021

Balance at June 30, 2020 and September 30, 2020

As of September 30, 2020, the remaining unrecognized compensation cost of $ 2.1 million relating to restricted stock units will be recognized over an amortization period of approximately 2.2 years.

The remaining unrecognized compensation cost of approximately $ 5.3 million for RSU awards is expected to be recognized over an amortization period of approximately 2.5 years as of March 31, 2021.

In January 2021, we issued 70,795 “target” PSUs to a select group of officers, which vest and are settled in shares of common stock (“Award Shares”) based on the Company’s total stockholder return over a period commencing on January 11, 2021 and ending on December 31, 2023 (the “Performance Period”) relative to two different comparator groups of companies.

At the end of the Performance Period, a recipient of PSUs may receive as few as zero Award Shares or as many as 150 % of the number of target PSUs in Award Shares, plus deemed dividends.

PSUs will also be reduced as necessary so the total value at the vesting date does not exceed 800 % of the grant date PSU price, and if the Company’s absolute total stockholder return during the Performance Period is negative, the payout of Award Shares is capped at the target number of PSUs, notwithstanding the Company’s outperformance of comparator groups.

No dividends are paid to the recipient during the Performance Period.

At the end of the Performance Period, if the Company’s total stockholder return is such that the recipient earns Award Shares, the recipient will receive additional shares of common stock relating to dividends deemed to have been paid and reinvested on the Award Shares.

The recipient of the Award Shares may not sell, transfer or otherwise dispose of the Award Shares for a one-year period following the vesting date of the Award Shares.

The grant date fair value of the PSUs granted in January 2021 was $ 12.0 million.

The fair value was calculated using a Monte Carlo simulation pricing model based on the following assumptions:

Fair Value Assumptions

Valuation date

January 6, 2021

Fair value per share on valuation date

Expected term

Expected price volatility

Risk-free interest rate

Discount for post vesting restriction

The expected share price volatility was based on the historical volatility of our shares of common stock over a period of approximately the Performance Period.

The risk-free interest rate was based on the zero-coupon risk-free interest rate derived from the Treasury Constant Maturities yield curve on the valuation date.

The discount for the post vesting restriction was estimated using the Finnerty model.

Stock-based compensation for market-based PSU awards is based on the grant date fair value of the equity awards and is recognized over the Performance Period.

For the three months ended March 31, 2021, we recognized stock-based compensation expense of $ 1.0 million relating to the PSU awards.

As of March 31, 2021, the remaining unrecognized compensation cost of approximately $ 11.0 million relating to PSU awards is expected to be recognized over the remaining Performance Period of approximately 2.8 years.

Commitments and Contingencies

Office Lease .

The future contractual lease payments for our office lease and the reconciliation to the office lease liability reflected in our condensed consolidated balance sheets as of September 30, 2020 is presented in the table below (in thousands):

2020 (three months ending December 31)

The future contractual lease payments for our office lease and the reconciliation to the office lease liability reflected in our condensed consolidated balance sheets as of March 31, 2021 is presented in the table below (in thousands):

2021 (nine months ending December 31)

Total future contractual lease payments

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Tenant Improvement Allowances .

As of September 30, 2020, we had approximately $ 232.6 million of commitments related to tenant improvement allowances, which generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease.

This amount does not include approximately $ 10.0 million which may be canceled by one tenant at its option.

Construction Funding.

As of September 30, 2020, we had approximately $ 6.9 million of commitments relating to construction funding for the development of one of our properties in Pennsylvania, and for which the tenant has agreed to use commercially reasonable efforts to complete by February 9, 2021.

As of March 31, 2021, we had approximately $ 263.9 million of commitments related to tenant improvement allowances, which generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease.

Environmental Matters.

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Subsequent Events

Subsequent to March 31, 2021, we acquired a 175,000 square foot industrial property in Michigan for approximately $ 15.6 million and executed a lease with Green Peak Industries, LLC (“Skymint”) for the entire property.

Skymint is expected to complete tenant improvements at the property, for which we agreed to provide reimbursement of up to approximately $ 14.4 million.

Lease Amendments Providing for Additional Tenant Improvement Allowances

In October 2020, we amended our lease with a subsidiary of Green Thumb Industries Inc.

at one of our Ohio properties, making available an additional $ 25.0 million in funding for tenant improvements at the property, and making the total tenant improvement allowance $ 29.3 million.

Assuming full payment of the tenant improvement allowance, our total investment in the property will be $ 32.2 million.

As of November 5, 2020, we had funded approximately $ 4.4 million of this tenant improvement allowance.

In October 2020, we amended our lease with GPI at one of our Michigan properties, making available an additional $ 525,000 in funding for tenant improvements at the property, and making the total tenant improvement allowance approximately $ 1.8 million.

Assuming full payment of the tenant improvement allowance, our total investment in the property will be approximately $ 3.4 million.

As of November 5, 2020, we had funded approximately $ 1.7 million of this tenant improvement allowance.

In November 2020, we amended our lease and development with PharmaCann at one of our Pennsylvania properties, making available an additional $ 2.0 million in construction funding at the property, and making the total construction funding approximately $ 27.1 million.

Assuming full payment of the construction funding, our total investment in the property will be approximately $ 28.0 million.

As of November 5, 2020, we had funded approximately $ 18.2 million of this construction funding.

Los Angeles, California Property Update (as of November 5, 2020)

Holistic has entered into a definitive agreement to acquire the retail, distribution, cultivation and manufacturing licenses for cannabis operations from the tenant at our Los Angeles, California property, which is in receivership, and we have negotiated for a long-term, triple-net lease with Holistic for the entire property upon the closing of Holistic’s acquisition of the licenses.

The transaction is subject to final government approvals for the transfer of the licenses and customary closing conditions, and we can provide no assurance that the transaction, including the lease, will be completed on the terms described here, or at all.

Rent Collections Update (as of November 5, 2020)

We collected 100 % of contractual rent due for each of the months of July, August, September and October 2020 across our total portfolio (other than the tenant at our Los Angeles, California property that is in receivership), and had not executed rent deferrals for any additional tenants, other than the three tenants described in Note 6.

In April 2021, we amended our lease with a subsidiary of Jushi Holdings, Inc.

at one of our Pennsylvania properties, increasing the tenant improvement allowance under the lease by $ 30.0 million to a total of approximately $ 40.0 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements