What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-08 · 231 added, 159 removed, 548 unchanged (42% of the section changed)

1 unchanged sentence

Innovative Industrial Properties, Inc.

Condensed Consolidated Balance Sheets

Consolidated Balance Sheets

( In thousands , except share and per share amounts )

March 31, December 31,

June 30, December 31,

Assets 2025 2024

24 unchanged sentences

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

9.00 % Series A cumulative redeemable preferred stock, liquidation preference of $ 25.00 per share, 1,387,820 and 1,002,673 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

9.00 % Series A cumulative redeemable preferred stock, liquidation preference of $ 25.00 per share, 1,561,654 and 1,002,673 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

36,843 23,632

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

28,378,181 and 28,331,833 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

28,017,520 and 28,331,833 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Additional paid-in capital 2,107,963 2,124,113

2 unchanged sentences

Total liabilities and stockholders’ equity $ 2,305,055 $ 2,378,047

See the accompanying notes to the condensed consolidated financial statements.

See the accompanying notes to the consolidated financial statements.

Innovative Industrial Properties, Inc.

Condensed Consolidated Statements of Income

Consolidated Statements of Income

( In thousands , except share and per share amounts )

For the Three Months Ended

June 30, For the Six Months Ended

2025 2024 2025 2024

Rental (including tenant reimbursements) $ 62,866 $ 79,253 $ 134,563 $ 154,167

Other 25 540 50 1,080

Total revenues 62,891 79,793 134,613 155,247

4 unchanged sentences

Total expenses 33,993 33,997 71,751 67,418

Gain (loss) on sale of real estate — ( 3,449 ) — ( 3,449 )

Income from operations 28,898 42,347 62,862 84,380

10 unchanged sentences

Diluted 28,317,693 28,572,138 28,452,111 28,527,419

See accompanying notes to the condensed consolidated financial statements.

See accompanying notes to the consolidated financial statements.

Innovative Industrial Properties, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Stockholders’ Equity

( In thousands , except share amounts )

Three Months Ended March 31, 2025

Preferred Stock Series A

Stock Shares of

Stock Additional

Three Months Ended June 30, 2025

Series A Preferred Stock Common Stock Additional

Capital Dividends in

1 unchanged sentence

Stockholders’

Shares Amount Shares Amount

Balances at beginning of period 1,387,820 $ 32,818 28,378,181 $ 28 $ 2,125,109 $ ( 235,791 ) $ 1,922,164

Net income — — — — — 26,024 26,024

Issuance of unvested restricted stock — — 6,291 — — — —

Issuance of preferred stock, net of issuance costs 173,834 4,025 — — — — 4,025

Repurchase of common stock — — ( 366,952 ) — ( 19,818 ) — ( 19,818 )

Preferred stock dividends — — — — — ( 878 ) ( 878 )

Common stock dividends — — — — — ( 53,783 ) ( 53,783 )

Stock-based compensation — — — — 2,672 — 2,672

Balances at end of period 1,561,654 $ 36,843 28,017,520 $ 28 $ 2,107,963 $ ( 264,428 ) $ 1,880,406

Six Months Ended June 30, 2025

Series A Preferred Stock Common Stock Additional

Capital Dividends in

Earnings Total

Stockholders’

Shares Amount Shares Amount

Balances at beginning of period 1,002,673 $ 23,632 28,331,833 $ 28 $ 2,124,113 $ ( 211,713 ) $ 1,936,060

Net income — — — — — 57,101 57,101

Issuance of unvested restricted stock, net of forfeitures — — 57,225 — ( 792 ) — ( 792 )

Net proceeds from sale of preferred stock 385,147 9,186 — — — — 9,186

Issuance of preferred stock, net of issuance costs 558,981 13,211 — — — — 13,211

Repurchase of common stock — — ( 371,538 ) — ( 20,108 ) — ( 20,108 )

4 unchanged sentences

Balances at end of period 1,561,654 $ 36,843 28,017,520 $ 28 $ 2,107,963 $ ( 264,428 ) $ 1,880,406

Three Months Ended March 31, 2024

Preferred Stock Series A

Stock Shares of

Stock Additional

Three Months Ended June 30, 2024

Series A Preferred Stock Common Stock Additional

Capital Dividends in

1 unchanged sentence

Stockholders’

Shares Amount Shares Amount

Balances at beginning of period 600,000 $ 14,009 28,328,647 $ 28 $ 2,111,111 $ ( 169,721 ) $ 1,955,427

Net income — — — — — 41,993 41,993

Issuance of unvested restricted stock — — 3,186 — — — —

Preferred stock dividends — — — — — ( 338 ) ( 338 )

Common stock dividends — — — — — ( 54,253 ) ( 54,253 )

Stock-based compensation — — — — 4,371 — 4,371

Balances at end of period 600,000 $ 14,009 28,331,833 $ 28 $ 2,115,482 $ ( 182,319 ) $ 1,947,200

Six Months Ended June 30, 2024

Series A Preferred Stock Common Stock Additional

Capital Dividends in

Earnings Total

Stockholders’

Shares Amount Shares Amount

Balances at beginning of period 600,000 $ 14,009 28,140,891 $ 28 $ 2,095,789 $ ( 156,854 ) $ 1,952,972

Net income — — — — — 81,421 81,421

Issuance of unvested restricted stock, net of forfeitures — — 39,310 — ( 750 ) — ( 750 )

Exchange of Exchangeable Senior Notes — — 28,408 — — — —

Net proceeds from sale of common stock — — 123,224 — 11,757 — 11,757

Issuance of common stock, net of issuance costs — — 123,224 — 11,757 — 11,757

Preferred stock dividends — — — — — ( 676 ) ( 676 )

2 unchanged sentences

Balances at end of period 600,000 $ 14,009 28,331,833 $ 28 $ 2,115,482 $ ( 182,319 ) $ 1,947,200

See accompanying notes to the condensed consolidated financial statements.

See accompanying notes to the consolidated financial statements.

Innovative Industrial Properties, Inc.

Condensed Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows

( In thousands )

For the Three Months Ended

For the Six Months Ended

Cash flows from operating activities

3 unchanged sentences

Impairment loss on real estate 3,527 —

Loss (gain) on sale of real estate — 3,449

Other non-cash adjustments 5 54

9 unchanged sentences

Investments in real estate ( 7,857 ) ( 13,026 )

Proceeds from sale of real estate asset 1,750 9,100

Funding of draws for improvements and construction ( 16,547 ) ( 36,988 )

21 unchanged sentences

Accrual for common and preferred stock dividends declared 54,661 54,591

See accompanying notes to the condensed consolidated financial statements.

See accompanying notes to the consolidated financial statements.

Innovative Industrial Properties, Inc.

Notes to the Condensed Consolidated Financial Statements

March 31, 2025

Notes to the Consolidated Financial Statements

June 30, 2025

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”).

7 unchanged sentences

Basis of Presentation.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

They do not include all of the information and footnotes required by GAAP for complete financial statements.

This interim financial information should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

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.

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

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

5 unchanged sentences

Assuming our dividends equal or exceed our taxable net income, we generally will not be required to pay federal corporate income taxes on such income.

The income taxes recorded on our condensed consolidated statements of income represent amounts paid for city and state income and franchise taxes and are included in general and administrative expenses in the accompanying condensed consolidated statements of income.

The income taxes recorded on our consolidated statements of income represent amounts paid for city and state income and franchise taxes and are included in general and administrative expenses in the accompanying consolidated statements of income.

Use of Estimates.

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period.

The preparation of the consolidated financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period.

Actual results may differ materially from these estimates and assumptions.

14 unchanged sentences

The fair value of acquired in-place leases is derived based on our assessment of estimated lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased.

The amounts recorded for acquired in-place leases are reflected as in-place lease intangible assets, net on our condensed consolidated balance sheets and are amortized on a straight-line basis as a component of depreciation and amortization expense over the remaining term of the applicable leases.

The amounts recorded for acquired in-place leases are reflected as in-place lease intangible assets, net on our consolidated balance sheets and are amortized on a straight-line basis as a component of depreciation and amortization expense over the remaining term of the applicable leases.

The fair value of the above-market component of an acquired in-place operating lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining non-cancellable lease term and (ii) our estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition measured over the remaining non-cancellable term of the lease.

The amount recorded for one above-market operating lease is included in other assets, net on our condensed consolidated balance sheets and is amortized on a straight-line basis as a reduction of rental revenues over the remaining term of the applicable lease.

Certain acquisitions of real estate did not satisfy the requirements for sale-leaseback accounting and therefore as of both March 31, 2025 and December 31, 2024, acquisitions of $ 16.8 million have been recognized as notes receivable and are included in other assets, net on our condensed consolidated balance sheets.

The amount recorded for one above-market operating lease is included in other assets, net on our consolidated balance sheets and is amortized on a straight-line basis as a reduction of rental revenues over the remaining term of the applicable lease.

Certain acquisitions of real estate did not satisfy the requirements for sale-leaseback accounting and therefore as of both June 30, 2025 and December 31, 2024, acquisitions of $ 16.8 million have been recognized as notes receivable and are included in other assets, net on our consolidated balance sheets.

Sale of Real Estate.

1 unchanged sentence

In assessing whether the buyer has gained control of the asset, we must determine whether the contract criteria in ASC 606, Revenue from Contracts with Customers (Topic 606) have been met, including 1) the parties to the contract have approved the contract and the contract has commercial substance, 2) we can identify each party’s rights regarding the asset to be transferred, 3) we can identify the payment terms for the asset to be transferred, and 4) it is probable that we will collect substantially all of the consideration to which we will be entitled in exchange for the asset to be transferred.

If all of the contract criteria have been met, the carrying amount of the applicable asset is derecognized with a corresponding gain or loss from the sale recognized in our condensed consolidated statements of income.

If the contract criteria are not all met, the asset transferred is not derecognized and we continue to report the asset in our condensed consolidated balance sheet.

If all of the contract criteria have been met, the carrying amount of the applicable asset is derecognized with a corresponding gain or loss from the sale recognized in our consolidated statements of income.

If the contract criteria are not all met, the asset transferred is not derecognized and we continue to report the asset in our consolidated balance sheet.

See Note 6 “Investments in Real Estate - Property Dispositions” for further information.

6 unchanged sentences

We depreciate buildings and improvements based on our evaluation of the estimated useful life of each specific asset, not to exceed 40 years.

For the three months ended March 31, 2025 and 2024, we recognized depreciation expense of $ 18.2 million and $ 16.9 million, respectively.

Depreciation expense relating to our real estate held for investment is included in depreciation and amortization expense in our condensed consolidated statements of income.

For the three months ended June 30, 2025 and 2024, we recognized depreciation expense of $ 18.3 million and $ 17.3 million, respectively, and for the six months ended June 30, 2025 and 2024, we recognized depreciation expense of $ 36.5 million and $ 34.2 million, respectively.

Depreciation expense relating to our real estate held for investment is included in depreciation and amortization expense in our consolidated statements of income.

We depreciate office equipment and furniture and fixtures on a straight-line basis over the estimated useful lives ranging from three to seven years .

We depreciate the leasehold improvements at our corporate office on a straight-line basis over the

shorter of the estimated useful lives or the remaining lease term.

Depreciation expense relating to our corporate assets is included in general and administrative expense in our condensed consolidated statements of income.

We depreciate the leasehold improvements at our corporate office on a straight-line basis over

the shorter of the estimated useful lives or the remaining lease term.

Depreciation expense relating to our corporate assets is included in general and administrative expense in our consolidated statements of income.

Determining whether expenditures meet the criteria for capitalization and the assignment of depreciable lives requires management to exercise significant judgment.

15 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.

During the three months ended March 31, 2025, real estate assets related to one of our properties in Palm Springs, California were determined to be impaired.

In April 2025, we marketed the property for sale and have executed a purchase and sale agreement with a prospective buyer in which the estimated net proceeds from sale is less than the carrying value of the property.

As a result, we recognized an impairment loss on real estate of $ 3.5 million during the three months ended March 31, 2025 to reduce its carrying value to the estimated fair value.

No impairment losses were recognized during the three months ended March 31, 2024.

During the three months ended March 31, 2025, we recognized an impairment loss on real estate of $ 3.5 million related to one of our properties in Palm Springs, California which was under contract for sale and sold in June 2025.

No impairment losses were recognized during the three months ended June 30, 2025, or during the three and six months ended June 30, 2024.

Revenue Recognition.

4 unchanged sentences

Additionally, for operating leases, 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.

For the three months ended March 31, 2025, rental revenue recognized included the application of $ 5.8 million of security deposits for rent.

No security deposits were applied for rent during the three months ended March 31, 2024.

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

For the three and six months ended June 30, 2025, rental revenue recognized included the application of $ 18,000 and $ 5.8 million of security deposits for rent, respectively.

For both the three and six months ended June 30, 2024, rental revenue recognized included the application of $ 0.6 million of security deposits for rent.

Construction Loan.

We executed a construction loan agreement with a developer, pursuant to which we agreed to lend up to $ 23.0 million for the development of a regulated cannabis cultivation and processing facility in California (the “Construction Loan”).

In June 2021, we executed a construction loan agreement with a developer, pursuant to which (as amended in February 2023), we agreed to lend up to $ 23.0 million for the development of a regulated cannabis cultivation and processing facility in California (the “Construction Loan”).

We have an option to purchase the property, and may execute a negotiated lease with an affiliate of the developer or with another third party, if we determine to exercise our purchase option .

The Construction Loan matures on June 30, 2025 .

As of both March 31, 2025 and December 31, 2024, we had funded $ 22.8 million of the $ 23.0 million total commitment.

As of both June 30, 2025 and December 31, 2024, we had funded $ 22.8 million of the $ 23.0 million total commitment.

Interest income on the Construction Loan is recognized on a cash basis.

The borrower exercised the option to extend the maturity date to December 31, 2025 with the satisfaction of certain conditions and payment of an extension fee.

Cash and Cash Equivalents.

7 unchanged sentences

Deferred Financing Costs.

The deferred financing costs relating to our Notes due 2026 are included as a reduction in the net book value of the related liability on our condensed consolidated balance sheets.

The deferred financing costs relating to our Notes due 2026 are included as a reduction in the net book value of the related liability on our consolidated balance sheets.

These costs are amortized as non-cash interest expense using the effective interest method over the life of the related obligations.

Deferred financing costs relating to our Revolving Credit Facility (as defined in Note 7 "Debt") are included in other assets, net in our condensed consolidated balance sheets.

Deferred financing costs relating to our Revolving Credit Facility (as defined in Note 7 "Debt") are included in other assets, net in our consolidated balance sheets.

These costs are being amortized on a straight-line basis and recognized as non-cash interest expense over the remaining term of the Revolving Credit Facility.

14 unchanged sentences

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

In both the three months ended March 31, 2025 and 2024, we recognized office lease expense of $ 0.1 million, which is included in general and administrative expenses in our condensed consolidated statements of income.

In both the three months ended March 31, 2025 and 2024, amounts paid and classified as operating activities in our condensed consolidated statements of cash flows for the office lease were $ 0.1 million.

In each of the three and six months ended June 30, 2025 and 2024, we recognized office lease expense of $ 0.1 million and $ 0.2 million, respectively, which is included in general and administrative expenses in our consolidated statements of income.

In both the six months ended June 30, 2025 and 2024, amounts paid and classified as operating activities in our consolidated statements of cash flows for the office lease were $ 0.2 million.

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.

For these transactions, we consider various inputs and assumptions including, but not necessarily

limited to, lease terms, renewal options, discount rates, and other rights and provisions in the purchase and sale agreement, lease and other documentation to determine whether control has been transferred to the Company or remains with the lessee.

For these transactions, we consider various inputs and assumptions including, but not necessarily limited to, lease terms, renewal options, discount rates, and other rights and provisions in the purchase and sale agreement, lease and other documentation to determine whether control has been transferred to the Company or remains with the lessee.

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.

4 unchanged sentences

Substantially all of 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 revenues and as property expenses, respectively, on our condensed consolidated statements of income.

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

Our tenant reimbursable revenue and property expenses continue to be presented on a gross basis as rental revenues 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.

Lease amendments are evaluated to determine if the modification grants the lessee an additional right-of-use not included in the original lease and if the lease payments increase commensurate with the standalone price of the additional right-of-use, adjusted for the circumstances of the particular contract.

1 unchanged sentence

In January 2024, the lease modifications for two of our leases to extend the initial term of each lease changed the lease classification from operating lease to sales-type lease that did not satisfy all the criteria for recognition as a completed sale.

Accordingly, we continue to recognize the underlying assets within net real estate held for investment and all lease payments received, as well as any future lease payments, will be recognized as a deposit liability and will be included in other liabilities on our condensed consolidated balance sheet until certain criteria are met.

As of March 31, 2025, we have received lease payments of $ 5.0 million that have been included in other liabilities on our condensed consolidated balance sheet.

The underlying assets’ land and building and improvements had a gross carrying value of $ 4.1 million and $ 28.9 million, respectively, and accumulated depreciation of $ 3.8 million as of March 31, 2025.

Accordingly, we continue to recognize the underlying assets within net real estate held for investment and all lease payments received, as well as any future lease payments, will be recognized as a deposit liability and will be included in other liabilities on our consolidated balance sheet until certain criteria are met.

As of June 30, 2025, we have received lease payments of $ 5.0 million that have been included in other liabilities on our consolidated balance sheet.

The underlying assets’ land and building and improvements had a gross carrying value of $ 4.1 million and $ 28.9 million, respectively, and accumulated depreciation of $ 3.9 million as of June 30, 2025.

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.

11 unchanged sentences

Concentration of Credit Risk.

As of March 31, 2025, we owned 110 properties located in 19 states and leased to 31 tenants (excluding five non-cannabis tenants at three of our properties).

As of June 30, 2025, we owned 108 properties located in 19 states and leased to 36 tenants.

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 tables set forth the five tenants in our portfolio that represented the largest percentage of our total rental revenues for the three months ended March 31, 2025 and 2024, including tenant reimbursements:

The following tables set forth the five tenants in our portfolio that represented the largest percentage of our total rental revenues for the three and six months ended June 30, 2025 and 2024, including tenant reimbursements:

For the Three Months Ended

March 31, 2025

June 30, 2025

Percentage of

1 unchanged sentence

Leases Revenue

PharmaCann Inc.

("PharmaCann") (1)

Ascend Wellness Holdings, Inc.

6 unchanged sentences

("Trulieve") 6 8 %

The Cannabist Company 21 8 %

For the Six Months Ended

June 30, 2025

Percentage of

Number of Rental

Leases Revenue

Ascend 4 12 %

Green Thumb 3 9 %

Curaleaf 8 8 %

Trulieve 6 8 %

The Cannabist Company 21 7 %

For the Three Months Ended

March 31, 2024

June 30, 2024

Leases Percentage of

PharmaCann Inc.

("PharmaCann") (1)

Holistic Industries Inc.

("Holistic") 5 11 %

Greent Thumb 3 7 %

Curaleaf 8 7 %

For the Six Months Ended

June 30, 2024

Leases Percentage of

PharmaCann (1)

Ascend 4 10 %

Holistic 5 9 %

Green Thumb 3 8 %

Curaleaf 8 7 %

Trulieve 6 7 %

(1) See Note 6 "Investment in Real Estate - Lease Amendments" for further information about the leases with PharmaCann.

In each of the tables above, these leases include leases with affiliates of each entity, for which the entity has provided a corporate guaranty.

As of both March 31, 2025 and December 31, 2024, our largest property was located in New York and accounted for 5.5 % of our net real estate held for investment.

No other properties accounted for more than 5 % of our net real estate held for investment as of March 31, 2025 and December 31, 2024.

As of both June 30, 2025 and December 31, 2024, our largest property was located in New York and accounted for 5.5 % of our net real estate held for investment.

No other properties accounted for more than 5 % of our net real estate held for investment as of June 30, 2025 and December 31, 2024.

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

As of March 31, 2025, we had cash accounts in excess of FDIC insured limits.

As of June 30, 2025, we had cash accounts in excess of FDIC insured limits.

We have not experienced any losses in such accounts.

As of March 31, 2025, the Company was authorized to issue up to 50,000,000 shares of common stock, par value $ 0.001 per share, and there were 28,378,181 shares of common stock issued and outstanding.

As of June 30, 2025, the Company was authorized to issue up to 50,000,000 shares of common stock, par value $ 0.001 per share, and there were 28,017,520 shares of common stock issued and outstanding.

In May 2024 , we terminated the previously existing “at-the-market” offering program (the “Prior ATM Program”) and entered into new equity distribution agreements with four sales agents , pursuant to which we may offer and sell from time to time through an “at-the-market” offering program (the “ATM Program”), including on a forward basis, shares of our common stock and 9.00 % Series A Cumulative Redeemable Preferred Stock, $ 0.001 par value per share (the “Series A Preferred Stock”) , up to an aggregate offering price of $ 500.0 million .

See Note 4 “Preferred Stock” for information regarding the sale of Series A Preferred Stock under the ATM Program.

No shares of common stock were issued pursuant to the ATM Program during the three months ended March 31, 2025.

During the three months ended March 31, 2024, we sold 123,224 shares of common stock that were issued pursuant to the Prior ATM Program for net proceeds of $ 11.8 million.

During the three months ended March 31, 2024, we issued 28,408 shares of our common stock related to the exchange premium upon exchange by holders of $ 4.3 million of outstanding principal amount of our 3.75 % Exchangeable Senior Notes due 2024 (the “Exchangeable Senior Notes”).

No shares of common stock were issued pursuant to the ATM Program during the six months ended June 30, 2025.

During the six months ended June 30, 2024, we sold 123,224 shares of common stock that were issued pursuant to the Prior ATM Program for net proceeds of $ 11.8 million.

During the six months ended June 30, 2024, we issued 28,408 shares of our common stock related to the exchange premium upon exchange by holders of $ 4.3 million of outstanding principal amount of our 3.75 % Exchangeable Senior Notes due 2024 (the “Exchangeable Senior Notes”).

In March 2025, our Board of Directors authorized a share repurchase program of up to $ 100.0 million of the Company’s common stock.

The repurchase program expires on March 17, 2026, and may be extended, suspended, modified or discontinued at any time at the Company’s discretion.

During the three months ended March 31, 2025, we repurchased and retired 4,586 shares of common stock for $ 0.3 million.

During the three and six months ended June 30, 2025, we repurchased and retired 366,952 and 371,538 shares of common stock for $ 19.8 million and $ 20.1 million, respectively.

Preferred Stock

As of March 31, 2025, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $ 0.001 per share, and there were 1,387,820 shares issued and outstanding of Series A Preferred Stock.

As of June 30, 2025, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $ 0.001 per share, and there were 1,561,654 shares issued and outstanding of Series A Preferred Stock.

The Company may, at its option, redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $ 25.00 per share, plus all accrued and unpaid dividends on such Series A Preferred Stock up to, but excluding, the redemption date.

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.

During the three months ended March 31, 2025, we sold 385,147 shares of our Series A Preferred Stock pursuant to the ATM Program for net proceeds of $ 9.2 million.

The following table describes the dividends declared by the Company during the three months ended March 31, 2025:

During the three and six months ended June 30, 2025, we sold 173,834 and 558,981 shares of our Series A Preferred Stock pursuant to the ATM Program for net proceeds of $ 4.0 million and $ 13.2 million, respectively.

The following table describes the dividends declared by the Company during the six months ended June 30, 2025:

Declaration Date Security Class Amount

Per Share Period Covered Dividend

Per Share Record Date Dividend

Paid Date Dividend

(In thousands)

March 14, 2025 Common stock $ 1.90 January 1, 2025 to March 31, 2025 April 15, 2025 $ 54,463

March 14, 2025 Series A preferred stock $ 0.5625 January 15, 2025 to April 14, 2025 April 15, 2025 $ 781

March 14, 2025 Common stock $ 1.90 March 31, 2025 April 15, 2025 $ 54,463

March 14, 2025 Series A preferred stock $ 0.5625 March 31, 2025 April 15, 2025 $ 781

June 13, 2025 Common stock $ 1.90 June 30, 2025 July 15, 2025 $ 53,783

June 13, 2025 Series A preferred stock $ 0.5625 June 30, 2025 July 15, 2025 $ 878

Investments in Real Estate

The Company made the following acquisition during the three months ended March 31, 2025 (dollars in thousands):

The Company made the following acquisition during the six months ended June 30, 2025 (dollars in thousands):

Property State Closing Date Rentable

5 unchanged sentences

Acquired In-Place Lease Intangible Assets

In-place lease intangible assets and related accumulated amortization as of March 31, 2025 and December 31, 2024 is as follows (in thousands):

March 31, 2025 December 31, 2024

In-place lease intangible assets and related accumulated amortization as of June 30, 2025 and December 31, 2024 is as follows (in thousands):

June 30, 2025 December 31, 2024

In-place lease intangible assets $ 9,979 $ 9,979

1 unchanged sentence

In-place lease intangible assets, net $ 6,955 $ 7,385

Amortization of in-place lease intangible assets classified in depreciation and amortization expense in our condensed consolidated statements of income was $ 0.2 million in each of the three months ended March 31, 2025 and 2024.

The weighted-average remaining amortization period of the acquired in-place leases was 8.5 years, and the estimated annual amortization of the value of the acquired in-place leases as of March 31, 2025 is as follows (in thousands):

2025 (nine months ending December 31) $ 645

Amortization of in-place lease intangible assets classified in depreciation and amortization expense in our consolidated statements of income was $ 0.2 million in each of the three months ended June 30, 2025 and 2024, and $ 0.4 million in each of the six months ended June 30, 2025 and 2024.

The weighted-average remaining amortization period of the acquired in-place leases was 8.3 years, and the estimated annual amortization of the value of the acquired in-place leases as of June 30, 2025 is as follows (in thousands):

2025 (six months ending December 31) $ 430

Thereafter 3,085

1 unchanged sentence

Above-Market Lease

The above-market lease and related accumulated amortization included in other assets, net on our condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024 is as follows (in thousands):

March 31, 2025 December 31, 2024

The above-market lease and related accumulated amortization included in other assets, net on our consolidated balance sheets as of June 30, 2025 and December 31, 2024 is as follows (in thousands):

June 30, 2025 December 31, 2024

Above-market lease $ 1,054 $ 1,054

2 unchanged sentences

The above-market lease is amortized on a straight-line basis as a reduction to rental revenues over the remaining lease term of 8.0 years.

For both the three months ended March 31, 2025 and 2024, the amortization of the above-market lease was $ 23,000 .

In each of the three and six months ended June 30, 2025 and 2024, the amortization of the above-market lease was $ 23,000 and $ 46,000 , respectively.

Lease Amendments

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In March 2025, PharmaCann defaulted on its obligations to pay rent for the month of March under nine of its eleven leases for properties located in New York, Illinois, Pennsylvania, Ohio, and Colorado and therefore, all modifications to our leases with PharmaCann described above became null and void and the leases reverted to the terms in effect as of January 1, 2025.

Subsequent to March 31, 2025, the lease for the cultivation property in Michigan was terminated concurrently with the execution of a new lease with a new tenant in April 2025.

In April 2025, the lease for the cultivation property in Michigan was terminated concurrently with the execution of a new lease with a new tenant.

In March 2025, we amended our lease with a subsidiary of AYR Wellness, Inc.

1 unchanged sentence

Capitalized Costs

During the three months ended March 31, 2025, we capitalized costs of $ 7.7 million relating to improvements and construction activities at our properties.

Property Disposition

In March 2023, we sold the portfolio of four properties in California previously leased to affiliates of Medical Investor Holdings, LLC (“Medical Investor Holdings”) for $ 16.2 million (excluding transaction costs) and provided a secured loan for $ 16.1 million to the buyer of the properties.

During the six months ended June 30, 2025, we capitalized costs of $ 11.8 million relating to improvements and construction activities at our properties.

Property Dispositions

In March 2023, we sold a portfolio of four properties in California for $ 16.2 million (excluding transaction costs) and provided a secured loan for $ 16.1 million to the buyer of the properties.

The loan matures on February 29, 2028 with two options to extend the maturity for twelve months , conditional in each instance on the payment of an extension fee and at least $ 0.5 million of the principal balance.

1 unchanged sentence

The transaction did not qualify for recognition as a completed sale under GAAP since not all of the criteria were met.

Accordingly, we have not derecognized the assets transferred on our condensed consolidated balance sheets.

All consideration received, as well as any future payments, from the buyer will be recognized as a deposit liability and will be included in other liabilities on our condensed consolidated balance sheet until such time the criteria for recognition as a sale have been met.

As of March 31, 2025, we have received interest payments of $ 2.6 million.

In addition, as we have not met all of the held-for-sale criteria, land and building and improvements with a gross carrying value of $ 3.4 million and $ 13.9 million, respectively, and accumulated depreciation of $ 2.1 million as of March 31, 2025, remain on the condensed consolidated balance sheet, and the buildings and improvements continue to be depreciated.

We declared this loan in default in March 2025 due to borrower's failure to pay $ 0.8 million of interest and reimbursement for taxes.

As a result, the principal amount of the note, plus accrued and unpaid interest, are immediately due and payable.

Accordingly, we have not derecognized the assets transferred on our consolidated balance sheets.

All consideration received, as well as any future payments, from the buyer will be recognized as a deposit liability and will be included in other liabilities on our consolidated balance sheet until such time the criteria for recognition as a sale have been met.

As of June 30, 2025, we have received interest payments of $ 2.6 million.

In addition, as we have not met all of the held-for-sale criteria, land and building and improvements with a gross carrying value of $ 3.4 million and $ 13.9 million, respectively, and accumulated depreciation of $ 2.2 million as of June 30, 2025, remain on the consolidated balance sheet, and the buildings and improvements continue to be depreciated.

We declared this loan in default in March 2025 due to borrower's failure to pay interest and reimbursement for taxes.

As a result of the default, the full principal and accrued interest under the loan, which amounted to $ 17.3 million as of June 30, 2025, became immediately due and payable.

In April 2025, we sold a property in Michigan for $ 9.0 million (excluding transaction costs) and provided a secured loan for $ 8.5 million to the buyer of the property.

The loan matures on April 24, 2028 with an option to extend the maturity for twelve months , conditional on the payment of an extension fee.

The loan is interest only and payments are payable monthly in advance.

The transaction did not qualify for recognition as a completed sale under GAAP since not all of the criteria were met.

Accordingly, we have not derecognized the assets transferred on our consolidated balance sheets.

As of June 30, 2025, we have received $ 1.2 million for a loan origination fee and interest.

In addition, as we have not met all of the held-for-sale criteria, land and building and improvements with a gross carrying value of $ 0.4 million and $ 9.6 million, respectively, and accumulated depreciation of $ 1.9 million as of June 30, 2025, remain on the consolidated balance sheet, and the buildings and improvements continue to be depreciated.

In June 2025, we sold a property in Palm Springs, California.

Net proceeds from the sale were $ 1.8 million and no gain or loss was recognized on the sale as the property was impaired and recognized at fair value less selling costs as of March 31, 2025.

Future Contractual Minimum Rent

Future contractual minimum rent (including base rent and property management fees) to be received on our leases as of March 31, 2025 for future periods is summarized as follows (in thousands):

Future contractual minimum rent (including base rent and property management fees) to be received on our leases as of June 30, 2025 for future periods is summarized as follows (in thousands):

Year Contractual Minimum Rent

2025 (nine months ending December 31) $ 234,273

2025 (six months ending December 31) $ 147,476

Thereafter 3,428,703

Total $ 4,856,141

Future contractual minimum rent includes payments to be received on two sales-type leases, which will be recognized as a deposit liability and will be included in other liabilities on our condensed consolidated balance sheet until certain criteria are met (see Note 2 “Lease Accounting” for further details).

Future contractual minimum rent includes payments to be received on two sales-type leases, which will be recognized as a deposit liability and will be included in other liabilities on our consolidated balance sheet until certain criteria are met (see Note 2 “Lease Accounting” for further details).

Exchangeable Senior Notes

During the three months ended March 31, 2024 , we issued 28,408 shares of our common stock and paid $ 4.3 million in cash upon exchange by holders of $ 4.3 million principal amount of Exchangeable Senior Notes and paid off the remaining $ 0.1 million principal amount at maturity in February 2024, in accordance with terms of the indenture for the Exchangeable Senior Notes.

During the six months ended June 30, 2024 , we issued 28,408 shares of our common stock and paid $ 4.3 million in cash upon exchange by holders of $ 4.3 million principal amount of Exchangeable Senior Notes and paid off the remaining $ 0.1 million principal amount at maturity in February 2024, in accordance with terms of the indenture for the Exchangeable Senior Notes.

The following table details our interest expense related to the Exchangeable Senior Notes which matured in February 2024 (in thousands):

For the Three Months Ended March 31,

For the Three Months Ended June 30, For the Six Months Ended June 30,

2025 2024 2025 2024

Cash coupon $ — $ — $ — $ 24

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The following table details our interest expense related to the Notes due 2026 (in thousands):

For the Three Months Ended March 31,

For the Three Months Ended June 30, For the Six Months Ended June 30,

2025 2024 2025 2024

Cash coupon $ 4,004 $ 4,125 $ 8,085 $ 8,250

3 unchanged sentences

The following table details the carrying value of our Notes due 2026 (in thousands):

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Principal amount $ 291,215 $ 300,000

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In February 2025, we made early partial repayments at a discount totaling $ 8.7 million on the Notes due 2026, reducing the principal balance by $ 8.8 million.

As of March 31, 2025, the outstanding principal balance was $ 291.2 million.

Following the partial repayment, all other terms and conditions of the debt agreement remain unchanged.

At June 30, 2025, the outstanding principal balance was $ 291.2 million and the Company currently does not have sufficient liquidity to satisfy this obligation at maturity.

Management has plans to refinance the Notes due 2026 and believes that it will be successful based on the strength of the Company’s investment-grade rated balance sheet, long-term history of generating positive cash flows from operations and track record of success in raising capital.

As a result, management has concluded that our plans are probable of achieving sufficient liquidity to satisfy this obligation prior to maturity in May 2026.

While management believes it is probable that we will be able to refinance the Notes due 2026, there can be no assurance that we will be able to raise new capital or complete such refinance on terms that are attractive to the Company, or at all.

The terms of the indenture for the Notes due 2026 require compliance with various financial covenants, including minimum level of debt service coverage and limits on the amount of total leverage and secured debt maintained by the Operating Partnership.

Management believes that it was in compliance with those covenants as of March 31, 2025.

Accrued interest payable for the Notes due 2026 as of March 31, 2025 and December 31, 2024 was $ 6.0 million and $ 2.1 million, respectively, and is included in accounts payable and accrued expenses on our condensed consolidated balance sheets.

Management believes that it was in compliance with those covenants as of June 30, 2025.

Accrued interest payable for the Notes due 2026 as of June 30, 2025 and December 31, 2024 was $ 2.0 million and $ 2.1 million, respectively, and is included in accounts payable and accrued expenses on our consolidated balance sheets.

Revolving Credit Facility

In October 2023, our Operating Partnership entered into a loan and security agreement (the “Loan Agreement”) with a federally regulated commercial bank, as lender and as agent for lenders that become party thereto from time to time, which matures on October 23, 2026.

The Loan Agreement provides $ 50.0 million in aggregate commitments for secured revolving loans (the “Revolving Credit Facility”), the availability of which is based on a borrowing base consisting of real properties owned by subsidiaries (the “Subsidiary Guarantors”) of the Operating Partnership that satisfy eligibility criteria set forth in the Loan Agreement.

The obligations of the Operating Partnership under the Loan Agreement are guaranteed by the Company and the Subsidiary Guarantors, and are secured by (i) operating accounts of the Operating Partnership into which lease payments under the real property included in the borrowing base are paid, (ii) the equity interest of the Subsidiary Guarantors, (iii) the real estate included in the borrowing base and the leases and rents thereunder, and (iv) all personal property of the Subsidiary Guarantors.

The Loan Agreement initially provided $ 50.0 million in aggregate commitments for secured revolving loans (the “Revolving Credit Facility”), the availability of which is based on a borrowing base consisting of real properties owned by subsidiaries (the “Subsidiary Guarantors”) of the Operating Partnership that satisfy eligibility criteria set forth in the Loan Agreement.

Subsidiary Guarantors, (iii) the real estate included in the borrowing base and the leases and rents thereunder, and (iv) all personal property of the Subsidiary Guarantors.

Borrowings under the Revolving Credit Facility bear interest at a variable rate based on the greater of the prime rate and an applicable margin based on deposits with the participating bank(s) and a stipulated interest rate.

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In November 2024, our Operating Partnership entered into an amendment to the Loan Agreement, pursuant to which the aggregate commitments under the Revolving Credit Facility was increased from $ 50.0 million to $ 87.5 million.

There were no amounts outstanding under the Revolving Credit Facility as of March 31, 2025.

There were no amounts outstanding under the Revolving Credit Facility as of June 30, 2025.

In connection with the Revolving Credit Facility, we recorded $ 1.2 million of issuance costs, which are being amortized on a straight-line basis and recognized as non-cash interest expense over the term of the Revolving Credit Facility.

For the three months ended March 31, 2025 and 2024, we recognized $ 0.1 million and $ 55,000 , respectively, of non-cash interest expense related to the Revolving Credit Facility.

The following table summarizes the principal payments on our outstanding indebtedness as of March 31, 2025 (in thousands):

For the three months ended June 30, 2025 and 2024, we recognized $ 0.1 million and $ 68,000 , respectively, of non-cash interest expense related to the Revolving Credit Facility.

For the six months ended June 30, 2025 and 2024, we recognized $ 0.2 million and $ 0.1 million, respectively, of non-cash interest expense related to the Revolving Credit Facility.

The following table summarizes the principal payments on our outstanding indebtedness as of June 30, 2025 (in thousands):

by Year Amount

2025 (nine months ending December 31) $ —

2025 (six months ending December 31) $ —

Total $ 291,215

2 unchanged sentences

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.

undistributed earnings, which represents net income remaining after deduction of dividends accruing during the period.

Earnings per basic share under the two-class method is calculated based on dividends declared on common shares and other participating securities (“distributed earnings”) and the rights of participating securities in any undistributed earnings, which represents net income remaining after deduction of dividends accruing during the period.

The undistributed earnings are allocated to all outstanding common shares and participating securities based on the relative percentage of each security to the total number of outstanding participating securities.

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

Through March 31, 2025, 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, 2025 and 2024 have been included in net income attributable to common stockholders to calculate net income per basic and diluted share.

The 38,079 shares necessary to settle the Exchangeable Senior Notes on the if-exchanged method basis were dilutive for the three months ended March 31, 2024, and were included in the computation of diluted earnings per share.

Through June 30, 2025, 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 six months ended June 30, 2025 and 2024 have been included in net income attributable to common stockholders to calculate net income per basic and diluted share.

The 19,040 shares necessary to settle the Exchangeable Senior Notes on the if-exchanged method basis were dilutive for the six months ended June 30, 2024, and were included in the computation of diluted earnings per share.

For the three and six months ended June 30, 2024, the performance share units (“PSUs”) granted to certain employees were included in dilutive securities to the extent the performance thresholds for vesting of the PSUs were met as measured as of June 30, 2024.

The PSUs expired on December 31, 2024.

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

For the Three Months Ended

For the Three Months Ended For the Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Net income $ 26,024 $ 41,993 $ 57,101 $ 81,421

7 unchanged sentences

Restricted stock and RSUs 393,601 300,582 353,261 289,736

PSUs — 20,713 — 20,713

Dilutive effect of Exchangeable Senior Notes — — — 19,040

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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 and approximate fair value of financial instruments at March 31, 2025 and December 31, 2024 (in thousands):

At March 31, 2025 At December 31, 2024

The following table presents the carrying value and approximate fair value of financial instruments at June 30, 2025 and December 31, 2024 (in thousands):

At June 30, 2025 At December 31, 2024

Carrying Value Fair Value Carrying Value Fair Value

9 unchanged sentences

$ 16,786 $ 16,786 $ 16,786 $ 16,786

(1) At March 31, 2025 and December 31, 2024 , investments consisting of short-term certificates of deposit with an original maturity at the time of purchase of greater than 90 days and less than one year are classified as held-to-maturity, stated at cost which approximates fair value using Level 2 inputs.

(1) At June 30, 2025 and December 31, 2024 , investments consisting of short-term certificates of deposit with an original maturity at the time of purchase of greater than 90 days and less than one year are classified as held-to-maturity, stated at cost which approximates fair value using Level 2 inputs.

(2) Investments as cash equivalents include investments of obligations of the U.S.

6 unchanged sentences

In the yield analysis, the Company considers the current contractual interest rate, the maturity and other terms of the loan relative to risk of the company and the specific loan.

At each of March 31, 2025 and December 31, 2024, the expected market yield used to determine fair value was 16.25 %.

At each of June 30, 2025 and December 31, 2024, the expected market yield used to determine fair value was 16.25 %.

Changes in market yields may change the fair value of the construction loan.

2 unchanged sentences

Additionally, the fair value of the construction loan may differ significantly from the value that would have been used had a readily available market existed for such loan and may differ materially from the value that the Company may ultimately realize.

(5) Notes receivable relate to certain acquisitions of real estate which did not satisfy the requirements for sale-leaseback accounting (see Note 2 “Acquisition of Real Estate Properties” to our condensed consolidated financial statements for more information).

(5) Notes receivable relate to certain acquisitions of real estate which did not satisfy the requirements for sale-leaseback accounting (see Note 2 “Acquisition of Real Estate Properties” to our consolidated financial statements for more information).

The notes receivable are categorized as Level 3 and were also valued using a yield analysis.

At March 31, 2025 and December 31, 2024, the weighted average expected market yields used to determine fair values were 21.6 % and 20.6 %, respectively.

At June 30, 2025 and December 31, 2024, the weighted average expected market yields used to determine fair values were 22.8 % and 20.6 %, respectively.

The carrying amounts of cash equivalents, accounts payable, accrued expenses and other liabilities approximate their fair values.

Nonrecurring Fair Value Measurements

As of March 31, 2025, assets measured at fair value on a nonrecurring basis consist of one real estate asset for which we recorded an impairment and was written down to its estimated fair value.

Our estimate of fair value was determined using the stated price within the purchase and sale agreement for this asset, net of estimated transaction costs, which is classified as Level 2 within the GAAP fair value hierarchy.

As of March 31, 2025, the fair value of the real estate asset, net of estimated transaction costs, measured on a nonrecurring basis was $ 1.8 million.

Refer to Note 2 "Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements" for further information on the impairment loss on real estate.

Common Stock Incentive Plan

4 unchanged sentences

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, 2025 is included in the table below:

A summary of the restricted stock activity under the 2016 Plan and related information for the six months ended June 30, 2025 is included in the table below:

Stock Weighted-

6 unchanged sentences

Balance at March 31, 2025 106,810 $ 83.04

Granted 6,291 $ 57.23

Vested ( 3,186 ) $ 113.05

Balance at June 30, 2025 109,915 $ 80.70

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

The remaining unrecognized compensation cost of $ 7.8 million for restricted stock awards is expected to be recognized over a weighted-average amortization period of 2.2 years as of March 31, 2025.

The fair value of restricted stock that vested during the three months ended March 31, 2025 was $ 2.3 million.

The following table summarizes our RSU activity for the three months ended March 31, 2025.

The remaining unrecognized compensation cost of $ 7.0 million for restricted stock awards is expected to be recognized over a weighted-average amortization period of 1.9 years as of June 30, 2025.

The fair value of restricted stock that vested during the six months ended June 30, 2025 was $ 2.4 million.

The following table summarizes our RSU activity for the six months ended June 30, 2025.

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

8 unchanged sentences

Balance at March 31, 2025 286,439 $ 104.63

Granted 2,796 $ 57.23

Balance at June 30, 2025 289,235 $ 104.17

(1) Shares that were forfeited upon employee's cessation of employment.

The remaining unrecognized compensation cost of $ 9.8 million for RSU awards is expected to be recognized over an amortization period of 0.7 years as of March 31, 2025.

The remaining unrecognized compensation cost of $ 8.5 million for RSU awards is expected to be recognized over an amortization period of 0.6 years as of June 30, 2025.

In January 2021 and 2022, we issued 70,795 and 102,641 “target” PSUs, respectively, to a select group of officers, which vest and are settled in shares of common stock based on the Company’s total stockholder return over a performance period beginning on the applicable grant date and ending on December 31, 2023 and 2024, respectively.

1 unchanged sentence

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 applicable performance period.

For the three months ended March 31, 2024, we recognized stock-based compensation expense of $ 1.7 million relating to PSU awards.

For the three and six months ended June 30, 2024, we recognized stock-based compensation expense of $ 1.7 million and $ 3.3 million, respectively, relating to PSU awards.

Commitments and Contingencies

Office Lease.

The future contractual lease payments for our office lease and the reconciliation to the office lease liability reflected in other liabilities in our condensed consolidated balance sheet as of March 31, 2025 is presented in the table below (in thousands):

2025 (nine months ending December 31) $ 395

The future contractual lease payments for our office lease and the reconciliation to the office lease liability reflected in other liabilities in our consolidated balance sheet as of June 30, 2025 is presented in the table below (in thousands):

2025 (six months ending December 31) $ 263

Total future contractual lease payments 851

2 unchanged sentences

Improvement Allowances.

As of March 31, 2025, we had $ 26.2 million of commitments related to 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.

Construction Commitments.

As of March 31, 2025, we had $ 1.2 million of commitments related to contracts with vendors for improvements at our properties.

As of June 30, 2025, we had $ 11.6 million of commitments related to 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.

Construction Loan.

As of March 31, 2025, we had $ 0.2 million of commitments related to our Construction Loan for the development of a regulated cannabis cultivation and processing facility in California.

As of June 30, 2025, we had $ 0.2 million of commitments related to our Construction Loan for the development of a regulated cannabis cultivation and processing facility in California.

Environmental Matters.

1 unchanged sentence

While there can be no assurance that a material environmental liability does not exist, we are not currently aware of any environmental liabilities that would have a material adverse effect on our financial condition, results of operations and cash flow, or that we believe would require disclosure or the recording of a loss contingency.

Class Action Lawsuit

Class Action Lawsuits

On April 25, 2022, a federal securities class action lawsuit was filed against the Company and certain of its officers.

22 unchanged sentences

On February 27, 2025, plaintiff filed their reply brief.

Oral argument is tentatively set for June 16, 2025.

Oral argument took place on June 17, 2025.

On January 17, 2025, a second federal securities class action lawsuit was filed against the Company and certain of its officers.

10 unchanged sentences

defendants are to file an answer, move to dismiss, or otherwise respond no later than August 22, 2025;

if defendants move to dismiss, plaintiff is to file a response no later than October 21, 2025;

if defendants move

to dismiss, plaintiff is to file a response no later than October 21, 2025;

and defendants are to file a reply no later than November 20, 2025.

Plaintiffs filed an Amended Complaint on June 23, 2025.

On June 23, 2025, a Consolidated Class Action Complaint was filed under the same Case Number, adding Catherine Hastings as a defendant, and asserting causes of action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

According to the Consolidated Class Action Complaint, the plaintiff is seeking an undetermined amount of damages, interest, attorneys’ fees and costs and other relief on behalf of the putative classes of all persons who acquired shares of the Company’s common stock between February 26, 2024 and March 28, 2025.

It is possible that similar lawsuits may yet be filed in the same or other courts that name the same or additional defendants.

We intend to defend the lawsuit vigorously.

However, at this time, we cannot predict the probable outcome of this action, and, accordingly, no amounts have been accrued in the Company’s condensed consolidated financial statements.

However, at this time, we cannot predict the probable outcome of this action, and, accordingly, no amounts have been accrued in the Company’s consolidated financial statements.

Derivative Action Lawsuits

13 unchanged sentences

Alan Gold, Paul Smithers, Catherine Hastings, Ben Regin, Andy Bui, Tracie Hager, Gary Kreitzer, David Stecher, Scott Shoemaker, Mary Curran, and Innovative Industrial Properties, Inc., Case Number 1:23-cv-00737-GLR, and filed in the United States District Court for the District of Maryland.

The lawsuit asserts putative derivative claims for breach of fiduciary duty and violations of

Section 14(a) of the Exchange Act, and seeks an undetermined amount of damages, equitable relief, and attorneys’ fees and costs.

The lawsuit asserts putative derivative claims for breach of fiduciary duty and violations of Section 14(a) of the Exchange Act, and seeks an undetermined amount of damages, equitable relief, and attorneys’ fees and costs.

Defendants in this action filed a Consent Motion to Stay the Proceeding, which was granted on April 17, 2023.

36 unchanged sentences

The Company intends to vigorously defend each of these lawsuits.

However, at this time, the Company cannot predict the probable outcome of these actions, and, accordingly, no amounts have been accrued in the Company’s condensed consolidated financial statements.

However, at this time, the Company cannot predict the probable outcome of these actions, and, accordingly, no amounts have been accrued in the Company’s consolidated financial statements.

We may, from time to time, be a party to other legal proceedings, which arise in the ordinary course of our business.

5 unchanged sentences

The CODM is our President and Chief Executive Officer.

The CODM assesses performance for the segment and decides how to allocate resources based on net income, which is reported on the condensed consolidated statements of income.

The CODM assesses performance for the segment and decides how to allocate resources based on net income, which is reported on the consolidated statements of income.

The CODM uses net income to evaluate return on investments and determine whether to reinvest profits or to pay dividends.

1 unchanged sentence

The revenues, expenses (including stock-based compensation) and net income for the reportable segment are the same as those presented on the consolidated financial statements.

The measure of segment assets is reported on the condensed consolidated balance sheets as total consolidated assets.

The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.

Subsequent Events

In April 2025, we sold one of our properties in Michigan for $ 9.0 million (excluding transaction costs) and provided a secured loan for $ 8.5 million to the buyer of the property.

The loan matures on April 24, 2028 with an option to extend the maturity for twelve months , conditional on the payment of an extension fee.

The loan is interest only and payments are payable monthly in advance.

In April 2025, we executed a lease for one of our properties in Michigan that was previously leased to PharmaCann.

In April 2025, we sold 20,978 shares of our Series A Preferred Stock pursuant to the ATM Program for net proceeds of $ 0.5 million.

In April 2025, we repurchased and retired 366,952 shares of our common stock pursuant to the Company's share repurchase program for $ 19.8 million.

In July 2025, we terminated the lease with a subsidiary of Gold Flora at our property located at 19533 McLane Street in Palm Springs, California.

On August 6, 2025, the Company through its Operating Partnership entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with IQHQ, Inc., a Maryland corporation (“IQHQ REIT”).

The Securities Purchase Agreement, together with certain exhibits thereto, set forth the terms under which the Operating Partnership agreed to:

(i) purchase up to $ 170 million of preferred stock of IQHQ REIT (the “Preferred Stock”) at a price of $ 1,000 per share, together with corresponding warrants to purchase common equity units of IQHQ Holdings, LP, a Delaware limited

partnership, subject to the satisfaction of certain funding milestones of the Preferred Stock;

and (ii) provide a $ 100 million commitment to the operating partnership of IQHQ REIT as a member of a lender syndicate under an Amended and Restated Credit Agreement (the “RCF”) with an initial term of three years , extendable by an additional 12 months upon payment of an extension fee and satisfaction of certain other conditions.

The transactions contemplated by the Securities Purchase Agreement and the RCF are expected to close in the third quarter of 2025, subject to the satisfaction of customary closing conditions and approvals.

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