What changed in this filing

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Item 1. Financial Statements

2025-11-04 compared with 2025-08-07 · 278 added, 147 removed, 632 unchanged (40% of the section changed)

3 unchanged sentences

( In thousands , except share and per share amounts )

June 30, December 31,

September 30, December 31,

Assets 2025 2024

6 unchanged sentences

Net real estate held for investment 2,131,464 2,168,782

Life science investments 105,240 —

Construction loan receivable 22,800 22,800

7 unchanged sentences

Notes due 2026, net $ 290,229 $ 297,865

Revolving credit facility 50,000 —

Building improvements and construction funding payable 4,298 10,230

7 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, 1,561,654 and 1,002,673 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

9.00 % Series A cumulative redeemable preferred stock, liquidation preference of $ 25.00 per share, 1,807,682 and 1,002,673 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

42,743 23,632

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

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

28,022,975 and 28,331,833 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital 2,110,486 2,124,113

7 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2025 2024 2025 2024

9 unchanged sentences

Income from operations 29,414 41,957 92,276 126,337

Interest income 1,570 3,966 3,183 5,750

Interest and other income 4,416 2,685 7,599 8,435

Interest expense ( 4,525 ) ( 4,427 ) ( 13,469 ) ( 13,136 )

12 unchanged sentences

( In thousands , except share amounts )

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Series A Preferred Stock Common Stock Additional

5 unchanged sentences

Net income — — — — — 29,305 29,305

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

Forfeiture of unvested restricted stock, net of issuance — — ( 324 ) — — — —

Issuance of preferred stock, net of issuance costs 246,028 5,900 — — — — 5,900

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

Preferred stock dividends — — — — — ( 1,017 ) ( 1,017 )

Common stock dividends — — — — — ( 53,776 ) ( 53,776 )

Conversion of restricted stock units into common stock, net of forfeitures — — 5,779 — ( 161 ) — ( 161 )

Stock-based compensation — — — — 2,684 — 2,684

Balances at end of period 1,807,682 $ 42,743 28,022,975 $ 28 $ 2,110,486 $ ( 289,916 ) $ 1,863,341

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Series A Preferred Stock Common Stock Additional

10 unchanged sentences

Common stock dividends — — — — — ( 162,022 ) ( 162,022 )

Forfeiture of unvested restricted stock units — — — — — 89 89

Conversion of restricted stock units into common stock, net of forfeitures — — 5,779 — ( 161 ) 89 ( 72 )

Stock-based compensation — — — — 7,434 — 7,434

Balances at end of period 1,807,682 $ 42,743 28,022,975 $ 28 $ 2,110,486 $ ( 289,916 ) $ 1,863,341

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Series A Preferred Stock Common Stock Additional

5 unchanged sentences

Net income — — — — — 40,215 40,215

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

Issuance of preferred stock, net of issuance costs 402,673 9,623 — — — — 9,623

Preferred stock dividends — — — — — ( 564 ) ( 564 )

2 unchanged sentences

Balances at end of period 1,002,673 $ 23,632 28,331,833 $ 28 $ 2,119,798 $ ( 196,921 ) $ 1,946,537

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Series A Preferred Stock Common Stock Additional

7 unchanged sentences

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

Issuance of preferred stock, net of issuance costs 402,673 9,623 — — — — 9,623

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

7 unchanged sentences

( In thousands )

For the Six Months Ended

For the Nine Months Ended

September 30,

Cash flows from operating activities

15 unchanged sentences

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

Investments in life science financial instruments ( 105,235 ) —

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

4 unchanged sentences

Cash flows from financing activities

Issuance of common stock, net of offering costs — 11,757

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

Repurchase of common stock ( 20,108 ) —

Issuance of preferred stock, net of offering costs 13,211 —

Principal payment on exchangeable senior notes — ( 4,436 )

Principal payment on notes due 2026 ( 8,697 ) —

Issuance of preferred stock, net of issuance costs 19,111 9,623

Draw on revolving credit facility 50,000 —

Principal payment on debt ( 8,697 ) ( 4,436 )

Payment of deferred financing costs — ( 261 )

11 unchanged sentences

Accrual for common and preferred stock dividends declared 54,793 54,817

Reclassification from other assets to real estate held for investment — 3,152

See accompanying notes to the consolidated financial statements.

1 unchanged sentence

Notes to the Consolidated Financial Statements

June 30, 2025

September 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”).

We are an internally-managed real estate investment trust (“REIT”) focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated cannabis facilities.

We are an internally-managed real estate investment trust (“REIT”) focused on the acquisition, ownership and management of specialized industrial properties and financial investments in the life science industry.

Our properties are primarily leased to experienced, state-licensed operators for their regulated cannabis facilities.

We have acquired and intend to continue to acquire our properties through sale-leaseback transactions and third-party purchases.

We have leased and expect to continue to lease our properties on a triple-net lease basis, where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, real estate taxes and insurance.

We have leased and expect to continue to primarily lease our properties on a triple-net lease basis, where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, real estate taxes and insurance.

We were incorporated in Maryland on June 15, 2016.

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We have aggregated our properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities, including the fact that they are operated using consistent business strategies.

The financial information disclosed herein represents all of the financial information related to our one reportable segment.

Our chief operating decision maker ("CODM") reviews financial information for our entire

consolidated operations when making decisions related to assessing our operating performance.

The financial information disclosed herein represents all of the financial information related to our one

reportable segment.

Our chief operating decision maker ("CODM") reviews financial information for our entire consolidated operations when making decisions related to assessing our operating performance.

See Note 13 "Segment Information" for additional information.

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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.

Certain acquisitions of real estate did not satisfy the requirements for sale-leaseback accounting and therefore as of both September 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.

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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 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.

For the three months ended September 30, 2025 and 2024, we recognized depreciation expense of $ 18.2 million and $ 17.7 million, respectively, and for the nine months ended September 30, 2025 and 2024, we recognized depreciation expense of $ 54.7 million and $ 51.9 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.

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.

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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.

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

Revenue Recognition.

Our leases are triple-net leases, an arrangement under which the tenant maintains the property while paying us rent.

We recognize revenue for each of the leases at our properties that are classified as operating leases on a cash basis due to the uncertain regulatory environment in the United States pertaining to the regulated cannabis industry, the limited operating history of certain tenants and the resulting uncertainty of collectability of lease payments from each tenant over the duration of the lease term.

Our leases in the cannabis sector are triple-net leases, an arrangement under which the tenant maintains the property while paying us rent.

We recognize revenue for each of the cannabis leases at our properties that are classified as operating leases on a cash basis due to the uncertain regulatory environment in the United States pertaining to the regulated cannabis industry, the limited operating history of certain tenants and the resulting uncertainty of collectability of lease payments from each tenant over the duration of the lease term.

We evaluate a number of factors in our initial and ongoing assessments of collectability of lease payments for each tenant on a lease-by-lease basis, including evaluations of each tenant’s financial performance, liquidity and overall credit profile, availability and terms of capital for each tenant needed to conduct operations or refinance existing obligations, utilization rates by property and lease duration.

2 unchanged sentences

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.

For the three and nine months ended September 30, 2025, rental revenue recognized included the application of $ 0.8 million and $ 6.6 million of security deposits for rent, respectively.

For the three and nine months ended September 30,

2024, rental revenue recognized included the application of $ 1.4 million and $ 2.0 million of security deposits for rent, respectively.

Life Science Investments.

Life science investments consist of an investment in the IQHQ Preferred Stock (as defined in Note 7 "Life Science Investments"), which also includes the IQHQ Warrant (as defined in Note 7).

The Company does not have significant influence over IQHQ (as defined in Note 7), and the investments in the equity securities of IQHQ do not have a readily determinable fair value.

As such, the investments in the equity securities of IQHQ are carried under the measurement alternative of ASC 321, Investments - Equity Securities , which is cost less impairment and adjusted for observable price changes in orderly transactions for identical or similar investment of the same issuer.

As of September 30, 2025, there were no impairments or adjustments to the carrying value of the investments in the equity securities of IQHQ as a result of observable price changes.

Life science investments also consist of an investment in the IQHQ Credit Facility (as defined in Note 7).

The investment is recorded at the amount funded, including transaction costs and is evaluated for current expected credit loss using relevant information from internal and external sources, current conditions and reasonable and supportable forecasts in accordance with ASC 326, Financial Instruments - Credit Loses ("CECL Standard").

No allowance for credit losses has been recorded as of September 30, 2025.

Interest income on the investment is recognized using the effective interest method over the estimated life of the note.

Construction Loan.

1 unchanged sentence

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 .

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

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

The Construction Loan is recorded at the amount funded and is evaluated for current expected credit loss in accordance with the CECL Standard.

No allowance for credit losses has been recorded as of September 30, 2025.

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

22 unchanged sentences

We also elected the short-term lease exception for lessees for leases that are less than 12 months.

As lessee, we recognized a liability to account for our future obligations and a corresponding right-of-use asset related to our corporate office lease, which ends in January 2027 and contains annual escalations.

As lessee, we recognized a liability to account for our future obligations and a corresponding right-of-use asset related to

our corporate office lease, which ends in January 2027 and contains annual escalations.

We measured the lease liability based on the present value of the future lease payments (excluding the extension option that we are not reasonably certain to exercise), discounted using the estimated incremental borrowing rates of 7.25 % and 5.5 %, which were the interest rates that we estimated we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments at initial commencement in December 2019 and upon an amendment in November 2021, respectively.

3 unchanged sentences

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

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.

In each of the three and nine months ended September 30, 2025 and 2024, we recognized office lease expense of $ 0.1 million and $ 0.4 million, respectively, which is included in general and administrative expenses in our consolidated statements of income.

In both the nine months ended September 30, 2025 and 2024, amounts paid and classified as operating activities in our consolidated statements of cash flows for the office lease were $ 0.4 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.

12 unchanged sentences

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.

As of September 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 $ 4.2 million as of September 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.

5 unchanged sentences

purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (or other amounts of depletion expense).

For any remaining items within each relevant expense caption, entities must provide a qualitative description of the nature of those expenses.

For any remaining items within each relevant

expense caption, entities must provide a qualitative description of the nature of those expenses.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

3 unchanged sentences

Concentration of Credit Risk.

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

Real Estate Investments

Tenant Concentration

As of September 30, 2025, we owned 112 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 and six months ended June 30, 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 nine months ended September 30, 2025 and 2024, including tenant reimbursements:

For the Three Months Ended

June 30, 2025

September 30, 2025

Percentage of

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The Cannabist Company 21 8 %

For the Six Months Ended

June 30, 2025

For the Nine Months Ended

September 30, 2025

Percentage of

7 unchanged sentences

For the Three Months Ended

June 30, 2024

September 30, 2024

Leases Percentage of

1 unchanged sentence

("PharmaCann") (1)

Holistic Industries Inc.

("Holistic") 5 11 %

Greent Thumb 3 7 %

Ascend 4 11 %

Green Thumb 3 8 %

Curaleaf 8 7 %

For the Six Months Ended

June 30, 2024

Trulieve 6 7 %

For the Nine Months Ended

September 30, 2024

Leases Percentage of

1 unchanged sentence

Ascend 4 11 %

Holistic 5 9 %

Green Thumb 3 8 %

Holistic Industries Inc.

Curaleaf 8 7 %

1 unchanged sentence

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 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.

Geographic Concentration

As of both September 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 September 30, 2025 and December 31, 2024.

Financial Instruments

Financial instruments that potentially subject us to a concentration of credit risk are cash and cash equivalents, notes and interest receivable, and investments in preferred stock.

Concentration of credit risk relating to notes and interest receivable and preferred stock investments are managed by the Company through portfolio monitoring and performing due diligence prior to origination or acquisition.

As of September 30, 2025, the Company had invested $ 100.0 million into the IQHQ Credit Facility, representing a significant concentration of credit risk.

The Company monitors IQHQ’s credit quality and enforces collateral rights under the credit agreement.

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

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

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

We have not experienced any losses in such accounts.

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.

As of September 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 28,022,975 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 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”).

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

During the nine months ended September 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 nine months ended September 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 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.

During the nine months ended September 30, 2025, we repurchased and retired 371,538 shares of common stock for $ 20.1 million.

No shares of common stock were repurchased and retired during the three months ended September 30, 2025 or during the three or nine months ended September 30, 2024.

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.

As of September 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 1,807,682 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 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:

During the three and nine months ended September 30, 2025, we sold 246,028 and 805,009 shares of our Series A Preferred Stock pursuant to the ATM Program for net proceeds of $ 5.9 million and $ 19.1 million, respectively.

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

Declaration Date Security Class Amount

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

September 15, 2025 Common stock $ 1.90 September 30, 2025 October 15, 2025 $ 53,776

September 15, 2025 Series A preferred stock $ 0.5625 September 30, 2025 October 15, 2025 $ 1,017

Investments in Real Estate

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

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

Property State Closing Date Rentable

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Acquired In-Place Lease Intangible Assets

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 and related accumulated amortization as of September 30, 2025 and December 31, 2024 is as follows (in thousands):

September 30, 2025 December 31, 2024

In-place lease intangible assets $ 9,757 $ 9,979

1 unchanged sentence

In-place lease intangible assets, net $ 6,577 $ 7,385

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

Amortization of in-place lease intangible assets classified in depreciation and amortization expense in our consolidated statements of income was $ 0.4 million and $ 0.8 million for the three and nine months ended September 30, 2025, respectively, and $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2024, respectively.

The weighted-average remaining amortization period of the acquired in-place leases was 8.0 years, and the estimated annual amortization of the value of the acquired in-place leases as of September 30, 2025 is as follows (in thousands):

2025 (three months ending December 31) $ 211

Thereafter 2,990

1 unchanged sentence

Above-Market Lease

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

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

September 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 7.7 years.

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.

In each of the three and nine months ended September 30, 2025 and 2024, the amortization of the above-market lease was $ 23,000 and $ 69,000 , 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.

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 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 August 2025, the lease for the cultivation property in Massachusetts was terminated and we took back possession of the property.

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

1 unchanged sentence

Capitalized Costs

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

During the nine months ended September 30, 2025, we capitalized costs of $ 14.8 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.

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

The loan was set to mature 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.

The loan was interest only and payments were 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.

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.

Accordingly, we did not derecognize the assets transferred on our consolidated balance sheets and all considerations received to date from the buyer have been recognized as a deposit liability and included in other liabilities on our consolidated balance sheet until such time the criteria for recognition as a sale have been met or the agreement is terminated.

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 September 2025, due to borrower's continued default and voluntary surrender, we took back possession and ownership of the properties through a deed in lieu of foreclosure.

In connection with the termination of the agreement, we recognized $ 2.7 million of considerations received to date as interest and other income on our consolidated statements of income for the three and nine months ended September 30, 2025.

In May 2024, we sold a property in Los Angeles, California for $ 9.1 million (excluding closing costs) to a third-party buyer.

Concurrently with the sale, pursuant to a separate agreement previously executed between us and the tenant, the tenant paid us a lease termination fee of $ 3.9 million and paid for the closing and other costs incurred by us in connection with the sale of the property.

In connection with this sale, during nine months ended September 30, 2024, we recognized a disposition-contingent lease termination fee of $ 3.9 million, which is included in rental revenue (including tenant reimbursements) on our consolidated statements of income, and a loss on sale of real estate of $ 3.4 million.

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.

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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.

As of September 30, 2025, we have received a total of $ 1.4 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 $ 2.0 million as of September 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.

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Future Contractual Minimum Rent

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):

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

Year Contractual Minimum Rent

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

2025 (three months ending December 31) $ 73,899

Thereafter 3,406,603

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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).

Life Science Investments

On August 6, 2025, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with IQHQ, Inc, a private life science real estate investment trust, and certain of its affiliates (collectively "IQHQ").

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

(i) purchase up to $ 170 million of 15.0 % Series G-1 Cumulative Redeemable Preferred Stock of IQHQ (the “IQHQ Preferred Stock”) at a price of $ 1,000 per share, together with corresponding warrants to purchase common equity units of IQHQ at an exercise price of $ 0.01 per unit, subject to the satisfaction of certain funding milestones of the IQHQ Preferred Stock;

and (ii) provide a $ 100 million commitment to IQHQ as a member of a lender syndicate under an Amended and Restated Credit Agreement (the “IQHQ Credit Facility”) 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.

On September 30, 2025, the Company completed the initial purchase of an aggregate of 5,000 shares of IQHQ Preferred Stock for a total investment of $ 5.0 million.

The IQHQ Preferred Stock accrues cumulative dividends comprised of (i) a 10.0 % annual cash dividend and (ii) a 5.0 % paid-in-kind (“PIK”) dividend, with dividends payable quarterly in arrears.

The PIK dividend rate increases by 1.25 % on each of the fourth and fifth anniversaries of issuance.

In the event of a failure by IQHQ to make required redemptions or cash dividend payments, the PIK dividend rate increases by an additional 5.0 %, until the failure is cured, subject to a cap on the increase.

The IQHQ Preferred Stock ranks senior to IQHQ's common equity and any junior securities, pari passu with its Series E Preferred Stock and other parity securities, and junior to its Series A and Series D-1 Preferred Stock with respect to dividends and liquidation preferences.

The IQHQ Preferred Stock is not convertible and carries limited voting rights, except as required by law or with respect to charter amendments that are materially adverse to holder rights.

The IQHQ Preferred Stock may be redeemed by IQHQ at any time at the greater of $ 1,560 per share or the then-current base amount and may also be subject to holder redemption upon a change of control or sale transaction.

The remaining balance of the Company’s committed investment in IQHQ Preferred Stock is scheduled to be funded in multiple tranches between the fourth quarter of 2025 and the second quarter of 2027, subject to extension options exercisable by IQHQ.

In connection with the initial closing, the Company also received a warrant (the “IQHQ Warrant”) to purchase common equity units of IQHQ.

The IQHQ Warrant is exercisable for a number of common equity units representing 1.5 % of the fully diluted outstanding common equity of IQHQ (after giving effect to all previously issued warrants) as of the date of the initial closing.

Pursuant to the terms of the Securities Purchase Agreement, upon the initial closing, the Company obtained the right to appoint one voting member to IQHQ’s board of directors, subject to certain ownership thresholds, and designated Paul Smithers, the Company’s President and Chief Executive Officer, for this role.

The Company also entered into a right of first offer letter with IQHQ, granting the Company a contractual right of first offer on certain real estate asset sales of IQHQ.

Additionally, in connection with the initial closing under the Securities Purchase Agreement, on September 30, 2025, the Company became a lender under the IQHQ Credit Facility and fully funded its $ 100.0 million commitment.

The IQHQ Credit Facility bears interest at a fixed annual rate of 13.5 %, consisting of 12.0 % payable in cash and 1.5 % PIK, with interest payable quarterly.

The IQHQ Credit Facility has an initial maturity on September 30, 2028, with a one -time extension option of up to 12 months, subject to the satisfaction of certain conditions and payment of a facility extension fee.

All obligations under the IQHQ Credit Facility are unconditionally guaranteed by IQHQ and secured by a first priority pledge of certain of IQHQ's assets.

The Company is subject to a rate reduction penalty of up to 3.0 % in the event it fails to make required purchases of IQHQ Preferred Stock under the Securities Purchase Agreement.

The IQHQ Credit Facility includes customary representations, warranties, and covenants, as well as major decision rights requiring lender approval.

IQHQ is required to prepay loans with proceeds from certain asset or equity sales and may voluntarily prepay or reduce commitments subject to specified conditions.

The following table details the carrying value of our life science investments (in thousands):

September 30, 2025

Investment in IQHQ Preferred Stock $ 3,805

Investment in IQHQ Warrant 1,195

Investment in IQHQ Credit Facility (1)

Total $ 105,240

(1) Includes transaction costs of $ 0.2 million.

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.

During the nine months ended September 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 June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 2025 2024

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

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 2025 2024

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Principal amount $ 291,215 $ 300,000

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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.

At September 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.

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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 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.

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

Accrued interest payable for the Notes due 2026 as of September 30, 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 consolidated balance sheets.

Revolving Credit Facility

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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.

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.

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.

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.

At September 30, 2025, the interest rate was 9.0 %.

The Revolving Credit Facility is subject to an unused line of credit fee, calculated in accordance with the Loan Agreement.

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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 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 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):

At September 30, 2025, there were $ 50.0 million of borrowings outstanding under the Revolving Credit Facility.

In connection with the Revolving Credit Facility, we recorded $ 1.2 million of deferred financing 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 September 30, 2025 and 2024, we recognized $ 0.2 million and $ 72,000 , respectively, of non-cash interest expense related to the Revolving Credit Facility.

For the nine months ended September 30, 2025 and 2024, we recognized $ 0.4 million and $ 0.2 million, respectively, of non-cash interest expense related to the Revolving Credit Facility.

IIP Life Science Credit Facility

Subsequent to September 30, 2025, on October 3, 2025, our Operating Partnership and IIP Life Science entered into a loan agreement with a federally regulated commercial bank, as agent for the lenders that become party thereto from time to time (the “IIP Life Science Credit Facility”).

Under the IIP Life Science Credit Facility, our Operating Partnership has a revolving line of credit available up to $ 100.0 million until the maturity date on October 3, 2028.

The IIP Life Science Credit Facility includes an accordion feature under which the revolving line of credit may be increased up to an aggregate of $ 135.0 million, under certain conditions, including obtaining additional lender commitments.

The availability of credit at any given time under the IIP Life Science Credit Facility is subject to, among other things, the amount of collateral available and a borrowing base formula based upon the value of eligible investments in certain securities and an eligible loan receivable.

All obligations under the IIP Life Science Credit Facility are secured by substantial assets of the loan parties, including the Company’s investment through IIP Life Science in IQHQ Preferred Stock, the IQHQ Warrant, and the IQHQ Credit Facility.

Borrowings under the IIP Life Science Credit Facility will bear interest on the outstanding daily balance at a rate of interest per annum equal to the greater of (i) the one-month Secured Overnight Financing Rate ("SOFR"), as administered by CME Group Benchmark Administration, plus 2.0 % and (ii) 6.10 %.

The IIP Life Science Credit Facility contains a liquidity covenant and a debt service coverage ratio covenant, which requires that the ratio of the Company’s consolidated EBITDA to debt service costs not be less than 2.0 to 1.0, measured as of the end of each fiscal quarter.

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

by Year Amount

2025 (six months ending December 31) $ —

2025 (three months ending December 31) $ —

Total $ 341,215

Net Income Per Share

Grants of restricted stock and restricted stock units (“RSUs”) of the Company 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.

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 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.

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

The 12,647 shares necessary to settle the Exchangeable Senior Notes on the if-exchanged method basis were dilutive for the nine months ended September 30, 2024, and were included in the computation of diluted earnings per share.

For the three and nine months ended September 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 September 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 Six Months Ended

June 30, June 30,

For the Three Months Ended For the Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

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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 June 30, 2025 and December 31, 2024 (in thousands):

At June 30, 2025 At December 31, 2024

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

At September 30, 2025 At December 31, 2024

Carrying Value Fair Value Carrying Value Fair Value

Investments (1)

Life science investments (1)

$ 100,240 $ 100,240 $ — $ —

Construction loan (2)

$ 22,800 $ 29,555 $ 22,800 $ 28,245

Investments as cash equivalents (3)

$ — $ — $ 45,714 $ 45,714

Notes due 2026 (3)

Notes receivable (4)

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

Construction loan (4)

Investments (5)

$ 5,258 $ 5,258 $ 5,000 $ 5,000

Notes receivable (5)

Notes due 2026 (6)

$ 290,229 $ 288,507 $ 297,865 $ 289,077

(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.

government with an original maturity at the time of purchase of 90 days or less are classified as held-to-maturity, stated at amortized cost and valued using Level 1 inputs.

Investments as cash equivalents also include investments in a money market fund that invests 100 % in U.S.

government securities, which is stated at cost and valued using level 1 inputs.

(3) The fair value is determined based upon Level 2 inputs as the Notes due 2026 were not traded in an active market.

Revolving credit facility (7)

$ 50,000 $ 50,000 $ — $ —

(1) Excludes $ 5.0 million of investments in the IQHQ Preferred Stock and IQHQ Warrant which are carried at cost under the measurement alternative of ASC 321, Investments - Equity Securities .

The investment in the IQHQ Credit Facility is categorized as Level 3 and was valued using a yield analysis, which is typically performed for non-credit impaired loans.

To determine fair value using a yield analysis, a current price is imputed for the loan based upon an assessment of the expected market yield for a similarly structured loan with a similar level of risk.

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 September 30, 2025, the expected market yield used to determine fair value was 14.4 %.

Changes in market yields may change the fair value of the investment into the revolving credit facility.

Generally, an increase in market yields may result in a decrease in the fair value of the investment in the revolving credit facility.

Due to the inherent uncertainty of determining the fair value of a loan that does not have a readily available market value, the fair value of the investment in the revolving credit facility may fluctuate from period to period.

Additionally, the fair value of the investment in the revolving credit facility 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.

(2) The construction loan receivable is categorized as Level 3 and was valued using a yield analysis, which is typically performed for non-credit impaired loans.

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

At each of September 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.

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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.

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

government with an original maturity at the time of purchase of 90 days or less are classified as held-to-maturity, stated at amortized cost and valued using Level 1 inputs.

Investments as cash equivalents also include investments in a money market fund that invests 100 % in U.S.

government securities, which is stated at cost and valued using Level 1 inputs.

(4) 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 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 notes receivable are categorized as Level 3 and were valued using a yield analysis.

At September 30, 2025 and December 31, 2024, the weighted average expected market yields used to determine fair values were 24.4 % and 20.6 %, respectively.

(5) At September 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.

(6) The fair value is determined based upon Level 2 inputs as the Notes due 2026 were not traded in an active market.

(7) The Revolving Credit Facility is categorized as Level 2 and was valued using a discounted cash flow analysis based on significant other observable inputs such as available market information on discount and borrowing rates with similar terms, maturities, and credit ratings.

Changes in discount and borrowing rates may change the fair value of the Revolving Credit Facility.

Additionally, the use of different market assumptions or estimation methods may have a material effect on the estimated fair value.

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

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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 six months ended June 30, 2025 is included in the table below:

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

Stock Weighted-

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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 $ 7.0 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.

Granted 276 $ 54.55

Forfeited (1)

( 600 ) $ 83.61

Balance at September 30, 2025 109,591 $ 80.61

(1) Shares that were forfeited to cover the employees’ tax withholding obligation upon vesting or employee's cessation of employment.

The remaining unrecognized compensation cost of $ 5.7 million for restricted stock awards is expected to be recognized over a weighted-average amortization period of 1.8 years as of September 30, 2025.

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

The following table summarizes our RSU activity for the nine months ended September 30, 2025.

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.

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:

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

Vested and converted to common stock ( 5,779 ) $ 100.10

Forfeited (1)

( 2,901 ) $ 110.88

Balance at September 30, 2025 280,555 $ 104.19

(1) Shares that were forfeited to cover employee's tax withholding obligation upon vesting or employee's cessation of employment.

The remaining unrecognized compensation cost of $ 7.0 million for RSU awards is expected to be recognized over an amortization period of 1.8 years as of September 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.

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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 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.

For the three and nine months ended September 30, 2024, we recognized stock-based compensation expense of $ 1.7 million and $ 5.0 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 consolidated balance sheet as of June 30, 2025 is presented in the table below (in thousands):

2025 (six months ending December 31) $ 263

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 September 30, 2025 is presented in the table below (in thousands):

2025 (three months ending December 31) $ 132

Total future contractual lease payments 720

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Improvement Allowances.

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.

As of September 30, 2025, we had $ 7.8 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.

Life Science Investments.

As of September 30, 2025, we had $ 165.0 million remaining on our commitment to purchase up to $ 170.0 million of IQHQ Preferred Stock, scheduled to be funded in various installments by June 30, 2027, subject to extension options exercisable by IQHQ.

See Note 7 "Life Science Investments" for further details.

Construction Loan.

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.

As of September 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.

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Oral argument took place on June 17, 2025.

On October 15, 2025, the United States Court of Appeals for the Third Circuit issued an opinion and judgment affirming the trial court’s dismissal of the Second Amended Class Action Complaint.

The judgment allowed the appellant to file a petition for rehearing on or before October 29, 2025.

On October 29, 2025, the appellant filed a petition for rehearing.

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

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District Court for the District of Maryland.

The lawsuit was purportedly brought on behalf of purchasers of our common stock and alleges that we and certain of our officers made false or misleading statements regarding our business in violation of Section 10(b) of the Exchange Act, SEC Rule 10b-5, and Section 20(a) of the Exchange Act.

The lawsuit was purportedly brought on behalf of purchasers of our common stock and alleges that we and certain of our officers made false or misleading statements

regarding our business in violation of Section 10(b) of the Exchange Act, SEC Rule 10b-5, and Section 20(a) of the Exchange Act.

According to the filed 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 27, 2024, and December 19, 2024.

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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.

On August 22, 2025, defendants moved to dismiss the Consolidated Class Action Complaint, and on October 21, 2025, plaintiff responded with their opposition to defendants’ motion to dismiss.

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

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1:23-cv-00737-GLR and 1:23-cv-01513-GLR with case number 1:23-cv-00737-GLR as the lead case and kept the stay in place.

The consolidated case remains stayed as Case Number 24-C-22-003312.

This derivative action relates to the same allegations as those made in the Mallozzi class action, detailed above.

After the United States Court of Appeals for the Third Circuit affirmed dismissal of the Mallozzi class action on October 15, 2025, plaintiffs in the consolidated action filed

a Consent Motion for Voluntary Dismissal on October 20, 2025.

On October 21, 2025, the United States Court for the District of Maryland granted the dismissal.

On May 9, 2024, a fifth derivative action lawsuit was filed against the Company and certain of its officers and directors.

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This derivative action also relates to the same allegations as those made in the Giraudon class action, detailed above.

On August 14, 2025, a derivative action lawsuit was filed against the Company and certain of its officers and directors.

The case was named Joann Crepaz, derivatively on behalf of Innovative Industrial Properties, Inc.

Alan Gold, David Boyle, Mary Curran, Catherine Hastings, Gary Kreitzer, Ben Regin, Scott Shoemaker, David Smith, Paul Smithers, David Stecher, and Innovative Industrial Properties, Inc.

, Case Number C-03-CV-25-003997, and was filed in the Circuit Court for Baltimore County, Maryland.

The lawsuit asserts putative derivative claims for breach of fiduciary duty and unjust enrichment against the directors and certain officers of the Company.

The plaintiff is seeking an undetermined amount of damages, reform, restitution, and attorneys’ fees and costs.

Plaintiff and Defendants in this action filed a Joint Motion and Proposed Order of Consolidation on September 18, 2025, seeking to consolidate this case with the Ramos case (detailed below) and with this case, C-03-CV-25-003997, as the lead case, which was granted on October 23, 2025.

This derivative action relates to the same allegations as those made in the Giraudon class action, detailed above.

On August 21, 2025, a derivative action lawsuit was filed against the Company and certain of its officers and directors.

The case was named Edward Ramos, derivatively on behalf of Innovative Industrial Properties, Inc.

Alan Gold, David Boyle, Mary Curran, Catherine Hastings, Gary Kreitzer, Ben Regin, Scott Shoemaker, David Smith, Paul Smithers, David Stecher, and Innovative Industrial Properties, Inc ., Case Number C-03-CV-25-004083, and was filed in the Circuit Court for Baltimore County, Maryland.

The lawsuit asserts putative derivative claims for breach of fiduciary duty and unjust enrichment against the directors and certain officers of the Company.

The plaintiff is seeking an undetermined amount of damages, reform, restitution, and attorneys’ fees and costs.

Plaintiff and Defendants in this action filed a Joint Motion and Proposed Order of Consolidation on September 18, 2025, seeking to consolidate this case with the Crepaz case (detailed above) and with C-03-CV-25-003997 (Crepaz) as the lead case, which was granted on October 23, 2025.

This derivative action relates to the same allegations as those made in the Giraudon class action, detailed above.

The Company intends to vigorously defend each of these lawsuits.

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Subsequent Events

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.

IIP Life Science Credit Facility

On October 3, 2025, our Operating Partnership and IIP Life Science entered into a loan agreement with a federally regulated commercial bank, as agent for the lenders that become party thereto from time to time.

Under the IIP Life Science Credit Facility, our Operating Partnership has a revolving line of credit available up to $ 100.0 million until the maturity date on October 3, 2028.

Refer to Note 8 "— IIP Life Science Credit Facility" for additional details.

As of October 31, 2025, outstanding borrowings under our IIP Life Science Credit Facility were $ 52.5 million.

Revolving Credit Facility

On October 9, 2025, the Company drew an additional $ 30.0 million on our Revolving Credit Facility.

As of October 31, 2025, outstanding borrowings under our Revolving Credit Facility were $ 80.0 million.

Life Science Investments

On October 31, 2025, the Company completed an additional purchase of an aggregate 45,000 shares of IQHQ Preferred Stock for a total investment of $ 45.0 million.

As a result of this transaction, the Company's total investment in IQHQ Preferred Stock increased to 50,000 shares having an aggregate purchase price of $ 50.0 million.

In October 2025, we executed a new lease with a tenant at our property located at 19533 McLane Street in Palm Springs, California.

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