What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-04 compared with 2025-08-07 · 215 added, 139 removed, 337 unchanged (51% of the section changed)

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the estimated growth in and evolving market dynamics of the regulated cannabis market;

the satisfaction of closing conditions under the Securities Purchase Agreement and the RCF (each as defined below);

anticipated funding sources for our investment in Preferred Stock of IQHQ REIT (each as defined below);

the demand for regulated cannabis cultivation and processing facilities;

anticipated funding sources for our investment in IQHQ Preferred Stock (as defined below);

defaults on our investments in real estate-related assets, such as the IQHQ Credit Facility and IQHQ Preferred Stock (as defined below);

our ability to identify, acquire, or profitably operate life science properties;

market dynamics in the life science sector;

decreased economic activity due to fluctuations in trade policies, tariffs, and related government actions;

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The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this report.

In addition, we discussed a number of material risks in our Annual Report on Form 10-K for the year ended December 31, 2024 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

In addition, we discussed a number of material risks in our Annual Report on Form 10-K for the year ended December 31, 2024, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 and in Part II, "Item 1A.

Risk Factors" included in this report.

Those risks continue to be relevant to our performance and financial condition.

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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 (the “Operating Partnership”).

We are an internally-managed REIT focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated cannabis facilities.

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 are an internally-managed real estate investment trust (“REIT”) focused on the acquisition, ownership and management of specialized industrial and commercial properties in the United States.

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 cannabis properties through sale-leaseback transactions and third-party purchases.

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.

Outside of the cannabis sector, our leases may include different lease structures that do not require tenants to assume all property-related expenses.

In addition to our cannabis-related real estate portfolio, we also have investments in the life science industry and intend to actively pursue acquisitions of properties within that sector as a key component of our growth strategy.

We may continue expanding our investment activities to include joint ventures, debt or mezzanine financing, preferred or joint venture equity interests, and interests in other real estate funds or REITs.

We were incorporated in Maryland on June 15, 2016.

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We are the sole general partner of our Operating Partnership and own, directly or through subsidiaries, 100% of the limited partnership interests in our Operating Partnership.

As of June 30, 2025, we had 23 full-time employees.

As of June 30, 2025, we owned 108 properties comprising 9.0 million square feet (including 588,000 rentable square feet under development/redevelopment) in 19 states.

As of June 30, 2025, we had invested $2.5 billion in the aggregate (consisting of purchase price and funding of draws for construction and improvements submitted by tenants, if any, but excluding transaction costs) and had committed an additional $11.6 million to fund draws to certain tenants and vendors for improvements at our properties.

Of the $11.6 million committed to fund draws to certain tenants and vendors for improvements at our properties, $5.6 million was incurred but not funded as of June 30, 2025.

Of these 108 properties, we include 105 properties in our operating portfolio, which were 98.6% leased as of June 30, 2025, with a weighted-average remaining lease term of 13.1 years.

We do not include in our operating portfolio the following properties (all of which were under development/redevelopment as of June 30, 2025, and together are expected to comprise 491,000 rentable square feet upon completion of development/redevelopment):

As of September 30, 2025, we had 23 full-time employees.

As of September 30, 2025, we owned 112 properties comprising 9.0 million square feet (including 483,000 rentable square feet under development/redevelopment) in 19 states.

As of September 30, 2025, we had invested $2.5 billion in the aggregate (consisting of purchase price and funding of draws for construction and improvements submitted by tenants, if any, but excluding transaction costs) and had committed an additional $7.8 million to fund draws to certain tenants and vendors for improvements at our properties.

Of the $7.8 million committed to fund draws to certain tenants and vendors for improvements at our properties, $4.3 million was incurred but not funded as of September 30, 2025.

Of these 112 properties, we include 109 properties in our operating portfolio, which were 95.8% leased as of September 30, 2025, with a weighted-average remaining lease term of 12.9 years.

We do not include in our operating portfolio the following properties (all of which were under development/redevelopment as of September 30, 2025, and together are expected to comprise 491,000 rentable square feet upon completion of development/redevelopment):

• 63795 19th Avenue in Palm Springs, California (pre-leased);

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As we have discussed in this and previous filings with the SEC, these challenges have negatively impacted the ability of certain of our tenants to make their lease payments on the properties they lease from us.

In light of these industry conditions and their impact on our existing portfolio, we may from time to time modify or expand our growth strategy to include a broader range of real estate and real estate-related investments, such as joint ventures, debt or mezzanine financing, preferred or joint venture equity interests, or interests in other real estate funds or REITs.

In light of these industry conditions and their impact on our existing portfolio, we have expanded our growth strategy to include a broader range of real estate and real estate-related investments.

See the subsection below entitled “— Recent Developments.”

In March 2025, the Company launched a strategic initiative aimed at improving long-term financial performance by seeking to refresh a substantial portion of its tenant base with more financially viable, long-term tenants.

As part of this initiative, the Company declared certain tenants and their affiliates in default for failure to pay contractual rent in full, including 4Front Ventures Corp., Gold Flora, LLC, and TILT Holdings Inc.

These tenants , which collectively accounted for approximately 11.4% of the Company’s contractual rent due as of June 30, 2025, owed $13.3 million, $2.8 million and $3.6 million, respectively, in base rent, property management fees, and estimated tax and insurance payments as of such date.

The Company is actively pursuing its rights under these leases, which may include init iating eviction proceedings.

Gold Flora and 4Front Ventures are both currently operating under receivership and 4Front Ventures has filed for bankruptcy protection in Canada.

These tenants, which collectively accounted

for approximately 11.4% of the Company’s annualized contractual rent due as of September 30, 2025, owed $18.0 million, $4.6 million and $4.4 million, respectively, in base rent, property management fees, and estimated tax and insurance payments as of such date.

The Company is actively pursuing its rights under these leases, which may include initiating eviction proceedings.

Gold Flora and 4Front Ventures are both currently operating under receivership and 4Front Ventures has filed for bankruptcy protection in Canada and for voluntary receivership in Massachusetts and Illinois.

Therefore, any actions with respect to their leases may involve additional legal processes and delays.

In July 2025, we terminated the lease with an affiliate of Gold Flora for our property located in Palm Springs, California, which represents one of three leases with affiliates of Gold Flora.

During the three months ended September 30, 2025, the Company declared additional defaults on its leases with two tenants for failure to pay rent in full.

These leases represent, in the aggregate, less than 2% of our total rental revenues for the three and nine months ended September 30, 2025.

Additionally, the Company previously declared a default under a secured promissory note in the aggregate principal amount of $16.1 million (the “MIH Note”).

As a result of the default, the full principal and accrued interest under the MIH Note, wh ich amounted to $17.3 million as of Ju ne 30, 2025, became immediately due and payable.

The MIH Note was

issued to the Company by the purchaser of four properties in California.

The MIH Note is secured by such four properties.

The Company is pursuing its rights under the MIH Note, which may include foreclosure on the four properties securing the loan.

The MIH Note was issued to the Company by the purchaser of four properties in California, and the MIH Note is secured by such four properties.

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

The Company previously entered into leases with PharmaCann Inc.

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The Company re-leased the 205,000 square foot Michigan property to Berry Green in April 2025 and is seeking to re-lease the property located in Massachusetts.

As previously disclosed, PharmaCann defaulted on its rent obligations under the remaining nine of these leas es, covering properties in New York, Illinois, Pennsylvania, Ohio and Colorado, with total amounts due of $12.8 million as of June 30, 2025, representing approximately 11.5% of the Company’s contractual rent due as of such date.

The Compan y is in continuing discussions with PharmaCann regarding these leases and expects to enforce its rights under the leases aggressively, which may include, but is not limited to, commencing eviction proceedings as the Company deems necessary.

As previously disclosed, PharmaCann defaulted on its rent obligations under the remaining nine of these leases, covering properties in New York, Illinois, Pennsylvania, Ohio and Colorado, with total amounts due of $21.4 million as of September 30, 2025.

These properties collectively accounted for approximately 11.4% of the Company’s annualized contractual rent due as of such date.

The Company recovered possession of one of its retail properties in Colorado through a default judgment, and PharmaCann has paid and continues to pay full rent on the remaining four retail properties located in Colorado.

The Company has commenced litigation against PharmaCann and is actively seeking possession of the properties located in New York, Illinois, Pennsylvania, and Ohio.

The Company continues to enforce its rights under these leases and intends to pursue all remedies available under the lease agreements and applicable law.

See Note 6 “Investments in Real Estate” in the notes to our consolidated financial statements for further information regarding our leases with PharmaCann and the MIH Note described above.

Because substantially all of our leases are triple net, our tenants are generally responsible for the maintenance, insurance, and property taxes associated with the properties they lease from us.

We expect to incur some property-level operating costs from time to time, however, in periods during which properties that become vacant are being remarketed or re-positioned.

In addition, we may recognize an expense for certain property costs, such as insurance premiums and real estate taxes billed in arrears, if we believe the tenant is likely to vacate the property before making payment on those obligations or may be unable to pay such costs in a timely manner.

Property costs are generally not significant to our operations, but the amount of property costs can vary quarter to quarter based on the number of property vacancies and whether we have any underperforming properties.

We may advance certain property costs on behalf of our tenants but expect that the majority of these costs will be reimbursed by the tenant and do not anticipate that they will be significant to our operations.

In addition, for properties that are not leased and are under development or redevelopment, we may make significant additional investments in these properties in order to get them ready for their intended use and to re-lease them.

For the three and nine months ended September 30, 2025, property expenses included $0.9 million and $2.3 million, respectively, of non-reimbursed expenses related to operating properties that were not leased.

Recent Developments

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”).

Investment in IQHQ

As previously disclosed, 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”) and certain of IQHQ REIT’s affiliates.

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 Preferred Stock investment is expected to be funded in multiple tranches between the third quarter of 2025 and the second quarter of 2027, subject to extension options exercisable by IQHQ REIT.

The Company expects to fund the RCF with a combination of cash on hand and draws from the Company’s Revolving Credit Facility (as defined below).

The Company expects to fund the Preferred Stock investment with cash on hand, draws from the Company’s Revolving Credit Facility and potential proceeds from future financing activities.

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.

(i) purchase up to $170 million of 15.0% Series G-1 Cumulative Redeemable Preferred Stock of IQHQ REIT (the “IQHQ 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 IQHQ 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 “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, our Operating Partnership assigned its rights and obligations under the Securities Purchase Agreement to IIP Life Science Investments LLC (“IIP Life Science”), a wholly owned subsidiary of the Operating Partnership.

Following the assignment, IIP Life Science completed the initial closing of the Company’s investment in preferred equity of IQHQ REIT, purchasing 5,000 shares of IQHQ Preferred Stock for $5.0 million.

On October 31, 2025, the Company purchased an additional 45,000 shares of IQHQ Preferred Stock for $45.0 million, resulting in a total investment of 50,000 shares with an aggregate purchase price of $50.0 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, both calculated on the Base Amount (as defined in the Securities Purchase Agreement), 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 REIT 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 REIT’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 REIT 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 expected 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 REIT.

In connection with the initial closing, IIP Life Science also received a warrant (the “IQHQ Warrant”) to purchase common equity units of IQHQ Holdings, LP, a Delaware limited partnership and the parent entity of IQHQ REIT.

The IQHQ Warrant is exercisable for a number of common equity units representing 1.5% of the fully diluted outstanding common equity of IQHQ Holdings, LP (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, IIP Life Science obtained the right to appoint one voting member to IQHQ REIT’s board of directors, subject to certain ownership thresholds, and designated Paul Smithers, the Company’s CEO, for this role.

IIP Life Science also entered into a Right of First Offer Letter with IQHQ REIT and its affiliates, granting the Company a contractual right of first offer on certain real estate asset sales of IQHQ REIT and certain of its affiliates, which the Company expects will support the execution of its strategy to acquire life science properties.

IQHQ Revolving Credit Facility Investment

In connection with the initial closing under the Securities Purchase Agreement, on September 30, 2025, IIP Life Science became a lender under the IQHQ Credit Facility.

Pursuant to the terms of the facility, IIP Life Science committed to provide a $100.0 million loan to the operating partnership of IQHQ REIT, which was fully funded on that same date.

As a result of IIP Life Science’s participation, the aggregate amount funded under the IQHQ Credit Facility by all lender parties increased to $400.0 million.

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 term of three years from the closing date, 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 REIT and secured by a first priority pledge of IQHQ, LP’s majority ownership interest in IQHQ Fenway Center, LLC, subordinated to certain construction financing.

IQHQ, LP is the operating partnership of IQHQ REIT.

IIP Life Science 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, LP is required to prepay loans with proceeds from certain asset or equity sales and may voluntarily prepay or reduce commitments subject to specified conditions.

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 (the “IIP Life Science Credit Facility” and together with the Revolving Credit Facility, the “Credit Facilities”).

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.

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

Factors Impacting Our Operating Results

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These conditions have already adversely impacted the ability of certain of our tenants to satisfy their lease obligations and, if such conditions persist or deteriorate further, we expect that additional tenants may default under their leases and we may be unable to re-lease those properties on favorable terms or at all.

These tenant-related challenges are currently having a material adverse effect on the Company’s financial condition, results of operations, and cash flows.

See “—Results of Operations—Comparison of the three and six months ended June 30, 2025 and 2024—Rental Revenues” for more information.

These tenant-related challenges are currently having a material adverse

effect on the Company’s financial condition, results of operations, and cash flows.

See “—Results of Operations—Comparison of the three and nine months ended September 30, 2025 and 2024—Rental Revenues” for more information.

The full extent and duration of these challenges remain subject to significant uncertainty.

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These added costs are especially impactful to our tenants operating in the regulated cannabis industry, which already faces heightened compliance, regulatory and tax burdens compared to other sectors.

In addition, escalating geopolitical tensions

and retaliatory trade measures have disrupted global supply chains, which may lead to sourcing challenges, longer lead times, and increased costs for capital projects, including the development and redevelopment of our properties.

In addition, escalating geopolitical tensions and retaliatory trade measures have disrupted global supply chains, which may lead to sourcing challenges, longer lead times, and increased costs for capital projects, including the development and redevelopment of our properties.

These factors may result in cost overruns or delays in the development or redevelopment of our properties and may adversely affect the timing and commencement of operations on certain of our tenants’ projects.

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Significant Tenants and Concentrations of Risk

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

As of September 30, 2025, we owned 112 properties located in 19 states leased to 36 tenants.

Many of our tenants are tenants at multiple properties.

We seek to manage our portfolio-level risk through geographic diversification and by minimizing dependence on any single property or tenant.

At June 30, 2025, 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 at June 30, 2025.

See Note 2 “Concentration of Credit Risk” in the notes to our consolidated financial statements for further information regarding the tenants in our portfolio that represented the largest percentage of our total rental revenues for the three and six months ended June 30, 2025.

At September 30, 2025, 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 at September 30, 2025.

See Note 2 “Concentration of Credit Risk” in the notes to our

consolidated financial statements for further information regarding the tenants in our portfolio that represented the largest percentage of our total rental revenues for the three and nine months ended September 30, 2025.

Competitive Environment

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Investments in Real Estate

See Note 6 “Investment in Real Estate” in the notes to the consolidated financial statements for information regarding our investments in real estate activity and property portfolio activity during the six months ended June 30, 2025.

Comparison of the Three and Six Months Ended June 30, 2025 and 2024

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

The following table sets forth the results of our operations (in thousands):

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

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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)

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Rental Revenues.

Rental revenues for the three months ended June 30, 2025 decreased by $16.4 million, or 21%, to $62.9 million, compared to $79.3 million for the three months ended June 30, 2024.

The decrease was primarily driven by tenant defaults totaling $15.3 million related to properties leased to PharmaCann, Gold Flora, TILT and 4Front.

In addition, there was also a decrease of $1.3 million related to properties that have been taken back or sold, a $3.9 million decrease from a one-time disposition-contingent lease termination fee that was collected during the three months ended June 30, 2024 in connection with the sale of a property in California, and a $0.6 million decrease in tenant reimbursement revenue primarily due to tenant defaults.

These decreases were partially offset by a $1.6 million increase from the two properties acquired in 2024 and one property acquired in 2025, a $1.5 million increase from new leases on five existing properties and a $1.6 million increase from annual contractual rent escalations.

For the three months ended June 30, 2025, we applied $18,000 of security deposits for payment of rent on a property leased to Emerald, which was sold in April 2025.

For the three months ended June 30, 2024, we applied $0.6 million security deposits for payment of rent on three properties leased to TILT and Temescal.

Rental revenues for the six months ended June 30, 2025 decreased by $19.6 million, or 13%, to $134.6 million, compared to $154.2 million for the six months ended June 30, 2024.

The decrease was primarily driven by tenant defaults totaling $20.9 million related to properties leased to PharmaCann, Gold Flora, TILT and 4Front.

In addition, there was also a decrease of $2.7 million related to properties that have been taken back or sold, a $3.9 million decrease from a one-time disposition-contingent lease termination fee that was collected during the six months ended June 30, 2024 in connection with the sale of our property in Los Angeles, California, and a $0.6 million decrease in tenant reimbursement revenue primarily due to tenant defaults.

Rental revenues for the three months ended September 30, 2025 decreased by $11.8 million, or 15%, to $64.3 million, compared to $76.1 million for the three months ended September 30, 2024.

The decrease was primarily driven by tenant defaults, resulting in a decrease of $14.9 million related to properties leased to PharmaCann, Gold Flora, TILT and 4Front.

In addition, there was also a decrease of $0.5 million related to properties that have been taken back or sold, and a decrease of $0.9 million in tenant reimbursement revenue primarily due to tenant defaults.

These decreases were partially offset by a $1.4 million increase from the two properties acquired in 2024 and one property acquired in 2025, a $1.6 million increase from new leases on four existing properties and a $1.6 million increase from annual contractual rent escalations.

For the three months ended September 30, 2025, we applied $0.8 million of security deposits for payment of rent on two properties leased to Verdant and a Sacramento tenant.

For the three months ended September 30, 2024, we applied $1.4 million of security deposits for payment of rent on six properties leased to 4Front, TILT and Emerald.

Rental revenues for the nine months ended September 30, 2025 decreased by $31.4 million, or 14%, to $198.9 million, compared to $230.2 million for the nine months ended September 30, 2024.

The decrease was primarily driven by tenant defaults, resulting in a decrease of $37.8 million related to properties leased to PharmaCann, Gold Flora, TILT, 4Front and Temescal.

In addition, there was also a decrease of $1.1 million related to properties that have been taken back or sold, a $3.9 million decrease from a one-time disposition-contingent lease termination fee that was collected during the nine months ended September 30, 2024 in connection with the sale of our property in Los Angeles, California, and a $1.7 million decrease in tenant reimbursement revenue primarily due to tenant defaults.

These decreases were partially offset by a $4.5 million increase from the two properties acquired in 2024 and the one property acquired in 2025, a $4.0 million increase from new leases on five existing properties and a $4.6 million increase from annual contractual rent escalations.

For the six months ended June 30, 2025, we applied $5.8 million of security deposits for payment of rent on properties leased to PharmaCann, Gold Flora, TILT, Sozo and Emerald.

For the six months ended June 30, 2024, we applied $0.6 million of security deposits for payment of rent on properties leased to Temescal and TILT.

For the nine months ended September 30, 2025, we applied $6.6 million of security deposits for payment of rent on properties leased to PharmaCann, Gold Flora, TILT, Sozo, Emerald, Verdant and a Sacramento tenant.

For the nine months

ended September 30, 2024, we applied $2.0 million of security deposits for payment of rent on properties leased to 4Front, Temescal, TILT and Emerald.

Other Revenues.

Other revenues for the three and six months ended June 30, 2025 and 2024 consisted of interest revenue related to leases for property acquisitions that did not satisfy the requirements for sale-leaseback accounting.

Other revenues for three and six months ended June 30, 2025 decreased by $0.5 million and $1.0 million, respectively, compared to the three and six months ended June 30, 2024, primarily due to non-collection of rent related to one property leased to 4Front.

Other revenues primarily consisted of interest revenue related to leases for property acquisitions that did not satisfy the requirements for sale-leaseback accounting.

Other revenues for the three and nine months ended September 30, 2025 decreased by $0.1 million and $1.1 million, respectively, compared to the three and nine months ended September 30, 2024, primarily due to non-collection of rent related to one property leased to 4Front.

Property Expenses.

Property expenses for the three months ended June 30, 2025 were $6.9 million, reflecting no material change compared to the three months ended June 30, 2024.

The property expenses for six months ended June 30, 2025 increased by $0.6 million to $14.2 million, compared to $13.6 million for the six months ended June 30, 2024.

The increase was primarily due to additional investment in existing properties, which resulted in higher property taxes that we paid for our properties, which was partially offset by a decrease in insurance expense due to lower premiums on the master policy renewed in August 2024.

Property expenses for the three months ended September 30, 2025 increased by $0.7 million to $8.0 million, compared to $7.3 million for the three months ended September 30, 2024.

The property expenses for the nine months ended September 30, 2025 increased by $1.3 million to $22.2 million, compared to $20.9 million for the nine months ended September 30, 2024.

The increase was primarily due to additional investment in existing properties, which resulted in higher property taxes that we paid for our properties, as well as properties we have taken back possession of from defaulted tenants, which resulted in higher property expenses related to non-leased properties.

The increase was partially offset by a decrease in insurance expense due to lower premiums on the master property insurance policy renewed in August 2024.

Property expenses related to leased properties are generally reimbursable to us by tenants under the terms of the leases.

General and Administrative Expense.

General and administrative expense for the three months ended June 30, 2025 decreased by $1.1 million to $8.6 million, compared to $9.7 million for the three months ended June 30, 2024.

General and administrative expense for the six months ended June 30, 2025 decreased by $2.1 million to $17.1 million, compared to $19.2 million for the six months ended June 30, 2024.

General and administrative expense for the three months ended September 30, 2025 decreased by $0.6 million to $8.7 million, compared to $9.3 million for the three months ended September 30, 2024.

General and administrative expense for the nine months ended September 30, 2025 decreased by $2.8 million to $25.8 million, compared to $28.6 million for the nine months ended September 30, 2024.

The decrease in general and administrative expense in both periods was primarily due to lower stock-based compensation expense driven by PSUs granted in 2022 that were forfeited on December 31, 2024 as they did not meet the performance thresholds.

The non-cash stock based compensation for employees and directors for the three and six months ended June 30, 2025 decreased by $1.7 million and $4.0 million, respectively, to $2.7 million and $4.7 million, compared to $4.4 million and $8.7 million for the three and six months ended June 30, 2024.

The decrease was partially offset by an increase in legal, consultant and payroll expenses during the three and six months ended June 30, 2025.

The non-cash stock based compensation for employees and directors for the three and nine months ended September 30, 2025 decreased by $1.6 million and $5.6 million, respectively, to $2.7 million and $7.4 million, compared to $4.3 million and $13.0 million for the three and nine months ended September 30, 2024.

The decrease was partially offset by an increase in legal, consultant and payroll expenses during the three and nine months ended September 30, 2025.

Depreciation and Amortization Expense.

Depreciation and amortization expense for the three months ended June 30, 2025 increased by $1.0 million to $18.5 million, compared to $17.5 million for the three months ended June 30, 2024.

Depreciation and amortization expense for the six months ended June 30, 2025 increased by $2.3 million to $36.9 million, compared to $34.6 million for the six months ended June 30, 2024.

Depreciation and amortization expense for the three months ended September 30, 2025 increased by $0.7 million to $18.6 million, compared to $17.9 million for the three months ended September 30, 2024.

Depreciation and amortization expense for the nine months ended September 30, 2025 increased by $2.9 million to $55.5 million, compared to $52.6 million for the nine months ended September 30, 2024.

The increase in depreciation and amortization expense was primarily related to depreciation on properties that we acquired in 2024, one property we acquired in February 2025 and the placement into service of construction and improvements at certain of our properties.

Impairment Loss on Real Estate.

Impairment loss on real estate of $3.5 million for the six months ended June 30, 2025 is related to one of our properties located in Palm Springs, California which was sold in June 2025.

Impairment loss on real estate of $3.5 million for the nine months ended September 30, 2025 is related to one of our properties located in Palm Springs, California which was sold in June 2025.

Loss on Sale of Real Estate.

Amount relates to the sale of property in Los Angeles, California (see Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information).

Interest Income.

Interest income for the three and six months ended June 30, 2025 decreased by $2.4 million and $2.6 million, respectively, to $1.6 million and $3.2 million, compared to $4.0 million and $5.8 million for the three and six months ended June 30, 2024.

The decrease was partially due to having less interest-bearing investments and lower rates earned on those investments during the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024.

The decrease of interest income was also driven by the lower cash interest received on our construction loan 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”).

Cash interest received on our Construction Loan for the three and six months ended June 30, 2025 were $0.8 million and $1.4 million, respectively, compared to $2.1 million in both the three and six months ended June 30, 2024.

Interest and Other Income.

Interest and other income for the three months ended September 30, 2025 increased by $1.7 million to $4.4 million, compared to $2.7 million for the three months ended September 30, 2024.

The increase was primarily due to interest payments on the MIH Note, which were previously recognized as a deposit liability on our consolidated balance sheets but was recognized as interest and other income in September 2025 in connection with the termination of the note.

Interest and other income for the nine months ended September 30, 2025 decreased by $0.8 million to $7.6 million, compared to $8.4 million for the nine months ended September 30, 2024.

The decrease was primarily due to (1) having less interest-bearing investments and lower rates earned on those investments;

(2) less cash interest received on our construction loan 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”);

and (3) partially offset by interest payments on the MIH Note, which were previously recognized as a deposit liability on our consolidated balance sheets but was recognized as interest and other income in September 2025 in connection with the termination of the note.

Cash interest received on our Construction Loan for the nine months ended September 30, 2025 was $2.3 million, compared to $3.2 million for the nine months ended September 30, 2024.

Interest Expense.

Interest expense primarily consists of interest on our Notes due 2026.

Interest expense for the three and six months ended June 30, 2025 increased by $0.1 million and $0.2 million, respectively, to $4.4 million and $8.9 million compare to $4.3 million and $8.7 million for the three and six months ended June 30, 2024.

The increase was primarily due to an increase in non-cash interest expense related to the Revolving Credit Facility and a decrease in the

amount of interest capitalized for both three and six months ended June 30, 2025.

Interest expense for the three and nine months ended September 30, 2025 increased by $0.1 million and $0.4 million, respectively, to $4.5 million and $13.5 million compared to $4.4 million and $13.1 million for the three and nine months ended September 30, 2024.

The increase was primarily due to an increase in interest expense related to the Revolving Credit Facility and a decrease in the amount of interest capitalized for both three and nine months ended September 30, 2025.

The increase was partially offset by a decrease in interest expense on our Notes due 2026 as we made an early partial repayment in February 2025, reducing the outstanding balance from $300 million to $291.2 million.

Comparison of the Six Months Ended June 30, 2025 and 2024 (in thousands)

Six Months Ended June 30,

Comparison of the Nine Months Ended September 30, 2025 and 2024 (in thousands)

Nine Months Ended September 30,

2025 2024 Change

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Operating Activities

Cash flows provided by operating activities for the six months ended June 30, 2025 and 2024 were $102.7 million and $135.8 million, respectively.

Cash flows provided by operating activities for the nine months ended September 30, 2025 and 2024 were $148.3 million and $200.6 million, respectively.

Cash flows provided by operating activities were generally from contractual rent and tenant reimbursements from our properties, partially offset by our general and administrative expense, interest expense, property expenses in excess of tenant reimbursements and property expenses at properties that were not leased.

The decrease in cash flows provided by operating activities for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to lower net income and the application of $5.8 million of security deposits for contractual rent due to tenant defaults.

Cash flows provided by operating activities for the six months ended June 30, 2024 also included a $3.9 million disposition-contingent lease termination fee that was received concurrently with the sale of our property in Los Angeles, California.

The decrease in cash flows provided by operating activities for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to lower net income and the application of $6.6 million of security deposits for contractual rent due to tenant defaults.

Cash flows provided by operating activities for the nine months ended September 30, 2024 also included a $3.9 million disposition-contingent lease termination fee that was received concurrently with the sale of our property in Los Angeles, California.

Investing Activities

Cash flows used in investing activities for the six months ended June 30, 2025 was $22.9 million, of which $24.4 million was related to investments in real estate and funding of draws for improvement and construction funding at our properties, $0.3 million was related to net purchases and maturities of short-term investments, partially offset by $1.8 million in proceeds related to the sale of our Palm Springs, California property.

Cash flows used in investing activities for the six months ended June 30, 2024 were $58.8 million, of which $50.0 million was related to investments in real estate and funding of draws for improvement and construction funding at our properties, $17.9 million was related to net purchases and maturities of short-term investments, and was partially offset by $9.1 million in proceeds related to the sale of our Los Angeles, California property.

Cash flows used in investing activities for the nine months ended September 30, 2025 were $132.6 million, of which $105.2 million was related to investments in life science financial instruments, $28.8 million was related to investments in real estate and funding of draws for improvement and construction funding at our properties, $0.3 million was related to net purchases and maturities of short-term investments, partially offset by $1.8 million in proceeds related to the sale of our Palm Springs, California property.

Cash flows used in investing activities for the nine months ended September 30, 2024 were $52.4 million, of which $58.7 million was related to investments in real estate and funding of draws for improvement and construction funding at our properties, $2.8 million was related to net purchases and maturities of short-term investments, and was partially offset by $9.1 million in proceeds related to the sale of our Los Angeles, California property.

Financing Activities

Net cash used in financing activities of $126.4 million during the six months ended June 30, 2025 was due to dividend payments of $110.1 million to common and preferred stockholders, partial principal payment on the Notes due 2026 of $8.7 million, $0.7 million related to net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees, and $20.1 million related to repurchase of common stock, partially offset by $13.2 million in net proceeds from the issuance of our Series A Preferred Stock pursuant to our ATM Program.

Net cash used in financing activities of $97.8 million during the six months ended June 30, 2024 was the result of $11.8 million in net proceeds from the issuance of our common stock, offset by dividend payments of $104.1 million to common and preferred stockholders, principal payment on the Exchangeable Senior Notes of $4.4 million, and $1.0 million related to net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees and payment of deferred financing costs.

Net cash used in financing activities of $125.3 million during the nine months ended September 30, 2025 was primarily due to dividend payments of $164.7 million to common and preferred stockholders, partial principal payment on the Notes due 2026 of $8.7 million, $0.9 million related to net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock or conversion of vested RSUs to common stock for certain employees, and $20.1 million related to repurchase of common stock, partially offset by a $50.0 million draw on our Revolving Credit Facility and $19.1 million in net proceeds from the issuance of our Series A Preferred Stock pursuant to our ATM Program.

Net cash used in financing activities of $142.8 million during the nine months ended September 30, 2024 was primarily the result of dividend payments of $158.7 million to common and preferred stockholders and a principal payment on the Exchangeable Senior Notes of $4.4 million, and $1.1 million related to net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees and payment of deferred financing

costs, partially offset by $11.8 million in net proceeds from the issuance of our common stock and $9.6 million in net proceeds from the issuance of our Series A Preferred Stock pursuant to our ATM Program.

Liquidity and Capital Resources

Sources and Uses of Cash

Our principal future uses of cash and cash equivalents include the acquisition of additional properties and other investments (including the completion of our investment in IQHQ Preferred Stock), associated acquisition and improvement costs, non-reimbursed expenses associated with unleased properties, operating and administrative expenses, scheduled debt service and repayments, and the payment of dividends to holders of our Common Stock and Preferred Stock, as well as any future series of preferred stock we may issue.

As of September 30, 2025, we had cash and cash equivalents of $36.7 million.

Liquidity is a measure of our ability to meet potential cash requirements.

We derive substantially all of our revenues from the leasing of our properties and collecting rental income, which includes operating expense reimbursements, based on contractual arrangements with our tenants.

This source of revenue represents our primary source of liquidity to fund the acquisition of additional properties, the development and redevelopment of existing properties, dividends to our stockholders, obligations under our Notes due 2026, repayment of borrowings and interest payments under our Revolving Credit Facility, general and administrative expenses, property development and redevelopment activities, property operating expenses and other expenses incurred related to managing our existing portfolio and investing in additional properties.

We derive substantially all of our revenues from leasing our properties and collecting rental income, which includes operating expense reimbursements, based on contractual arrangements with our tenants.

This source of revenue represents our primary source of liquidity to fund the acquisition of additional properties, the development and redevelopment of existing properties, dividends to our stockholders, scheduled debt service under our Notes due 2026, repayment of borrowings and interest payments under our Credit Facilities, general and administrative expenses, property development and redevelopment activities, property operating expenses and other expenses incurred related to managing our existing portfolio and investing in additional properties.

Because substantially all of our leases are triple net, our tenants are generally responsible for the maintenance, insurance and property taxes associated with the properties they lease from us.

If a tenant defaults on one of our leases or the lease term expires with no tenant renewal, we would incur property costs not paid by the tenant during the time it takes to re-lease or sell the property.

As of June 30, 2025, we owned 108 properties.

Of these properties, the 105 properties in our operating portfolio were 98.6% leased, with a weighted-average remaining lease term of 13.1 years.

We expect to incur some property-level operating costs from time to time in periods during which properties that become vacant are being remarketed or re-positioned.

For the three and six months ended June 30, 2025, property expenses included $0.7 million and $1.4 million, respectively, of non-reimbursed expenses related to operating properties that were not leased.

The Preferred Stock investment is expected to be funded in multiple tranches between the third quarter of 2025 and the second quarter of 2027, subject to extension options exercisable by IQHQ REIT.

We expect to fund the RCF with a combination of cash on hand and draws on our Revolving Credit Facility.

We expect to fund the Preferred Stock investment with cash on hand, draws on our Revolving Credit Facility and potential proceeds from future financing activities.

We expect to meet our liquidity needs through a combination of rental income from our properties, cash and investments on hand, borrowings under our Credit Facilities, and access to capital markets, including potential note issuances, equity offerings (of both common stock and preferred stock), including under our ATM Program, or other financing arrangements.

We believe that our liquidity and these sources of capital will be adequate to satisfy our cash requirements over the next 12-month period.

We cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet our liquidity needs.

In recent years, financial markets have been volatile in general.

If sustained, this could have a material adverse effect on our business, financial condition and results of operations, including our ability to continue to make acquisitions of new properties and fund investments for improvements at existing properties, and refinance our existing indebtedness.

Our investment guidelines also provide that our aggregate borrowings (secured and unsecured) will not exceed 50% of the cost of our tangible assets at the time of any new borrowing, subject to our board of directors’ discretion.

IQHQ Investments

We have made a long-term capital commitment to fund investments in IQHQ REIT through both purchases of preferred equity and secured credit instruments.

These investments represent a strategic expansion of our portfolio and are expected to be funded over an extended period through a combination of available cash on hand, operating cash flows, our Credit Facilities, and potential future financing activities.

On September 30, 2025, IIP Life Science completed the initial closing of the Company’s investment in preferred equity of IQHQ REIT pursuant to the Securities Purchase Agreement, acquiring 5,000 shares of IQHQ Preferred Stock for an aggregate purchase price of $5.0 million.

Under the terms of the Securities Purchase Agreement, IIP Life Science holds the right and obligation to purchase up to an aggregate of $170.0 million of IQHQ Preferred Stock, subject to the exercise of preemptive rights by existing IQHQ investors and certain other conditions.

Our remaining investment in IQHQ Preferred Stock pursuant to the Securities Purchase Agreement is expected to be funded in multiple tranches between the fourth quarter of 2025 and the second quarter of 2027.

IQHQ REIT may elect to delay or cancel scheduled funding dates under the terms of the Securities Purchase Agreement, which could affect the timing or total amount of our investment.

We expect to fund the additional investments in IQHQ Preferred Stock with cash on hand, draws on our IIP Life Science Credit Facility and potential proceeds from future financing activities.

In connection with the initial closing of our investment in IQHQ Preferred Stock, we also became a lender under the IQHQ Revolving Credit Facility and funded our $100.0 million loan commitment using available cash on hand and

borrowings under our Revolving Credit Facility.

See the section above entitled “Overview—Recent Developments” for a discussion of the terms of the IQHQ Credit Facility.

Notes Due 2026

In May 2021, we received an investment grade rating from a ratings agency.

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The terms of the Notes due 2026 are governed by an indenture, which requires compliance with various financial covenants including limits on the amount of total leverage and secured debt maintained by the Operating Partnership and which require the Operating Partnership to maintain minimum levels of debt service coverage.

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

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

In addition, the terms of the indenture provide that if the debt rating on the Notes due 2026 is downgraded or withdrawn entirely, interest on the Notes due 2026 will increase to a range of 6.0% to 6.5% based on such debt rating.

In February 2025, we filed a new shelf registration statement to replace our prior shelf registration statement, which terminated on January 24, 2025, which may permit us, from time to time, to offer and sell common stock, preferred stock, debt, warrants and other securities to the extent necessary or advisable to meet our liquidity needs.

Following the filing of the new registration statement, we filed with the SEC a prospectus supplement that continues our at-the-market” offering program (“ATM Program”), pursuant to which we may offer and sell from time to time, 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.

During the six months ended June 30, 2025, we sold 558,981 shares of our Series A Preferred Stock for net proceeds of $13.2 million.

As of June 30, 2025, shares of the Company’s common stock and Series A Preferred Stock having an aggregate offering price of up to $476.1 million remain available for offer and sale pu rsuant to the ATM Program.

At September 30, 2025, the outstanding principal balance on our Notes due 2026 was $291.2 million and we plan to refinance these notes prior to maturity in May 2026.

We have an “at the market” equity offering program (“ATM Program”), pursuant to which we may offer and sell from time to time, 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.

During the nine months ended September 30, 2025, we sold 805,009 shares of our Series A Preferred Stock for net proceeds of $19.1 million.

As of September 30, 2025, shares of the Company’s common stock and Series A Preferred Stock having an aggregate offering price of up to $470.0 million remain available for offer and sale pu rsuant to the ATM Program.

Credit Facilities

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.

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The Loan Agreement also allows the Operating Partnership, subject to the satisfaction of certain conditions, to request additional revolving incremental loan commitments up to a specified amount.

The Loan Agreement is subject to certain liquidity and operating covenants and includes customary representations and warranties, affirmative and negative covenants and events of default.

There were no amounts outstanding under the Loan Agreement as of June 30, 2025.

We expect to meet our liquidity needs through cash and investments on hand, cash flows from operations, draws on our Revolving Credit Facility and our ability to issue additional debt and equity securities under our ATM Program or otherwise.

At June 30, 2025, the outstanding principal balance on our Notes due 2026 was $291.2 million and we plan to refinance these notes prior to maturity in May 2026.

We believe that our liquidity and these sources of capital will be adequate to satisfy our cash requirements over the next 12-month period.

We cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet our liquidity needs.

In the long term, we may also voluntarily repurchase our outstanding debt or equity securities (depending on prevailing market conditions, our liquidity, contractual restrictions and other factors) through cash purchases, open-market purchases, privately negotiated transactions, tender offers or otherwise.

Borrowings under the Revolving Credit Facility bear interest at a variable rate based on the greater of (i) the prime rate plus an applicable margin based on deposits with the participating bank(s) ranging from 0.5% to 2.05% and (ii) 9.0%.

The Loan Agreement is subject to certain liquidity and operating covenants, including a debt service coverage ratio covenant, defined as the ratio of (i) consolidated EBITDA to (ii) debt service costs and required to be not less than 2.0 to 1.0, measured as of the end of each fiscal quarter.

The Loan Agreement also includes customary representations and warranties, affirmative and negative covenants and events of default.

Our Operating Partnership drew $50.0 million under the Revolving Credit Facility in connection with the funding of the Company’s investment in the IQHQ Credit Facility and its initial investment in IQHQ Preferred Stock on September 30, 2025.

See the section above entitled “Overview—Recent Developments” for a discussion of the IIP Life Science Credit Facility that we entered in October 2025.

Share Repurchase Program

We may voluntarily repurchase our outstanding debt or equity securities (depending on prevailing market conditions, our liquidity, contractual restrictions and other factors) through cash purchases, open-market purchases, privately negotiated transactions, tender offers or otherwise.

In March of 2025, our Board of Directors authorized the purchase of up to $100.0 million in shares of our common stock.

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There is no guarantee as to the number of shares that will be repurchased.

Repurchases under the share repurchase plan are expected to be funded from existing cash balances and proceeds from the sale of the Company’s Series A Preferred Stock under its ATM Program.

During the three months ended June 30, 2025, 366,952 shares were repurchased under the share repurchase plan.

Repurchases under the share repurchase plan are expected to be funded from existing cash balances and proceeds from the sale of the

Company’s Series A Preferred Stock under its ATM Program.

No shares were repurchased under the share repurchase plan during the three months ended September 30, 2025.

During the nine months ended September 30, 2025, 371,538 shares were repurchased under the share repurchase plan.

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

In recent years, financial markets have been volatile in general.

The Company is required to pay dividends to its stockholders at least equal to 90% of its taxable income in order to qualify and maintain its qualification as a REIT.

As a result of this distribution requirement, our Operating Partnership cannot rely on retained earnings to fund its ongoing operations to the same extent that other companies whose parent companies are not REITs can.

Our ability to continue to pay dividends is dependent upon our ability to continue to generate cash flows, service any debt obligations we have, including our Notes due 2026, and make accretive new investments.

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

Our ability to continue to pay dividends is dependent upon our ability to continue to generate cash flows, service any debt obligations we have, including our Notes due 2026 and borrowings under our Credit Facilities, and make accretive new investments.

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

Contractual Obligations

The following table summarizes our contractual obligations as of June 30, 2025 (in thousands):

by Year Notes due 2026 Interest Office Rent Total

2025 (six months ended December 31) $ — $ 8,009 $ 263 $ 8,272

The following table summarizes our contractual obligations as of September 30, 2025 (in thousands):

by Year Notes due 2026 Revolving Credit Facility Interest Office Rent Total

2025 (three months ending December 31) $ — $ — $ 5,129 $ 132 $ 5,261

2026 291,215 50,000 10,113 543 351,871

2027 — — — 45 45

2028 — — — — —

2029 — — — — —

Total $ 291,215 $ 50,000 $ 15,242 $ 720 $ 357,177

Additionally, as of June 30, 2025, we had (1) $11.6 million outstanding in 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;

Additionally, as of September 30, 2025, we had (1) $165.0 million remaining on our commitment to purchase up to $170.0 million of IQHQ Preferred Stock which is scheduled to be funded in various installments by June 30, 2027, subject to extension options exercisable by IQHQ;

(2) $7.8 million outstanding in 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;

and (3) $0.2 million outstanding in commitments to fund the Construction Loan.

The commitments discussed in this paragraph are excluded from the table of contractual obligations above, as improvement allowances 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, there is no explicit time frame for incurring the obligations related to our contracts with vendors, and Construction Loan funding generally may be requested by the borrower from time to time, subject to satisfaction of certain conditions.

The commitments discussed in this paragraph are excluded from the table of contractual obligations above as there is no explicit time frame for incurring the obligations, which generally may be requested from time to time, subject to satisfaction of certain conditions.

Non-GAAP Financial Information

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Normalized FFO is used by management in evaluating the performance of our core business operations.

Items included in calculating FFO that may be excluded in calculating

Normalized FFO include certain transaction-related gains, losses, income or expense or other non-core amounts as they occur.

During the three months ended September 30, 2025, the Company revised its presentation of Normalized FFO to include two adjustments related to income on seller-financed notes and deferred lease payments received on sales-type leases that were previously reflected in adjusted funds from operations (“AFFO”), which has been reflected for all periods presented.

Management believes this change better aligns the Company’s presentation with its assessment of core operating performance and improves comparability with industry peers.

Items included in calculating FFO that may be excluded in calculating Normalized FFO include certain transaction-related gains, losses, income or expense or other non-core amounts as they occur.

Management believes that adjusted funds from operations (“AFFO”) and AFFO per share are also appropriate supplemental measures of a REIT’s operating performance.

We calculate AFFO by adjusting Normalized FFO for certain cash and non-cash items.

For the six months ended June 30, 2024 , FFO (diluted), Normalized FFO and AFFO, and FFO, Normalized FFO and AFFO per diluted share include the dilutive impact of the assumed full exchange of the Exchangeable Senior Notes for shares of common stock as if the Exchangeable Senior Notes were exchanged at the beginning of the respective reporting period.

We calculate AFFO by adjusting Normalized FFO for certain non-cash items.

For the nine months ended September 30, 2024 , FFO (diluted), Normalized FFO and AFFO, and FFO, Normalized FFO and AFFO per diluted share include the dilutive impact of the assumed full exchange of the Exchangeable Senior Notes for shares of common stock as if the Exchangeable Senior Notes were exchanged at the beginning of the respective reporting period.

The Exchangeable Senior Notes matured in February 2024.

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.

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.

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Further, FFO and AFFO do not represent cash flow available for management’s discretionary use.

FFO, Normalized FFO and AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions.

distributions.

FFO, Normalized FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of operations.

The table below is a reconciliation of net income attributable to common stockholders to FFO, Normalized FFO and AFFO for the three and six months ended June 30, 2025 and 2024 (in thousands, except share and per share amounts):

The table below is a reconciliation of net income attributable to common stockholders to FFO, Normalized FFO and AFFO for the three and nine months ended September 30, 2025 and 2024 (in thousands, except share and per share amounts):

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

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Disposition-contingent lease termination fee, net of loss on sale of real estate (1)

— (451) — (451)

FFO attributable to common stockholders (basic) 46,927 57,595 142,787 172,512

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Loss (gain) on partial repayment of Notes due 2026 — — (32) —

Normalized FFO attributable to common stockholders (diluted) 44,059 58,841 96,647 115,255

Income on seller-financed notes (2)

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— 1,452 25 4,370

Normalized FFO attributable to common stockholders (diluted) 45,156 59,525 143,145 178,504

Stock-based compensation 2,684 4,316 7,434 13,002

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(1) Amount reflects the $3.9 million disposition-contingent lease termination fee received concurrently with the sale of our property in Los Angeles, California, net of the loss on sale of real estate of $3.4 million.

(2) Amount reflects the non-refundable cash payments received pursuant to two seller-financed notes issued to us by the buyers in connection with our disposition of certain properties which are recognized as a deposit liability and is included in other liabilities in our consolidated balance sheet as of June 30, 2025, as the transactions did not qualify for recognition as completed sales.

(3) Amount reflects the non-refundable lease payments received on two sales-type leases which are recognized as a deposit liability starting on January 1, 2024, and is included in other liabilities in our consolidated balance sheet as of June 30, 2025, as the transaction did not qualify for recognition as a completed sale (see Note 2 “Lease Accounting” to our consolidated financial statements included in this report for more information).

(2) Positive amounts represent non-refundable cash payments received pursuant to two seller-financed notes issued by us in connection with our disposition of certain properties.

As the transactions did not qualify for recognition as completed sales under GAAP, the payments were initially recorded as a deposit liability and included in other liabilities on our consolidated balance sheet.

For both the three and nine months ended September 30, 2025, the negative amounts resulted from the recognition of $2.6 million of non-refundable cash payments received on the MIH Note as interest and other income in connection with the termination of the seller-financed note.

(3) Amount reflects the non-refundable lease payments received on two sales-type leases which are recognized as a deposit liability starting on January 1, 2024, and is included in other liabilities in our consolidated balance sheet as of September 30, 2025, as the transaction did not qualify for recognition as a completed sale (see Note 2 “Lease Accounting” to our consolidated financial statements included in this report for more information).

Prior to the lease modifications on January 1, 2024, which extended the initial lease terms, the leases were classified as operating leases and the lease payments received were recognized as rental revenue and therefore, included in net income attributable to common stockholders.

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The determination of lease classification requires the calculation of the rate implicit in the lease, which is driven by significant estimates relating to the unguaranteed residual value of the assets at the end of the non-cancelable lease term.

A decrease of 5% in the estimated unguaranteed residual value of our properties would not change the lease classification of any new leases or leases that were modified during the six months ended June 30, 2025.

Acquisition of Rental Property, Depreciation and Impairment

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We completed the sale of the property in June 2025 for net proceeds of $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.

For all other operating properties that were evaluated, we determined that the undiscounted cash flows over the holding period were in excess of carrying value and, therefore, we did not record any impairment losses for these properties for the six months ended June 30, 2025.

Significant adverse changes in the critical accounting estimates used in the impairment evaluation are required for the undiscounted cash flows over the holding period to be less than the carrying value of these properties as of June 30, 2025.

Impact of Real Estate and Credit Markets

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Interest Rate Risk

As of June 30, 2025, we had $291.2 million principal amount of Notes due 2026 outstanding at a fixed interest rate of 5.50%, and therefore, if interest rates decline, our required payments may exceed those based on current market rates.

As of September 30, 2025, we had $291.2 million principal amount of Notes due 2026 outstanding at a fixed interest rate of 5.50%, and therefore, if interest rates decline, our required payments may exceed those based on current market rates.

It is possible that a property we acquire in the future would be subject to a mortgage, which we may assume.

In recent years, the commercial real estate market generally has experienced significant disruptions from, among other things, significant

increases in interest rates and changing tenant preferences for space.

In recent years, the commercial real estate market generally has experienced significant disruptions from, among other things, significant increases in interest rates and changing tenant preferences for space.

Our Revolving Credit Facility bears interest at a variable rate based on the greater of the prime rate and an applicable margin and a stipulated interest rate;

therefore, if interest rates increase, our required payments on any amounts outstanding on our Revolving Credit Facility may also increase.

As of June 30, 2025, we had no outstanding borrowings on our Revolving Credit Facility.

As of September 30, 2025, we had $50.0 million outstanding borrowings on our Revolving Credit Facility.

Our IIP Life Science Credit Facility bears interest at a variable rate based on the greater of SOFR and an applicable margin and a stipulated interest rate;

therefore, if interest rates increase our required payments on any amounts outstanding under our IIP Life Science Credit Facility may also increase.

As of October 31, 2025, we had outstanding borrowings of $52.5 million on our IIP Life Science Credit Facility.

Impact of Inflation

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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 2. Management’s Discussion and Analysis