INNOVATIVE INDUSTRIAL PROPERTIES INC 10-Q

ITEM 1. FINANCIAL STATEMENTS Innovative Industrial Properties, Inc. Consolidated Balance Sheets (Unaudited) ( In thousands , except share and per share amounts ) September 30, December 31, Assets 2025 2024 Real estate, at cost: Land $ 146,469 $ 146,772 Buildings and improvements 2,252,137 2,230,807 Construction in progress 57,713 62,393 Total real estate, at cost 2,456,319 2,439,972 Less accumulated depreciation ( 324,855 ) ( 271,190 ) Net real estate held for investment 2,131,464 2,168,782 Life science investments 105,240 — Construction loan receivable 22,800 22,800 Cash and cash equivalents 36,671 146,245 Investments 5,258 5,000 Right of use office lease asset 621 946 In-place lease intangible assets, net 6,577 7,385 Other assets, net 29,283 26,889 Total assets $ 2,337,914 $ 2,378,047 Liabilities and stockholders’ equity Liabilities: Notes due 2026, net $ 290,229 $ 297,865 Revolving credit facility 50,000 — Building improvements and construction funding payable 4,298 10,230 Accounts payable and accrued expenses 15,244 10,561 Dividends payable 54,793 54,817 Rent received in advance and tenant security deposits 51,196 57,176 Other liabilities 8,813 11,338 Total liabilities 474,573 441,987 Commitments and contingencies (Notes 6, 7 and 12) Stockholders’ equity: 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, 1,807,682 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: 28,022,975 and 28,331,833 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively 28 28 Additional paid-in capital 2,110,486 2,124,113 Dividends in excess of earnings ( 289,916 ) ( 211,713 ) Total stockholders’ equity 1,863,341 1,936,060 Total liabilities and stockholders’ equity $ 2,337,914 $ 2,378,047 See the accompanying notes to the consolidated financial statements. 3 Table of Contents Innovative Industrial Properties, Inc. Consolidated Statements of Income (Unaudited) ( In thousands , except share and per share amounts ) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Revenues: Rental (including tenant reimbursements) $ 64,292 $ 76,052 $ 198,855 $ 230,219 Other 393 474 443 1,554 Total revenues 64,685 76,526 199,298 231,773 Expenses: Property expenses 7,951 7,295 22,197 20,867 General and administrative expense 8,681 9,330 25,768 28,553 Depreciation and amortization expense 18,639 17,944 55,530 52,567 Impairment loss on real estate — — 3,527 — Total expenses 35,271 34,569 107,022 101,987 Gain (loss) on sale of real estate — — — ( 3,449 ) Income from operations 29,414 41,957 92,276 126,337 Interest and other income 4,416 2,685 7,599 8,435 Interest expense ( 4,525 ) ( 4,427 ) ( 13,469 ) ( 13,136 ) Net income 29,305 40,215 86,406 121,636 Preferred stock dividends ( 1,017 ) ( 564 ) ( 2,676 ) ( 1,240 ) Net income attributable to common stockholders $ 28,288 $ 39,651 $ 83,730 $ 120,396 Net income attributable to common stockholders per share (Note 9): Basic $ 0.99 $ 1.38 $ 2.91 $ 4.21 Diluted $ 0.97 $ 1.37 $ 2.87 $ 4.16 Weighted-average shares outstanding: Basic 27,912,881 28,254,565 28,036,179 28,216,946 Diluted 28,303,600 28,579,687 28,402,063 28,548,050 See accompanying notes to the consolidated financial statements. 4 Table of Contents Innovative Industrial Properties, Inc. Consolidated Statements of Stockholders’ Equity (Unaudited) ( In thousands , except share amounts ) Three Months Ended September 30, 2025 Series A Preferred Stock Common Stock Additional Paid-In- Capital Dividends in Excess of Earnings Total Stockholders’ Equity Shares Amount Shares Amount Balances at beginning of period 1,561,654 $ 36,843 28,017,520 $ 28 $ 2,107,963 $ ( 264,428 ) $ 1,880,406 Net income — — — — — 29,305 29,305 Forfeiture of unvested restricted stock, net of issuance — — ( 324 ) — — — — Issuance of preferred stock, net of issuance costs 246,028 5,900 — — — — 5,900 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 Nine Months Ended September 30, 2025 Series A Preferred Stock Common Stock Additional Paid-In- Capital Dividends in Excess of Earnings Total Stockholders’ Equity Shares Amount Shares Amount Balances at beginning of period 1,002,673 $ 23,632 28,331,833 $ 28 $ 2,124,113 $ ( 211,713 ) $ 1,936,060 Net income — — — — — 86,406 86,406 Issuance of unvested restricted stock, net of forfeitures — — 56,901 — ( 792 ) — ( 792 ) Issuance of preferred stock, net of issuance costs 805,009 19,111 — — — — 19,111 Repurchase of common stock — — ( 371,538 ) — ( 20,108 ) — ( 20,108 ) Preferred stock dividends — — — — — ( 2,676 ) ( 2,676 ) Common stock dividends — — — — — ( 162,022 ) ( 162,022 ) 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 5 Table of Contents Three Months Ended September 30, 2024 Series A Preferred Stock Common Stock Additional Paid-In- Capital Dividends in Excess of Earnings Total Stockholders’ Equity Shares Amount Shares Amount Balances at beginning of period 600,000 $ 14,009 28,331,833 $ 28 $ 2,115,482 $ ( 182,319 ) $ 1,947,200 Net income — — — — — 40,215 40,215 Issuance of preferred stock, net of issuance costs 402,673 9,623 — — — — 9,623 Preferred stock dividends — — — — — ( 564 ) ( 564 ) Common stock dividends — — — — — ( 54,253 ) ( 54,253 ) Stock-based compensation — — — — 4,316 — 4,316 Balances at end of period 1,002,673 $ 23,632 28,331,833 $ 28 $ 2,119,798 $ ( 196,921 ) $ 1,946,537 Nine Months Ended September 30, 2024 Series A Preferred Stock Common Stock Additional Paid-In- Capital Dividends in Excess of Earnings Total Stockholders’ Equity Shares Amount Shares Amount Balances at beginning of period 600,000 $ 14,009 28,140,891 $ 28 $ 2,095,789 $ ( 156,854 ) $ 1,952,972 Net income — — — — — 121,636 121,636 Issuance of unvested restricted stock, net of forfeitures — — 39,310 — ( 750 ) — ( 750 ) 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 Preferred stock dividends — — — — — ( 1,240 ) ( 1,240 ) Common stock dividends — — — — — ( 160,463 ) ( 160,463 ) Stock-based compensation — — — — 13,002 — 13,002 Balances at end of period 1,002,673 $ 23,632 28,331,833 $ 28 $ 2,119,798 $ ( 196,921 ) $ 1,946,537 See accompanying notes to the consolidated financial statements. 6 Table of Contents Innovative Industrial Properties, Inc. Consolidated Statements of Cash Flows (Unaudited) ( In thousands ) For the Nine Months Ended September 30, 2025 2024 Cash flows from operating activities Net income $ 86,406 $ 121,636 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization 55,530 52,567 Impairment loss on real estate 3,527 — Loss (gain) on sale of real estate — 3,449 Other non-cash adjustments 17 79 Stock-based compensation 7,434 13,002 Amortization of discounts on investments — ( 504 ) Amortization of debt discount and issuance costs 1,431 1,214 Changes in assets and liabilities Other assets, net ( 2,836 ) ( 2,800 ) Accounts payable, accrued expenses and other liabilities 2,753 10,271 Rent received in advance and tenant security deposits ( 5,980 ) 1,726 Net cash provided by (used in) operating activities 148,282 200,640 Cash flows from investing activities 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 Funding of draws for improvements and construction ( 20,976 ) ( 45,642 ) Purchases of short-term investments ( 5,258 ) ( 45,110 ) Maturities of short-term investments 5,000 42,247 Net cash provided by (used in) investing activities ( 132,576 ) ( 52,431 ) Cash flows from financing activities Issuance of common stock, net of issuance costs — 11,757 Repurchase of common stock ( 20,108 ) — 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 ) Dividends paid to common stockholders ( 162,499 ) ( 157,699 ) Dividends paid to preferred stockholders ( 2,223 ) ( 1,014 ) Taxes paid related to net share settlement of equity awards ( 864 ) ( 750 ) Net cash provided by (used in) financing activities ( 125,280 ) ( 142,780 ) Net increase (decrease) in cash and cash equivalents ( 109,574 ) 5,429 Cash and cash equivalents, beginning of period 146,245 141,699 Cash and cash equivalents, end of period $ 36,671 $ 147,128 Supplemental disclosure of cash flow information: Cash paid during the period for interest, net of interest capitalized $ 8,019 $ 7,806 Supplemental disclosure of non-cash investing and financing activities: Accrual for current-period additions to real estate $ 3,541 $ 8,574 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. 7 Table of Contents Innovative Industrial Properties, Inc. Notes to the Consolidated Financial Statements September 30, 2025 (Unaudited) 1. Organization 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 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 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. We conduct our business through a traditional umbrella partnership real estate investment trust, or UPREIT structure, in which our properties are owned by our Operating Partnership, directly or through subsidiaries. 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. 2. Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements Basis of Presentation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. This interim financial information should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Any references to square footage or occupancy percentage, and any amounts derived from these values in these notes to the consolidated financial statements, are outside the scope of our independent registered public accounting firm’s review. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2025. Federal Income Taxes. We believe that we have operated our business so as to qualify to be taxed as a REIT for U.S. federal income tax purposes. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income, we generally will not be required to pay federal corporate income taxes on such income. The income taxes recorded on our consolidated statements of income represent amounts paid for city and state income and franchise taxes and are included in general and administrative expenses in the accompanying consolidated statements of income. Use of Estimates. The preparation of the consolidated financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from these estimates and assumptions. The most significant estimates and assumptions made include determination of lease accounting and fair value of acquisition of real estate properties. Reportable Segment. 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 8 Table of Contents 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. Acquisition of Real Estate Properties. Our investment in real estate is recorded at historical cost, less accumulated depreciation. Upon acquisition of a property, the tangible and intangible assets acquired and liabilities assumed are initially measured based upon their relative fair values. We estimate the fair value of land by reviewing comparable sales within the same submarket and/or region. We estimate the fair value of buildings and improvements as if the property was vacant utilizing a direct capitalization approach and take into consideration current replacement costs and other relevant market rate information and may engage third-party valuation specialists. Acquisition costs are capitalized as incurred. All of our acquisitions to date were recorded as asset acquisitions. The fair value of acquired in-place leases is derived based on our assessment of estimated lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased. The amounts recorded for acquired in-place leases are reflected as in-place lease intangible assets, net on our consolidated balance sheets and are amortized on a straight-line basis as a component of depreciation and amortization expense over the remaining term of the applicable leases. The fair value of the above-market component of an acquired in-place operating lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining non-cancellable lease term and (ii) our estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition measured over the remaining non-cancellable term of the lease. The amount recorded for one above-market operating lease is included in other assets, net on our 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 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. When a real estate asset is sold, we evaluate the provisions of Accounting Standards Codification (“ASC”) 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”) to determine whether the asset is within the scope of ASC 610-20, including an evaluation of whether the asset being sold is a nonfinancial asset and whether the buyer has gained control of an asset within the scope of ASC 610-20. In assessing whether the buyer has gained control of the asset, we must determine whether the contract criteria in ASC 606, Revenue from Contracts with Customers (Topic 606) have been met, including 1) the parties to the contract have approved the contract and the contract has commercial substance, 2) we can identify each party’s rights regarding the asset to be transferred, 3) we can identify the payment terms for the asset to be transferred, and 4) it is probable that we will collect substantially all of the consideration to which we will be entitled in exchange for the asset to be transferred. If all of the contract criteria have been met, the carrying amount of the applicable asset is derecognized with a corresponding gain or loss from the sale recognized in our consolidated statements of income. If the contract criteria are not all met, the asset transferred is not derecognized and we continue to report the asset in our consolidated balance sheet. See Note 6 “Investments in Real Estate - Property Dispositions” for further information. Cost Capitalization and Depreciation. We capitalize costs (including interest) associated with development and redevelopment activities and improvements when we are considered to be the accounting owner of the resulting assets. The development and redevelopment activities may be funded by us pursuant to the lease. We are generally considered the accounting owner for such improvements that are attached to or built into the premises, which are required under the lease to be surrendered to us upon the expiration or earlier termination of the lease. Typically, such improvements include, but are not limited to, ground up development, and enhanced HVAC, plumbing, electrical and other building systems. Amounts capitalized are depreciated on a straight-line basis over the estimated useful lives determined by management. 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 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 9 Table of Contents straight-line basis over the shorter of the estimated useful lives or the remaining lease term. Depreciation expense relating to our corporate assets is included in general and administrative expense in our consolidated statements of income. Determining whether expenditures meet the criteria for capitalization and the assignment of depreciable lives requires management to exercise significant judgment. Project costs that are clearly associated with the acquisition and development or redevelopment of a real estate project, for which we are the accounting owner, are capitalized as a cost of that project. Expenditures that meet one or more of the following criteria generally qualify for capitalization: • the expenditure provides benefit in future periods; and • the expenditure extends the useful life of the asset beyond our original estimates. We define redevelopment properties as existing properties for which we expect to spend significant development and construction costs that are not reimbursements to tenants for improvements at the properties. When existing properties are determined to be redevelopment properties, the net carrying value of the buildings and improvements are transferred to construction in progress while the redevelopment activities are in process. Costs capitalized to construction in progress related to redevelopment properties are transferred to buildings and improvements at historical cost of the properties as the redevelopment project or phases of projects are placed in service. Provision for Impairment. On a quarterly basis, we review current activities and changes in the business conditions of all of our properties prior to and subsequent to the end of each quarter to determine the existence of any triggering events or impairment indicators requiring an impairment analysis. If triggering events or impairment indicators are identified, we review an estimate of the future undiscounted cash flows for the properties. Long-lived assets are individually evaluated for impairment when conditions exist that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Impairment indicators or triggering events for long-lived assets to be held and used are assessed by project and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations, current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, construction costs, available market information, current and historical operating results, known trends, current market/economic conditions that may affect the property, and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount to its estimated fair value. We may adjust depreciation of properties that are expected to be disposed of or redeveloped prior to the end of their useful lives. During the three months ended March 31, 2025, 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 September 30, 2025, or during the three and nine months ended September 30, 2024. Revenue Recognition. 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. We also consider current market conditions, impact of federal, state and local taxation and regulatory burdens and reasonable and supportable forecasts of future economic conditions. Additionally, for operating leases, contractually obligated reimbursements from tenants for recoverable real estate taxes, insurance and operating expenses are included in rental revenues in the period when such costs are reimbursed by the tenants. Contractually obligated real estate taxes that are paid directly by the tenant to the tax authorities are not reflected in our consolidated financial statements. 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, 10 Table of Contents 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. In June 2021, we executed a construction loan agreement with a developer, pursuant to which (as amended in February 2023), we agreed to lend up to $ 23.0 million for the development of a regulated cannabis cultivation and processing facility in California (the “Construction Loan”). We have an option to purchase the property, and may execute a negotiated lease with an affiliate of the developer or with another third party, if we determine to exercise our purchase option . 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. The borrower exercised the option to extend the maturity date to December 31, 2025 with the satisfaction of certain conditions and payment of an extension fee. Cash and Cash Equivalents. We consider all highly-liquid investments with original maturities of 90 days or less to be cash equivalents, which is comprised of short-term money market funds, obligations of the U.S. government and certificates of deposit with an original maturity at the time of purchase of less than or equal to 90 days. Investments. Investments consist of short-term obligations of the U.S. government and certificates of deposit with an original maturity at the time of purchase of greater than 90 days. Investments in obligations of the U.S. government are classified as held-to-maturity and stated at amortized cost. Investments in certificates of deposit are classified as held-to-maturity and stated at cost. Deferred Financing Costs. The deferred financing costs relating to our Notes due 2026 are included as a reduction in the net book value of the related liability on our consolidated balance sheets. These costs are amortized as non-cash interest expense using the effective interest method over the life of the related obligations. Deferred financing costs relating to our Revolving Credit Facility (as defined in Note 8 "Debt") are included in other assets, net in our consolidated balance sheets. These costs are being amortized on a straight-line basis and recognized as non-cash interest expense over the remaining term of the Revolving Credit Facility. Stock-Based Compensation. Stock-based compensation for equity awards is based on the grant date fair value of the equity awards and is recognized over the requisite service or performance period. If awards are forfeited prior to vesting, we reverse any previously recognized expense related to such awards in the period during which the forfeiture occurs and reclassify any non-forfeitable dividends and dividend equivalents previously paid on these awards from retained earnings to compensation expense. Forfeitures are recognized as incurred. Certain equity awards are subject to vesting based upon the satisfaction of various market conditions. Forfeiture of share awards with market-based restrictions does not result in a reversal of previously recognized share-based compensation expense. Lease Accounting. We account for our leases under ASC 842, Leases , and have elected the practical expedient not to separate certain non-lease components from the lease component if the timing and pattern of transfer are the same for the non-lease component and associated lease component, and the lease component would be classified as an operating lease if accounted for separately. We also elected the 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 11 Table of Contents 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. Subsequently, the lease liability is accreted by applying a discount rate established at the lease commencement date to the lease liability balance as of the beginning of the period and is reduced by the payments made during the period. The right-of-use asset is measured based on the corresponding lease liability. We did not incur any initial direct leasing costs or exchange any other consideration with the landlord prior to the commencement of the lease. Subsequently, the right-of-use asset is amortized on a straight-line basis during the lease term. 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. For these transactions, we consider various inputs and assumptions including, but not necessarily limited to, lease terms, renewal options, discount rates, and other rights and provisions in the purchase and sale agreement, lease and other documentation to determine whether control has been transferred to the Company or remains with the lessee. A transaction involving a sale leaseback will be treated as a purchase of a real estate property if it is considered to transfer control of the underlying asset from the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control and will be classified as a sales-type lease if control of the underlying asset is transferred to the lessee. Otherwise, the lease is treated as an operating lease. These criteria also include estimates and assumptions regarding the fair value of the leased facilities, minimum lease payments, the economic useful life of the facilities, the existence of a purchase option, and certain other terms in the lease agreements. The lease accounting guidance requires accounting for a transaction as a financing in a sale leaseback when the seller-lessee is provided an option to purchase the property from the landlord at the tenant’s option. Substantially all of our leases continued to be classified as operating leases and we continue to record revenue for each of our properties on a cash basis. Our tenant reimbursable revenue and property expenses continue to be presented on a gross basis as rental revenues and as property expenses, respectively, on our consolidated statements of income. Property taxes paid directly by the lessee to a third party continue to be excluded from our consolidated financial statements. Lease amendments are evaluated to determine if the modification grants the lessee an additional right-of-use not included in the original lease and if the lease payments increase commensurate with the standalone price of the additional right-of-use, adjusted for the circumstances of the particular contract. If both conditions are present, the lease amendment is accounted for as a new lease that is separate from the original lease. In January 2024, the lease modifications for two of our leases to extend the initial term of each lease changed the lease classification from operating lease to sales-type lease that did not satisfy all the criteria for recognition as a completed sale. Accordingly, we continue to recognize the underlying assets within net real estate held for investment and all lease payments received, as well as any future lease payments, will be recognized as a deposit liability and will be included in other liabilities on our consolidated balance sheet until certain criteria are met. 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. Certain of our leases provide the lessee with a right of first refusal or right of first offer in the event we market the leased property for sale. Recent Accounting Pronouncements. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses . The amendments in ASU 2024-03 require entities to provide enhanced disclosures related to certain expense categories included in income statement captions. Under ASU 2024-03, entities are required to disaggregate, in a tabular format, expense captions presented on the face of the income statement — excluding earnings or losses from equity method investments — if they include any of the following expense categories: 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 12 Table of Contents 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. Early adoption is permitted. We expect to adopt this ASU on January 1, 2027. While the adoption is not expected to have an impact on our consolidated financial statements, it is expected to result in incremental disclosures within the footnotes to our consolidated financial statements. Concentration of Credit Risk. 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 nine months ended September 30, 2025 and 2024, including tenant reimbursements: For the Three Months Ended September 30, 2025 Percentage of Number of Rental Leases Revenue Ascend Wellness Holdings, Inc. ("Ascend") 4 13 % Green Thumb Industries, Inc. ("Green Thumb") 3 9 % Curaleaf Holdings, Inc. ("Curaleaf") 8 9 % Trulieve Cannabis Corp. ("Trulieve") 6 8 % The Cannabist Company 21 8 % For the Nine Months Ended September 30, 2025 Percentage of Number of Rental Leases Revenue Ascend 4 12 % Green Thumb 3 9 % Curaleaf 8 8 % Trulieve 6 8 % The Cannabist Company 21 8 % For the Three Months Ended September 30, 2024 Number of Leases Percentage of Rental Revenue PharmaCann Inc. ("PharmaCann") (1) 11 17 % Ascend 4 11 % Green Thumb 3 8 % Curaleaf 8 7 % Trulieve 6 7 % 13 Table of Contents For the Nine Months Ended September 30, 2024 Number of Leases Percentage of Rental Revenue PharmaCann (1) 11 17 % Ascend 4 11 % Green Thumb 3 8 % Holistic Industries Inc. 5 8 % Curaleaf 8 7 % (1) See Note 6 "Investment in Real Estate - Lease Amendments" for further information about the leases with PharmaCann. In each of the tables above, these leases include leases with affiliates of each entity, for which the entity has provided a corporate guaranty. 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 September 30, 2025, we had cash accounts in excess of FDIC insured limits. We have not experienced any losses in such accounts. 3. Common Stock 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 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”). 14 Table of Contents 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 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. 4. 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 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. 5. Dividends The following table describes the dividends declared by the Company during the nine months ended September 30, 2025: Declaration Date Security Class Amount Per Share Record Date Dividend Paid Date Dividend Amount (In thousands) March 14, 2025 Common stock $ 1.90 March 31, 2025 April 15, 2025 $ 54,463 March 14, 2025 Series A preferred stock $ 0.5625 March 31, 2025 April 15, 2025 $ 781 June 13, 2025 Common stock $ 1.90 June 30, 2025 July 15, 2025 $ 53,783 June 13, 2025 Series A preferred stock $ 0.5625 June 30, 2025 July 15, 2025 $ 878 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 6. Investments in Real Estate Acquisitions The Company made the following acquisition during the nine months ended September 30, 2025 (dollars in thousands): Property State Closing Date Rentable Square Feet (1) Purchase Price Transaction Costs Total Harvard Place Maryland February 20, 2025 22,000 $ 7,750 $ 107 $ 7,857 Total 22,000 $ 7,750 $ 107 $ 7,857 (2) (1) Includes expected rentable square feet at completion of construction at the property. (2) $ 0.6 million was allocated to land and $ 7.2 million was allocated to building and improvements. Acquired In-Place Lease Intangible Assets In-place lease intangible assets and related accumulated amortization as of September 30, 2025 and December 31, 2024 is as follows (in thousands): 15 Table of Contents September 30, 2025 December 31, 2024 In-place lease intangible assets $ 9,757 $ 9,979 Accumulated amortization ( 3,180 ) ( 2,594 ) 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 $ 0.4 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): Year Amount 2025 (three months ending December 31) $ 211 2026 844 2027 844 2028 844 2029 844 Thereafter 2,990 Total $ 6,577 Above-Market Lease 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 Accumulated amortization ( 348 ) ( 279 ) Above-market lease, net $ 706 $ 775 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 nine months ended September 30, 2025 and 2024, the amortization of the above-market lease was $ 23,000 and $ 69,000 , respectively. Lease Amendments In January 2025, we entered into lease amendments with PharmaCann with respect to nine of its leases for properties located in New York, Illinois, Pennsylvania, Ohio, and Colorado. Those lease amendments reduced cumulative total base rent from $ 2.8 million per month to $ 2.6 million per month, with cash rent payments commencing February 1, 2025, and provided for pro-rata replenishment of security deposits over thirty-six months commencing February 1, 2027. We also entered into lease amendments with PharmaCann with respect to two of its leases for cultivation properties in Michigan and Massachusetts. Those amendments provide that monthly base rent of $ 1.3 million for these two properties will be abated in full effective February 1, 2025 and, if the properties have not been transitioned to new tenant(s) by August 1, 2025, we will regain full control over the properties. We applied security deposits held by us pursuant to all of the PharmaCann leases for the payment in full of all defaulted rent for December 2024 and January 2025 and certain penalties. The lease amendments also provided that if PharmaCann defaults again or is not able to refinance its existing senior secured credit facility maturing June 30, 2025, all modifications to our leases with PharmaCann described above will immediately be null and void and the leases will revert to the terms in effect as of January 1, 2025. 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 16 Table of Contents 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. at one of our Florida properties to reduce the improvement allowance by $ 2.5 million to $ 27.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. Capitalized Costs 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 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 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. 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. The loan matures on April 24, 2028 with an option to extend the maturity for twelve months , conditional on the payment of an extension fee. The loan is interest only and payments are payable monthly in advance. The transaction did not qualify for recognition as a completed sale under GAAP since not all of the criteria were met. Accordingly, we have not derecognized the assets transferred on our consolidated balance sheets. 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 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. Net proceeds from the sale were $ 1.8 million and no gain or loss was recognized on the sale as the property was impaired and recognized at fair value less selling costs as of March 31, 2025. 17 Table of Contents Future Contractual Minimum Rent 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 (three months ending December 31) $ 73,899 2026 304,130 2027 314,736 2028 321,128 2029 328,429 Thereafter 3,406,603 Total $ 4,748,925 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). 7. 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. 18 Table of Contents 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) 100,240 Total $ 105,240 (1) Includes transaction costs of $ 0.2 million. 8. Debt 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 September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Cash coupon $ — $ — $ — $ 24 Amortization of issuance cost — — — 5 Capitalized interest — — — ( 1 ) Total interest expense $ — $ — $ — $ 28 Notes due 2026 In May 2021, our Operating Partnership issued $ 300.0 million aggregate principal amount of its 5.50 % Senior Notes due 2026 (the “Notes due 2026”). The Notes due 2026 are senior unsecured obligations of our Operating Partnership, are fully and unconditionally guaranteed by us and rank equally in right of payment with all of the Operating Partnership’s future senior unsecured indebtedness. However, the Notes due 2026 are effectively subordinated to any of the Company’s, the Operating Partnership’s and the Operating Partnership’s subsidiaries’ future secured indebtedness to the extent of the value of the assets securing such indebtedness. The Notes due 2026 pay interest semiannually at a rate of 5.50 % per year and will mature on May 25, 2026. The terms of the Notes due 2026 are governed by an indenture dated May 25, 2021, and 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. 19 Table of Contents In connection with the issuance of the Notes due 2026, we recorded $ 6.8 million of issuance costs, which are being amortized using the effective interest method and recognized as non-cash interest expense over the term of the Notes due 2026. The effective interest rate including amortization of issuance costs is 6.03 %. The following table details our interest expense related to the Notes due 2026 (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Cash coupon $ 4,004 $ 4,125 $ 12,089 $ 12,375 Amortization of issuance cost 368 357 1,094 1,054 Capitalized interest ( 43 ) ( 127 ) ( 138 ) ( 516 ) Total interest expense $ 4,329 $ 4,355 $ 13,045 $ 12,913 The following table details the carrying value of our Notes due 2026 (in thousands): September 30, 2025 December 31, 2024 Principal amount $ 291,215 $ 300,000 Unamortized issuance cost ( 986 ) ( 2,135 ) Carrying value $ 290,229 $ 297,865 The Operating Partnership may redeem some or all of the Notes due 2026 at its option at any time at the applicable redemption price. If the Notes due 2026 are redeemed prior to February 25, 2026, the redemption price will be equal to 100 % of the principal amount of the Notes due 2026 being redeemed, plus a make-whole premium and accrued and unpaid interest thereon to, but excluding, the applicable redemption date. If the Notes due 2026 are redeemed on or after February 25, 2026, the redemption price will be equal to 100 % of the principal amount of the Notes due 2026 being redeemed, plus accrued and unpaid interest thereon to, but excluding, the applicable redemption date. In February 2025, we made early partial repayments at a discount totaling $ 8.7 million on the Notes due 2026, reducing the principal balance by $ 8.8 million. Following the partial repayment, all other terms and conditions of the debt agreement remain unchanged. 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. As a result, management has concluded that our plans are probable of achieving sufficient liquidity to satisfy this obligation prior to maturity in May 2026. While management believes it is probable that we will be able to refinance the Notes due 2026, there can be no assurance that we will be able to raise new capital or complete such refinance on terms that are attractive to the Company, or at all. The terms of the indenture for the Notes due 2026 require compliance with various financial covenants, including minimum level of debt service coverage and limits on the amount of total leverage and secured debt maintained by the Operating Partnership. Management believes that it was in compliance with those covenants as of 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 In October 2023, our Operating Partnership entered into a loan and security agreement (the “Loan Agreement”) with a federally regulated commercial bank, as lender and as agent for lenders that become party thereto from time to time, which matures on October 23, 2026. The Loan Agreement 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 20 Table of Contents 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. 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. The Loan Agreement also allows the Operating Partnership, subject to the satisfaction of certain conditions, to request additional revolving loan commitments up to a specified amount. 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. 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): Payments Due by Year Amount 2025 (three months ending December 31) $ — 2026 341,215 2027 — 2028 — 2029 — Thereafter — Total $ 341,215 9. 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 21 Table of Contents 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. Earnings per basic share under the two-class method is calculated based on dividends declared on common shares and other participating securities (“distributed earnings”) and the rights of participating securities in any undistributed earnings, which represents net income remaining after deduction of dividends accruing during the period. The undistributed earnings are allocated to all outstanding common shares and participating securities based on the relative percentage of each security to the total number of outstanding participating securities. Earnings per basic share represents the summation of the distributed and undistributed earnings per share class divided by the total number of shares. Through 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 Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Net income $ 29,305 $ 40,215 $ 86,406 $ 121,636 Preferred stock dividends ( 1,017 ) ( 564 ) ( 2,676 ) ( 1,240 ) Distribution to participating securities ( 741 ) ( 570 ) ( 2,246 ) ( 1,684 ) Net income attributable to common stockholders used to compute net income per share – basic 27,547 39,081 81,484 118,712 Dilutive effect of Exchangeable Senior Notes — — — 28 Net income attributable to common stockholders used to compute net income per share – diluted $ 27,547 $ 39,081 $ 81,484 $ 118,740 Weighted-average common shares outstanding: Basic 27,912,881 28,254,565 28,036,179 28,216,946 Restricted stock and RSUs 390,719 299,770 365,884 293,105 PSUs — 25,352 — 25,352 Dilutive effect of Exchangeable Senior Notes — — — 12,647 Diluted 28,303,600 28,579,687 28,402,063 28,548,050 Net income attributable to common stockholders per share: Basic $ 0.99 $ 1.38 $ 2.91 $ 4.21 Diluted $ 0.97 $ 1.37 $ 2.87 $ 4.16 10. Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Accounting guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. 22 Table of Contents Level 2—Includes other inputs that are directly or indirectly observable in the marketplace. 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 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 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 receivable (4) $ 16,786 $ 16,786 $ 16,786 $ 16,786 Investments (5) $ 5,258 $ 5,258 $ 5,000 $ 5,000 Notes due 2026 (6) $ 290,229 $ 288,507 $ 297,865 $ 289,077 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. 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 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. Generally, an increase in market yields may result in a decrease in the fair value of the construction loan. 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 construction loan may fluctuate from period to period. 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 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. 23 Table of Contents The carrying amounts of cash equivalents, accounts payable, accrued expenses and other liabilities approximate their fair values. 11. Common Stock Incentive Plan Our board of directors adopted our 2016 Omnibus Incentive Plan (the “2016 Plan”) to enable us to motivate, attract and retain the services of directors, employees and consultants considered essential to our long-term success. The 2016 Plan offers our directors, employees and consultants an opportunity to own our stock or rights that will reflect our growth, development and financial success. Under the terms of the 2016 Plan, the aggregate number of shares of our common stock subject to options, restricted stock, stock appreciation rights, restricted stock units and other awards, will be no more than 1,000,000 shares. Any equity awards that lapse, expire, terminate, are canceled or are forfeited (including forfeitures in connection with satisfaction of tax withholding obligations of the recipient) are re-credited to the 2016 Plan’s reserve for future issuance. The 2016 Plan automatically terminates on the date which is ten years following the effective date of the 2016 Plan. A summary of the restricted stock activity under the 2016 Plan and related information for the nine months ended September 30, 2025 is included in the table below: Unvested Restricted Stock Weighted- Average Grant Date Fair Value Balance at December 31, 2024 77,268 $ 108.95 Granted 62,817 $ 73.18 Vested ( 21,392 ) $ 102.04 Forfeited (1) ( 11,883 ) $ 165.13 Balance at March 31, 2025 106,810 $ 83.04 Granted 6,291 $ 57.23 Vested ( 3,186 ) $ 113.05 Balance at June 30, 2025 109,915 $ 80.70 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 24 Table of Contents 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: Restricted Stock Units Weighted-Average Grant Date Fair Value Balance at December 31, 2024 222,502 $ 114.68 Granted 73,179 $ 73.18 Forfeited (1) ( 9,242 ) $ 97.39 Balance at March 31, 2025 286,439 $ 104.63 Granted 2,796 $ 57.23 Balance at June 30, 2025 289,235 $ 104.17 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. The PSUs granted in January 2021 and 2022 were forfeited in their entirety on December 31, 2023 and 2024, respectively, pursuant to the terms of the agreements, as the PSUs failed to meet the performance threshold for vesting. 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 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. 12. 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 September 30, 2025 is presented in the table below (in thousands): Year Amount 2025 (three months ending December 31) $ 132 2026 543 2027 45 2028 — 2029 — Total future contractual lease payments 720 Effect of discounting ( 28 ) Office lease liability $ 692 Improvement Allowances. 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. 25 Table of Contents 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 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. We follow the policy of monitoring our properties, both targeted acquisition and existing properties, for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist, we are not currently aware of any environmental liabilities that would have a material adverse effect on our financial condition, results of operations and cash flow, or that we believe would require disclosure or the recording of a loss contingency. Litigation. Class Action Lawsuits On April 25, 2022, a federal securities class action lawsuit was filed against the Company and certain of its officers. The case was named Michael V. Mallozzi, individually and on behalf of others similarly situated v. Innovative Industrial Properties, Inc., Paul Smithers, Catherine Hastings and Andy Bui, Case No. 2-22-cv-02359 , and was filed in the U.S. District Court for the District of New Jersey. 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 Securities Exchange Act of 1934, as amended (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 May 7, 2020, and April 13, 2022. On September 29, 2022, an Amended Class Action Complaint was filed under the same Case Number, adding as defendants Alan D. Gold and Benjamin C. Regin, 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 Amended 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 August 7, 2020, and August 4, 2022. On December 1, 2022, defendants moved to dismiss the Amended Class Action Complaint. On September 19, 2023, the court granted defendants’ motion to dismiss the Amended Class Action Complaint without prejudice. On October 19, 2023, a Second Amended Class Action Complaint was filed under the same Case Number, and asserted 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 Second Amended 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 August 7, 2020, and August 4, 2022. On December 18, 2023, defendants moved to dismiss the Second Amended Class Action Complaint; on February 1, 2024, plaintiff responded with their opposition to defendants’ motion to dismiss the Second Amended Class Action Complaint; and on March 1, 2024, defendants replied to plaintiff’s response. On September 25, 2024, the court granted defendants’ motion to dismiss the Second Amended Class Action Complaint with prejudice. On September 30, 2024, plaintiff filed a notice of appeal of the court’s dismissal of the Second Amended Class Action Complaint with prejudice. On December 9, 2024, plaintiff filed their opening appellate brief with the United States Court of Appeals for the Third Circuit. On January 23, 2025, defendants filed their appellate brief. On February 27, 2025, plaintiff filed their reply brief. 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. The case was named Alain Giraudon, individually and on behalf of others similarly situated v. Innovative Industrial Properties, Inc., Alan D. Gold, Paul E. Smithers, David Smith and Ben Regin, Case No. 1:25-cv-00182-RDB , and was filed in the U.S. 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 26 Table of Contents 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. On April 25, 2025, the court issued an order setting a briefing schedule, which is as follows: plaintiff is to file an Amended Complaint no later than June 23, 2025; 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; and defendants are to file a reply no later than November 20, 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. We intend to defend the lawsuit vigorously. However, at this time, we cannot predict the probable outcome of this action, and, accordingly, no amounts have been accrued in the Company’s consolidated financial statements. Derivative Action Lawsuits On July 26, 2022, a derivative action lawsuit was filed against the Company and certain of its officers and directors. The case was named John Rice, derivatively on behalf of Innovative Industrial Properties, Inc. v. Paul Smithers, Catherine Hastings, Andy Bui, Alan Gold, Gary Kreitzer, Mary Curran, Scott Shoemaker, David Stecher, and Innovative Industrial Properties, Inc., Case Number 24-C-22-003312, and was filed in the Circuit Court for Baltimore City, Maryland. The lawsuit asserts putative derivative claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets against the directors and certain officers of the Company. The plaintiffs are seeking declaratory relief, direction to reform and improve corporate governance and internal procedures, and an undetermined amount of damages, restitution, interest, and attorneys’ fees and costs. On September 6, 2022, the defendants in this action filed a Consent Motion to Stay the Proceedings, which was granted on October 11, 2022. On September 28, 2022, a second derivative action lawsuit was filed against the Company and certain of its officers and directors. The case was named Karen Draper, derivatively on behalf of Innovative Industrial Properties, Inc. v. Paul Smithers, Catherine Hastings, Andy Bui, Alan Gold, Gary Kreitzer, Mary Curran, Scott Shoemaker, David Stecher, Defendants, and Innovative Industrial Properties Inc., Nominal Defendant, Case Number 24-C-22-004243, and filed in the Circuit Court for Baltimore City, Maryland. The lawsuit asserts putative derivative claims for breach of fiduciary duty, and seeks actions to reform and improve the Company, and an undetermined amount of damages, restitution, interest, and attorneys’ fees and costs. On October 19, 2022, the parties to both cases filed a Joint Motion to Consolidate Related Shareholder Derivative Actions and to Appoint Lead and Liaison Counsel for plaintiffs, which was granted on December 19, 2022, along with a stay in the lawsuit pending a ruling on the defendants’ motion to dismiss the federal class action lawsuit described above. On April 17, 2023, a third derivative action lawsuit was filed against the Company and certain of its officers and directors. The case was named Ross Weintraub, derivatively on behalf of Innovative Industrial Properties, Inc. v. Alan Gold, Paul Smithers, Catherine Hastings, Ben Regin, Andy Bui, Tracie Hager, Gary Kreitzer, David Stecher, Scott Shoemaker, Mary Curran, and Innovative Industrial Properties, Inc., Case Number 1:23-cv-00737-GLR, and filed in the United States District Court for the District of Maryland. The lawsuit asserts putative derivative claims for breach of fiduciary duty and violations of Section 14(a) of the Exchange Act, and seeks an undetermined amount of damages, equitable relief, and attorneys’ fees and costs. Defendants in this action filed a Consent Motion to Stay the Proceeding, which was granted on April 17, 2023. On June 5, 2023, a fourth derivative action lawsuit was filed against the Company and certain of its officers and directors. The case was named Franco DeBlasio, on behalf of Gerich Melenth Nin (GMN) LP, derivatively on behalf of Innovative Industrial Properties, Inc. v. Paul Smithers, Catherine Hastings, Alan D. Gold, Tracie J. Hager, Benjamin C. Regin, Andy Bui, Gary A. Kreitzer, David Stecher, Scott Shoemaker, Mary Curran, and Innovative Industrial Properties, Inc., Case Number 1:23-cv-01513-GLR, and filed in the United States District Court for the District of Maryland. On July 19, 2023, the United States Court for the District of Maryland consolidated Case Nos. 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. 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 27 Table of Contents 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. The case was named Gary A Gedig, derivatively on behalf of Innovative Industrial Properties, Inc. v. Paul Smithers, Catherine Hastings, Ben Regin, Andy Bui, Tracy Hager, Alan Gold, Gary A. Kreitzer, Mary Curran, Scott Shoemaker, M.D., and David Stecher, and Innovative Industrial Properties, Inc., Civil No. C-24-CV-24-000130, and filed in the Circuit Court for Baltimore City, Maryland. Plaintiff and defendants in this action filed a Joint Stipulation to Stay the Proceedings, which was granted on September 17, 2024. This derivative action relates to the same allegations as those made in the Mallozzi class action, detailed above. On February 12, 2025, a derivative action lawsuit was filed against the Company and certain of its officers and directors. The case was named Joshua Steffens, derivatively on behalf of Innovative Industrial Properties, Inc. v. Alan Gold, Paul Smithers, David Smith, Ben Regin, Gary Kreitzer, Gary Stecher, Scott Shoemaker, Mary Allis Curran, and Innovative Industrial Properties, Inc., Case Number 1:25-cv-00456-ABA , and was filed in the United States District Court for the District of Maryland. The lawsuit asserts putative derivative claims for violations of the Exchange Act, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, waste of corporate assets, and contribution against the directors and certain officers of the Company. The plaintiffs are seeking an undetermined amount of damages, interest, an accounting and constructive trust, punitive damages, and attorneys’ fees and costs. On February 18, 2025, the case was reassigned and given Case Number 1:25-cv-00456-GLR. On February 19, 2025, the United States Court for the District of Maryland consolidated Case Nos. 1:25-cv-00469-BAH (detailed below) with case number 1:25-cv-00456-GLR as the lead case. Plaintiff and defendants in this action filed a Joint Stipulation and Order Staying the Consolidated Action, which was granted on March 13, 2025. This derivative action relates to the same allegations as those made in the Giraudon class action, detailed above. On February 13, 2025, a derivative action lawsuit was filed against the Company and certain of its officers and directors. The case was named Joshua Albers, derivatively on behalf of Innovative Industrial Properties, Inc. v. Alan Gold, Paul Smithers, David Smith, Ben Regin, Gary Kreitzer, Gary Stecher, Scott Shoemaker, Mary Allis Curran, and Innovative Industrial Properties, Inc., Case Number 1:25-cv-00469-BAH , and was filed in the United States District Court for the District of Maryland. The lawsuit asserts putative derivative claims for violations of the Exchange Act, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, waste of corporate assets, and contribution against the directors and certain officers of the Company. The plaintiffs are seeking an undetermined amount of damages, interest, reform, punitive damages, and attorneys’ fees and costs. On February 19, 2025, the United States Court for the District of Maryland consolidated Case Nos. 1:25-cv-00469-BAH with case number 1:25-cv-00456-GLR as the lead case. 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. v. 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. v. 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. 28 Table of Contents The Company intends to vigorously defend each of these lawsuits. However, at this time, the Company cannot predict the probable outcome of these actions, and, accordingly, no amounts have been accrued in the Company’s consolidated financial statements. We may, from time to time, be a party to other legal proceedings, which arise in the ordinary course of our business. Although the results of these proceedings, claims, inquiries, and investigations cannot be predicted with certainty, we do not believe that the final outcome of these matters is reasonably likely to have a material adverse effect on our business, financial condition, or results of operations. Regardless of final outcomes, however, any such proceedings, claims, inquiries, and investigations may nonetheless impose a significant burden on management and employees and may come with significant defense costs or unfavorable preliminary and interim rulings. 13. Segment Information We operate in one reportable segment of acquiring, developing/redeveloping and leasing real estate to tenants on a long-term triple-net basis. All of our revenues are generated in the United States and the CODM manages the business activities on a consolidated basis. The CODM is our President and Chief Executive Officer. The CODM assesses performance for the segment and decides how to allocate resources based on net income, which is reported on the consolidated statements of income. The CODM uses net income to evaluate return on investments and determine whether to reinvest profits or to pay dividends. The evaluation is also used to establish management’s compensation. The revenues, expenses (including stock-based compensation) and net income for the reportable segment are the same as those presented on the consolidated financial statements. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. 14. Subsequent Events 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. 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. 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. New Lease In October 2025, we executed a new lease with a tenant at our property located at 19533 McLane Street in Palm Springs, California. 29 Table of Contents