What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-24 compared with 2025-02-21 · 263 added, 182 removed, 246 unchanged (64% of the section changed)

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For a discussion of such risk factors, see Item 1A, “Risk Factors.”

We are an internally-managed REIT focused on the acquisition, ownership and management of specialized industrial properties in the United States.

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

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

We are an internally-managed REIT focused on the acquisition, ownership and management of specialized industrial and commercial properties in the United States.

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

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

These properties are generally leased, and we expect to continue leasing them, on a triple-net lease basis, pursuant to which the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, real estate taxes and insurance.

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

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

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

We were incorporated in Maryland on June 15, 2016.

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Of these properties, we include 109 properties in our operating portfolio, which were 96.7% leased as of December 31, 2025, with a weighted-average remaining lease term of 12.8 years.

We do not include in our operating portfolio the following properties (all of which were under development/redevelopment as of December 31, 2024, and together are expected to comprise 491,000 rentable square feet upon completion of development/redevelopment):

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

We define our “operating portfolio” as the portion of our property portfolio consisting of properties that are leased or are not leased but ready for their intended use.

The operating portfolio excludes properties under development or redevelopment that are not yet available for tenant occupancy.

Properties are added to the operating portfolio upon substantial completion and availability for occupancy and may be removed if they become vacant and we elect to redevelop them, pursue alternative uses, or market them for sale rather than re-lease them.

We do not include in our operating portfolio the following two properties (all of which were under development/redevelopment as of December 31, 2025, and together are expected to comprise 255,000 rentable square feet upon completion of development/redevelopment):

• Inland Center Drive in San Bernardino, California;

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Factors Impacting Our Operating Results

Our results of operations are affected by a number of factors and depend on the rental revenue we receive from the properties that we acquire, the timing of lease expirations, general market conditions, the regulatory environment in the cannabis industry, and the competitive environment for real estate assets that support the regulated cannabis industry.

Our results of operations are affected by a number of factors and depend on the rental revenue we receive from the properties that we acquire, the timing of lease expirations, general market conditions, the regulatory environment in the cannabis industry, the regulatory and market conditions applicable to the life science industry, and the competitive environment for real estate assets supporting regulated cannabis operators and life science tenants.

Rental Revenues

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Conditions in Our Markets

Positive or negative changes in regulatory, economic or other conditions, drought, and natural disasters in the markets where we acquire properties may affect our overall financial performance.

Our tenants primarily operate in the regulated cannabis industry.

Market dynamics and the regulatory regime in the states where they operate create challenges that impact our tenants’ businesses and may decrease future demand for regulated cannabis cultivation and production facilities.

These challenges include federal, state and local taxation burdens;

ineffective enforcement policies with respect to the illicit cannabis market;

Conditions in the markets in which we operate, including regulatory, economic and industry-specific developments, influence tenant performance and the performance of our life science investments and, in turn, our financial condition, results of operations and cash flows.

Our tenants primarily operate in the regulated cannabis industry and continue to be affected by a combination of macroeconomic, industry-specific and regulatory factors.

These include federal, state and local taxation burdens;

competitive pressure from illicit, unlicensed cannabis operations;

declines in unit pricing for regulated cannabis products;

limited access to capital;

and inflation and supply chain constraints.

The resulting adverse impact on the Company’s and our tenants’ financial condition, results of operations, and cash flows depends on the extent and duration of these challenges in the regulated cannabis markets where we own properties, which are further described below.

constrained access to capital;

inflationary pressures;

elevated interest rates;

significant debt maturities;

labor market constraints;

supply chain disruptions;

evolving trade policies;

and broader U.S.

consumer financial conditions.

Market dynamics and regulatory frameworks vary by state and may influence tenant profitability and demand for regulated cannabis cultivation and production facilities.

These conditions have already adversely affected the ability of certain tenants to meet their lease obligations and have had a material adverse effect on the Company’s financial condition, results of operations, and cash flows.

If these challenges persist or worsen, additional tenants may default under their leases and we may be unable to re-lease affected properties on favorable terms, or at all.

The extent and duration of these impacts depend on developments in the regulated cannabis markets in which we operate and remain subject to significant uncertainty.

In addition to the regulated cannabis industry, we have investments and strategic objectives related to the life science industry.

Conditions in the life science sector, including capital availability, interest rate trends, new supply, valuation levels and sector consolidation may affect the performance of our life science investments and any life science properties that we may acquire.

See “Item 1A.

Risk factors” in this annual report on Form 10-K for a discussion of additional risks we face.

Market Dynamics in Regulated Cannabis State Programs

States vary significantly in their market dynamics, driven by many factors, including, but not limited to, regulatory frameworks, enforcement policies with respect to illicit, unlicensed cannabis operations, taxation and licensing structures.

I neffective enforcement policies with respect to illicit cannabis sales in a particular state may significantly limit the growth and profitability of operators in that state’s regulated cannabis market.

Regulated cannabis markets differ significantly by state, reflecting variations in regulatory structures, taxation and licensing regimes, and enforcement practices related to illicit cannabis activity.

In certain states, including California, the illicit market continues to represent a substantial portion of overall cannabis sales, and high state and local taxes on regulated cannabis products have impacted operator profitability.

In markets where enforcement against illicit sales is limited or inconsistent, regulated operators may face additional competitive pressure, which can affect demand for regulated cannabis facilities.

In addition, many states have experienced sustained declines in unit pricing for regulated cannabis products, with pricing pressure more pronounced in certain markets.

These trends have compressed margins for operators and, in some cases, led to consolidation of operations or the closure of certain facilities.

These developments have influenced tenant demand for space and capital investment decisions and may continue to affect leasing activity.

Reduced Capital Availability and Significant Debt Maturities for Cannabis Operators

Capital availability for regulated cannabis operators remains constrained due to a combination of higher interest rates, increased market volatility, regulatory uncertainty, and the continued federal illegality of cannabis in the United States, which limits access to traditional bank financing and public capital markets.

As a result, many operators rely on alternative sources of capital that are generally more expensive and restrictive.

Since 2021, capital availability for the regulated cannabis industry has declined, in part due to broader macroeconomic conditions.

According to Viridian Capital Advisors (“Viridian”), worldwide cannabis capital raises in 2025 decreased modestly to $2.1 billion, compared to $2.3 billion in 2024, but remained well below levels observed in prior years, including over $4.3 billion in 2022.

In contrast, Viridian reports that mergers and acquisitions activity in the North American regulated cannabis industry increased to approximately $2.1 billion in 2025, up from $1.2 billion in 2024.

At the same time, a number of operators have reached or are approaching the maturity of debt incurred in prior periods.

Limited refinancing options, often at higher interest rates and with restrictive covenants, have increased financial pressure on some tenants and may lead to balance sheet restructurings, asset sales or reductions in operations.

These factors may affect tenant credit profiles and leasing decisions and could influence future rental income and property utilization.

Inflation, Tariffs and Supply Chain Disruption

Inflationary pressures, changes in trade policy and ongoing supply chain challenges have contributed to higher operating and capital costs for cannabis operators and, in certain cases, for the development or redevelopment of our properties.

Changes in tariff policies may increase the cost of equipment, construction materials and other inputs used in cultivation and production facilities.

These higher costs may further affect tenant capital expenditure plans and operating margins.

In addition, supply chain disruptions and geopolitical developments have resulted in longer lead times and increased costs for certain capital projects, which may delay development or redevelopment activities and the commencement or expansion of tenant operations.

The extent of these impacts will continue to depend on broader economic conditions, regulatory developments and future changes in trade and tariff policies.

Unit Pricing for Regulated Cannabis Products

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As a result, certain regulated cannabis operators have consolidated operations or shuttered certain operations to reduce costs, which could have a negative impact on operators’ demand for regulated cannabis facilities, including our existing tenants.

Inflation and Supply Chain Constraints

economy has experienced a sustained increase in inflation rates in recent years, which we believe is negatively impacting our tenants.

This inflation has impacted costs for labor and production inputs for regulated cannabis operators, in addition to increasing costs of construction for development and redevelopment projects.

shortages and global supply chain issues also continue to adversely impact costs and timing for completion of these development and redevelopment projects, which are resulting in cost overruns and delays in commencing operations on certain of our tenants’ projects.

Capital Availability for Tenants

Recently, financial markets have been volatile, reflecting heightened geopolitical risks and material tightening of financial conditions since the U.S.

Federal Reserve began increasing interest rates in spring of 2022 and continued uncertainty regarding monetary policy.

Driven in part by overall macroeconomic conditions, since 2021 capital availability has declined for regulated cannabis operators.

According to Viridian Capital Advisors (“Viridian”), worldwide cannabis capital raises in 2024 increased slightly over 2023, with less than $2.3 billion in total capital raises, versus over $1.9 billion in 2023, $4.3 billion in 2022 and over $12.0 billion in 2021.

Also, according to Viridian, mergers and acquisitions activity in the North American regulated cannabis industry declined in 2024 to $1.2 billion, down from $1.8 billion in 2023.

Capital raising activities by U.S.

REITs continued to increase in 2024 with $85 billion of capital raised compared to $62 billion in 2023.

According to the National Association of Real Estate Investment Trusts, Inc.

(“NAREIT”), U.S.

REIT 2024 capital raising was higher than 2022 and 2023, but remained lower than 2019-2021 levels.

Significant Tenants and Concentrations of Risk

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

See Note 2 “Summary of Significant Accounting Policies and Procedures” in the notes to the consolidated financial statements for further information regarding the tenants in our portfolio that represented the largest percentage of our total rental revenues for the year ended December 31, 2024.

See Note 2 “Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements” in the notes to the consolidated financial statements for further information regarding the tenants in our portfolio that represented the largest percentage of our total rental revenues for the year ended December 31, 2025.

Competitive Environment

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Results of Operations

Investments in Real Estate

See Note 6 “Investments in Real Estate” in the notes to the consolidated financial statements for information regarding our investments in real estate and property portfolio activity during the year ended December 31, 2025.

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

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

Accordingly, we have not derecognized the assets transferred.

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

In addition, as we have not met all of the held-for-sale criteria, land and building and improvements with gross carrying values of $3.4 million and $13.9 million, respectively, and accumulated depreciation of $2.0 million as of December 31, 2024, remain on the consolidated balance sheets, and the buildings and improvements continue to be depreciated.

During the year ended December 31, 2024, we received cash interest payments of $1.1 million, which has been recorded as a liability as of December 31, 2024.

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 27, 2024, for a comparison of the years ended December 31, 2023 and December 31, 2022.

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

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

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

Investment in Life Science

See Note 7 "Life Science Investments" in the notes to the consolidated financial statements for information regarding our life science investment activity for the year ended December 31, 2025.

Comparison of the Years Ended December 31, 2024 and 2023

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 21, 2025, for a comparison of the years ended December 31, 2024 and 2023.

Comparison of the Years Ended December 31, 2025 and 2024 (in thousands)

Years Ended December 31,

Rental (including tenant reimbursements)

Total revenues

2025 2024 Change

Cannabis Portfolio Segment:

Rental revenues (including tenant reimbursements) $ 265,486 $ 306,936 $ (41,450)

Other revenues 469 1,581 (1,112)

Property expenses (30,177) (28,472) (1,705)

General and administrative expense

Depreciation and amortization expense (74,068) (70,807) (3,261)

Total expenses

Impairment loss on real estate (3,527) — (3,527)

Gain (loss) on sale of real estate (326) (3,449) 3,123

Income from operations

Interest income

Interest and other income 6,413 4,388 2,025

Cannabis Portfolio Segment net income 164,270 210,177 (45,907)

Life Science Portfolio Segment:

Interest and other income 5,047 — 5,047

Life Science Portfolio Segment net income 5,047 — 5,047

General and administrative expense (33,735) (37,444) 3,709

Interest and other income 2,860 6,600 (3,740)

Interest expense (20,195) (17,672) (2,523)

Gain (loss) on exchange of Exchangeable Senior Notes

Net income 118,247 161,661 (43,414)

Preferred stock dividends (3,812) (1,804) (2,008)

Net income attributable to common stockholders $ 114,435 $ 159,857 $ (45,422)

Cannabis Portfolio Segment

Rental Revenues.

Rental revenues for the year ended December 31, 2024 were $306.9 million, compared to $307.4 million for the year ended December 31, 2023, reflecting a decrease of $0.4 million or less than 1%.

This decrease in rental revenues was primarily related to certain properties we took back possession of or sold since 2023, lease amendments that adjusted and deferred rent for certain properties, partial payment of rent by certain tenants and two leases that were classified as sale-type leases starting in January 2024 where rental revenue collected is recognized as a deposit liability and is included in other liabilities in our consolidated balance sheet as of December 31, 2024.

The decrease was partially offset by the $3.9 million disposition-contingent lease termination fee that was received in

connection with the sale of our property in Los Angeles, California, amendments to leases for additional improvement allowances at existing properties that resulted in adjustments to rent, revenue from the two properties we acquired in 2024 and contractual rent escalations on our other existing properties.

Rental revenues for the year ended December 31, 2025 were $265.5 million, compared to $306.9 million for the year ended December 31, 2024, reflecting a decrease of $41.5 million, or 14%, year over year.

The decrease was primarily driven by tenant defaults, resulting in a decrease of $46.9 million related to properties leased to PharmaCann, Gold Flora, TILT, and 4Front.

In addition, there was a decrease of $3.1 million related to properties that have been taken back or sold, a $3.9 million decrease from a one-time disposition-contingent lease termination fee that was collected during the year ended December 31, 2024 in connection with the sale of property in Los Angeles, California, and a $3.1 million decrease in tenant reimbursement revenue primarily due to tenant defaults.

These decreases were partially offset by a $5.4 million increase from two properties acquired in 2024 and one property acquired in 2025, a $5.1 million increase from new leases executed on existing properties, and a $6.0 million increase from annual contractual rent escalations.

For the year ended December 31, 2025, we applied $6.6 million of security deposits for payment of contractual rent on properties leased to seven tenants.

For the year ended December 31, 2024, we applied $7.7 million of security deposits for payment of contractual rent on properties leased to six tenants.

For the year ended December 31, 2023, we applied $8.7 million of security deposits for payment of contractual rent on properties leased to five tenants.

Rental revenues for the year ended December 31, 2024 were negatively impacted by non-collection of rent from properties in our operating portfolio totaling $5.5 million.

While we have re-leased several properties that we regained possession of, the rent commencement on certain of these properties is contingent on the tenants obtaining the requisite approvals to operate.

We have also granted temporary rent abatements in certain instances as tenants transition into the properties and commence operations.

As a result, we do not expect to recognize rental revenue from those properties until such events have occurred.

Other Revenues.

Other revenues for the years ended December 31, 2024 and 2023 consist of interest revenue related to leases for property acquisitions that did not satisfy the requirements for sale-leaseback accounting.

The decrease in other revenues for the year ended December 31, 2024 was primarily due to non-collection of $0.6 million in rent from one property, partially offset by the application of $0.2 million of security deposits.

Other revenues for the years ended December 31, 2025 and 2024 primarily consist of interest revenue related to leases for property acquisitions that did not satisfy the requirements for sale-leaseback accounting.

The $1.1 million decrease in other revenue for the year ended December 31, 2025 was primarily due to non-collection of rent related to one property leased to 4Front.

Property Expenses.

Property expenses for the year ended December 31, 2025 increased by $1.7 million, or 6%, to $30.2 million, compared to $28.5 million for the year ended December 31, 2024.

The increase was primarily due to additional investment in existing properties, which resulted in higher property tax that we paid for our properties, as well as higher property expenses related to properties that we have regained possession of but not yet leased.

The increase was primarily driven by additional investment in existing properties, resulting in a $2.1 million increase in property tax expense, as well as a $0.8 million increase in expenses associated with properties that we took back possession of from defaulted tenants but not yet re-leased.

These increases were partially offset by a $1.2 million decrease in insurance expense due to lower premiums on

the master property insurance policy renewed in August 2024 and 2025.

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

General and Administrative Expense .

General and administrative expense for the year ended December 31, 2024 decreased by $5.4 million, or 13%, to $37.4 million, compared to $42.8 million for the year ended December 31, 2023.

The decrease in general and administrative expense was primarily due to lower tenant litigation-related expense incurred, which decreased by $1.8 million compared to 2023, and lower compensation to employees compared to the prior year.

The lower compensation was primarily due to the expiration of the performance share units (“PSUs”) granted in 2021 on December 31, 2023 (which were forfeited in their entirety as they failed to meet the threshold for any payout as of that date) resulting in a decrease of $4.0 million in PSU related stock-based compensation, which was partially offset by an increase to non-PSU related stock-based compensation for employees and directors.

Compensation expense for the year ended December 31, 2024 and 2023 included $17.3 million and $19.6 million, respectively, of non-cash stock-based compensation.

Depreciation and Amortization Expense.

Depreciation and amortization expense for the year ended December 31, 2025 increased by $3.3 million, or 5%, to $74.1 million, compared to $70.8 million for the year ended December 31, 2024.

The increase in depreciation and amortization expense was primarily related to depreciation on the two properties we acquired in 2024 and the placement into service of construction and improvements at certain of our properties.

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

Impairment loss on real estate .

Impairment loss on real estate of $3.5 million for the year ended December 31, 2025 is related to one of our properties located in Palm Springs, California which was sold in June 2025.

Loss on Sale of Real Estate.

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

Interest Income .

Interest income for the year ended December 31, 2024 increased by $2.6 million, or 30%, to $11.0 million, compared to $8.4 million for the year ended December 31, 2023.

The increase in interest income was primarily due to an additional $3.3 million of interest received on our construction loan, which was partially offset by a $0.7 million decrease to interest earned on our interest-bearing cash and cash equivalents and short-term investments.

Loss on sale of real estate for the year ended December 31, 2025 related to the sale of a property located in Mancos, Colorado, which was sold in December 2025.

Loss on sale of real estate for the year ended December 31, 2024 related to the sale of a property located in Los Angeles, California, which was sold in May 2024.

See Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information.

Interest and Other Income.

Interest and other income for the year ended December 31, 2025 increased by $2.0 million, or 46%, to $6.4 million, compared to $4.4 million for year ended December 31, 2024.

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

Life Science Portfolio Segment

Interest and Other Income .

Interest and other income was $5.0 million for the year ended December 31, 2025 and represented interest and dividend income earned on our investments in the IQHQ Credit Facility and IQHQ Preferred Stock.

Unallocated Items

General and Administrative Expense.

General and administrative expense for the year ended December 31, 2025 decreased by $3.7 million, or 10%, to $33.7 million, compared to $37.4 million for the year ended December 31, 2024.

The decrease was primarily attributable to lower non-cash stock-based compensation expense, which decreased by $7.2 million from $17.3 million for the year ended December 31, 2024 to $10.1 million for the year ended December 31, 2025, driven by the expiration of the performance share units (“PSUs”) granted in 2022 on December 31, 2024.

The decrease was partially offset by higher legal, consultant and payroll expenses during the year ended December 31, 2025.

Interest and Other Income .

Interest and other income decreased by $3.7 million, or 57%, to $2.9 million for the year ended December 31, 2025, compared to $6.6 million for the year ended December 31, 2024.

The decrease was due to lower interest-bearing investments and lower rates earned on those investments.

Interest Expense.

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

The increase to interest expense was due to a $0.3 million increase of non-cash interest expense related to the Revolving Credit Facility, which was partially offset by a decrease in interest expense on our Exchangeable Senior Notes as a result of their maturity in February 2024.

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

Interest expense for the year ended December 31, 2025 increased by $2.5 million, or 14%, to $20.2 million, compared to $17.7 million for the year ended December 31, 2024.

The increase was primarily driven by interest incurred on borrowings under our Credit Facilities beginning in September 2025.

Preferred Stock Dividends.

Preferred stock dividends increased by $2.0 million, or 111%, to $3.8 million for the year ended December 31, 2025, compared to $1.8 million for the year ended December 31, 2024 due to issuance of 1,016,852 shares of preferred stock during the year ended December 31, 2025.

The following summary discussion of our cash flows is based on the consolidated statements of cash flows in Item 8, “Financial Statements and Supplementary Data” and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below (in thousands):

Year Ended December 31,

2025 2024 Change

Net cash provided by (used in) operating activities $ 198,189 $ 258,446 $ (60,257)

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Net cash provided by (used in) financing activities (122,536) (197,904) 75,368

Ending cash, cash equivalents and restricted cash

Ending cash and cash equivalents 47,597 146,245 (98,648)

Operating Activities

Cash flows provided by operating activities for the years ended December 31, 2025 and 2024 were $198.2 million and $258.4 million, respectively.

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

The increase in cash flows provided by operating activities from 2023 to 2024 was primarily due to the $3.9 million disposition-contingent lease termination fee that was received concurrently with the sale of our property in Los Angeles, California.

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

The decrease in cash flows provided by operating activities for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to lower net income and the application of $6.6 million of security deposits for contractual rent due to tenant defaults.

Cash flows provided by operating activities for the year ended December 31, 2024 also included a one-time $3.9 million disposition-contingent lease termination fee that was received concurrently with the sale of our property in Los Angeles, California.

Investing Activities

Cash flows used in investing activities for the year ended December 31, 2024 included $82.6 million of purchases of investments in real estate, funding of draws for improvements and construction, and funding of construction loan and other investments in the aggregate, partially offset by $9.1 million in proceeds related to the sale of our Los Angeles, California property and $17.5 million of net maturities of short-term investments.

Cash flows used in investing activities for the year ended December 31, 2023 included $189.0 million of purchases of investments in real estate, funding of draws for improvements and construction, and funding of construction loan and other investments in the aggregate, partially offset by $182.2 million of net maturities of short-term investments.

Cash flows used in investing activities for the year ended December 31, 2025 were $174.3 million, of which $150.3 million was related to investments in life science financial instruments, $31.2 million was related to investments in real estate and funding of draws for improvements and construction funding at our properties, partially offset by $2.2 million in net proceeds related to the sale of two real estate properties and $5.0 million in proceeds related to the net purchases and maturities of short-term investments.

Cash flows used in investing activities for the year ended December 31, 2024 were $56.0 million, of which $82.6 million was related to the purchases of investments in real estate, funding of draws for improvements and construction, and funding of construction loan and other investments in the aggregate, partially offset by $9.1 million in net proceeds related to the sale of our Los Angeles, California property and $17.5 million of net maturities of short-term investments.

The year-over-year decrease in purchases of investments in real estate, funding of draws for improvements and construction, and funding of construction loan and other investments was due to smaller acquisitions and lower development activities as certain projects were completed during 2025.

Financing Activities

Cash flows used in financing activities for the year ended December 31, 2024 were $197.9 million, primarily related to dividend payments of $213.5 million to common and preferred stockholders, principal payment on the Exchangeable Senior Notes of $4.4 million, and $1.4 million related to the net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees and payment of deferred financing costs, partially offset by $11.8 million in net proceeds from the issuance of our common stock and $9.6 million in net proceeds from the issuance of our Series A Preferred Stock pursuant to our ATM program.

Cash flows used in financing activities for the year ended December 31, 2023 were $195.6 million, primarily related to dividend payments of $204.1 million to common and preferred stockholders and $1.1 million related to the net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees

and payment of deferred financing costs, partially offset by $9.6 million in net proceeds from the issuance of our common stock.

Cash flows used in financing activities for the year ended December 31, 2025 were $122.5 million, primarily related to dividend payments of $219.5 million to common and preferred stockholders, $20.1 million related to repurchase of common stock and partial principal payments on the Notes due 2026 of $8.7 million, partially offset by net total draws on our two revolving credit facilities of $102.5 million and $24.1 million in net proceeds from the issuance of our Series A Preferred Stock pursuant to our ATM program.

Liquidity and Capital Resources

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

We expect to use significant cash to acquire additional properties, develop and redevelop existing properties, pay dividends to our stockholders, fund our operations, service our Notes due 2026 and meet other general business needs.

Sources and Uses of Cash

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

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

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

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

As of December 31, 2025, we had cash and cash equivalents of $47.6 million.

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

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

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

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

In July 2022, Kings Garden defaulted on its obligations to pay rent at all of the properties that Kings Garden leases from us.

In September 2023, we regained possession of the four remaining properties that Kings Garden had occupied, where Kings Garden paid stipulated rent during its period of occupancy until September 20, 2023.

In November 2022, Parallel defaulted on its obligations to pay rent at one of our properties in Pennsylvania, and we regained possession of that property in October 2023.

Also in November 2022, Green Peak defaulted on its obligations to pay rent at one of our properties in Michigan.

During 2023, a receiver was appointed over substantially all of Green Peak’s assets, and we regained possession of one property that was under redevelopment as a regulated cannabis cultivation and processing facility and three retail properties in Michigan.

In February 2024, we regained possession of the remaining regulated cannabis cultivation and processing facility that was leased to Green Peak.

In February 2023, Parallel also defaulted on its obligations to pay rent at one of our properties in Texas, and we regained possession of that property in March 2023.

In May 2024, Temescal Wellness defaulted on its obligations to pay rent at one of our properties in Massachusetts and we regained possession of that property in September 2024.

In December 2024, PharmaCann defaulted on its obligations to pay rent for the month of December under six of its eleven leases for properties located in Illinois, Massachusetts, Michigan, New York, Ohio and Pennsylvania.

December rent, including base rent, property management fees and estimated tax and insurance payments, totaled $4.3 million for these six properties.

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 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 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.

If PharmaCann 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.

We directly pay for all property insurance and most property taxes, which are typically reimbursed to us by our tenants.

Some tenants have elected to pay property taxes directly.

From time to time, we incur non-reimbursed property-level operating costs when properties become vacant and are being re-marketed or re-positioned.

These costs vary

quarterly based on vacancy levels and underperforming properties.

Additionally, for properties that are not leased and are under development or redevelopment, we may invest significant capital to prepare them for their intended use and re-leasing.

For the year ended December 31, 2024, property expenses included $4.1 million in non-reimbursed costs related to vacant properties or non-payment.

To the extent additional resources are needed, we expect to fund our investment activity generally through equity or debt issuances either in the public or private markets along with draws on our Revolving Credit Facility.

Where possible, we also may issue limited partnership interests in our Operating Partnership to acquire properties from existing owners seeking a tax-deferred transaction.

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

At December 31, 2025, the outstanding principal balance on the Notes due 2026 was $291.2 million, which matures in May 2026.

The maturity of the Notes due 2026 within one year from the date of issuance of the Company’s financial statements, together with the Company’s current liquidity position, raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

Management is actively evaluating alternatives to address the maturity of the Notes due 2026, which may include refinancing the existing indebtedness or raising additional capital combined with existing cash resources to retire the obligation.

Although management believes that it is more likely than not that the Company will be able to address the maturity of the Notes due 2026, guidance issued under Accounting Standard Codification ("ASC") 205-40, Presentation of Financial Statements - Going Concern , requires that management not conclude that such an outcome is "probable" if, among other factors, the outcome is not within control of the Company.

Because no such refinancing or capital transactions have closed, such outcomes are not solely within the control of the Company and therefore, management is unable to conclude that such an outcome is probable.

Accordingly, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year following the date of issuance of these consolidated financial statements.

The failure to retire or refinance the Notes due 2026 could lead to an event of default, which would have a material adverse effect on the Company’s financial condition.

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

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

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

IQHQ Investments

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

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

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

On October 31, 2025, the Company purchased an additional 45,000 shares of IQHQ Preferred Stock for $45.0 million, resulting in a total investment of 50,000 shares with an aggregate purchase price of $50.0 million.

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

Our remaining investment in IQHQ Preferred Stock pursuant to the Securities Purchase Agreement is expected to be funded in multiple tranches commencing the second quarter of 2026 and continuing through the second quarter of 2027.

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

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

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

See the section above entitled “Business - 2025 Business Update - Life Science Investments” for a discussion of the terms of the IQHQ Credit Facility.

Notes Due 2026

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

We sought to obtain an investment grade rating to facilitate access to the investment grade unsecured debt market as part of our overall strategy to maximize our financial flexibility and manage our overall cost of capital.

On May 25, 2021, our Operating Partnership issued $300.0 million aggregate principal amount of Notes due 2026.

The Notes due 2026 are the Operating Partnership’s general unsecured obligations, and rank equally in right of payment with all of the Operating Partnership’s existing and future senior unsecured indebtedness, including the Exchangeable Senior Notes which matured in February 2024.

In May 2021, our Operating Partnership issued $300.0 million aggregate principal amount of Notes due 2026.

The Notes due 2026 are the Operating Partnership’s general unsecured and unsubordinated obligations, and rank equally in right of payment with all of the Operating Partnership’s future senior unsecured indebtedness.

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

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

We, or our affiliates, may at any time and from time to time, purchase our Notes due 2026 for cash through open market purchases, privately negotiated transactions, a tender offer or otherwise.

Such purchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

In February 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, in accordance with terms of the indenture for the Exchangeable Senior Notes.

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 .

During the year ended December 31, 2024, we sold 123,224 shares of our common stock pursuant to the Prior ATM Program for net proceeds of $11.8 million.

During the year ended December 31, 2024, we sold 402,673 shares of our Series A Preferred Stock pursuant to the ATM Program for net proceeds of $9.6 million.

We intend to file an automatic shelf registration statement, which may permit us, from time to time, to offer and sell common stock, preferred stock, warrants, debt securities of our Operating Partnership and other securities to the extent necessary or advisable to meet our liquidity needs.

On October 23, 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.

As of December 31, 2025, the outstanding principal balance on our Notes due 2026 was $291.2 million and we plan to refinance these notes prior to maturity in May 2026.

We have an “at the market” equity offering program (“ATM Program”), pursuant to which we may offer and sell from time to time, including on a forward basis, shares of our common stock and 9.00% Series A Cumulative Redeemable Preferred Stock, $0.00 1 par value per share (the “Series A Preferred Stock”), up to an aggregate offering price of $500.0 million.

During the year ended December 31, 2025, we sold 1,016,852 shares of our Series A Preferred Stock for net proceeds of $24.1 million.

As of December 31, 2025, shares of the Company’s common stock and Series A Preferred Stock having an aggregate offering price of up to $464.9 million remain available for offer and sale pursuant to the ATM Program.

Credit Facilities

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

The Loan Agreement matures on October 23, 2026, and was most recently amended in November 2024 to increase aggregate commitments for secured revolving loans to $87.5 million (the “Revolving Credit Facility”).

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

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

There were no amounts outstanding under the Loan Agreement as of December 31, 2024.

See Note 7 “Debt” to our consolidated financial statements included in this report for more information.

In May 2024, we sold a property in Los Angeles, California for $9.1 million (excluding closing costs), received a disposition-contingent lease termination fee from the tenant concurrently with the closing of $3.9 million and received tenant reimbursement of our closing and other costs related to the sale of the property.

We expect to meet our short-term and long-term liquidity needs through cash and short-term investments on hand, cash flows from operations and cash flows from sources discussed above.

We believe that our liquidity and sources of capital are adequate to satisfy our cash requirements.

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

In recent years, financial markets have been volatile in general, which has also significantly reduced our access to capital.

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

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

At December 31, 2025, the interest rate was 9.0%.

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

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

Management believes it was in compliance with these covenants as of

December 31, 2025.

As of December 31, 2025, there were $27.5 million of borrowings outstanding under the Revolving Credit Facility.

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

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

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

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

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

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

At December 31, 2025, the interest rate was 6.1%.

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.

Management believes it was in compliance with these covenants as of December 31, 2025.

As of December 31, 2025, outstanding borrowings under our IIP Life Science Credit Facility were $75.0 million.

Share Repurchase Program

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

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

The timing, volume and nature of the repurchases will be at the discretion of management based on its evaluation of the capital needs of the Company, market conditions, applicable legal requirements and other factors.

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

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

During the year ended December 31, 2025, 371,538 shares of common stock were repurchased and retired for $20.1 million under the share repurchase plan.

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

We have filed a registration statement with the SEC allowing us, from time to time, to offer and sell common stock, preferred stock, warrants, debt securities of our Operating Partnership and other securities to the extent necessary or advisable to meet our liquidity needs.

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

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Year Ended December 31,

2025 2024 2023

Ordinary income distributions $ 6.143200 $ 7.440000 $ 7.700000

Long-term capital gain distributions (1)

(1) Unrecaptured Section 1250 Gain of $0.058864 represents additional characterization of and is part of long-term capital gain distributions for the year ended December 31, 2022.

The common stock distribution with a record date of December 31, 2024 was a split-year distribution, with $0.83 allocable to 2024 for federal income tax purposes and $1.07 allocable to 2025 for federal income tax purposes.

Return of capital 0.626800 — —

Total $ 6.770000 $ 7.440000 $ 7.700000

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The following table summarizes our contractual obligations as of December 31, 2025 (in thousands):

Notes due 2026

As of December 31, 2024, we had (1) $37.1 million outstanding in commitments related to improvement allowances, which generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease;

(2) $1.2 million outstanding in commitments related to contract with vendors for improvements at our properties;

and (3) $0.2 million outstanding in commitments to fund a construction loan.

The commitments discussed in this paragraph are excluded from the table of contractual obligations above, as improvement allowances generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease, there is no explicit time frame for incurring the obligations related to our contracts with vendors, and construction loan funding generally may be requested by the borrower from time to time, subject to satisfaction of certain conditions.

There were no amounts outstanding under the Revolving Credit Facility as of December 31, 2024.

See Note 7 “Debt” to our consolidated financial statements included in this report for more information.

by Year Notes due 2026 Credit Facilities Interest Office Rent Total

2026 $ 291,215 $ 27,500 $ 13,132 $ 543 $ 332,390

2027 — — 4,639 45 4,684

2028 — 75,000 3,517 — 78,517

2029 — — — — —

2030 — — — — —

Thereafter — — — — —

Total $ 291,215 $ 102,500 $ 21,288 $ 588 $ 415,591

As of December 31, 2025, we had (1) $120 million remaining on our commitment to purchase up to $170 million of IQHQ Preferred Stock which is scheduled to be funded in various installments by June 30, 2027, subject to extension options exercisable by IQHQ;

(2) $6.5 million outstanding in commitments related to improvement allowances, which generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease;

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

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

Non-GAAP Financial Information and Other Metrics

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For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share.

We compute normalized funds from operations (“Normalized FFO”) by adjusting FFO, as defined by NAREIT, to exclude certain GAAP income and expense amounts that we believe are infrequent and unusual in nature and/or not

related to our core real estate operations.

Exclusion of these items from similar FFO-type metrics is common within the equity REIT industry, and management believes that presentation of Normalized FFO and Normalized FFO per share provides investors with a metric to assist in their evaluation of our operating performance across multiple periods and in comparison to the operating performance of other companies, because it removes the effect of unusual items that are not expected to impact our operating performance on an ongoing basis.

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

During the year ended December 31, 2025, the Company revised its presentation of Normalized FFO to include two adjustments related to income on seller-financed notes and deferred lease payments received on sales-type leases that were previously reflected in adjusted funds from operations (“AFFO”), which has been reflected for all periods presented.

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

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

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

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

Other than for the three months ended December 31, 2024, September 30, 2024 and June 30, 2024, FFO (diluted), Normalized FFO, AFFO and FFO, Normalized FFO and AFFO per diluted share include the dilutive impact of the assumed full exchange of the Exchangeable Senior Notes for shares of common stock.

For the years ended December 31, 2024 and 2023, and for the three months ended March 31, 2024, FFO (diluted), Normalized FFO, AFFO and FFO, Normalized FFO and AFFO per diluted share include the dilutive impact of the assumed full exchange of the Exchangeable Senior Notes for shares of common stock.

For the three months ended September 30, 2024 and June 30, 2024, 25,352 shares and 20,713 shares, respectively, issuable upon vesting of the PSUs were dilutive, as the performance thresholds for vesting of these PSUs were met as measured as of the respective periods.

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Years Ended December 31,

2025 2024 2023

Net income attributable to common stockholders $ 114,435 $ 159,857 $ 164,236

Real estate depreciation and amortization 74,068 70,807 67,194

Loss (gain) on sale of real estate

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

Impairment loss on real estate 3,527 — —

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

FFO attributable to common stockholders (basic) 192,356 230,213 231,430

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FFO attributable to common stockholders (diluted) 192,356 230,241 231,649

Financing expense

Litigation-related expense 2,008 788 2,480

Loss (gain) on exchange of Exchangeable Senior Notes — — (22)

Normalized FFO attributable to common stockholders (diluted)

Interest income on seller-financed note (2)

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

Income on seller-financed notes (2)

(835) 1,104 1,342

Deferred lease payments received on sales-type leases (3)

Normalized FFO attributable to common stockholders (diluted) 193,522 237,071 235,449

Stock-based compensation 10,132 17,317 19,581

Non-cash interest expense 1,999 1,664 1,375

Non-cash accretion of life science investments (333) — —

Above-market lease amortization 92 92 92

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Weighted average common shares outstanding – diluted 28,377,227 28,530,650 28,255,797

(1) Amount reflects the $3.9 million disposition-contingent lease termination fee received concurrently with the sale of our property in Los Angeles, California, net of the loss on sale of real estate of $3.4 million (see Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information).

(2) Amount reflects the non-refundable interest paid on the seller-financed note issued to us by the buyer in connection with our disposition of a portfolio of four properties in southern California previously leased to affiliates of Vertical, which is recognized as a deposit liability and is included in other liabilities in our consolidated balance sheet as of December 31, 2024 and 2023, as the transaction did not qualify for recognition as a completed sale.

(3) Amount reflects the non-refundable lease payments received on two sales-type leases which are recognized as a deposit liability starting on January 1, 2024, and is included in other liabilities in our consolidated balance sheets as of December 31, 2024, as the transaction did not qualify for recognition as a completed sale (see Note 2 “Lease Accounting” to our consolidated financial statements included in this report for more information).

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

________________________________________________________

(1) For the year ended December 31, 2024, amount reflects the $3.9 million disposition-contingent lease termination fee received concurrently with the sale of our property in Los Angeles, California, net of the loss on sale of real estate of $3.4 million (see Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information).

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

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

For the year ended December 31, 2025, the negative amount resulted from the recognition of $2.6 million of non-refundable cash payments received on the MIH Note as interest and other income in connection with the termination of the seller-financed note.

(3) Amount reflects the non-refundable lease payments received on two sales-type leases which are recognized as a deposit liability starting on January 1, 2024, and is included in other liabilities in our consolidated balance sheets as of December 31, 2025 and 2024 , as the transaction did not qualify for recognition as a completed sale (see Note 2 “Lease Accounting” to our consolidated financial statements included in this report for more information).

The tables below are reconciliations of quarterly net income attributable to common stockholders to FFO, Normalized FFO and AFFO for the years ended December 31, 2025 and 2024 (in thousands, except share and per share amounts):

Three Months Ended (1)

December 31, 2024

September 30, 2024

June 30, 2024

March 31, 2024

December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025

Net income attributable to common stockholders $ 30,705 $ 28,288 $ 25,146 $ 30,296

Real estate depreciation and amortization 18,538 18,639 18,500 18,391

Disposition-contingent lease termination fee, net of loss on sale of real estate (2)

FFO attributable to common stockholders (basic)

Cash and non-cash interest expense on Exchangeable Senior Notes

FFO attributable to common stockholders (diluted)

Impairment loss on real estate — — — 3,527

Loss on sale of real estate 326 — — —

FFO attributable to common stockholders (basic and diluted) 49,569 46,927 43,646 52,214

Litigation-related expense 585 604 413 406

Normalized FFO attributable to common stockholders (diluted)

Interest income on seller-financed note (3)

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

Income on seller-financed notes (2)

223 (2,375) 1,164 153

Deferred lease payments received on sales-type leases (3)

Normalized FFO attributable to common stockholders (diluted) 50,377 45,156 45,228 52,761

Stock-based compensation 2,698 2,684 2,672 2,078

Non-cash interest expense 568 485 476 470

Non-cash accretion of life science investments (333) — — —

Above-market lease amortization 23 23 23 23

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Restricted stock and RSUs 390,146 390,719 393,601 312,473

Dilutive effect of Exchangeable Senior Notes

Weighted average common shares outstanding – diluted 28,303,530 28,303,600 28,317,693 28,588,022

Three Months Ended (1)

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024

Net income attributable to common stockholders $ 39,461 $ 39,651 $ 41,655 $ 39,090

Real estate depreciation and amortization 18,240 17,944 17,473 17,150

Disposition-contingent lease termination fee, net of loss on sale of real estate (4)

FFO attributable to common stockholders (basic) 57,701 57,595 58,677 56,240

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Litigation-related expense 268 210 164 146

Loss (gain) on exchange of Exchangeable Senior Notes

Income on seller-financed notes (2)

30 268 403 403

Deferred lease payments received on sales-type leases (3)

568 1,452 1,462 1,456

Normalized FFO attributable to common stockholders (diluted) 58,567 59,525 60,706 58,273

Interest income on seller-financed note (3)

Stock-based compensation 4,315 4,316 4,371 4,315

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Restricted stock and RSUs 299,770 299,770 300,582 278,890

PSUs — 25,352 20,713 —

Dilutive effect of Exchangeable Senior Notes — — — 38,079

Weighted average common shares outstanding – diluted 28,554,335 28,579,687 28,572,138 28,461,986

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(1) The sum of quarterly financial data may vary from annual data due to rounding and differences in the dilutive effect of potentially issuable shares of each reporting period.

(2) Amount reflects the $3.9 million disposition-contingent lease termination fee received concurrently with the sale of our property in Los Angeles, California, net of the loss on sale of real estate of $3.4 million (see Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information)

(3) Amount reflects the non-refundable interest paid on the seller-financed note issued to us by the buyer in connection with our disposition of a portfolio of four properties in southern California previously leased to affiliates of Vertical, which is recognized as a deposit liability and is included in other liabilities in our consolidated balance sheets as of December 31, 2024 and 2023, as the transaction did not qualify for recognition as a completed sale.

(4) Amount reflects the non-refundable lease payments received on two sales-type leases which are recognized as a deposit liability starting on January 1, 2024, and is included in other liabilities in our consolidated balance sheets as of December 31, 2024, as the transaction did not qualify for recognition as a completed sale (see Note 2 “Lease Accounting” to our consolidated financial statements included in this report for more information).

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

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

(3) Amount reflects the non-refundable lease payments received on two sales-type leases which are recognized as a deposit liability starting on January 1, 2024, and is included in other liabilities in our consolidated balance sheets as of December 31, 2025 and 2024, as the transaction did not qualify for recognition as a completed sale (see Note 2 “Lease Accounting” to our consolidated financial statements included in this report for more information).

(4) Amount reflects the $3.9 million disposition-contingent lease termination fee received concurrently with the sale of our property in Los Angeles, California, net of the loss on sale of real estate of $3.4 million (see Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information)

Critical Accounting Estimates

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We continually evaluate the estimates and assumptions we use to prepare our consolidated financial statements.

Our critical accounting estimates are defined as accounting estimates or assumptions made in accordance with GAAP, which involve a significant level of estimation uncertainty or subjectivity and have had or are reasonably likely to have a material impact on our financial condition or results of operations.

impact on our financial condition or results of operations.

The following critical accounting estimates discussion reflects what we believe are the most significant estimates and assumptions used in the preparation of our consolidated financial statements.

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Lease Accounting

We account for our leases under Accounting Standards Codification 842, Leases, which requires significant estimates and judgments by management in its application.

We account for our leases as lessor under ASC 842, Leases, which requires significant estimates and judgments by management in its application.

Upon lease inception or lease modification, we assess the lease classification of both the land and building components of the property.

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

A decrease of 5% in the estimated unguaranteed residual value of our properties would result in a change to the lease classification of one lease that was modified during the year ended December 31, 2024.

A decrease of 5% in the estimated unguaranteed residual value of our properties would not change the lease classification of any new leases or leases that were modified during the year ended December 31, 2025.

Acquisition of Rental Property, Depreciation and Impairment

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We depreciate buildings and improvements where we are considered the owner for accounting purposes based on our evaluation of the estimated useful life of each specific asset, not to exceed 40 years.

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

The determination of whether we are or the tenant is the owner of improvements for accounting purposes is subject to significant judgment.

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

The determination of whether we are or the tenant is the owner of improvements for accounting purposes is subject to judgment.

In making that determination, we consider numerous factors and perform a detailed evaluation of each individual lease.

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For each property where such an indicator occurred, we completed an impairment evaluation.

After completing this process, we determined that for each of the operating properties evaluated, undiscounted cash flows over the holding period were in excess of carrying value and, therefore, we did not record any impairment losses for these properties for the years ended December 31, 2024, 2023 and 2022.

Significant adverse changes in the critical accounting estimates and judgements used in the impairment evaluation would need to occur for the undiscounted cash flows over the holding period to be less than the carrying value for each operating property evaluated as of December 31, 2024.

During the year ended December 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.

We completed the sale of the property in June 2025.

For all other operating properties that were evaluated, we determined that the undiscounted cash flows over the holding period were in excess of carrying value and, therefore, we did not record any impairment losses for these properties for the year ended December 31, 2025.

Significant adverse changes in the critical accounting estimates used in the impairment evaluation are required for the undiscounted cash flows over the holding period to be less than the carrying value of these properties as of December 31, 2025.

No impairment losses were recognized for the year ended December 31, 2024 and 2023.

Impact of Real Estate and Credit Markets

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Interest Rate Risk

As of December 31, 2024, we had $300.0 million principal amount of Notes due 2026 outstanding at a fixed interest rate of 5.50%, and therefore, if interest rates decline, our required payments may exceed those based on current market rates.

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

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

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

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

As of December 31, 2024, we had no outstanding borrowings on our Revolving Credit Facility.

We are exposed to interest rate risk primarily through our variable-rate indebtedness, including amounts outstanding under our Revolving Credit Facility and our IIP Life Science Credit Facility.

Borrowings under these facilities bear interest at variable rates based on the greater of prime rate or SOFR, as applicable, plus an applicable margin and stipulated rate.

As a result, increases in market interest rates may increase our borrowing costs and adversely affect our results of operations and cash flows.

Our Notes due 2026 bear interest at a fixed rate of 5.50% per annum and therefore are not subject to variability in interest payments due to changes in market interest rates.

Our investments in IQHQ Preferred Stock and the IQHQ Credit Facility provide fixed cash and PIK returns and are not directly exposed to changes in prevailing market interest rates.

However, to the extent these investments are funded with variable-rate indebtedness or other interest-sensitive capital sources, increases in interest rates may increase our cost of capital and reduce investment spreads.

We monitor our exposure to interest rate risk and may use a mix of fixed- and variable-rate debt to manage such exposure over time.

See “Item 7A.

Quantitative and Qualitative Disclosures About Market Risk” for additional information regarding our interest rate sensitivity.

Our investments in short-term money market funds, certificates of deposit and short-term investments in obligations of the U.S.

government with an original maturity at the time of purchase of greater than 90 days are less sensitive to market fluctuations than a portfolio of long-term securities.

Accordingly, we believe that a significant change in interest rates would not have a material effect on the consolidated financial statements.

Impact of Inflation

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

What changed 10-K

Item 7. Management’s Discussion and Analysis