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 ) June 30, December 31, Assets 2026 2025 Real estate, at cost: Land $ 141,289 $ 146,320 Buildings and improvements 2,189,885 2,269,597 Construction in progress 34,769 40,593 Total real estate, at cost 2,365,943 2,456,510 Less accumulated depreciation ( 369,450 ) ( 343,062 ) Net real estate held for investment 1,996,493 2,113,448 Life science investments 275,888 152,665 Loans receivable 71,800 22,800 Cash and cash equivalents 204,734 47,597 Restricted cash 2,903 — In-place lease intangible assets, net 5,515 6,366 Other assets, net 24,308 27,982 Total assets $ 2,581,641 $ 2,370,858 Liabilities and stockholders’ equity Liabilities: Notes due 2026, net $ — $ 290,602 Exchangeable notes, net 391,163 — Term loans, net 125,370 — Revolving credit facilities 92,500 102,500 Building improvements and construction funding payable 789 2,964 Accounts payable and accrued expenses 8,354 10,870 Dividends payable 56,314 54,913 Rent received in advance and tenant security deposits 44,710 50,307 Other liabilities 10,842 10,698 Total liabilities 730,042 522,854 Commitments and contingencies (Notes 6, 7 and 13) 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, 5,666,082 and 2,019,525 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 128,995 47,780 Common stock, par value $ 0.001 per share, 50,000,000 shares authorized: 27,571,349 and 28,022,975 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 28 28 Additional paid-in capital 2,072,317 2,113,184 Dividends in excess of earnings ( 349,741 ) ( 312,988 ) Total stockholders’ equity 1,851,599 1,848,004 Total liabilities and stockholders’ equity $ 2,581,641 $ 2,370,858 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 June 30, For the Six Months Ended June 30, 2026 2025 2026 2025 Revenues: Rental (including tenant reimbursements) $ 62,890 $ 62,866 $ 131,810 $ 134,563 Other 425 25 501 50 Total revenues 63,315 62,891 132,311 134,613 Expenses: Property expenses 7,196 6,867 14,772 14,246 General and administrative expense 7,719 8,626 18,068 17,087 Depreciation and amortization expense 18,799 18,500 37,383 36,891 Impairment loss on real estate — — — 3,527 Total expenses 33,714 33,993 70,223 71,751 Gain (loss) on sale of real estate, net 11,847 — 12,269 — Income from operations 41,448 28,898 74,357 62,862 Interest and other income 10,752 1,570 17,083 3,183 Interest expense ( 8,348 ) ( 4,444 ) ( 14,779 ) ( 8,944 ) Net income 43,852 26,024 76,661 57,101 Preferred stock dividends ( 3,187 ) ( 878 ) ( 5,841 ) ( 1,659 ) Net income attributable to common stockholders $ 40,665 $ 25,146 $ 70,820 $ 55,442 Net income attributable to common stockholders per share (Note 10): Basic $ 1.39 $ 0.87 $ 2.43 $ 1.92 Diluted $ 1.36 $ 0.86 $ 2.39 $ 1.90 Weighted-average shares outstanding: Basic 28,443,143 27,924,092 28,218,773 28,098,850 Diluted 29,992,248 28,317,693 29,233,929 28,452,111 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 June 30, 2026 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 4,718,048 $ 108,081 28,314,520 $ 28 $ 2,123,710 $ ( 337,279 ) $ 1,894,540 Net income — — — — — 43,852 43,852 Issuance of unvested restricted stock — — 44,529 — — — — Issuance of preferred stock, net of issuance costs 948,034 20,914 — — — — 20,914 Issuance of common stock, net of issuance costs — — 680,842 1 34,749 — 34,750 Repurchase of common stock — — ( 1,468,542 ) ( 1 ) ( 88,968 ) — ( 88,969 ) Preferred stock dividends — — — — — ( 3,187 ) ( 3,187 ) Common stock dividends — — — — — ( 53,127 ) ( 53,127 ) Stock-based compensation — — — — 2,826 — 2,826 Balances at end of period 5,666,082 $ 128,995 27,571,349 $ 28 $ 2,072,317 $ ( 349,741 ) $ 1,851,599 Six Months Ended June 30, 2026 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 2,019,525 $ 47,780 28,022,975 $ 28 $ 2,113,184 $ ( 312,988 ) $ 1,848,004 Net income — — — — — 76,661 76,661 Issuance of unvested restricted stock, net of forfeitures — — 139,786 — ( 962 ) — ( 962 ) Issuance of preferred stock, net of issuance costs 3,646,557 81,215 — — — — 81,215 Issuance of common stock, net of issuance costs — — 859,497 1 44,030 — 44,031 Repurchase of common stock — — ( 1,468,542 ) ( 1 ) ( 88,968 ) — ( 88,969 ) Preferred stock dividends — — — — — ( 5,841 ) ( 5,841 ) Common stock dividends — — — — — ( 107,573 ) ( 107,573 ) Conversion of restricted stock units into common stock, net of forfeitures — — 17,633 — ( 377 ) — ( 377 ) Stock-based compensation — — — — 5,410 — 5,410 Balances at end of period 5,666,082 $ 128,995 27,571,349 $ 28 $ 2,072,317 $ ( 349,741 ) $ 1,851,599 5 Table of Contents Three Months Ended June 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 1,387,820 $ 32,818 28,378,181 $ 28 $ 2,125,109 $ ( 235,791 ) $ 1,922,164 Net income — — — — — 26,024 26,024 Issuance of unvested restricted stock, net of forfeitures — — 6,291 — — — — Issuance of preferred stock, net of issuance costs 173,834 4,025 — — — — 4,025 Repurchase of common stock — — ( 366,952 ) — ( 19,818 ) — ( 19,818 ) Preferred stock dividends — — — — — ( 878 ) ( 878 ) Common stock dividends — — — — — ( 53,783 ) ( 53,783 ) Stock-based compensation — — — — 2,672 — 2,672 Balances at end of period 1,561,654 $ 36,843 28,017,520 $ 28 $ 2,107,963 $ ( 264,428 ) $ 1,880,406 Six Months Ended June 30, 2025 Series A Preferred Stock Common Stock Additional 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 — — — — — 57,101 57,101 Issuance of unvested restricted stock, net of forfeitures — — 57,225 — ( 792 ) — ( 792 ) Issuance of preferred stock, net of issuance costs 558,981 13,211 — — — — 13,211 Repurchase of common stock — — ( 371,538 ) — ( 20,108 ) — ( 20,108 ) Preferred stock dividends — — — — — ( 1,659 ) ( 1,659 ) Common stock dividends — — — — — ( 108,246 ) ( 108,246 ) Forfeiture of unvested restricted stock units — — — — — 89 89 Stock-based compensation — — — — 4,750 — 4,750 Balances at end of period 1,561,654 $ 36,843 28,017,520 $ 28 $ 2,107,963 $ ( 264,428 ) $ 1,880,406 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 Six Months Ended June 30, 2026 2025 Cash flows from operating activities Net income $ 76,661 $ 57,101 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization 37,383 36,891 Impairment loss on real estate — 3,527 Loss (gain) on sale of real estate, net ( 12,269 ) — Paid-in-kind dividends and interest income on life science investments ( 2,548 ) — Stock-based compensation 5,410 4,750 Amortization of debt discount and issuance costs 1,787 946 Other non-cash adjustments ( 1,847 ) 5 Changes in assets and liabilities Other assets, net 2,915 3,719 Accounts payable, accrued expenses and other liabilities ( 947 ) 1,281 Rent received in advance and tenant security deposits ( 5,597 ) ( 5,529 ) Net cash provided by (used in) operating activities 100,948 102,691 Cash flows from investing activities Investments in real estate — ( 7,857 ) Investments in life science financial instruments ( 120,000 ) — Proceeds from sale of real estate assets 45,192 1,750 Funding of draws for improvements and construction ( 3,591 ) ( 16,547 ) Purchases of short-term investments — ( 5,258 ) Maturities of short-term investments — 5,000 Net cash provided by (used in) investing activities ( 78,399 ) ( 22,912 ) Cash flows from financing activities Issuance of common stock, net of issuance costs 44,031 — Repurchase of common stock ( 88,969 ) ( 20,108 ) Issuance of preferred stock, net of issuance costs 81,215 13,211 Proceeds from issuance of exchangeable notes 402,500 — Proceeds from term loans 148,660 — Principal payments on debt and term loans ( 311,274 ) ( 8,697 ) Draws on revolving credit facilities 125,000 — Repayments on revolving credit facilities ( 135,000 ) — Payment of deferred financing costs ( 15,320 ) — Dividends paid to common stockholders ( 108,223 ) ( 108,716 ) Dividends paid to preferred stockholders ( 3,790 ) ( 1,345 ) Taxes paid related to net share settlement of equity awards ( 1,339 ) ( 703 ) Net cash provided by (used in) financing activities 137,491 ( 126,358 ) Net increase (decrease) in cash, cash equivalents and restricted cash 160,040 ( 46,579 ) Cash and cash equivalents, beginning of period 47,597 146,245 Cash, cash equivalents and restricted cash, end of period $ 207,637 $ 99,666 Supplemental disclosure of cash flow information: Cash paid during the period for interest, net of interest capitalized $ 13,085 $ 8,058 Supplemental disclosure of non-cash investing and financing activities: Accrual for current-period additions to real estate $ 140 $ 4,402 Accrual for common and preferred stock dividends declared 56,314 54,661 See accompanying notes to the consolidated financial statements. 7 Table of Contents Innovative Industrial Properties, Inc. Notes to the Consolidated Financial Statements June 30, 2026 (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 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, 2025. 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 statement 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, 2026. 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. Reclassification . Certain prior period amounts have been reclassified to conform to the current period presentation. The reclassification had no impact on previously reported net income attributable to common stockholders. Going Concern. As of June 30, 2026, management believes the substantial doubt about the Company's ability to continue as a going concern has been resolved. The going concern conditions that caused substantial doubt no longer exist as the Company repaid in full the $ 291.2 million principal amount of its Notes due 2026 upon their maturity in May 2026. Significant Accounting Policies. The consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 24, 2026, contain a discussion of significant accounting policies. There have been no material changes to our significant accounting policies other than as listed below. 8 Table of Contents Exchangeable Notes . Our exchangeable notes are classified as convertible debt instruments recorded as liabilities in accordance with Accounting Standards Codification ("ASC") 470-20 and are initially recognized at their principal amount, net of issuance costs. Issuance costs are amortized to interest expense over the term of the instrument using the effective interest method. We evaluate each instrument to determine its classification as debt or equity and assess whether embedded features, such as conversion options, require bifurcation and separate accounting as derivatives under ASC 815-15. Bifurcation is required if these features are not clearly and closely related to the host contract and do not meet the scope exception criteria under ASC 815-40. Upon conversion, the carrying amount of the debt is reduced, and the settlement is accounted for based on the terms of the instrument, which may include issuance of common stock, cash payment, or a combination thereof. Interest expense includes the contractual coupon rate and amortization of issuance costs. Restricted Cash. At June 30, 2026, restricted cash relates to interest and other reserves required by one of our term loans. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the total amount shown in the consolidated statements of cash flows (in thousands): June 30, 2026 December 31, 2025 Cash and cash equivalents $ 204,734 $ 47,597 Restricted cash 2,903 — Cash, cash equivalents and restricted cash $ 207,637 $ 47,597 Concentration of Credit Risk. Real Estate Investments Tenant Concentration As of June 30, 2026, we owned 108 properties located in 19 states and leased to 37 tenants. The ability of any of our tenants to honor the terms of their leases is dependent upon the economic, regulatory, competitive, natural and social factors affecting the community in which that tenant operates. The following tables set forth the five tenants in our portfolio that represented the largest percentage of our total rental revenues for the three and six months ended June 30, 2026 and 2025, including tenant reimbursements: For the Three Months Ended June 30, 2026 Percentage of Number of Rental Leases Revenue Ascend Wellness Holdings, Inc. ("Ascend") 4 14 % Green Thumb Industries, Inc. ("Green Thumb") 3 10 % Curaleaf Holdings, Inc. ("Curaleaf") 8 9 % Trulieve Cannabis Corp. ("Trulieve") 6 9 % Cresco Labs Inc. 5 8 % For the Six Months Ended June 30, 2026 Number of Leases Percentage of Rental Revenue Ascend 4 13 % Green Thumb 3 9 % Curaleaf 8 9 % Trulieve 6 8 % Cresco Labs Inc. 5 7 % 9 Table of Contents For the Three Months Ended June 30, 2025 Number of Leases Percentage of Rental Revenue Ascend 4 13 % Green Thumb 3 10 % Curaleaf 8 9 % Trulieve 6 8 % The Cannabist Company 21 8 % For the Six Months Ended June 30, 2025 Percentage of Number of Rental Leases Revenue Ascend 4 12 % Green Thumb 3 9 % Curaleaf 8 8 % Trulieve 6 8 % The Cannabist Company 21 7 % 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 June 30, 2026 and December 31, 2025, our largest property was located in New York and accounted for 5.7 % and 5.5 % of our net real estate held for investment, respectively. No other properties accounted for more than 5 % of our net real estate held for investment as of June 30, 2026 and December 31, 2025. 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 and warrants. Concentration of credit risks 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 June 30, 2026, the Company had invested $ 100.0 million into the IQHQ Credit Facility (as defined in Note 7) and $ 170.0 million into the IQHQ Preferred Stock and IQHQ Warrant (each as defined in Note 7), cumulatively. As of December 31, 2025, the Company had invested $100.0 million into the IQHQ Credit Facility and $ 50.0 million into the IQHQ Preferred Stock and IQHQ Warrant. These investments represent a significant concentration of credit risk. The Company monitors IQHQ’s (as defined in Note 7) credit quality and enforces collateral rights under the credit agreement. We have deposited cash with financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of June 30, 2026, we had cash accounts in excess of FDIC insured limits. We have not experienced any losses in such accounts. 3. Common Stock As of June 30, 2026, the Company was authorized to issue up to 50,000,000 shares of common stock, par value $ 0.001 per share, and there were 27,571,349 shares of common stock issued and outstanding. We have entered into equity distribution agreements with six 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 10 Table of Contents 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. During the three and six months ended June 30, 2026, we sold 680,842 shares and 859,497 shares of common stock pursuant to the ATM Program for net proceeds of $ 34.7 million and $ 44.0 million, respectively. No shares of common stock were issued pursuant to the ATM Program during the three and six months ended June 30, 2025. In March 2025, our Board of Directors authorized a share repurchase program (the "Prior Share Repurchase Program") of up to $ 100.0 million of the Company’s common stock. In March 2026, the Board of Directors authorized a new share repurchase program (the "New Share Repurchase Program”) of up to $ 100.0 million of the Company's common stock. The New Share Repurchase Program replaces the Company's Prior Share Repurchase Program, which expired on March 17, 2026. The New Share Repurchase Program expires on March 4, 2027, and may be extended, suspended, modified or discontinued at any time at the Company’s discretion. During three months ended June 30, 2026, we repurchased and retired 1,468,542 shares of common stock under the New Share Repurchase Program for $ 89.0 million. During three and six months ended June 30, 2025, we repurchased and retired 366,952 and 371,538 shares of common stock under the Prior Share Repurchase Program for $ 19.8 million and $ 20.1 million, respectively. 4. Preferred Stock As of June 30, 2026, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $ 0.001 per share, and there were 5,666,082 shares issued and outstanding of Series A Preferred Stock. The Company may, at its option, redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $ 25.00 per share, plus all accrued and unpaid dividends on such Series A Preferred Stock up to, but excluding, the redemption date. Holders of the Series A Preferred Stock generally have no voting rights except for limited voting rights if the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances. During the three and six months ended June 30, 2026, we sold 948,034 and 3,646,557 shares of our Series A Preferred Stock pursuant to the ATM Program for net proceeds of $ 20.9 million and $ 81.2 million, respectively. During the three and six months ended June 30, 2025, we sold 173,834 and 558,981 shares of our Series A Preferred Stock pursuant to the ATM Program for net proceeds of $ 4.0 million and $ 13.2 million, respectively. 5. Dividends The following table describes the dividends declared by the Company during the six months ended June 30, 2026: Declaration Date Security Class Amount Per Share Record Date Dividend Paid Date Dividend Amount (In thousands) March 13, 2026 Common stock $ 1.90 March 31, 2026 April 15, 2026 $ 54,446 March 13, 2026 Series A preferred stock $ 0.5625 March 31, 2026 April 15, 2026 $ 2,654 June 15, 2026 Common stock $ 1.90 June 30, 2026 July 15, 2026 $ 53,127 June 15, 2026 Series A preferred stock $ 0.5625 June 30, 2026 July 15, 2026 $ 3,187 6. Investments in Real Estate Certain acquisitions of real estate did not satisfy the requirements for sale-leaseback accounting and therefore as of both June 30, 2026 and December 31, 2025, acquisitions of $ 16.8 million have been recognized as notes receivable and are included in other assets, net on our consolidated balance sheets. No impairment losses were recognized during the three and six months ended June 30, 2026. During the six months ended June 30, 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. 11 Table of Contents Acquired In-Place Lease Intangible Assets In-place lease intangible assets and related accumulated amortization as of June 30, 2026 and December 31, 2025 is as follows (in thousands): June 30, 2026 December 31, 2025 In-place lease intangible assets $ 8,965 $ 9,757 Accumulated amortization ( 3,450 ) ( 3,391 ) In-place lease intangible assets, net $ 5,515 $ 6,366 Amortization of in-place lease intangible assets classified in depreciation and amortization expense in our consolidated statements of income was $ 0.6 million and $ 0.8 million for the three and six months ended June 30, 2026, respectively, and $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2025, respectively. The weighted-average remaining amortization period of the acquired in-place leases was 7.4 years, and the estimated annual amortization of the value of the acquired in-place leases as of June 30, 2026 is as follows (in thousands): Year Amount 2026 (six months ending December 31) $ 382 2027 764 2028 764 2029 764 2030 764 Thereafter 2,077 Total $ 5,515 Above-Market Lease The above-market lease and related accumulated amortization included in other assets, net on our consolidated balance sheets as of June 30, 2026 and December 31, 2025 is as follows (in thousands): June 30, 2026 December 31, 2025 Above-market lease $ 1,054 $ 1,054 Accumulated amortization ( 417 ) ( 371 ) Above-market lease, net $ 637 $ 683 The above-market lease is amortized on a straight-line basis as a reduction to rental revenues over the remaining lease term of 7.0 years. Amortization of the above-market lease was $ 23,000 for each of the three-month periods ended June 30, 2026 and 2025, and $ 46,000 for each of the six-month periods ended June 30, 2026 and 2025. Lease Amendments, Terminations and New Leases 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 June 30, 2026, we have received lease payments of $ 5.7 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 $ 4.8 million as of June 30, 2026. In January 2026, the leases with Gold Flora, LLC for the properties located in Desert Hot Springs and Palm Springs, California were terminated in connection with the receivership and concurrent with the lease terminations, we executed new leases with a new tenant for both properties. 12 Table of Contents In March 2026, we executed a new lease with a new tenant for one of our properties located in Illinois, which was previously leased to PharmaCann. In April 2026, we executed a new lease with an existing tenant for one of our properties located in Ohio, which was previously leased to PharmaCann. In April 2026, we terminated a lease related to one of our properties located in Pennsylvania and took back possession of the property. Capitalized Costs During the six months ended June 30, 2026, we capitalized costs of $ 1.5 million relating to improvements and construction activities at our properties. Property Dispositions 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 June 30, 2026, we have received a total of $ 2.1 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 $ 2.3 million as of June 30, 2026, remain on the consolidated balance sheet, and the buildings and improvements continue to be depreciated. In February 2026, we sold a property in Arizona for net proceeds of $ 2.6 million and recognized a gain on sale of real estate of $ 0.5 million. In May 2026, we sold a property in Texas for net proceeds of $ 3.1 million and recognized a loss on sale of real estate of $ 4.9 million. In May 2026, we sold a property in New York for a contractual sales price of $ 88.5 million and recognized a gain on sale of real estate of $ 16.7 million. At closing, the Company received $ 39.5 million in cash and provided a secured loan for $ 49.0 million to the buyer of the property (see Note 8 “Loans Receivable”). Future Contractual Minimum Rent Future contractual minimum rent (including base rent and property management fees) to be received on our leases as of June 30, 2026 for future periods is summarized as follows (in thousands): Year Contractual Minimum Rent 2026 (six months ending December 31) $ 138,254 2027 286,947 2028 293,634 2029 299,187 2030 302,872 Thereafter 2,628,324 Total $ 3,949,218 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. 13 Table of Contents 7. Life Science Investments In August 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 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. On October 31, 2025, the Company purchased an additional 45,000 shares of IQHQ Preferred Stock for $ 45.0 million. During the three months ended June 30, 2026, the Company purchased an additional 120,000 shares of IQHQ Preferred Stock for $ 120.0 million, fulfilling its $ 170.0 million purchase commitment. 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. In connection with the purchase of the IQHQ Preferred Stock, 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 5 % of the fully diluted outstanding common equity of IQHQ (after giving effect to all previously issued warrants) at the time of exercise. Pursuant to the terms of the Securities Purchase Agreement, upon the initial closing, the Company obtained the right to appoint one voting member to IQHQ’s board of directors, subject to certain ownership thresholds, and designated Paul Smithers, the Company’s President and Chief Executive Officer, for this role. The Company also entered into a right of first offer letter with IQHQ, granting the Company a contractual right of first offer on certain real estate asset sales of IQHQ. Additionally, in connection with the initial closing under the Securities Purchase Agreement, on September 30, 2025, the Company became a lender under the IQHQ Credit Facility and fully funded its $ 100.0 million commitment. The IQHQ Credit Facility bears interest at a fixed annual rate of 13.5 %, consisting of 12.0 % payable in cash and 1.5 % PIK, with interest payable quarterly. The IQHQ Credit Facility has an initial maturity on September 30, 2028, with a one -time extension option of up to 12 months, subject to the satisfaction of certain conditions and payment of a facility extension fee. All obligations under the IQHQ Credit Facility are unconditionally guaranteed by IQHQ and secured by a first priority pledge of certain of IQHQ's assets. The Company is subject to a rate reduction penalty of up to 3.0 % in the event it fails to make required purchases of IQHQ Preferred Stock under the Securities Purchase Agreement. The IQHQ Credit Facility includes customary representations, warranties, and covenants, as well as major decision rights requiring lender approval. IQHQ is required to prepay loans with proceeds from certain asset or equity sales and may voluntarily prepay or reduce commitments subject to specified conditions. 14 Table of Contents The following table details the carrying value of our life science investments, including the value of the forward contract to purchase the remaining minimum commitment of IQHQ Preferred Stock (in thousands): June 30, 2026 December 31, 2025 Investment in IQHQ Preferred Stock $ 159,730 $ 47,430 Investment in IQHQ Warrant 15,654 5,321 Forward contract for the purchase of IQHQ Preferred Stock — 2,562 PIK dividend 2,220 444 Investment in IQHQ Credit Facility 97,121 96,493 PIK interest 1,163 415 Total $ 275,888 $ 152,665 As of June 30, 2026 and December 31, 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 and there were no allowance for credit losses with respect to our investment in the IQHQ Credit Facility. 8. Loans Receivable Seller Financed Note In May 2026, we sold a property in New York for a contractual sales price of $ 88.5 million. At closing, the Company received $ 39.5 million in cash and provided a secured loan for $ 49.0 million to the buyer of the property (the "Seller Financed Note"). The Seller Financed Note requires monthly interest-only payments and matures on May 25, 2027, subject to two one-year extensions with payment of an extension fee of 1 % of the then outstanding principal balance. The Seller Financed Note is recorded at the amount of the loan outstanding and no allowance for credit losses has been recorded as of June 30, 2026. Interest income on the Seller Financed Note is recognized on an accrual basis and is included in interest and other income in our consolidated statements of income. Construction Loan In June 2021, we executed a construction loan agreement with a developer, pursuant to which we agreed to lend up to $ 23.0 million for the development of a regulated cannabis cultivation and processing facility in California (the "Construction Loan"). We have an option to purchase the property, and may execute a negotiated lease with an affiliate of the developer or with another third party, if we determine to exercise our purchase option. As of both June 30, 2026 and December 31, 2025, we had funded $ 22.8 million of the Construction Loan. The Construction Loan is recorded at the amount funded and no allowance for credit losses has been recorded as of June 30, 2026. Interest income on the Construction Loan is recognized on a cash basis and is included in interest and other income in our consolidated statements of income. The borrower exercised the option to extend the maturity date to December 31, 2026. 9. Debt 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”). In connection with the issuance of the Notes due 2026, we recorded $ 6.8 million of issuance costs, which were 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 was 6.03 %. 15 Table of Contents The following table details our interest expense related to the Notes due 2026 (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2026 2025 2026 2025 Cash coupon $ 2,383 $ 4,004 $ 6,387 $ 8,085 Amortization of issuance cost 231 362 610 726 Capitalized interest ( 44 ) ( 39 ) ( 94 ) ( 95 ) Total interest expense $ 2,570 $ 4,327 $ 6,903 $ 8,716 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 remained unchanged. In April 2026, we made early partial repayments at a discount totaling $ 9.1 million on the Notes due 2026, reducing the principal balance by $ 9.1 million from $ 291.2 million to $ 282.1 million. Following the partial repayment, all other terms and conditions of the debt agreement remained unchanged. The Notes due 2026 matured on May 25, 2026 and were repaid in full. The following table details the carrying value of our Notes due 2026 (in thousands): December 31, 2025 Principal amount $ 291,215 Unamortized issuance cost ( 613 ) Carrying value $ 290,602 Exchangeable Notes On June 15, 2026, our Operating Partnership issued $ 402.5 million of 6.00 % exchangeable senior notes due 2029 (the “Exchangeable Notes”) in a private offering, including the exercise in full of the initial purchasers' option to purchase additional notes. The Exchangeable Notes are senior unsecured obligations of our Operating Partnership, are fully and unconditionally guaranteed by us and are exchangeable for cash, shares of our common stock, or a combination of cash and shares of our common stock, at our Operating Partnership's option, at any time prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date. The initial exchange rate for the Exchangeable Notes is 14.4113 shares of our common stock per $1,000 principal amount of Exchangeable Notes and the initial exchange price is $ 69.39 per share of our common stock. The initial exchange rate and initial exchange price are subject to adjustment in certain circumstances. The Exchangeable Notes bear interest at a rate of 6.00 % per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning December 15, 2026 until maturity on June 15, 2029. Our Operating Partnership does not have the right to redeem the Exchangeable Notes prior to maturity, but may be required to repurchase the Exchangeable Notes from holders under certain circumstances. The Company incurred approximately $ 11.5 million of issuance costs in connection with the issuance of the Exchangeable Notes. The amortization of the debt issuance costs is recognized as a non-cash component of interest expense over the term of the Exchangeable Notes. The effective interest rate, including the amortization of debt issuance costs, was 7.29 %. 16 Table of Contents The following table details our interest expense related to the Exchangeable Notes (in thousands): For the Three and Six Months Ended June 30, 2026 Cash coupon $ 1,006 Amortization of issuance cost 144 Total interest expense $ 1,150 The following table details the carrying value of our Exchangeable Notes as of June 30, 2026 (in thousands): June 30, 2026 Principal amount $ 402,500 Unamortized issuance cost ( 11,337 ) Carrying value $ 391,163 Term Loans During the six months ended June 30, 2026, the Company entered into several new term loan facilities with various lenders. These term loans are secured by, among other things, certain mortgages and security interests in the real and personal properties, certain assignments of leases and rents, and certain deposit accounts maintained with the lenders. The following table summarizes the key terms related to the new term loans and presents the outstanding principal balance and the carrying value of the term loans as of June 30, 2026 (dollar amounts in thousands): Term Loan Closing Date Original Principal Principal Outstanding Net Carrying Value Interest Rate Effective Interest Rate Maturity Date Payment type Term Loan #1 Apr-26 $ 20,000 $ 19,941 $ 19,527 9.00 % 10.18 % Apr-29 Principal and interest Term Loan #2 (1) May-26 56,500 56,500 54,951 SOFR + 5 % 9.84 % May-29 Interest only Term Loan #3 May-26 44,860 44,860 43,884 6.67 % 7.57 % Jun-31 Principal and interest Term Loan #4 (2) May-26 20,000 — — 10.00 % — % Oct-26 Principal and interest Term Loan #5 Jun-26 7,300 7,300 7,008 7.50 % 8.51 % Jul-31 Principal and interest Total $ 148,660 $ 128,601 $ 125,370 (1) The loan has two , one-year extension options that may extend the maturity through May 2031. SOFR is subject to a floor of 3.75 %. The loan also requires the Company to maintain a minimum net worth of $ 120.0 million and liquid assets with a market value of at least $ 12.0 million. As of June 30, 2026, the Company was in compliance with these covenants. (2) In June 2026, we fully repaid the loan prior to maturity and wrote off $ 0.5 million of related unamortized issuance cost as non-cash interest expense. 17 Table of Contents The following table details our interest expense related to the Term Loans (in thousands): For the Three and Six Months Ended June 30, 2026 Cash coupon $ 1,656 Amortization of issuance cost 684 Capitalized interest ( 31 ) Total interest expense $ 2,309 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 certain assets of the Company. 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 June 30, 2026, 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 were increased from $ 50.0 million to $ 87.5 million. There were no amounts outstanding under the Revolving Credit Facility as of June 30, 2026. As of December 31, 2025, there were $ 27.5 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. In each of the three months ended June 30, 2026 and 2025, we recognized $ 0.1 million, respectively, of non-cash interest expense related to the Revolving Credit Facility. IIP Life Science Credit Facility In October 2025, our Operating Partnership and IIP Life Science Investments LLC ("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 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 %. As of June 30, 2026 and December 31, 2025, there were $ 92.5 million and $ 75.0 million, respectively, of borrowings outstanding under the IIP Life Science Credit Facility. 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 that the Company was in compliance with those covenants as of June 30, 2026. 18 Table of Contents In connection with the IIP Life Science Credit Facility, we recorded $ 0.9 million of issuance costs, which are being amortized on a straight-line basis and recognized as non-cash interest expense over the term of the IIP Life Science Credit Facility. For the six months ended June 30, 2026, we recognized $ 79,000 of non-cash interest expense related to the IIP Life Science Credit Facility. The following table summarizes the principal payments on our outstanding indebtedness as of June 30, 2026 (in thousands): Payments Due by Year Amount 2026 (six months ending December 31) $ 623 2027 1,242 2028 93,825 2029 478,915 2030 1,041 Thereafter 47,955 Total $ 623,601 10. Net Income Per Share Grants of restricted stock and restricted stock units (“RSUs”) of the Company in share-based payment transactions are considered participating securities prior to vesting and, therefore, are considered in computing basic earnings per share under the two-class method. 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 June 30, 2026, all of the Company’s participating securities received dividends or dividend equivalents at an equal dividend rate per share or unit. As a result, distributions to participating securities for the three and six months ended June 30, 2026 and 2025 have been included in net income attributable to common stockholders to calculate net income per basic and diluted share. The 1,019,877 and 512,756 shares necessary to settle the Exchangeable Notes under the if-converted method were dilutive for the three and six months ended June 30, 2026, respectively, and were included in the computation of diluted earnings per share. 19 Table of Contents Computations of net income per basic and diluted share (in thousands, except share and per share data) were as follows: For the Three Months Ended For the Six Months Ended June 30, June 30, 2026 2025 2026 2025 Net income $ 43,852 $ 26,024 $ 76,661 $ 57,101 Preferred stock dividends ( 3,187 ) ( 878 ) ( 5,841 ) ( 1,659 ) Distribution to participating securities ( 1,150 ) ( 758 ) ( 2,133 ) ( 1,505 ) Net income attributable to common stockholders used to compute net income per share (basic) 39,515 24,388 68,687 53,937 Cash and non-cash interest on Exchangeable Notes 1,150 — 1,150 — Net income attributable to common stockholders used to compute net income per share (diluted) $ 40,665 $ 24,388 $ 69,837 $ 53,937 Weighted-average common shares outstanding: Basic 28,443,143 27,924,092 28,218,773 28,098,850 Restricted stock and RSUs 529,228 393,601 502,400 353,261 Dilutive effect of Exchangeable Notes 1,019,877 — 512,756 — Diluted 29,992,248 28,317,693 29,233,929 — 28,452,111 Net income attributable to common stockholders per share: Basic $ 1.39 $ 0.87 $ 2.43 $ 1.92 Diluted $ 1.36 $ 0.86 $ 2.39 $ 1.90 11. 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. 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 June 30, 2026 and December 31, 2025 (in thousands): 20 Table of Contents At June 30, 2026 At December 31, 2025 Carrying Value Fair Value Carrying Value Fair Value Life science investments (1) $ 98,284 $ 98,284 $ 96,908 $ 96,908 Seller Financed Note (2) $ 49,000 $ 49,000 $ — $ — Construction Loan (3) $ 22,800 $ 30,111 $ 22,800 $ 29,997 Investments as cash equivalents (4) $ — $ — $ 158 $ 158 Notes receivable (5) $ 16,786 $ 16,786 $ 16,786 $ 16,786 Notes due 2026 (6) $ — $ — $ 290,602 $ 288,644 Exchangeable Notes (7) $ 391,163 $ 428,373 $ — $ — Term Loans (8) $ 125,370 $ 125,370 $ — $ — Revolving Credit Facility (9) $ — $ — $ 27,500 $ 27,500 IIP Life Science Credit Facility (10) $ 92,500 $ 92,500 $ 75,000 $ 75,000 (1) Excludes $ 177.6 million and $ 55.8 million as of June 30, 2026 and December 31, 2025, respectively, 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 remaining balance relates to our investment in the IQHQ Credit Facility. The fair value was determined based on Level 3 inputs 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. At June 30, 2026 and December 31, 2025, the expected market yield used to determine fair values were 16.6 % and 16.8 % , respectively. (2) The fair value of the Seller-Financed note was determined based on Level 3 inputs and was also valued using a yield analysis. At June 30, 2026, the expected market yield used to determine fair value was 18.1 %. (3) The fair value of the Construction Loan receivable was determined based on Level 3 inputs and was also valued using a yield analysis. At each of June 30, 2026 and December 31, 2025, the expected market yield used to determine fair value was 16.25 %. (4) Investments as cash equivalents include 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. (5) Notes receivable relate to certain acquisitions of real estate which did not satisfy the requirements for sale-leaseback accounting (see Note 6 “Investments in Real Estate” to our consolidated financial statements for more information). The fair values of the notes receivable were determined based on Level 3 inputs and were also valued using yield analysis. At June 30, 2026 and December 31, 2025, the weighted average expected market yields used to determine fair values were 33.0 % and 26.5 %, respectively. (6) The fair value was determined based upon Level 2 inputs as the Notes due 2026 were not traded in an active market. The Notes due 2026 matured in May 2026. (7) The fair value was determined based on Level 2 inputs as the Exchangeable Notes were not traded in an active market. (8) The fair values of the term loans were determined based on Level 3 inputs and were valued using a discounted cash flow analysis. As of June 30, 2026, the weighted average discount rate used to estimate the fair value of the term loans was 9.7 %. (9) The fair value of the Revolving Credit Facility was determined based on Level 2 inputs 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. (10) The fair value of the IIP Life Science Credit Facility was determined based on Level 2 inputs and was also 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. The carrying amounts of cash equivalents, interest receivable, accounts payable, accrued expenses and other liabilities approximate their fair values. 12. Common Stock Incentive Plans Our Board of Directors adopted the 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 was terminated in June 2026 and was replaced with the 2026 Omnibus Incentive Plan (the "2026 Plan") upon stockholders' approval. Under the terms of the 2026 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 1,250,000 shares. Any equity awards that lapse, expire, terminate, are canceled or are forfeited (including forfeitures in connection 21 Table of Contents with satisfaction of tax withholding obligations of the recipient) are re-credited to the 2026 Plan’s reserve for future issuance. The 2026 Plan will automatically terminate in June 2036. A summary of the restricted stock activity under both the 2016 Plan and 2026 Plan (together the "Incentive Plans") and related information for the six months ended June 30, 2026 is included in the table below: Unvested Restricted Stock Weighted- Average Grant Date Fair Value Balance at December 31, 2025 109,591 $ 80.61 Granted 113,937 $ 49.85 Vested ( 28,355 ) $ 78.07 Forfeited (1) ( 18,680 ) $ 103.65 Balance at March 31, 2026 176,493 $ 58.72 Granted 44,529 $ 59.77 Vested ( 6,291 ) $ 57.23 Balance at June 30, 2026 214,731 $ 58.99 (1) Shares that were forfeited to cover the employees’ tax withholding obligation upon vesting. The remaining unrecognized compensation cost of $ 10.2 million for restricted stock awards is expected to be recognized over a weighted-average amortization period of 2.2 years as of June 30, 2026. The fair value of restricted stock that vested during the six months ended June 30, 2026 was $ 2.7 million. The following table summarizes our RSU activity for the six months ended June 30, 2026. RSUs are issued as part of the Innovative Industrial Properties, Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”), which allows a select group of management and our non-employee directors to defer receiving certain of their cash and equity-based compensation. RSUs are subject to vesting conditions of the Deferred Compensation Plan and have the same economic rights as shares of restricted stock under the Incentive Plans: Restricted Stock Units Weighted-Average Grant Date Fair Value Balance at December 31, 2025 280,555 $ 104.19 Granted 87,366 $ 49.85 Vested and converted to common stock, net ( 17,633 ) $ 85.72 Forfeited (1) ( 9,258 ) $ 75.35 Balance at March 31, 2026 341,030 $ 92.01 Granted 49,404 $ 59.68 Balance at June 30, 2026 390,434 $ 87.92 (1) Shares that were forfeited to cover employee's tax withholding obligation upon distribution from the Deferred Compensation Plan. The remaining unrecognized compensation cost of $ 10.0 million for RSU awards is expected to be recognized over an amortization period of 2.0 years as of June 30, 2026. 13. Commitments and Contingencies Improvement Allowances. As of June 30, 2026, we had $ 6.3 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. 22 Table of Contents 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. On September 25, 2024, the district court granted defendants’ motion to dismiss the operative complaint with prejudice. The plaintiff appealed, and on October 15, 2025, the United States Court of Appeals for the Third Circuit affirmed the dismissal. On October 29, 2025, the appellant filed a petition for rehearing en banc, which was denied on November 13, 2025. Plaintiff did not file a petition for writ of certiorari with the U.S. Supreme Court. 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 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 February 27, 2024, and December 19, 2024. 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 Exchange Act 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. On November 20, 2025, defendants filed a reply in support of their motion to dismiss. On May 27, 2026, the district court granted defendants’ motion to dismiss the operative complaint without prejudice. On June 26, 2026, plaintiff filed its Second Amended Class Action Complaint. Defendants have until August 10, 2026, to move to dismiss the Second Amended Class Action Complaint. Plaintiff will have until September 24, 2026, to respond in opposition, and defendants will have until October 23, 2026, to reply in further support of their 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 Five derivative lawsuits were filed related to the Mallozzi federal securities class action discussed above. 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 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, were filed in the Circuit Court for Baltimore City, Maryland. 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 February 13, 2026, the parties filed a Joint Motion for Voluntary Dismissal Without Prejudice, which was granted on February 18, 2026. Two derivative lawsuits, 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 23 Table of Contents Kreitzer, David Stecher, Scott Shoemaker, Mary Curran, and Innovative Industrial Properties, Inc., Case Number 1:23-cv-00737-GLR, and 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, were 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. After the United States Court of Appeals for the Third Circuit affirmed dismissal of the Mallozzi class action on October 15, 2025, plaintiffs in the consolidated action filed a Consent Motion for Voluntary Dismissal on October 20, 2025. On October 21, 2025, the United States Court for the District of Maryland granted the dismissal. On May 9, 2024, a fifth derivative action lawsuit was filed against the Company and certain of its officers and directors. 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, and remains pending. On April 23, 2026, the defendants filed a motion to dismiss this derivative action. Plaintiff filed his opposition to the motion to dismiss on June 22, 2026, and defendants filed their reply in further support of the motion on July 22, 2026. 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, which is stayed. 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, and was stayed pending resolution of the Giraudon motion to dismiss, by a March 13, 2025, Court order. On August 14, 2025 and August 21, 2025, two derivative action lawsuits were filed against the Company and certain of its officers and directors in the Circuit Court for Baltimore County, Maryland: 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 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. Each complaint asserts putative derivative claims for breach of fiduciary duty and unjust enrichment against certain directors and officers and seeks an undetermined amount of damages, reform, restitution, and attorneys’ fees and costs. On September 18, 2025, the parties filed a joint motion to consolidate the actions, which the court granted on October 23, 2025, designating the Crepaz action as the lead case. These derivative actions relate to the same allegations as those asserted in the Giraudon 24 Table of Contents class action described above and were stayed pending resolution of the Giraudon motion to dismiss, by an order of the Circuit Court of Baltimore County, Maryland that was issued on February 10, 2026. On November 19, 2025, a derivative action lawsuit was filed against the Company and certain of its officers and directors. The case was named James Loen, derivatively on behalf of Nominal Defendant Innovative Industrial Properties v. Alan Gold, Paul Smithers, David Smith, Ben Regin, Gary Kreitzer, Scott Shoemaker, Catherine Hastings, David Stecher, and Mary Curran, Case Number 1:25-cv-03786, and was filed in the United States District Court for the District of 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. On January 23, 2026, the defendants filed a motion to dismiss plaintiff’s claims. On February 3, 2026, the defendants filed a motion to consolidate the Loen lawsuit with the Steffens and Albers consolidated action, 1:25-cv-00456. On February 17, 2026, the parties filed a Joint Stipulation and Order Staying Action pursuant to which the parties agreed to stay the lawsuit until the resolution of the Giraudon class action. The Court granted the motion on February 20, 2026. The stay can be lifted before then by either party with 30 days’ notice. 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. SEC Investigation On February 13, 2026, the Company was notified that the SEC is conducting a formal investigation of the Company concerning matters generally similar to those alleged in the Giraudon case and related derivative lawsuits. On the same date, the Company received a subpoena from the Denver Regional Office of the Division of Enforcement of the SEC requesting the production of documents and information related to the investigation. The Company intends to cooperate fully with the SEC. 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. At this stage of the investigation, the Company believes that a loss is neither probable nor estimable. 14. Segment Information Our reportable segments consist of the following as of June 30, 2026: • Cannabis Portfolio Segment , which primarily includes the acquisition, development and redevelopment, and leasing of real estate properties to regulated cannabis operators on a long-term triple-net basis. • Life Science Portfolio Segment , which includes the investments in the IQHQ Credit Facility, IQHQ Preferred Stock and IQHQ Warrant. The chief operating decision maker ("CODM") is our President and Chief Executive Officer. The CODM evaluates the performance of each reportable segment and allocates resources based on segment net income. Items that are not directly assignable to a reportable segment are reflected as Unallocated, consistent with how our CODM utilizes segment information for planning and execution of our business strategy. Total capital expenditures are reviewed by the CODM on a consolidated basis as presented in the accompanying consolidated statements of cash flows. All of our operations are conducted within the United States. The segment net income, including significant segment expenses that are regularly reviewed by the CODM, for the three and six months ended June 30, 2026 and 2025, and the total segment assets as of June 30, 2026 and December 31, 2025, are presented in the tables below (in thousands): 25 Table of Contents For the Three Months Ended For the Six Months Ended June 30, June 30, 2026 2025 2026 2025 Cannabis Portfolio Segment: Rental revenues (including tenant reimbursements) $ 62,890 $ 62,866 $ 131,810 $ 134,563 Other revenues 425 25 501 50 Total reportable segment revenue 63,315 62,891 132,311 134,613 Property expenses ( 7,196 ) ( 6,867 ) ( 14,772 ) ( 14,246 ) Depreciation and amortization expense ( 18,799 ) ( 18,500 ) ( 37,383 ) ( 36,891 ) Impairment loss on real estate — — — ( 3,527 ) Gain (loss) on sale of real estate, net 11,847 — 12,269 — Interest and other income 1,429 770 1,871 1,370 Cannabis Portfolio Segment net income 50,596 38,294 94,296 81,319 Life Science Portfolio Segment: Interest and other income 8,471 — 14,015 — Life Science Portfolio Segment net income 8,471 — 14,015 — Total reportable segment net income 59,067 38,294 108,311 81,319 Unallocated: General and administrative expense ( 7,719 ) ( 8,626 ) ( 18,068 ) ( 17,087 ) Interest and other income 852 800 1,197 1,813 Interest expense ( 8,348 ) ( 4,444 ) ( 14,779 ) ( 8,944 ) Net income 43,852 26,024 76,661 57,101 Preferred stock dividends ( 3,187 ) ( 878 ) ( 5,841 ) ( 1,659 ) Net income attributable to common stockholders $ 40,665 $ 25,146 $ 70,820 $ 55,442 Segment Total Assets: June 30, 2026 December 31, 2025 Cannabis Portfolio Segment $ 2,094,298 $ 2,165,359 Life Science Portfolio Segment 275,888 152,665 Unallocated 211,455 52,834 Total $ 2,581,641 $ 2,370,858 15. Subsequent Events As disclosed in our 8-K filed on July 21, 2026, in July 2026, affiliates of SH Parent, Inc. ("Parallel") defaulted on leases for two of our properties in Florida and notified us that it has ceased operations at those properties. 26 Table of Contents