INNOVATIVE INDUSTRIAL PROPERTIES INC 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. We make statements in this report that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, our statements regarding anticipated growth in our funds from operations and anticipated market and regulatory conditions, our strategic direction, demographics, results of operations, plans and objectives are forward-looking statements. Forward-looking statements involve numerous risks and uncertainties, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: rates of default on leases for our assets; our ability to re-lease properties upon tenant defaults or lease terminations for the rent we currently receive, or at all; concentration of our portfolio of assets and limited number of tenants; the estimated growth in and evolving market dynamics of the regulated cannabis market; the demand for regulated cannabis cultivation and processing facilities; defaults on our investments in real estate-related assets, such as the IQHQ Credit Facility and IQHQ Preferred Stock (as defined in Note 7 to the consolidated financial statements); our ability to identify, acquire, or profitably operate life science properties; market dynamics in the life science sector; decreased economic activity due to fluctuations in trade policies, tariffs, and related government actions; inflation dynamics; the impact of pandemics on us, our business, our tenants, or the economy generally; war and other hostilities, including the conflicts in Ukraine and Iran; our business and investment strategy; our projected operating results; actions and initiatives of the U.S. or state governments and changes to government policies and the execution and impact of these actions, initiatives and policies, including the fact that cannabis remains illegal under federal law; the timing, scope and impact of the April 2026 final order issued by the U.S. Department of Justice and the Drug Enforcement Administration ("DEA") regarding the federal scheduling status of certain marijuana activities; availability of suitable investment opportunities in the regulated cannabis industry; our understanding of our competition and our potential tenants’ alternative financing sources; the expected medical-use or adult-use cannabis legalization in certain states; shifts in public opinion regarding regulated cannabis; the potential impact on us from litigation matters, including rising liability and insurance costs; the additional risks that may be associated with certain of our tenants cultivating, processing and/or dispensing adult-use cannabis in our facilities; the state of the U.S. economy generally or in specific geographic areas; economic trends and economic recoveries; our ability to access equity or debt capital; financing rates for our target assets; our level of indebtedness, which could reduce funds available for other business purposes and reduce our operational flexibility; covenants in our debt instruments, which may limit our flexibility and adversely affect our financial condition; our ability to maintain our investment grade credit rating; changes in the values of our assets; our expected portfolio of assets; our expected investments; interest rate mismatches between our assets and our borrowings used to fund such investments; changes in interest rates and the market value of our assets; the degree to which any interest rate or other hedging strategies may or may not protect us from interest rate volatility; the impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters; how and when any forward equity sales may settle; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; our ability to maintain our exemption from registration under the Investment Company Act of 1940; availability of qualified personnel; and market trends in our industry, interest rates, real estate values, the securities markets or the general economy. The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this report. In addition, we discussed a number of material risks in our Annual Report on Form 10-K for the year ended December 31, 2025 and in Part II, "Item 1A. Risk Factors" included in this report. Those risks continue to be relevant to our performance and financial condition. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Any forward-looking statement made by us speaks only of the date on which we make it. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. Stockholders and investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in the Company’s filings and reports. 27 Table of Contents The purpose of this Management’s Discussion and Analysis (“MD&A”) is to provide an understanding of the Company’s consolidated financial condition, results of operations and cash flows. MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s consolidated financial statements and accompanying notes. Overview As used herein, the terms “we”, “us”, “our” or the “Company” refer to Innovative Industrial Properties, Inc., a Maryland corporation, and any of our subsidiaries, including IIP Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership”). We are an internally-managed 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 cannabis properties through sale-leaseback transactions and third-party purchases. We have leased and expect to continue to primarily lease our properties on a triple-net lease basis, where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, real estate taxes and insurance. Outside of the cannabis sector, our leases may include different lease structures that do not require tenants to assume all property-related expenses. In addition to our cannabis-related real estate portfolio, we also have investments in the life science industry and intend to actively pursue acquisitions of properties within that sector as a key component of our growth strategy. We may continue expanding our investment activities to include joint ventures, debt or mezzanine financing, preferred or joint venture equity interests, and interests in other real estate funds or REITs. We were incorporated in Maryland on June 15, 2016. 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. As of June 30, 2026, we had 24 full-time employees. As of June 30, 2026, we owned 108 properties comprising 8.4 million square feet (including 240,000 rentable square feet under development/redevelopment) in 19 states. As of June 30, 2026, we had invested $2.4 billion in the aggregate (consisting of purchase price and funding of draws for construction and improvements submitted by tenants, if any, but excluding transaction costs) and had committed an additional $6.3 million to fund draws to certain tenants and vendors for improvements at our properties. Of the $6.3 million committed to fund draws to certain tenants and vendors for improvements at our properties, $0.8 million was incurred but not funded as of June 30, 2026. Of these 108 properties, we include 107 properties in our operating portfolio, which were 95.8% leased as of June 30, 2026, with a weighted-average remaining lease term of 11.9 years. We do not include in our operating portfolio the property in San Bernardino, California (which was under redevelopment as of June 30, 2026, and is expected to comprise 192,000 rentable square feet upon completion of redevelopment). As previously disclosed, we entered into leases with PharmaCann Inc. ("PharmaCann") and its affiliates for eleven properties. On March 14, 2025, PharmaCann defaulted on its obligations to pay rent for the month of March under nine of those leases, covering properties located in Colorado, Illinois, New York, Ohio and Pennsylvania. The remaining two leases, relating to cultivation facilities in Michigan and Massachusetts, were amended in January 2025 to provide full rent abatement effective February 1, 2025. Both of these properties were subsequently re-leased in 2025, with the Michigan property re-leased to Berry Green and the Massachusetts property re-leased to another operator. Of the nine leases on which PharmaCann defaulted in March 2025, PharmaCann has paid, and continues to pay, full rent on the four retail properties in Colorado. We regained possession of one additional retail property in Colorado through a default judgment, and the property was subsequently sold in December 2025. In December 2025, we also obtained a judgment in our favor in an eviction action relating to the Dwight, Illinois facility, regained possession of that property and subsequently re-leased it to Grown Rogue in March 2026. Our efforts to resolve the remaining three defaulted leases, relating to the properties in New York, Ohio and Pennsylvania, culminated in the settlement agreement described below. On February 26, 2026, the Company entered into a settlement agreement (as amended, the “PharmaCann Settlement Agreement”) with PharmaCann to resolve pending litigation relating to rent defaults under leases for three properties owned by the Company located in New York, Ohio and Pennsylvania. In connection with the PharmaCann Settlement 28 Table of Contents Agreement, the parties also entered into consent orders, stipulations of judgment and stipulations of settlement with the respective courts in New York, Ohio and Pennsylvania, which were fully executed on March 13, 2026, and provide for judgments in favor of the Company's subsidiaries for possession of the premises and monetary damages, subject to dollar-for-dollar reduction for escrowed rent funds released to the Company. Pursuant to the PharmaCann Settlement Agreement, PharmaCann agreed to wind down operations and surrender the Ohio, Pennsylvania and New York premises by May 20, 2026, May 26, 2026 and June 20, 2026, respectively, at which time the applicable leases would terminate. In April 2026, PharmaCann surrendered the Ohio premises, the applicable lease was terminated and the Company immediately entered into a new lease with Curaleaf. PharmaCann has remained in possession of the the New York and Pennsylvania properties past the applicable surrender dates with the Company's consent, as the parties work to transfer the existing licenses for those facilities to new tenants. The Company retains all rights to enforce the eviction judgments and PharmaCann's surrender of possession at those locations. In March 2025, we initiated a strategic effort to improve long-term financial performance by repositioning a portion of our tenant base toward more financially viable, long-term operators. In connection with this effort, we declared certain tenants and their affiliates in default for failure to pay contractual rent in full, including 4Front Ventures Corp., Gold Flora, LLC and TILT Holdings Inc. We are actively pursuing our rights under these leases, which may include eviction proceedings. 4Front Ventures has filed for bankruptcy protection in Canada and for voluntary receivership in Massachusetts and Illinois, which may delay our enforcement efforts. As of June 30, 2026, we have terminated all three leases with affiliates of Gold Flora. As of June 30, 2026, 4Front Ventures Corp and TILT Holdings Inc. collectively represented approximately 9.3% of our annualized contractual rent and owed $32.3 million and $7.6 million, respectively, for base rent, property management fees, and estimated tax and insurance payments. During the quarter ended March 31, 2026, we also declared defaults under leases with two additional tenants, The Cannabist Company ("Cannabist") and Battle Green Holdings, Inc. ("Battle Green"), for failure to pay rent in full. As of June 30, 2026, these leases represented, in the aggregate, 6.0% of our annualized contractual rent. Cannabist previously announced agreements to sell certain of its cannabis operations and assets in Ohio and Delaware, as well as a memorandum of understanding for the sale of additional operations located in Illinois, New Jersey, Colorado, Massachusetts, Maryland and West Virginia. In connection with these transactions, Cannabist and an affiliate announced their commencement of voluntary proceedings under the Companies’ Creditors Arrangement Act (Canada) and announced their intention to seek recognition of those proceedings under Chapter 15 of the U.S. Bankruptcy Code. We continue to monitor these developments and their potential impact on Cannabist’s ability to satisfy its obligations under its leases with us. As of June 30, 2026, we leased 19 properties to Cannabist and its affiliates, comprising approximately 236,000 square feet in 2 states and representing approximately 3.2% of our annualized contractual rent as of June 30, 2026. Subsequent to quarter end, on July 20, 2026, affiliates of SH Parent, Inc., together with SH Parent, Inc. as guarantor (collectively, “Parallel”), defaulted under two leases with us for properties located in Florida. These leases represented approximately 6.1% of our annualized contractual rent as of June 30, 2026. Following the expiration of applicable cure periods, Parallel failed to pay July 2026 rent due under these leases, including base rent, reimbursements for estimated tax and insurance payments, default interest and late charges, totaling approximately $1.6 million. We are holding security deposits pursuant to these leases, which may be applied to cover payment in full of the defaulted rent and estimated tax and insurance payments, in addition to late charges and interest. We are continuing discussions with Parallel regarding the leases and intend to enforce our rights thereunder, which may include commencing eviction proceedings, as we deem necessary. During the three months ended June 30, 2026, we took several actions to strengthen our balance sheet and liquidity. 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. In May 2026, we repaid in full the $282.1 million outstanding principal balance of our Notes due 2026 at maturity. During the three months ended June 30, 2026, certain of our subsidiaries entered into an aggregate of $148.7 million of new secured term loans with various lenders. In addition, on June 15, 2026, our Operating Partnership issued $402.5 million aggregate principal amount of 6.00% Exchangeable Notes, including the full exercise of the initial purchasers’ option to purchase additional notes. See “—Liquidity and Capital Resources” below for further discussion of these financing activities. 29 Table of Contents Factors Impacting Our Operating Results Our results of operations are affected by a number of factors and depend on the rental revenues we receive from the properties that we acquire, the timing of lease expirations, general market conditions, the regulatory environment in the regulated 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 We receive income primarily from rental revenues generated by the properties that we acquire. The amount of rental revenues depends upon a number of factors, including: • our ability to enter into leases with increasing or market value rents for the properties that we acquire; and • rent collection, which primarily relates to each of our tenant’s financial condition and ability to make rent payments to us on time. The properties that we have acquired primarily consist of real estate assets that support the regulated cannabis industry. Most states where we own properties issue licenses for cannabis operations for a limited period. If one or more of our tenants are unable to renew or otherwise maintain their licenses or other state and local authorizations necessary to continue their cannabis operations, such tenants may default on their lease payments to us. Current unfavorable market dynamics in the regulated cannabis industry have adversely affected our ability to re-lease properties upon tenant defaults at the rental rates we currently receive and, in some cases, for prolonged periods. Furthermore, changes in federal law and current favorable state or local laws in the cannabis industry may impair our ability to renew or re-lease properties and the ability of our tenants to fulfill their lease obligations and could materially and adversely affect our ability to maintain or increase rental rates for our properties. Conditions in Our Markets 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; 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. These tenant-related challenges are currently having a material adverse effect on the Company’s financial condition, results of operations, and cash flows. See “—Results of Operations—Comparison of the three and six months ended June 30, 2026 and 2025—Rental Revenues” for more information. 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 April 2026, the U.S. Department of Justice (“DOJ”) and the DEA announced a final order reclassifying FDA-approved marijuana drug products and certain state-licensed medical marijuana activities from Schedule I to Schedule III, while adult-use marijuana, synthetic tetrahydrocannabinols and unlicensed marijuana activities remain Schedule I. The final order creates an expedited DEA registration pathway for eligible state-licensed medical marijuana operators and, if such operators obtain registration, may eliminate the application of Section 280E to qualifying medical marijuana operations. Separately, the DEA held an administrative hearing on the broader rescheduling of marijuana, including adult-use marijuana, from Schedule I to Schedule III, which began on June 29, 2026, and concluded on July 15, 2026, without a 30 Table of Contents ruling. The presiding administrative law judge directed participating parties to submit post-hearing briefs and proposed corrections to the hearing transcript by August 17, 2026, following which the judge will issue a recommendation to the DEA Administrator, who retains sole authority to determine whether to issue a final rule rescheduling marijuana. No timeline has been established for either the judge’s recommendation or the DEA Administrator’s final decision. In addition, the April 2026 final order remains subject to pending legal challenges before the U.S. Court of Appeals for the D.C. Circuit. Accordingly, significant uncertainty remains regarding dual-license operators, actions by the DEA, the U.S. Department of the Treasury, and the Internal Revenue Service, tenants’ ability to obtain DEA registration, and the ultimate outcome and timing of the broader rescheduling process, and no retrospective tax relief or guidance has been issued to date. Accordingly, while we believe these developments represent a meaningful step forward for the industry and could improve operator economics, access to capital, and long-term growth, we continue to assess their impact on our tenants, properties, and business and cannot predict the effect on our financial condition, results of operations, or cash flows. 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. Market Dynamics in Regulated Cannabis State Programs 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 31 Table of Contents 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 Many states have experienced declines in unit pricing for regulated cannabis products, with that decline more pronounced in certain states than in others, which compresses operating margins for operators. 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. Significant Tenants and Concentrations of Risk As of June 30, 2026, we owned 108 properties located in 19 states leased to 37 tenants. Many of our tenants are tenants at multiple properties. We seek to manage our portfolio-level risk through geographic diversification and by minimizing dependence on any single property or tenant. At June 30, 2026, our largest property was located in New York and accounted for 5.7% of our net real estate held for investment. No other properties accounted for more than 5% of our net real estate held for investment at June 30, 2026. See Note 2 “Concentration of Credit Risk” in the notes to our consolidated financial statements for further information regarding the tenants in our portfolio that represented the largest percentage of our total rental revenues for the three and six months ended June 30, 2026. Competitive Environment We face competition from a diverse mix of market participants, including but not limited to other companies with similar business models, independent investors, hedge funds, lenders and other real estate investors, as well as potential tenants (cannabis operators themselves), all of whom may compete with us in our efforts to acquire real estate zoned for regulated cannabis operations. Competition from others may diminish our opportunities to acquire a desired property on favorable terms or at all. In addition, this competition may put pressure on us to reduce the rental rates below those that we expect to charge for the properties that we acquire, which would adversely affect our financial results. Operating Expenses Our operating expenses include general and administrative expenses, including personnel costs, stock-based compensation, and legal, accounting and other expenses related to corporate governance, public reporting and compliance with the various provisions of U.S. securities laws. Our operating expenses also include costs that we incur for properties that are not leased (or are leased but tenant’s rent obligations, including for payment of operating expenses, have not yet commenced), including taxes, insurance, maintenance, security, utilities and other property-specific costs. We generally structure our leases so that the tenant is responsible for taxes, maintenance, insurance and structural repairs with respect to the premises throughout the lease term. Increases or decreases in such operating expenses will impact our overall financial performance. Our Qualification as a REIT We have been organized and operate our business so as to qualify to be taxed as a REIT for U.S. federal income tax purposes. Shares of our common stock and Series A Preferred Stock are subject to restrictions on ownership and transfer that are intended, among other purposes, to assist us in qualifying and maintaining our qualification as a REIT. In order for us to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), the relevant sections of our charter provide that, subject to certain exceptions, no person or entity may own, or be deemed to own, by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% (in value or number of shares, whichever is more restrictive) of the aggregate of our outstanding shares of stock or Series A Preferred Stock or more than 9.8% (in value or number of shares, whichever is more restrictive) of our outstanding common stock or any class or series of our outstanding preferred stock. 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 activity and property portfolio activity during the six months ended June 30, 2026. 32 Table of Contents Investments 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 during the six months ended June 30, 2026. Comparison of the Three and Six Months Ended June 30, 2026 and 2025 The following table sets forth the results of our operations (in thousands): 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 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 — 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 Cannabis Portfolio Segment Rental Revenues. Rental revenues for the three months ended June 30, 2026 and 2025 remained consistent at $62.9 million. Increases in rental revenue generated from new leases on existing properties and annual contractual rent escalations on certain properties were substantially offset by decreases in rental revenue resulting from the sale of certain properties, tenant defaults and lease terminations. During the three months ended June 30, 2026, we applied $1.2 million of security deposits for payment of rent on properties leased to Battle Green and Cannabist. During the three months ended June 30, 2025, we applied $18,000 of security deposits for payment of rent on a property leased to Emerald Growth, which was sold in April 2025. Rental revenues for the six months ended June 30, 2026 decreased by $2.8 million, or 2%, to $131.8 million, compared to $134.6 million for the six months ended June 30, 2025. The decrease was primarily driven by a $12.6 million reduction in rental revenue resulting from the sale of four properties, tenant defaults and lease terminations. These decreases were partially offset by a $9.8 million increase in rental revenue attributable to annual contractual rent escalations on multiple properties, new leases executed on existing properties, and collections from court settlements related to certain defaulted tenants. 33 Table of Contents For the six months ended June 30, 2026, we applied $2.4 million of security deposits for payment of rent on properties leased to Battle Green and Cannabist. For the six months ended June 30, 2025, we applied $5.8 million of security deposits for payment of rent on properties leased to PharmaCann, Gold Flora, TILT, Sozo and Emerald Growth. Property Expenses. Property expenses for the three months ended June 30, 2026 increased by $0.3 million to $7.2 million, compared to $6.9 million for the three months ended June 30, 2025. Property expenses for the six months ended June 30, 2026 increased by $0.6 million to $14.8 million, compared to $14.2 million for the six months ended June 30, 2025. The increase was primarily due to higher property taxes on certain properties, which was partially offset by lower insurance expense resulting from reduced insurance premiums under our master insurance policy and lower other property-related expenses. Property expenses related to leased properties are generally reimbursable to us by tenants under the terms of the leases. Depreciation and Amortization Expense. Depreciation and amortization expense for the three months ended June 30, 2026 increased by $0.3 million to $18.8 million, compared to $18.5 million for the three months ended June 30, 2025. Depreciation and amortization expense for the six months ended June 30, 2026 increased by $0.5 million to $37.4 million, compared to $36.9 million for the six months ended June 30, 2025. The increase was primarily due to the full amortization of in-place lease intangible assets upon the early termination of certain leases, partially offset by lower depreciation expense resulting from the sale of certain properties. Impairment Loss on Real Estate. We recognized an impairment loss on real estate of $3.5 million during the three months ended March 31, 2025 related to one of our properties in Palm Springs, California. The property was under contract to be sold for less than its carrying value and was subsequently sold in June 2025. No other impairment loss on real estate was recognized during the three and six months ended June 30, 2026 and 2025. Gain on Sale of Real Estate, Net . Gain on sale of real estate, net was $11.8 million for the three months ended June 30, 2026, consisting of a $16.7 million gain recognized on the sale of our property located in New York, partially offset by a $4.9 million loss recognized on the sale of our property located in Texas. Gain on sale of real estate, net was $12.3 million for the six months ended June 30, 2026, which also included a $0.5 million gain recognized on the sale of our property located in Arizona. There were no gains or losses on the sale of real estate during the three or six months ended June 30, 2025. Interest and Other Income . Interest and other income for the three months ended June 30, 2026 increased by $0.7 million to $1.4 million, compared to $0.8 million for the three months ended June 30, 2025. Interest and other income for the six months ended June 30, 2026 increased by $0.5 million to $1.9 million, compared to $1.4 million for the six months ended June 30, 2025. The increase was primarily due to $0.7 million of interest income recognized on the seller-financed note associated with the sale of a property in New York, partially offset by a $0.2 million decrease in interest income from our construction loan related to the development of a regulated cannabis cultivation and processing facility in California. Life Science Portfolio Segment Interest and Other Income. Interest and other income for the three and six months ended June 30, 2026 was $8.5 million and $14.0 million, respectively, and consisted of interest and dividend income earned on our investments in the IQHQ Credit Facility and IQHQ Preferred Stock. These investments were made starting in September 2025 and, accordingly, did not have comparable income during the three and six months ended June 30, 2025. Unallocated Items General and Administrative Expense. General and administrative expenses for the three months ended June 30, 2026 decreased by $0.9 million to $7.7 million from $8.6 million for the three months ended June 30, 2025. The decrease was primarily driven by lower compensation expense, primarily due to lower bonus expense, as well as lower consulting expenses. These decreases were partially offset by higher non-capitalizable financing expenses and legal expenses related to various litigation matters. General and administrative expenses for the six months ended June 30, 2026 increased by $1.0 million to $18.1 million, compared to $17.1 million for the six months ended June 30, 2025. The increase was primarily driven by higher legal expenses related to various litigation matters and higher non-capitalizable financing expenses. These increases were partially offset by lower compensation expense, primarily due to lower bonus expense, as well as lower consulting expenses. 34 Table of Contents Interest and Other Income. Interest and other income for the three months ended June 30, 2026 increased slightly to $0.9 million from $0.8 million for the three months ended June 30, 2025. Interest and other income for the six months ended June 30, 2026 decreased to $1.2 million from $1.8 million for the six months ended June 30, 2025. Interest and other income is primarily affected by prevailing market interest rates and the balance of our interest-bearing investments. Interest Expense . Interest expense for the three months ended June 30, 2026 increased by $3.9 million to $8.3 million from $4.4 million for the three months ended June 30, 2025. Interest expense for the six months ended June 30, 2026 increased by $5.9 million to $14.8 million from $8.9 million for the six months ended June 30, 2025. The increase was primarily due to interest expense recognized on the Exchangeable Notes and new term loans, partially offset by lower interest expense on the Notes due 2026 following their maturity in May 2026. Preferred Stock Dividends. Preferred stock dividends for the three months ended June 30, 2026 increased by $2.3 million to $3.2 million from $0.9 million for the three months ended June 30, 2025. Preferred stock dividends for the six months ended June 30, 2026 increased by $4.1 million to $5.8 million from $1.7 million for the six months ended June 30, 2025. The increases were primarily due to the issuance of additional shares of Series A Preferred Stock subsequent to June 30, 2025. Cash Flows Comparison of the Six Months Ended June 30, 2026 and 2025 (in thousands) Six Months Ended June 30, 2026 2025 Change Net cash provided by (used in) operating activities $ 100,948 $ 102,691 $ (1,743) Net cash provided by (used in) investing activities (78,399) (22,912) (55,487) Net cash provided by (used in) financing activities 137,491 (126,358) 263,849 Ending cash, cash equivalents and restricted cash 207,637 99,666 107,971 Operating Activities Cash flows provided by operating activities for the six months ended June 30, 2026 and 2025 were $100.9 million and $102.7 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. For the six months ended June 30, 2026, cash flows provided by operating activities also included interest and dividend income earned on our investments in the IQHQ Credit Facility and IQHQ Preferred Stock. The decrease in cash flows provided by operating activities for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to lower rental revenue and timing differences in working capital and application of tenant security deposits, partially offset by interest and dividend income earned on our investments in the IQHQ Credit Facility and IQHQ Preferred Stock. Investing Activities For the six months ended June 30, 2026, cash flows used in investing activities consisted of a $120.0 million investment in life science financial instruments and $3.6 million in funding of draws for improvements and construction, partially offset by $45.2 million in proceeds from the sale of real estate assets. For the six months ended June 30, 2025, net cash used in investing activities was $22.9 million, which was primarily driven by $24.4 million used for investments in real estate and funding of draws for improvement and construction funding at our properties, partially offset by $1.8 million in proceeds related to the sale of our Palm Springs, California property. Financing Activities Net cash provided by financing activities of $137.5 million during the six months ended June 30, 2026 was driven by $535.8 million of net proceeds from the issuance of the Exchangeable Notes and term loans, $81.2 million of net proceeds from the issuance of Series A Preferred Stock, and $44.0 million of net proceeds from the issuance of common stock. These amounts were partially offset by dividend payments of $112.0 million to common and preferred stockholders, $89.0 35 Table of Contents million related to the repurchase of our common stock, net decrease in borrowings under our revolving credit facilities of $10.0 million, principal repayments of $311.3 million on our term loans and Notes due 2026, and $1.3 million related to the net share settlement of equity awards to satisfy employee withholding taxes upon the vesting of restricted stock. Net cash used in financing activities of $126.4 million during the six months ended June 30, 2025 was due to dividend payments of $110.1 million to common and preferred stockholders, partial principal payment on the Notes due 2026 of $8.7 million, $0.7 million related to net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees, and $20.1 million related to repurchase of common stock, partially offset by $13.2 million in net proceeds from the issuance of our Series A Preferred Stock pursuant to our ATM Program. Liquidity and Capital Resources Sources and Uses of Cash Liquidity is a measure of our ability to meet potential cash requirements. Our principal future uses of cash and cash equivalents include the acquisition of additional properties and other investments, 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 June 30, 2026, we had cash and cash equivalents of $204.7 million. We derive substantially all of our income from leasing our properties and life science investments, collecting rental, interest and dividend income. These sources of income represent our primary source of liquidity to fund the acquisition of additional properties, the development and redevelopment of existing properties, dividends to our stockholders, 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. 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, mortgage financing on certain of our properties, 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. In recent years, financial markets have been volatile in general. If sustained, this could have a material adverse effect on our business, financial condition and results of operations, including our ability to continue to make acquisitions of new properties and fund investments for improvements at existing properties, and refinance our existing indebtedness. Our investment guidelines also provide that our aggregate borrowings (secured and unsecured) will not exceed 50% of the cost of our tangible assets at the time of any new borrowing, subject to our Board of Directors’ discretion. IQHQ Investments We have made a long-term capital commitment to fund investments in IQHQ REIT through both purchases of preferred equity and secured credit instruments. These investments represent a strategic expansion of our portfolio and are expected to be funded over an extended period through a combination of available cash on hand, operating cash flows, our credit facilities, and potential future financing activities. In September 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. During the three months ended June 30, 2026, the Company funded the remaining $120.0 million of its commitment to purchase shares of IQHQ Preferred Stock, resulting in a total investment of 170,000 shares of IQHQ Preferred Stock having an aggregate purchase price of $170.0 million. In connection with the initial closing of our investment in IQHQ Preferred Stock, we also became a lender under the IQHQ Credit Facility and funded our $100.0 million loan commitment using available cash on hand and borrowings under our Revolving Credit Facility. 36 Table of Contents 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. In May 2021, our Operating Partnership issued $300.0 million aggregate principal amount of Notes due 2026. The Notes due 2026 were the Operating Partnership’s general unsecured and unsubordinated obligations, and ranked equally in right of payment with all of the Operating Partnership’s future senior unsecured indebtedness. 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. In May 2026, we paid off the remaining principal balance of $282.1 million and accrued interest obligations related to the Notes due 2026. As of June 30, 2026, no amounts remained outstanding on the Notes due 2026. Exchangeable Notes On June 15, 2026, our Operating Partnership issued $402.5 million of 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. We received net proceeds of approximately $391.0 million from the offering of Exchangeable Notes, after deducting the initial purchasers’ discounts and estimated offering expenses, reflecting the increased offering size resulting from the full exercise of the initial purchasers’ option. We used approximately $80.5 million of the net proceeds to fund the concurrent repurchase of 1,334,466 shares of our common stock from certain purchasers of the Exchangeable Notes in privately negotiated transactions, and intend to use the remaining net proceeds for working capital and general corporate purposes, which may include the repayment of indebtedness, including amounts outstanding under our credit facilities and the term loans described below, and funding investments consistent with our investment strategy. Term Loans During the six months ended June 30, 2026, we entered into several new secured term loan facilities with various lenders for an aggregate principal amount of $148.7 million and received net proceeds of $144.8 million after deducting issuance costs. The proceeds from the term loans were used to pay off the Notes due 2026 in May 2026. In June 2026, we fully repaid one of the term loans with an original principal amount of $20.0 million prior to maturity. The remaining 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 remaining term loans have maturities ranging from April 2029 to June 2031, have fixed interest rates ranging from 6.67% to 9.0% and one term loan has a variable interest rate at one-month SOFR, subject to a floor of 3.75%, plus 5.0%. See Note 9 "Debt - Term Loans" to our consolidated financial statements for more information. ATM Program We have an ATM Program, pursuant to which we may offer and sell from time to time, including on a forward basis, shares of our common stock and 9.00% Series A Cumulative Redeemable Preferred Stock, $0.001 par value per share (the “Series A Preferred Stock”), up to an aggregate offering price of $500.0 million. During the three months ended June 30, 2026, we sold 948,034 shares of our Series A Preferred Stock for net proceeds of $20.9 million. During the three months ended June 30, 2026, we sold 680,842 shares of common stock for net proceeds of $34.7 million. As of June 30, 2026, shares of the Company’s common stock and Series A Preferred Stock having an aggregate offering price of up to $336.9 million remain available for offer and sale pursuant to the ATM Program. 37 Table of Contents 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. 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 June 30, 2026, 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 the Company was in compliance with these covenants as of June 30, 2026. As of June 30, 2026, there were no amounts outstanding under the Revolving Credit Facility. In October 2025, our Operating Partnership and IIP Life Science entered into a loan agreement with a federally regulated commercial bank, as agent for the lenders that become party thereto from time to time (the “IIP Life Science Credit Facility”). Under the IIP Life Science Credit Facility, our Operating Partnership has a revolving line of credit available up to $100.0 million until the maturity date on October 3, 2028. The IIP Life Science Credit Facility includes an accordion feature under which the revolving line of credit may be increased up to an aggregate of $135.0 million, under certain conditions, including obtaining additional lender commitments. The availability of credit at any given time under the IIP Life Science Credit Facility is subject to, among other things, the amount of collateral available and a borrowing base formula based upon the value of eligible investments in certain securities and an eligible loan receivable. All obligations under the IIP Life Science Credit Facility are secured by substantial assets of the loan parties, including the Company’s investment through IIP Life Science in IQHQ Preferred Stock, the IQHQ Warrant, and the IQHQ Credit Facility. Borrowings under the IIP Life Science Credit Facility bear interest on the outstanding daily balance at a rate of interest per annum equal to the greater of (i) the one-month SOFR, as administered by CME Group Benchmark Administration, plus 2.0% and (ii) 6.10%. At June 30, 2026, 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 the Company was in compliance with these covenants as of June 30, 2026. As of June 30, 2026, the outstanding borrowings under our IIP Life Science Credit Facility were $92.5 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. On March 3, 2026, our Board of Directors approved a new share repurchase program authorizing the purchase of up to $100.0 million in shares of our common stock, which replaces our share repurchase program that expired on March 17, 2026. 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 program are expected to be funded from existing cash balances and proceeds from the sale of the Company’s Series A Preferred Stock under its ATM Program. During the three months ended June 30, 2026, we repurchased 1,468,542 shares of our common stock under the current share repurchase program for $89.0 million, including the shares repurchased in connection with our Exchangeable Notes. The current share repurchase program expires on March 4, 2027, and may be extended, suspended, modified or discontinued at any time at the Company’s discretion. Dividends The Company is required to pay dividends to its stockholders at least equal to 90% of its taxable income in order to qualify and maintain its qualification as a REIT. As a result of this distribution requirement, our Operating Partnership cannot rely on retained earnings to fund its ongoing operations to the same extent that other companies whose parent companies are not REITs can. Our ability to continue to pay dividends is dependent upon our ability to continue to generate cash flows, service any debt obligations we have, including our Exchangeable Notes, term loans, borrowings under our credit facilities, and make accretive new investments. 38 Table of Contents 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 Contractual Debt Obligations The following table summarizes our contractual debt obligations as of June 30, 2026 (in thousands): Payments Due by Year Exchangeable Notes Credit Facilities Term Loans Interest Total 2026 (six months ending December 31) $ — $ — $ 623 $ 20,377 $ 21,000 2027 — — 1,242 40,193 41,435 2028 — 92,500 1,325 38,741 132,566 2029 402,500 — 76,415 16,720 495,635 2030 — — 1,041 3,332 4,373 Thereafter — — 47,955 1,441 49,396 Total $ 402,500 $ 92,500 $ 128,601 $ 120,804 $ 744,405 Additionally, as of June 30, 2026, we had $6.3 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. 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 In addition to the required GAAP presentations, we use certain non-GAAP performance measures as we believe these measures improve the understanding of our operational results. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public and thus such reported measures could change. Funds from Operations, Normalized Funds from Operations and Adjusted Funds from Operations Funds from operations (“FFO”) and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, depreciation, amortization and impairment related to real estate properties, and after adjustments for unconsolidated partnerships and joint ventures. Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO and FFO per share to be supplemental measures of a REIT’s performance because they provide an understanding of the operating performance of our properties without giving effect to certain significant non-cash items, primarily depreciation expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. We believe that by excluding the effect of depreciation, FFO and FFO per share can facilitate comparisons of operating performance between periods. We report FFO and FFO per share because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs and because FFO per share is consistently reported, discussed, and compared by research analysts in their notes and publications about REITs. For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share. 39 Table of Contents The Exchangeable Notes were dilutive for purposes of calculating earnings per diluted share for the three and six months ended June 30, 2026, as GAAP requires convertible notes that can be settled in cash and/or shares at the Company’s discretion to be evaluated under the if-converted method. However, for the purposes of calculating FFO, Normalized FFO and AFFO per diluted share, the Company excludes the dilutive impact of the Exchangeable Notes under the if-converted method as management believes the evaluation of operating performance based on actual diluted shares outstanding is more appropriate to facilitate consistent comparisons between reporting periods and reflects the actual shares that are entitled to common stock dividends each period. Accordingly, for the three months ended June 30, 2026, cash interest expense of $1.0 million relating to the Exchangeable Notes was included and 1,019,877 weighted-average shares potentially issuable upon exchange of the Exchangeable Notes under the if-converted method were excluded from the calculation of FFO, Normalized FFO and AFFO per diluted share. For the six months ended June 30, 2026, cash interest expense of $1.0 million relating to the Exchangeable Notes was included and 512,756 weighted-average shares potentially issuable upon exchange of the Exchangeable Notes under the if-converted method were excluded from the calculation of FFO, Normalized FFO and AFFO per diluted 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. Normalized FFO is used by management in evaluating the performance of our core business operations. 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 non-cash items. Our computation of FFO, Normalized FFO, and AFFO may differ from the methodology for calculating FFO, Normalized FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such REITs. Further, FFO and AFFO do not represent cash flow available for management’s discretionary use. FFO, Normalized FFO and AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. FFO, Normalized FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of operations. 40 Table of Contents The table below is a reconciliation of net income attributable to common stockholders to FFO, Normalized FFO and AFFO for the three and six months ended June 30, 2026 and 2025 (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 Net income attributable to common stockholders $ 40,665 $ 25,146 $ 70,820 $ 55,442 Real estate depreciation and amortization 18,799 18,500 37,383 36,891 Impairment loss on real estate — — — 3,527 Loss (gain) on sale of real estate, net (11,847) — (12,269) — FFO attributable to common stockholders 47,617 43,646 95,934 95,860 Litigation-related expense 1,312 413 3,182 819 Income on seller-financed notes (1) 223 1,164 446 1,317 Deferred lease payments received on sales-type leases (2) 525 5 700 25 Transaction costs and other (3) (463) — (463) (32) Normalized FFO attributable to common stockholders 49,214 45,228 99,799 97,989 Stock-based compensation 2,826 2,672 5,410 4,750 Non-cash interest expense 1,281 476 1,857 946 Non-cash accretion of life science investments (335) — (669) — Above-market lease amortization 23 23 46 46 AFFO attributable to common stockholders $ 53,009 $ 48,399 $ 106,443 $ 103,731 FFO per common share – diluted $ 1.64 $ 1.54 $ 3.34 $ 3.37 Normalized FFO per common share – diluted $ 1.70 $ 1.60 $ 3.47 $ 3.44 AFFO per common share – diluted $ 1.83 $ 1.71 $ 3.71 $ 3.65 Weighted average common shares used for FFO, Normalized FFO, and AFFO: 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 Diluted (4) 28,972,371 28,317,693 28,721,173 28,452,111 (1) Amount reflects non-refundable cash payments received pursuant to 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 received are recorded as a deposit liability and included in other liabilities on our consolidated balance sheet. (2) Amount reflects the non-refundable lease payments received on two sales-type leases which are recognized as a deposit liability starting on January 1, 2024, and is included in other liabilities in our consolidated balance sheet as of June 30, 2026, as the transaction did not qualify for recognition as a completed sale. (3) Amount reflects other items that are considered to be infrequent and unusual in nature and/or not related to our core real estate operation. For the three and six months ended June 30, 2026, amount reflects certain financing costs that were not capitalizable and write-off of certain liabilities. (4) For the three and six months ended June 30, 2026, amounts exclude 1,019,877 and 512,756 weighted-average shares potentially issuable upon exchange of the Exchangeable Notes under the if-converted method, respectively. See the Non-GAAP Financial Information section above for more detail. Critical Accounting Estimates The preparation of our financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of our financial statements, the reported amounts of revenues and expenses during the reporting periods and the related disclosures in our unaudited consolidated financial statements and accompanying footnotes. We have discussed those estimates that we believe are critical and require the use of complex judgment in their application in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on February 24, 2026. There have been no material changes to our critical accounting estimates or the methods or assumptions we apply. 41 Table of Contents Impact of Real Estate and Credit Markets In the commercial real estate market, property prices generally continue to fluctuate. Likewise, during certain periods, the U.S. credit markets have experienced significant price volatility, dislocations, and liquidity disruptions, which may impact our access to and cost of capital. We continually monitor the commercial real estate and U.S. credit markets carefully and, if required, will make decisions to adjust our business strategy accordingly. 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. Interest Rate Risk We are exposed to interest rate risk primarily through our variable-rate indebtedness, including amounts outstanding under our Revolving Credit Facility, our IIP Life Science Credit Facility, and one of our term loans. Borrowings under these credit facilities bear interest at variable rates based on the greater of prime rate or SOFR, as applicable, plus an applicable margin and stipulated rate and one of our term loans bears interest at a rate per annum equal to the one-month SOFR, subject to a floor of 3.75%, plus 5.0%. As a result, increases in market interest rates may increase our borrowing costs and adversely affect our results of operations and cash flows. Our Exchangeable Notes bear interest at a fixed rate of 6.0% per annum and are not directly exposed to changes in prevailing market interest rates. However, changes in market interest rates may affect the trading value of the Exchangeable Notes. 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 3. Quantitative and Qualitative Disclosures About Market Risk” for additional information regarding our interest rate sensitivity. Impact of Inflation The U.S. economy has experienced a period of increased inflation in recent years. We enter into leases that generally provide for fixed increases in rent. During times when inflation is greater than the fixed increases in rent, as provided for in the leases, rent increases may not keep up with the rate of inflation. Seasonality Our business has not been, and we do not expect our business in the future to be, subject to material seasonal fluctuations.