One-glance verdict
Undervalued
$117.48 our estimate vs market $56.16
Wall Street consensus: $64.50 (-45.1% lower than our fair-value estimate)
52% below our estimate, below the bear case
Fundamentals snapshot
Innovative Industrial Properties, Inc.
IIPR · NYQ · Real Estate · REIT - Industrial
Current price
$56.16
52-week range
$44.58 - $65.38
Market cap
$1.55B
Balance sheet
Watch
6.83x Adequate
Net debt $404.30M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Returns 7.4% on equity, ahead of 66% of its peers.
- Reward Free cash flow was positive in 4/10 years.
- Risk Net debt grew 61.2% over 3 years.
- Risk Operating margin compressed from 60.1% to 48.8% over 3 years.
What this company does
Innovative Industrial Properties, Inc.
Innovative Industrial Properties is a real estate company that acts as a specialized landlord for state-licensed cannabis growers, buying properties and leasing them back to the growers. The company's main source of income is the long-term rent it collects from these tenants, which provides a steady, predictable cash flow. Because its entire business is focused on this single industry, the company's success is directly tied to the financial health and continued growth of the legal cannabis market.
How the company got here
Innovative Industrial Properties was founded in 2016 as the first publicly traded company on the New York Stock Exchange to provide real estate capital to the regulated cannabis industry. Because cannabis is illegal at the federal level, cannabis companies have had a hard time getting traditional bank loans. IIPR stepped in to fill this gap, primarily by buying the industrial buildings where cannabis is grown and processed and then leasing them back to the operators. This business model, known as a sale-leaseback, provided cannabis companies with needed cash and IIPR with a steady stream of rental income. The company grew rapidly for several years, but more recently has faced challenges as some of its tenants have struggled financially.
What it actually does
Think of Innovative Industrial Properties as a specialized landlord. It owns and manages industrial buildings, like greenhouses and processing facilities, that it leases to state-licensed cannabis operators. The company is structured as a Real Estate Investment Trust (REIT), which is a type of company that owns and often operates income-producing real estate. A key rule for REITs is that they must pay out at least 90% of their taxable income to shareholders in the form of dividends (a portion of the company's profits paid out to its investors). In addition to its real estate business, the company has recently started making financial investments in the life science industry.
Cannabis Portfolio
This is the company's original and largest business. IIPR buys specialized industrial properties from state-licensed cannabis growers and processors and then rents those same properties back to them under long-term agreements. These are often 'triple-net leases,' meaning the tenant is responsible for most of the property's expenses, like maintenance, insurance, and taxes. This arrangement provides cannabis operators with capital (cash for their business needs) that they might not be able to get from banks. This segment generates the vast majority of the company's revenue through rental income.
Life Science Portfolio
This is a newer and smaller part of the company's business. IIPR has started making financial investments in companies that own and develop real estate for the life science industry, such as labs and research facilities. For example, it has provided a large loan and purchased a type of investment called preferred stock in a life science real estate developer called IQHQ. This provides IIPR with a new source of income from interest payments and potential returns on its investment, separate from its cannabis real estate holdings. This diversification (spreading investments across different industries) is a way for the company to reduce its reliance on the cannabis sector.
What management is betting on now
The company's leadership is focused on navigating the challenges in the cannabis industry while also expanding into new areas. A key priority is managing its existing properties, which includes finding new tenants for any vacant facilities. At the same time, they are making a significant strategic bet on the life science industry through financial investments. This move is intended to diversify the company's sources of revenue and leverage the management team's past experience in life science real estate. By expanding into a different industry, the company aims to create more stable and predictable earnings for its investors over the long term.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
Revenue
$63.31M
Net income
$43.85M
Diluted EPS
1.36
Operating cash flow
$44.92M
Free cash flow
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Revenue
$69.00M
Net income
$32.81M
Diluted EPS
1.02
Operating cash flow
$56.03M
Free cash flow
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Revenue
$66.66M
Net income
$31.84M
Diluted EPS
1.07
Operating cash flow
$49.91M
Free cash flow
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Revenue
$64.69M
Net income
$29.30M
Diluted EPS
0.97
Operating cash flow
$45.59M
Free cash flow
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Revenue
$62.89M
Net income
$26.02M
Diluted EPS
0.86
Operating cash flow
$48.45M
Free cash flow
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Revenue
$71.72M
Net income
$31.08M
Diluted EPS
1.03
Operating cash flow
$54.24M
Free cash flow
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Revenue
$76.74M
Net income
$40.02M
Diluted EPS
1.35
Operating cash flow
$57.81M
Free cash flow
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Revenue
$76.53M
Net income
$40.22M
Diluted EPS
1.37
Operating cash flow
$64.87M
Free cash flow
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Is it cheap or expensive?
Fair value $117.48 vs current price $56.16
Wall Street consensus is the average analyst price target: $64.50 (-45.1% lower than our fair-value estimate).
Our most-likely fair value is $117.48 a share — about 109.2% above today's price of $56.16, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Watch
Net debt $404.3M. Interest coverage 6.8x.
Net debt
$404.30M
Interest coverage
6.83x
Innovative Industrial Properties, Inc.'s profit covers its interest bill about 6.8 times over. which is stronger than most peers shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Watch
Worse cushion
Baseline
Better cushion
IIPR
BASELINE
Innovative Industrial Properties, Inc.
Total debt $609.03M Interest coverage 6.83x This is the baseline the peer rows are being compared against.
Total debt $7.68M Interest coverage 32.52x +376% vs IIPR Carries about 4.8x more debt cushion than IIPR.
Total debt $19.65M Interest coverage -0.20x -100% vs IIPR This peer has almost no interest-payment cushion compared with IIPR.
Total debt $858.75M Interest coverage 1.39x -80% vs IIPR Carries about 4.9x less debt cushion than IIPR.
Total debt $3.48B Interest coverage 2.42x -65% vs IIPR Carries about 2.8x less debt cushion than IIPR.
Total debt $17.84B Interest coverage 4.33x -37% vs IIPR Carries about 1.6x less debt cushion than IIPR.
What you should know
The case for and against IIPR
3 Rewards
3 Risks
Rewards
-
Returns 7.4% on equity, ahead of 66% of its peers.
-
Free cash flow was positive in 4/10 years.
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Trades at 12.7x P/E vs peer median 20.8x (38.9% cheaper).
Risks
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Net debt grew 61.2% over 3 years.
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Operating margin compressed from 60.1% to 48.8% over 3 years.
-
Forward P/E (12.8x) is higher than trailing (12.7x) - earnings are expected to drop.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
12.71x
Forward P/E
12.79x
P/B
0.90x
P/S
5.87x
EV/EBITDA
10.20x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
88.4%
Operating margin
48.8%
Net margin
52.3%
ROE
7.4%
ROA
3.3%
Health
Liquidity and balance-sheet strength
Debt / equity
0.33x
Current ratio
4.58x
Quick ratio
3.17x
Total debt
$609.03M
Total cash
$204.73M
Growth
How the business has been compounding
Revenue TTM
$263.65M
Revenue 5Y CAGR
6.8%
EPS TTM
4.42
EPS 5Y CAGR
-10.7%
Cash flow
How much cash the business throws off
Operating CF TTM
$196.45M
Free CF TTM
$198.19M
FCF margin
75.2%
Dividend
Shareholder payout
Yield
13.7%
Payout ratio
171.9%
Last ex-div date
2026-09-30