SAN DIEGO--(BUSINESS WIRE)--
Innovative Industrial Properties, Inc. (NYSE: IIPR) (the "Company")
announced today results for the quarter ended December 31, 2016 and for
the period from June 15, 2016 (date of incorporation) through December
31, 2016.
Fourth Quarter 2016 Highlights
-
The Company completed its initial public offering on the New York
Stock Exchange.
-
The Company acquired a 127,000 square foot industrial property in a
sale-leaseback transaction with PharmaCann LLC (the "Initial
Property").
-
The Company generated total revenues of $321,000 and rental revenues
of $180,000, reflecting the pro rata rent paid by PharmaCann at its
Initial Property in December 2016.
Initial Public Offering
On December 5, 2016, the Company completed its initial public offering
on the New York Stock Exchange, issuing an aggregate of 3,350,000 shares
of common stock and receiving approximately $61.1 million of net
proceeds. Approximately $30.0 million of the net proceeds from the
Company's initial public offering were utilized to purchase the Initial
Property. At December 31, 2016, the Company had cash and cash
equivalents of approximately $33.0 million.
Acquisition Activity and Pipeline
On December 19, 2016, the Company completed the acquisition of the
Initial Property in New York in a sale-leaseback transaction with
PharmaCann for approximately $30.0 million. Concurrent with the closing
of the acquisition, the Company entered into a triple-net lease with
PharmaCann, as tenant, which includes the following terms:
-
PharmaCann is responsible for paying for all structural repairs,
maintenance expenses, insurance and taxes related to the Initial
Property.
-
The term of the lease is 15 years, with two options to extend the term
for two five-year periods.
-
The initial base rent is $319,580 per month, subject to annual
increases at a rate based on the higher of (i) 4% or (ii) 75% of the
consumer price index.
-
The Company receives a property management fee equal to 1.5% of the
then-current base rent throughout the term, and supplemental base rent
for the first five years of the term at a rate of $105,477 per month.
-
Together, the annualized initial base rent, property management fee
and supplemental base rent equate to approximately 17.2% of the
purchase price of the Initial Property.
As of March 22, 2017, the Company had identified and was in various
stages of reviewing approximately $120 million of additional potential
properties for acquisition, which amount is estimated based on sellers’
asking prices for the properties, ongoing negotiations with sellers, the
Company's assessment of the values of such properties after taking into
account the current and expected lease revenue, operating history, age
and condition of the property, and other relevant factors. There can be
no assurance that the Company will consummate the acquisition of any of
the properties in its current acquisition pipeline on the terms
anticipated, or at all.
Financial Results
For the fourth quarter 2016 and for the period from June 15, 2016 (date
of incorporation) through December 31, 2016, the Company had total
revenues of $321,000 and rental revenues of $180,000. Rental revenues
reflect the pro rata rent paid for the month of December by PharmaCann
at the Company's Initial Property, which was the only property that the
Company owned as of December 31, 2016. The Company began real estate
operations after closing its initial public offering and purchasing the
Initial Property in December 2016.
For the fourth quarter 2016 and for the period from June 15, 2016 (date
of incorporation) through December 31, 2016, the Company recorded a net
loss of $4.2 million ($2.80 per basic and diluted share) and $4.4
million ($4.56 per basic and diluted share), respectively, which
includes $3.5 million and $3.7 million, respectively, of a one-time,
non-cash expense related to the redemption of the Company's Class B
common stock. All shares of the Company's Class B common stock were
initially purchased by the founders of the Company at par value ($0.001
per share) and were subsequently redeemed in their entirety by the
Company at par value ($0.001 per share). Notwithstanding the fact that
no value was received by any of the founders (including any executive
officer or director of the Company) for the Class B common stock, the
Company, in accordance with U.S. generally accepted accounting
principles ("GAAP"), was required to record the unamortized value of the
Class B common stock as a non-cash Class B stock forfeiture expense in
the fourth quarter 2016.
For the fourth quarter 2016, funds from operations ("FFO") and FFO per
basic and diluted share were ($4.2) million and ($2.78) per basic and
diluted share, respectively, and were ($658,000) and ($0.44) per share,
respectively, excluding the one-time, non-cash Class B stock forfeiture
expense. For the period from June 15, 2016 (date of incorporation)
through December 31, 2016, FFO and FFO per share were ($4.4) million and
($4.53) per share, respectively, and were ($658,000) and ($0.68) per
share excluding the one-time, non-cash Class B stock forfeiture expense.
For the fourth quarter 2016, adjusted funds from operations ("AFFO") and
AFFO per share were ($600,000) and $(0.40) per basic and diluted share,
respectively. For the period from June 15, 2016 (date of incorporation)
through December 31, 2016, AFFO and AFFO per share were ($600,000) and
$(0.62) per basic and diluted share, respectively.
FFO and AFFO are supplemental non-GAAP financial measures used in the
real estate industry to measure and compare the operating performance of
real estate companies. A complete reconciliation containing adjustments
from GAAP net loss available to common stockholders to FFO and AFFO and
definitions of terms are included at the end of this release.
Teleconference and Webcast
Innovative Industrial Properties, Inc. will conduct a conference call
and webcast at 10:00 a.m. Pacific Time (1:00 p.m. Eastern Time)
on Thursday, March 23, 2017 to discuss the company's financial results
and operations for the quarter ended December 31, 2016 and for the
period from June 15, 2016 (date of incorporation) through December 31,
2016. The call will be open to all interested investors through a live
audio webcast at the Investor Relations section of the company's website
at www.innovativeindustrialproperties.com,
or live by calling 1-866-807-9684 (domestic) or 1-412-317-5415
(international) and asking to be joined to the Innovative Industrial
Properties, Inc. conference call. The complete webcast will be archived
for 90 days on the company's website. A telephone playback of the
conference call will also be available from 12:00 p.m. Pacific
Time on Thursday, March 23, 2017 until 12:00 p.m. Pacific
Time on Thursday, March 30, 2017, by calling 1-877-344-7529 (domestic),
1-855-669-9658 (Canada) or 1-412-317-0088 (international) and using
access code 10103239.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised Maryland
corporation focused on the acquisition, ownership and management of
specialized industrial properties leased to experienced, state-licensed
operators for their regulated medical-use cannabis facilities.
Innovative Industrial Properties, Inc. intends to elect to be taxed as a
real estate investment trust. Additional information is available at www.innovativeindustrialproperties.com.
This press release contains statements that the Company believes to
be “forward-looking statements” within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. All
statements other than historical facts are forward-looking statements.
When used in this press release, words such as the Company “expects,”
“intends,” “plans,” “estimates,” “anticipates,” “believes” or “should”
or the negative thereof or similar terminology are generally intended to
identify forward-looking statements. Such forward-looking statements are
subject to risks and uncertainties that could cause actual results to
differ materially from those expressed in, or implied by, such
statements.Investors should not place undue reliance upon
forward-looking statements.The Company disclaims any obligation
to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.
|
| |
| INNOVATIVE INDUSTRIAL PROPERTIES, INC. |
|
|
| CONSOLIDATED BALANCE SHEET |
(Dollars in thousands, except share and per share amounts)
|
| | |
| Assets | | | At December 31, 2016 |
|
Real estate, at cost:
| | | |
|
Land
| |
$
|
7,600
| |
|
Buildings and improvements
| | |
22,475
|
|
|
Total real estate, at cost
| | |
30,075
| |
|
Less accumulated depreciation
| | |
(27
|
)
|
|
Net real estate held for investment
| | |
30,048
| |
|
Cash and cash equivalents
| | |
33,003
| |
|
Prepaid insurance and other assets, net
| | |
276
|
|
|
Total assets
| |
$
|
63,327
|
|
| Liabilities and stockholders' equity | | | |
|
Accounts payable, accrued expenses and other liabilities
| |
$
|
70
| |
|
Offering cost liability
| | |
276
| |
|
Rents received in advance and tenant security deposit
| | |
2,542
|
|
|
Total liabilities
| | |
2,888
|
|
|
Commitments and contingencies
| | | |
|
Stockholders' equity:
| | | |
|
Preferred stock, par value $0.001 per share, 50,000,000 shares
authorized, no shares issued and outstanding as of December 31, 2016
| | |
—
| |
|
Class A common stock, par value $0.001 per share, 49,000,000 shares
authorized, 3,416,508 shares issued and outstanding as of December
31, 2016
| | |
3
| |
|
Class B common stock, par value $0.001 per share, 1,000,000 shares
authorized, no shares issued and outstanding as of December 31, 2016
| | |
—
| |
|
Additional paid-in-capital
| | |
64,828
| |
|
Accumulated deficit
| | |
(4,392
|
)
|
|
Total stockholders' equity
| | |
60,439
|
|
|
Total liabilities and stockholders' equity
| |
$
|
63,327
|
|
| | |
|
| | |
|
| INNOVATIVE INDUSTRIAL PROPERTIES, INC. |
|
|
| CONSOLIDATED STATEMENTS OF OPERATIONS |
(Dollars in thousands, except share and per share amounts)
|
|
| | |
| |
| | | For the three
months ended
December
31, 2016 | | For the period
from June 15,
2016
(date of
incorporation)
through
December 31, 2016 |
|
Revenues:
| | |
(unaudited)
| | |
|
Rental
| |
$
|
180
| | |
$
|
180
| |
|
Tenant reimbursements
| | |
87
| | | |
87
| |
|
Other
| | |
54
|
| |
|
54
|
|
|
Total revenues
| | |
321
|
| |
|
321
|
|
|
Expenses:
| | | | | |
|
Property expenses
| | |
87
| | | |
87
| |
|
General and administrative
| | |
770
| | | |
770
| |
|
Stock-based compensation
| | |
58
| | | |
58
| |
|
Forfeited Class B common shares
| | |
3,507
| | | |
3,707
| |
|
Organization costs
| | |
64
| | | |
64
| |
|
Depreciation
| | |
27
|
| |
|
27
|
|
|
Total expenses
| | |
4,513
|
| |
|
4,713
|
|
|
Net loss
| |
$
|
(4,192
|
)
| |
$
|
(4,392
|
)
|
|
Net loss per share (basic and diluted)
| |
$
|
(2.80
|
)
| |
$
|
(4.56
|
)
|
|
Weighted average shares outstanding (basic and diluted)
| | |
1,496,564
| | | |
962,775
| |
| | | | | | | |
|
| | | | | | | |
|
| INNOVATIVE INDUSTRIAL PROPERTIES, INC. |
|
|
| CONSOLIDATED FUNDS FROM OPERATIONS |
(In thousands, except share data)
|
(Unaudited)
|
|
| |
| |
The Company's FFO available to common shares and a reconciliation
to net loss for the three months ended December 31, 2016 and for
the period from June 15, 2016 (date of incorporation) through
December 31, 2016 were as follows (dollars in thousands, except
for share and per share amounts):
|
| | | |
|
| | For the three
months ended
December
31, 2016 | | For the period
from June 15, 2016
(date of
incorporation)
through
December 31, 2016 |
|
Net loss
| |
$
|
(4,192
|
)
| |
$
|
(4,392
|
)
|
|
Real estate depreciation
| |
|
27
|
| |
|
27
|
|
|
FFO
| |
$
|
(4,165
|
)
| |
$
|
(4,365
|
)
|
|
FFO per common share – basic and diluted
| |
$
|
(2.78
|
)
| |
$
|
(4.53
|
)
|
|
Weighted-average common shares outstanding – basic and diluted
| |
|
1,496,564
|
| |
|
962,775
|
|
| | | |
|
| | | |
|
The Company's AFFO available to common shares and a reconciliation
of FFO to AFFO for the three months ended December 31, 2016 and
for the period from June 15, 2016 (date of incorporation) through
December 31, 2016 were as follows (dollars in thousands, except
for share and per share amounts):
|
| | | |
|
| | For the three
months ended
December
31, 2016 | | For the period
from June 15, 2016
(date of
incorporation)
through
December 31, 2016 |
|
FFO
| |
$
|
(4,165
|
)
| |
$
|
(4,365
|
)
|
|
Stock-based compensation
| | |
58
| | | |
58
| |
|
Forfeited Class B common shares
| |
|
3,507
|
| |
|
3,707
|
|
|
Total adjustments
| |
|
3,565
|
| |
|
3,765
|
|
|
AFFO
| |
$
|
(600
|
)
| |
$
|
(600
|
)
|
|
AFFO per common share – basic and diluted
| |
$
|
(0.40
|
)
| |
$
|
(0.62
|
)
|
|
Weighted-average common shares outstanding – basic and diluted
| |
|
1,496,564
|
| |
|
962,775
|
|
| | | | | | | |
|
| | | | | | | |
|
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 (loss) (computed in
accordance with GAAP), excluding gains (or losses) from sales of
property, plus depreciation and amortization related to real estate
properties, and after adjustments for unconsolidated partnerships and
joint ventures."
Management believes FFO and FFO per share to be important supplemental
measures of a REIT's performance because they provide an understanding
of the operating performance of the Company's 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. The Company
believes that by excluding the effect of depreciation, FFO and FFO per
share can facilitate comparisons of operating performance between
periods. The Company reports 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.
Management believes that AFFO and AFFO per share are also appropriate
supplemental measures of a REIT's operating performance. The Company
calculates AFFO by adding to FFO certain non-cash expenses, consisting
primarily of non-cash stock-based compensation expense and forfeited
Class B common shares.
The Company's computation of FFO and AFFO may differ from the
methodology for calculating FFO and AFFO utilized by 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 and AFFO should not be considered as an alternative to net income
(loss) (computed in accordance with GAAP) as an indicator of the
Company's financial performance or to cash flow from operating
activities (computed in accordance with GAAP) as an indicator of the
Company's liquidity, nor is it indicative of funds available to fund the
Company's cash needs, including the Company's ability to pay dividends
or make distributions. FFO and AFFO should be considered only as
supplements to net income (loss) computed in accordance with GAAP as
measures of the Company's operations.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170322006236/en/
Innovative Industrial Properties, Inc.
Robert Sistek
Chief
Financial Officer and Executive Vice President, Investments
858-997-3332
Source: Innovative Industrial Properties, Inc.