SAN DIEGO--(BUSINESS WIRE)--
Innovative Industrial Properties, Inc. (NYSE: IIPR) (the "Company")
announced today results for the quarter ended March 31, 2017, the first
full quarter since the Company commenced real estate operations and
completed its initial public offering in December 2016.
2017 Highlights Year-to-Date
-
During the first quarter 2017, the Company generated total revenues
and rental revenues of approximately $1.3 million, primarily
reflecting the rent paid by PharmaCann at the Company's medical-use
cannabis cultivation facility located in New York.
-
Subsequent to the end of the first quarter 2017, the Company executed
an agreement to purchase the 9220 Alaking Court property in Capitol
Heights, Maryland.
Acquisition Activity and Pipeline
On May 1, 2017, the Company executed an agreement to purchase the 9220
Alaking Court property in Capitol Heights, Maryland, which is currently
under development and expected to comprise approximately 72,000 square
feet upon completion. The initial purchase price is $8 million, with an
additional $3 million payable to the seller upon completion of certain
development milestones and an additional $4 million payable to the
tenant, Holistic Industries LLC, as reimbursement for certain tenant
improvements. Concurrent with the completion of the purchase, the
Company expects to enter into a triple-net lease agreement with
Holistic, which intends to use the facility for medical cannabis
cultivation. The Company also agreed to separately fund a rent reserve
equal to $1.9 million, which will be drawn down each month (starting in
month four) to pay base rent and the property management fee until
depleted. The initial term of the lease is 16 years, with three options
to extend the term of the lease for three additional five year periods.
The initial annualized base rent, after a three month rent abatement
period, is subject to the rent reserve and is expected to be 15% of the
sum of the initial purchase price, the additional seller reimbursement
and the reimbursed tenant improvements, with 3.25% annual escalations
for the initial term of the lease. Holistic is also responsible for
paying the Company a 1.5% property management fee of the then-existing
base rent under the lease. Holistic is one of 15 applicants in the state
of Maryland to have received provisional approval for the cultivation of
medical-use cannabis by the Maryland Medical Cannabis Commission (the
"MMCC"), having also received provisional approval from the MMCC for
processing and dispensing. The transaction is expected to be completed
in the second quarter 2017.
As of May 10, 2017, the Company had identified and was in various stages
of reviewing approximately $100 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. The
transaction for the Alaking Court property is subject to the Company's
continued diligence and customary closing conditions, and the Company
cannot provide assurances that it will complete the purchase of the
Alaking Court property or the other properties in the Company's pipeline
on the terms described herein, or at all.
Financial Results
For the first quarter 2017, the Company had total revenues and rental
revenues of approximately $1.3 million, primarily reflecting the rent
paid by PharmaCann at the Company's medical-use cannabis cultivation
facility located in New York, which was the only property that the
Company owned as of March 31, 2017. The Company began real estate
operations after closing its initial public offering and purchasing the
Initial Property in December 2016.
For the first quarter 2017, the Company recorded a net loss and net loss
per basic and diluted share of ($591,000) and ($0.18), respectively. For
the first quarter 2017, funds from operations ("FFO") and FFO per basic
share were ($430,000) and ($0.13), respectively. For the first quarter
2017, AFFO and AFFO per diluted share were $340,000 and $0.10,
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 not be conducting a
conference call to discuss its first quarter 2017 earnings results, but
does expect to conduct a conference call for second quarter 2017
earnings results.
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. |
|
|
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (Unaudited) |
(Dollars in thousands, except share and per share amounts)
|
|
| | |
|
| |
| |
| Assets | | | March 31,
2017 | | | | | December 31,
2016 |
|
Real estate, at cost:
| | | | | | | | |
|
Land
| |
$
|
7,600
| | | |
$
| |
7,600
| |
|
Buildings and improvements
| | |
22,475
|
| | | | |
22,475
|
|
|
Total real estate, at cost
| | |
30,075
| | | | | |
30,075
| |
|
Less accumulated depreciation
| | |
(187
|
)
| | | | |
(27
|
)
|
|
Net real estate held for investment
| | |
29,888
| | | | | |
30,048
| |
|
Cash and cash equivalents
| | |
33,351
| | | | | |
33,003
| |
|
Prepaid insurance and other assets, net
| |
|
268
|
|
|
| |
|
276
|
|
|
Total assets
| |
$
|
63,507
|
|
|
|
$
|
|
63,327
|
|
| Liabilities and stockholders' equity | | | | | | | | |
|
Accounts payable, accrued expenses and other liabilities
| |
$
|
344
| | | |
$
| |
70
| |
|
Offering cost liability
| | |
—
| | | | | |
276
| |
|
Rents received in advance and tenant security deposit
| |
|
2,545
|
|
|
| |
|
2,542
|
|
|
Total liabilities
| |
|
2,889
|
|
|
| |
|
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 March 31, 2017
and December 31, 2016
| | |
—
| | | | | |
—
| |
|
Common stock, par value $0.001 per share, 50,000,000 shares and no
shares authorized, and 3,525,564 shares and no shares issued and
outstanding as of March 31, 2017 and December 31, 2016, respectively
| | |
4
| | | | | |
—
| |
|
Class A common stock, par value $0.001 per share, no shares and
49,000,000 shares authorized, and no shares and 3,416,508 shares
issued and outstanding as of March 31, 2017 and December 31, 2016,
respectively
| | |
—
| | | | | |
3
| |
|
Class B common stock, par value $0.001 per share, no shares and
1,000,000 shares authorized, and no shares issued and outstanding as
of March 31, 2017 and December 31, 2016, respectively
| | |
—
| | | | | |
—
| |
|
Additional paid-in-capital
| | |
65,597
| | | | | |
64,828
| |
|
Accumulated deficit
| |
|
(4,983
|
)
|
|
|
|
|
(4,392
|
)
|
|
Total stockholders' equity
| |
|
60,618
|
|
|
|
|
|
60,439
|
|
|
Total liabilities and stockholders' equity
| |
$
|
63,507
|
|
|
|
$
|
|
63,327
|
|
|
|
| INNOVATIVE INDUSTRIAL PROPERTIES, INC. |
|
|
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
| for the Three Months Ended March 31, 2017 |
| (Unaudited) |
(Dollars in thousands, except share and per share amounts)
|
|
| | |
|
Revenues:
| | | |
|
Rental
| |
$
|
1,290
| |
|
Other
| |
|
35
|
|
|
Total revenues
| |
|
1,325
|
|
|
Expenses:
| | | |
|
General and administrative
| | |
985
| |
|
Stock-based compensation
| | |
770
| |
|
Depreciation
| |
|
161
|
|
|
Total expenses
| |
|
1,916
|
|
|
Net loss
| |
$
|
(591
|
)
|
|
Net loss per share (basic and diluted)
| |
$
|
(0.18
|
)
|
|
Weighted average shares outstanding:
| | | |
|
Basic and diluted
| |
|
3,350,000
|
|
| | | |
|
|
|
| INNOVATIVE INDUSTRIAL PROPERTIES, INC. |
|
|
| CONDENSED CONSOLIDATED FFO AND AFFO |
| for the Three Months Ended March 31, 2017 |
| (Unaudited) |
(Dollars in thousands, except share and per share amounts)
|
|
|
The Company's FFO available to common shares and a reconciliation
to net loss for the three months ended March 31, 2017 were as
follows:
|
|
| | | |
Net loss
| |
$
|
(591
|
)
|
|
Real estate depreciation
| |
|
161
|
|
|
FFO
| |
$
|
(430
|
)
|
|
FFO per common share – basic
| |
$
|
(0.13
|
)
|
|
Weighted-average common shares outstanding – basic
| |
|
3,350,000
|
|
The Company's AFFO available to common shares and a reconciliation
of FFO to AFFO for the three months ended March 31, 2017 were as
follows:
|
|
| | | |
|
FFO
| |
$
|
(430
|
)
|
|
Stock-based compensation
| |
|
770
|
|
|
AFFO
| |
$
|
340
|
|
|
AFFO per common share – diluted
| |
$
|
0.10
|
|
|
Weighted-average common shares outstanding – diluted
| |
|
3,504,921
|
|
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.
The Company's computation of FFO and AFFO may differ from the
methodology for calculating 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 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/20170510006404/en/
Innovative Industrial Properties, Inc.
Robert Sistek
Chief
Financial Officer and Executive Vice President, Investments
(858)
997-3332
Source: Innovative Industrial Properties, Inc.