SAN DIEGO--(BUSINESS WIRE)--
Innovative Industrial Properties, Inc. (NYSE: IIPR) (the "Company")
announced today results for the quarter ended March 31, 2018, the fifth
full quarter since the Company commenced real estate operations and
completed its initial public offering in December 2016.
First Quarter 2018 Highlights
Financial Results and Financing Activity
-
The Company generated rental revenues of approximately $2.7 million in
the quarter.
-
The Company recorded net income of approximately $607,000 for the
quarter, or $0.09 per diluted share, and adjusted funds from
operations ("AFFO") of approximately $1.4 million, or $0.23 per
diluted share.
-
The Company paid its fourth consecutive quarterly dividend of $0.25
per common share on April 16, 2018 to stockholders of record as of
March 29, 2018.
-
The Company completed an underwritten public offering of 3,220,000
shares of common stock, including the exercise in full of the
underwriters' option to purchase an additional 420,000 shares,
resulting in net proceeds of approximately $79.3 million.
Acquisition Activity
-
Subsequent to the end of the quarter, the Company acquired an 89,000
square foot medical-use cannabis cultivation and processing facility
in a sale-leaseback transaction with a subsidiary of Vireo Health,
Inc. ("Vireo") in Pennsylvania for an aggregate consideration of $8.6
million (excluding transaction costs), which includes an approximately
$2.8 million tenant improvement allowance available for additional
improvements at the property.
Portfolio Update, Acquisition Activity and Pipeline
Portfolio Update
As of May 9, 2018, the Company owned six properties located in Arizona,
Maryland, Minnesota, New York and Pennsylvania, totaling approximately
706,000 rentable square feet, which were 100% leased with a
weighted-average remaining lease term of approximately 14.4 years. As of
May 9, 2018, the Company had invested approximately $75.4 million in the
aggregate (excluding transaction costs) and had committed an additional
approximately $6.5 million to reimburse certain tenants for tenant
improvements at the Company's properties. The Company's average current
yield on invested capital is approximately 15.7% for these six
properties, calculated as the sum of the current base rents,
supplemental rent (with respect to the lease with PharmaCann LLC at one
of the Company's New York properties) and property management fees,
divided by the Company's aggregate investment in these properties
(excluding transaction costs and including aggregate potential tenant
reimbursements of approximately $6.5 million).
Acquisition Activity
Subsequent to the end of the quarter, on April 6, 2018, the Company
acquired a property in Pennsylvania for approximately $5.8 million
(excluding transaction costs) in a sale-leaseback transaction,
comprising approximately 89,000 square feet of industrial space. Upon
the closing, the Company entered into a triple-net lease for the entire
property with a subsidiary of Vireo to operate a medical-use cannabis
cultivation and processing facility. The tenant is responsible for
paying all structural repairs, maintenance expenses, insurance and taxes
related to the property, and the lease provides that the Company will
fund up to approximately $2.8 million as reimbursement for future tenant
improvements at the property. The initial annual base rent for the
property is equal to 15% of the sum of the purchase price and the tenant
improvement allowance made available for the property, and subject to
annual increases at a rate of 3.5%.
Pipeline
As of May 9, 2018, the Company had executed an agreement to purchase one
property for a total investment of $3 million. In addition, the Company
executed three non-binding letters of intent for three properties
representing a total expected additional investment by the Company of
approximately $38 million, with the final investment determined based on
the Company's review and approval of future tenant improvements at each
property.
As of May 9, 2018, 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 which the Company has an executed agreement is subject
to the Company's continuing diligence and customary closing conditions,
and the Company cannot provide assurances that it will complete the
purchase of this property or the other properties in the Company's
pipeline on the terms described herein, or at all.
Financing Activity
On January 22, 2018, the Company completed an underwritten public
offering of 3,220,000 shares of common stock, including the exercise in
full of the underwriters' option to purchase an additional 420,000
shares, resulting in net proceeds of approximately $79.3 million, after
deducting the underwriters' discounts and commissions and offering
expenses. The Company expects to use the net proceeds to invest in
specialized industrial real estate assets that support the regulated
medical-use cannabis cultivation and processing industry and for general
corporate purposes.
Financial Results
The Company generated rental revenues of approximately $2.7 million for
the three months ended March 31, 2018. The Company began real estate
operations after closing its initial public offering and purchasing the
Company's initial property in December 2016.
For the three months ended March 31, 2018, the Company recorded net
income and net income per diluted share of approximately $607,000 and
$0.09, respectively. For the first quarter 2018, funds from operations
("FFO") and FFO per diluted share were approximately $1.1 million and
$0.18, respectively; and AFFO and AFFO per diluted share were
approximately $1.4 million and $0.23, 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 2018 earnings results, but
does expect to conduct a conference call for second quarter 2018
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. has elected to be taxed as a real
estate investment trust, commencing with the year ended December 31,
2017. 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) |
| (In thousands, except share and per share amounts) |
|
| | |
| | |
Assets | |
| March 31, 2018 | |
| December 31, 2017 |
|
Real estate, at cost:
| | | | | | |
|
Land
| |
$
|
11,514
| | |
$
|
11,514
| |
|
Buildings and improvements
| | |
51,315
| | | |
51,315
| |
|
Tenant improvements
| |
|
5,901
|
| |
|
5,901
|
|
|
Total real estate, at cost
| | |
68,730
| | | |
68,730
| |
|
Less accumulated depreciation
| |
|
(1,418
|
)
| |
|
(942
|
)
|
|
Net real estate held for investment
| | |
67,312
| | | |
67,788
| |
|
Cash and cash equivalents
| | |
42,076
| | | |
11,758
| |
|
Short-term investments
| | |
48,856
| | | |
—
| |
|
Prepaid insurance and other assets, net
| |
|
654
|
| |
|
482
|
|
|
Total assets
| |
$
|
158,898
|
| |
$
|
80,028
|
|
| Liabilities and stockholders' equity | | | | | | |
|
Accounts payable and accrued expenses
| |
$
|
551
| | |
$
|
1,082
| |
|
Dividends payable
| | |
2,034
| | | |
1,198
| |
|
Offering cost liability
| | |
—
| | | |
41
| |
|
Rents received in advance and tenant security deposits
| |
|
4,599
|
| |
|
4,158
|
|
|
Total liabilities
| |
|
7,184
|
| |
|
6,479
|
|
|
Commitments and contingencies
| | | | | | |
|
Stockholders' equity:
| | | | | | |
|
Preferred stock, par value $0.001 per share, 50,000,000 shares
authorized: 9.00% Series A cumulative redeemable preferred stock,
$15,000 liquidation preference ($25.00 per share), 600,000 shares
issued and outstanding at March 31, 2018 and December 31, 2017
| | |
14,009
| | | |
14,009
| |
|
Common stock, par value $0.001 per share, 50,000,000 shares
authorized: 6,782,079 and 3,501,147 shares issued and outstanding at
March 31, 2018 and December 31, 2017, respectively
| | |
7
| | | |
4
| |
|
Additional paid-in capital
| | |
141,217
| | | |
64,000
| |
|
Accumulated deficit
| |
|
(3,519
|
)
| |
|
(4,464
|
)
|
|
Total stockholders' equity
| |
|
151,714
|
| |
|
73,549
|
|
|
Total liabilities and stockholders' equity
| |
$
|
158,898
|
| |
$
|
80,028
|
|
| | | | | |
|
| INNOVATIVE INDUSTRIAL PROPERTIES, INC. |
|
|
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| for the Three Months Ended March 31, 2018 and 2017 |
| (Unaudited) |
| (In thousands, except share and per share amounts) |
|
| |
| | For the Three Months Ended March 31, |
| |
| 2018 |
|
|
| 2017 |
|
| Revenues: | | | | | | |
|
Rental
| |
$
|
2,677
| | |
$
|
1,290
| |
|
Tenant reimbursements
| |
|
87
|
| |
|
—
|
|
|
Total revenues
| |
|
2,764
|
| |
|
1,290
|
|
| Expenses: | | | | | | |
|
Property expenses
| | |
87
| | | |
—
| |
|
General and administrative expense
| | |
1,477
| | | |
1,755
| |
|
Depreciation expense
| |
|
476
|
| |
|
161
|
|
|
Total expenses
| |
|
2,040
|
| |
|
1,916
|
|
|
Income / (loss) from operations
| | |
724
| | | |
(626
|
)
|
|
Interest income
| |
|
221
|
| |
|
35
|
|
|
Net income / (loss)
| | |
945
| | | |
(591
|
)
|
|
Preferred stock dividend
| |
|
(338
|
)
| |
|
—
|
|
|
Net income / (loss) attributable to common stockholders
| |
$
|
607
|
| |
$
|
(591
|
)
|
|
Net income / (loss) attributable to common stockholders per share:
| | | | | | |
|
Basic
| |
$
|
0.10
|
| |
$
|
(0.18
|
)
|
|
Diluted
| |
$
|
0.09
|
| |
$
|
(0.18
|
)
|
|
Weighted average shares outstanding:
| | | | | | |
|
Basic
| | |
5,883,610
| | | |
3,350,000
| |
|
Diluted
| | |
6,025,067
| | | |
3,350,000
| |
|
Dividends declared per common share
| |
$
|
0.25
| | |
$
|
—
| |
| | | | | |
|
| INNOVATIVE INDUSTRIAL PROPERTIES, INC. |
|
|
| CONDENSED CONSOLIDATED FFO AND AFFO |
| for the Three Months Ended March 31, 2018 and 2017 |
| (Unaudited) |
| (In thousands, except share and per share amounts) |
|
| |
The table below is a reconciliation of net income / (loss) to FFO
and AFFO for the three months ended March 31, 2018 and 2017.
|
| |
|
| | For the Three Months Ended March 31, |
| |
| 2018 |
|
|
| 2017 |
|
|
Net income / (loss) attributable to common stockholders
| |
$
|
607
| | |
$
|
(591
|
)
|
|
Real estate depreciation
| |
|
476
| | |
|
161
|
|
|
FFO available to common stockholders
| |
$
|
1,083
| | |
$
|
(430
|
)
|
|
Stock-based compensation
| |
|
330
| | |
|
770
|
|
|
AFFO available to common stockholders
| |
$
|
1,413
| | |
$
|
340
|
|
|
FFO per share — basic and diluted
| |
$
|
0.18
| | |
$
|
(0.13
|
)
|
|
AFFO per share — basic
| |
$
|
0.24
| | |
$
|
0.10
|
|
|
AFFO per share — diluted
| |
$
|
0.23
| | |
$
|
0.10
|
|
|
Weighted average shares outstanding — basic
| |
|
5,883,610
| | |
|
3,350,000
|
|
|
Weighted average shares outstanding — diluted
| |
|
6,025,067
| | |
|
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 accounting principles generally accepted in the United
States (“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 that net income (loss), 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
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 and non-recurring
expenses, consisting 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: https://www.businesswire.com/news/home/20180509006039/en/
Innovative Industrial Properties, Inc.
Catherine Hastings
Chief
Financial Officer
(858) 997-3332
Source: Innovative Industrial Properties, Inc.