As the broader cannabis sector has been under pressure, IIPR stock is not an exception, with a fall of over 35% over the past couple of months. Let's find out what this fall could mean for Innovative Industrial Properties Inc (NYSE:IIPR).
Real estate investment trusts have often proven to be excellent investment opportunities, and Innovative Industrial Properties is among the more interesting companies in this space at this point in time.
Important Things to Know
The company is involved in working as a REIT in the cannabis space and is involved in leasing out properties it owns to firms that operate in the medical cannabis business. Due to the sheer growth in the cannabis cultivation sector over recent times, IIP has also grown at a breakneck pace. The company is not only growing at a highly impressive rate, but its profits have ballooned as well.
Rental revenue soared by as much as 155% year-on-year in Q2 2019 and IIPR’s profits for the quarter also grew by 155% year-on-year. Since it is a REIT, Innovative Industrial distributes a minimum of 90% of its income to its shareholders as dividends. At this point in time, the dividend yield stands at 2.4%, but experts believe it could have gone higher had IIPR stock not doubled in value in 2019 so far.
In Thursday's morning session, IIPR stock is down over 1% at $90.04.
However, in order to keep growing, Innovative needs to keep acquiring land and leasing it. It has invested heavily in new properties and currently owns as many as 27 separate properties spread across 12 states.
The expansion plan for IIPR is clear. It is now looking to buy more and more properties in the states in which it already operates. On the other hand, there is also the opportunity to buy properties in 21 other states in the United States in which cannabis cultivation has been legalized.
That being said, investors should be wary of the fact that the company might try to raise capital by diluting IIPR stock and in fact, Innovative Industrial Properties has already made plans to sell $250 million worth of securities at some point in the future. In the long term, the dilution will be a blessing for IIPR stock investors, though.
What do you think?
Featured image: DepositPhotos © Jirsak