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What changed in INNOVATIVE INDUSTRIAL PROPERTIES INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of INNOVATIVE INDUSTRIAL PROPERTIES INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+592 added−411 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-21)

Top changes in INNOVATIVE INDUSTRIAL PROPERTIES INC's 2025 10-K

592 paragraphs added · 411 removed · 302 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

211 edited+200 added−60 removed440 unchanged
Biggest changeThese principal risk and uncertainties relate to, among other things: Risks Related to Our Business ● Many of our tenants are, and we expect that many of our future tenants will be, companies with limited histories of operations and may be unable to pay rent with funds from operations or at all. ● Continuing unfavorable market dynamics affecting the regulated cannabis industry could adversely affect our business, liquidity and financial condition, and overall results of operations. ● The inability of any single tenant to make its lease payments could adversely affect our business. ● We are focused on properties leased to licensed cannabis operators, and a decrease in demand for these types of facilities would have a greater impact on us than if we had a more diversified property portfolio. ● Our real estate investments consist of primarily properties suitable for cultivation and production of cannabis, which may be difficult to sell or re-lease upon tenant defaults or lease terminations. ● The assets we acquire may be subject to impairment charges. ● We face significant risks associated with the development and redevelopment of properties that we acquire. 23 Table of Contents ● We are currently subject to securities lawsuits and we may be subject to litigation in the future, which may divert management’s attention and have a material adverse effect on us. ● Inflation may adversely affect our business and our tenants’ financial condition and results of operations. ● Competition for the acquisition of properties suitable for regulated cannabis operations and alternative financing sources for licensed operators may make new acquisitions difficult or less economically attractive. ● Our growth will depend upon future acquisitions of regulated cannabis facilities. ● There may only be a limited number of cannabis facilities operated by suitable tenants available for acquisition. ● Our and our tenants’ businesses may be materially and adversely affected by global pandemics. ● Our tenants may be unable to renew or otherwise maintain their licenses for their cannabis operations. ● We acquire our properties “as-is,” which increases the risk of costs to remedy defects without recourse. ● Our property portfolio is and will be geographically concentrated in certain states. ● Some of our tenants could be susceptible to bankruptcy. ● Our tenants may be subject to Section 280E of the Internal Revenue Code of 1986, as amended (the “Code”). ● We have acquired and may continue to acquire and lease cannabis retail stores and dispensaries, which present additional risks in comparison to properties for the cultivation and production of regulated cannabis. ● We are exposed to the potential impacts of future climate change. ● Liability for uninsured losses could adversely affect our financial condition. ● Our properties’ access to adequate water and power supplies could be interrupted. ● We may have a difficult time obtaining the insurance policies with our focus on the regulated cannabis industry. ● Construction loans involve an increased risk of loss and other risks that are different from owning properties. ● We may purchase properties subject to ground leases or engage in other transactions involving ground leases. ​ Risks Related to Regulation ● Cannabis remains illegal under federal law, and therefore, strict enforcement of federal laws regarding cannabis would likely result in our inability and the inability of our tenants to execute our respective business plans. ● Certain of our tenants engage in operations for the adult-use cannabis industry, which may subject us and our properties to additional risks associated with such adult-use cannabis operations. ● New laws adverse to the business of our tenants may be enacted, and current favorable national, state or local laws or enforcement guidelines relating to cannabis operations may be modified or eliminated in the future. ● Our ability to grow our business depends on state laws pertaining to the cannabis industry. ● FDA regulation of cannabis facilities could negatively affect the regulated cannabis industry. ● We and our tenants may have difficulty accessing the service of banks and other financial institutions. ● Property owners located in close proximity to our properties may assert claims against our cannabis facilities. ● Laws and regulations affecting the regulated cannabis industry are constantly changing, which could materially adversely affect our operations, and we cannot predict the impact that future regulations may have on us. ● Assets leased to cannabis businesses may be forfeited to the federal government. ● We may have difficulty accessing bankruptcy courts. ● The properties that we acquire are subject to extensive regulations, which may result in significant costs. ● Compliance with environmental laws could materially increase our operating expenses. ​ Risks Related to Financing Our Business ● Our growth depends on external sources of capital, which may not be available on favorable terms or at all. ● Our existing and future indebtedness could reduce our distributable cash and expose us to default risk. ● A downgrade in our investment grade credit rating could adversely affect our business and financial condition. ● Our Notes due 2026 include restrictive covenants that limit our operational flexibility. ​ Risks Related to Our Organization and Structure ● Our senior management team manages our portfolio subject to very broad investment guidelines. ● Our board of directors may change our investment objectives and strategies without stockholder consent. ● Certain provisions of Maryland law could inhibit changes in control. ● Our authorized but unissued shares of common and preferred stock may prevent a change in our control. ● Severance agreements with our executive officers could be costly and prevent a change in our control. 24 Table of Contents ● We depend on our Operating Partnership for cash flow and are structurally subordinated in right of payment. ● Our Operating Partnership may issue additional limited partnership interests to third parties without the consent of our stockholders, which would reduce the distributions we can make to our stockholders. ● If we issue limited partnership interests in our Operating Partnership in exchange for property, the value placed on such partnership interests may not accurately reflect their market value, which may dilute your interest in us. ● Our rights and the rights of our stockholders to take action against our directors and officers are limited. ● Our charter provisions make it difficult to remove directors, and to effect changes in management as a result. ● Ownership limitations may restrict change in control or business combination opportunities in which our stockholders might receive a premium for their shares. ● We plan to continue to operate our business so as not to require registration under the Investment Company Act. ​ Risks Related to Our Securities ● The market prices and trading volumes of our capital stock have been and may continue to be volatile. ● Capital stock eligible for future sale may have material and adverse effects on our share price. ● We cannot assure you of our ability to make distributions in the future. ● Our charter permits us to pay distributions from any source and, as a result, the amount of distributions paid at any time may not reflect the performance of our properties or as cash flow from operations. ● The market price of our capital stock could be materially, adversely affected by our level of cash distributions. ● We may enter into forward sale transactions that subject us to certain risks. ​ Risks Related to Our Taxation as a REIT ● Our failure to qualify as a REIT would reduce our distributable cash and negatively impact us. ● The REIT distribution requirements could adversely affect our ability to execute our business plan, and require us to make unfavorable borrowing decisions or subject us to tax. ● If Section 280E of the Code applies to us, tax deductions may be disallowed, resulting in federal income tax and potentially jeopardizing our REIT status. ● Complying with REIT requirements may cause us to forego attractive business opportunities or asset sales. ● The tax on prohibited transactions could limit what transactions we make or subject us to a 100% penalty tax. ● Our board of directors has the ability to revoke our REIT election without stockholder approval. ● Dividends payable by REITs do not qualify for the reduced tax rates on dividends from regular corporations. ● REIT requirements may limit our ability to hedge our liabilities effectively and result in tax liabilities. ● Re-characterization of sale-leaseback transactions may cause us to lose our REIT status. ● Non-U.S. stockholders will generally be subject to withholding tax with respect to our ordinary dividends. ● Legislative, regulatory or administrative changes could adversely affect us or our stockholders. ● Any repurchase of our Notes due 2026 at a discount may result in cancellation of debt income. ​ General Risk Factors ● We are dependent on our key personnel for our success. ● The occurrence of cyber incidents or cyberattacks could disrupt our operations and damage our business. ● Contingent or unknown liabilities could materially and adversely affect our business. ​ Risks Related to Our Business Many of our existing tenants are, and we expect that many of our future tenants will be, companies with limited histories of operations and may be unable to pay rent with funds from operations or at all, which could adversely affect our cash available to make distributions to our stockholders or otherwise impair the value of our common stock.
Biggest changeThese principal risk and uncertainties relate to, among other things: 24 Table of Contents Risks Related to Our Business • Many of our tenants are, and we expect that many of our future tenants will be, companies with limited histories of operations and may be unable to pay rent with funds from operations or at all. • Continuing unfavorable market dynamics affecting the regulated cannabis industry could adversely affect our business, liquidity and financial condition, and overall results of operations. • The inability of any single tenant to make its lease payments could adversely affect our business. • We are focused on properties leased to licensed cannabis operators, and a decrease in demand for these types of facilities would have a greater impact on us than if we had a more diversified property portfolio. • Our real estate investments consist of primarily properties suitable for cultivation and production of cannabis, which may be difficult to sell or re-lease upon tenant defaults or lease terminations. • The assets we acquire may be subject to impairment charges. • We face significant risks associated with the development and redevelopment of properties that we acquire. • We are currently subject to securities lawsuits and an SEC investigation, and we may be subject to litigation in the future, which may divert management’s attention and have a material adverse effect on us. • Competition for the acquisition of properties suitable for regulated cannabis operations and alternative financing sources for licensed operators may make new acquisitions difficult or less economically attractive. • Our growth depends, in part, upon future acquisitions of regulated cannabis facilities. • There may only be a limited number of cannabis facilities operated by suitable tenants available for acquisition. • Our tenants may be unable to renew or otherwise maintain their licenses for their cannabis operations. • We acquire our properties “as-is,” which increases the risk of costs to remedy defects without recourse. • Our property portfolio is and will be geographically concentrated in certain states. • Certain of our tenants have experienced financial distress or are in receivership, which increases the risk of lease defaults and potential delays in enforcing our rights. • Our tenants may be subject to Section 280E of the Internal Revenue Code of 1986, as amended (the “Code”). • We are exposed to the potential impacts of future climate change. • Liability for uninsured losses could adversely affect our financial condition. • Our properties’ access to adequate water and power supplies could be interrupted. • We may have a difficult time obtaining the insurance policies with our focus on the regulated cannabis industry. • Construction loans involve an increased risk of loss and other risks that are different from owning properties.
Our competitors may have greater financial and operational resources than we do and may be willing to pay more for certain assets or may be willing to accept more risk than we believe can be prudently managed.
Our competitors may have greater financial and operational resources than we do and may be willing to pay more for certain assets or may be willing to accept more risk than we believe can be prudently managed.
In particular, larger companies may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. Our competitors may also adopt transaction structures similar to ours, which would decrease our competitive advantage in offering flexible transaction terms.
In particular, larger companies may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. Our competitors may also adopt transaction structures similar to ours, which would decrease our competitive advantage in offering flexible transaction terms.
Risks Related to Regulation Cannabis remains illegal under federal law, and therefore, strict enforcement of federal laws regarding cannabis would likely result in our inability and the inability of our tenants to execute our respective business plans. Cannabis is a Schedule I controlled substance under the CSA.
Risks Related to Cannabis Regulation Cannabis remains illegal under federal law, and therefore, strict enforcement of federal laws regarding cannabis would likely result in our inability and the inability of our tenants to execute our respective business plans. Cannabis is a Schedule I controlled substance under the CSA.
During her tenure as Attorney General in the State of Florida, Bondi routinely opposed the softening of anti-cannabis laws, including opposition to ballot initiatives to broaden access to medical cannabis, but she also generally faithfully enforced state cannabis laws to maintain a well-regulated medical cannabis market.
During her tenure as Attorney General in the State of Florida, Bondi routinely opposed the softening of anti-cannabis laws, including opposition to ballot initiatives to broaden access to medical cannabis, but she also generally faithfully enforced state cannabis laws to maintain a well-regulated medical cannabis market.
The DOJ continues to have the right and power to prosecute crimes committed by banks and financial institutions, such as money laundering and violations of the Bank Secrecy Act, that occur in any state including states that have in some form legalized the sale of cannabis.
The DOJ continues to have the right and power to prosecute crimes committed by banks and financial institutions, such as money laundering and violations of the Bank Secrecy Act, that occur in any state including states that have in some form legalized the sale of cannabis.
Furthermore, following any such change in the federal government’s enforcement position, we could be subject to criminal prosecution, which could lead to imprisonment and/or the imposition of penalties, fines, or forfeiture.
Furthermore, following any such change in the federal government’s enforcement position, we could be subject to criminal prosecution, which could lead to imprisonment and/or the imposition of penalties, fines, or forfeiture.
In addition, for our tenants that are publicly traded companies, securities clearing firms may refuse to accept deposits of securities of those tenants, which may negatively impact the trading and valuations of such tenants and have a material adverse impact on our tenants’ ability to finance their operations and growth through the capital markets.
In addition, for our tenants that are publicly traded companies, securities clearing firms may refuse to accept deposits of securities of those tenants, which may negatively impact the trading and valuations of such tenants and have a material adverse impact on our tenants’ ability to finance their operations and growth through the capital markets.
On May 16, 2024, the DEA issued a Notice of Proposed Rulemaking, which proposed to schedule cannabis as a Schedule III substance under the CSA.
On May 16, 2024, the DEA issued a Notice of Proposed Rulemaking, which proposed to schedule cannabis as a Schedule III substance under the CSA.
Section 280E of the Code provides that, with respect to any taxpayer, no deduction or credit is allowed for expenses incurred during a taxable year “in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the CSA) which is prohibited by federal law or the law of any state in which such trade or business is conducted.” Because cannabis is a Schedule I controlled substance under the CSA, Section 280E by its terms applies to the purchase and sale of cannabis products.
Section 280E of the Code provides that, with respect to any taxpayer, no deduction or credit is allowed for expenses incurred during a taxable year “in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the CSA) which is prohibited by federal law or the law of any State in which such trade or business is conducted.” Because cannabis is presently a Schedule I controlled substance under the CSA, Section 280E by its terms applies to the purchase and sale of cannabis products.
We cannot predict the extent to which global pandemics may impact our business and operating results and those of our tenants, but their impact may include the following: ​ ● a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant actions; ● the temporary inability of consumers and patients to purchase our tenant’s cannabis products due to a number of factors, including but limited to illness, dispensary closures or limitations on operations (including but not limited to shortened operating hours, social distancing requirements and mandated “curbside only” pickup), quarantine, financial hardship, and “stay at home” orders, could severely impact our tenants’ businesses, 32 Table of Contents financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations; ● difficulty accessing equity and debt capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations and our tenants’ ability to fund their business operations and meet their obligations to us; ● workforce disruptions for our tenants, as a result of infections, quarantines, stay at home orders or other factors, could result in a material reduction in our tenants’ cannabis cultivation, manufacturing, distribution and/or sales capacity; ● because of the federal regulatory uncertainty relating to the regulated cannabis industry, our tenants may not be eligible for financial relief available to other businesses, including federal assistance programs; ● restrictions on public events for the regulated cannabis industry limit the opportunity for our tenants to market and sell their products and promote their brands; ● delays in construction at our properties may adversely impact our tenants’ ability to commence operations and generate revenues from projects, including but not limited to delays caused by: o construction moratoriums by local, state or federal government authorities; o delays by applicable governmental authorities in providing the necessary authorizations to continue construction or commence operations; o reductions in construction team sizes to effectuate social distancing and other requirements; o infection by one or more members of a construction team necessitating a partial or full shutdown of construction; and o manufacturing and supply chain disruptions for materials sourced from other geographies which may be experiencing shutdowns and/or restrictions on transportation of such materials; ● a general decline in business activity in the regulated cannabis industry would adversely affect our ability to grow our portfolio of regulated cannabis properties; and ● the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, would result in a deterioration in our ability to ensure business continuity during a disruption.
We cannot predict the extent to which global pandemics may impact our business and operating results and those of our tenants, but their impact may include the following: • a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant actions; • the temporary inability of consumers and patients to purchase our tenant’s cannabis products due to a number of factors, including but not limited to illness, dispensary closures or limitations on operations (including but not limited to shortened operating hours, social distancing requirements and mandated “curbside only” pickup), quarantine, financial hardship, and “stay at home” orders, could severely impact our tenants’ businesses, financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations; • difficulty accessing equity and debt capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations and our tenants’ ability to fund their business operations and meet their obligations to us; • workforce disruptions for our tenants, as a result of infections, quarantines, stay at home orders or other factors, could result in a material reduction in our tenants’ cannabis cultivation, manufacturing, distribution and/or sales capacity; • because of the federal regulatory uncertainty relating to the regulated cannabis industry, our tenants may not be eligible for financial relief available to other businesses, including federal assistance programs; • restrictions on public events for the regulated cannabis industry limit the opportunity for our tenants to market and sell their products and promote their brands; • delays in construction at our properties may adversely impact our tenants’ ability to commence operations and generate revenues from projects, including but not limited to delays caused by: ◦ construction moratoriums by local, state or federal government authorities; ◦ delays by applicable governmental authorities in providing the necessary authorizations to continue construction or commence operations; ◦ reductions in construction team sizes to effectuate social distancing and other requirements; ◦ infection by one or more members of a construction team necessitating a partial or full shutdown of construction; and ◦ manufacturing and supply chain disruptions for materials sourced from other geographies which may be experiencing shutdowns and/or restrictions on transportation of such materials; • a general decline in business activity in the regulated cannabis industry would adversely affect our ability to grow our portfolio of regulated cannabis properties; and • the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, would result in a deterioration in our ability to ensure business continuity during a disruption.
To that end, we believe we offer a highly competitive compensation (including salary, bonuses and equity) and benefits package for each member of our team, which include the following: ● Comprehensive health insurance, including medical, dental and vision, to each employee and every member of his or her immediate family at no cost to the employee, with the same benefits to every employee, regardless of title; ● Four weeks of paid time off each year for each employee (increasing to five weeks after five years of service and to six weeks after ten years of service), which are in addition to Company holidays; ● A severance plan applicable to all non-executive employees that assists with each employee’s financial security in the event his or her employment is terminated without cause or he or she resigns for good reason; ● A 401(k) plan with matching contributions from the Company; ● Disability insurance; 22 Table of Contents ● Company sponsorship of continuing education courses related to our Company’s business, including commercial real estate, cannabis, property management, legal and accounting courses; ● Company reimbursement of up to $200 per year for each employee’s health and wellness activities, materials, equipment and/or classes; and ● Matching contribution by the Company, dollar-for-dollar, up to $2,500 per year per employee for donations to qualifying educational institutions.
To that end, we believe we offer a highly competitive compensation (including salary, bonuses and equity) and benefits package for each member of our team, which include the following: • Comprehensive health insurance, including medical, dental and vision, to each employee and every member of his or her immediate family at no cost to the employee, with the same benefits to every employee, regardless of title; • Four weeks of paid time off each year for each employee (increasing to five weeks after five years of service and to six weeks after ten years of service), which are in addition to Company holidays; • A severance plan applicable to all non-executive employees that assists with each employee’s financial security in the event his or her employment is terminated without cause or he or she resigns for good reason; • A 401(k) plan with matching contributions from the Company; • Disability insurance; • Company sponsorship of continuing education courses related to our Company’s business, including commercial real estate, cannabis, property management, legal and accounting courses; • Company reimbursement of up to $200 per year for each employee’s health and wellness activities, materials, equipment and/or classes; and • Matching contribution by the Company, dollar-for-dollar, up to $2,500 per year per employee for donations to qualifying educational institutions.
Some of the factors that could negatively affect the share price or result in fluctuations in the price or trading volume of our common stock and preferred stock include: ● our actual or projected operating results, financial condition, cash flows and liquidity or changes in business strategy or prospects; ● changes in government policies, regulations or laws; 50 Table of Contents ● the performance of our current properties and additional properties that we acquire; ● our ability to make acquisitions on preferable terms or at all; ● equity issuances by us, including issuances by us of shares of common stock under our ATM Program, or share resales by our stockholders, or the perception that such issuances or resales may occur; ● actual or anticipated accounting problems; ● publication of research reports about us, the real estate industry or the cannabis industry; ● changes in market valuations of similar companies; ● adverse market reaction to any increased indebtedness we may incur in the future; ● interest rate changes; ● additions to or departures of our senior management team; ● speculation in the press or investment community or negative press in general; ● our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts; ● failure to maintain our qualification as a REIT; ● refusal of securities clearing firms to accept deposits of our securities; ● a delisting of our common stock or preferred stock from the New York Stock Exchange (“NYSE”); ● the realization of any of the other risk factors presented in this report; ● actions by institutional stockholders; ● price and volume fluctuations in the stock market generally; and ● market and economic conditions generally, including the current state of the credit and capital markets and the market and economic conditions.
Some of the factors that could negatively affect the share price or result in fluctuations in the price or trading volume of our common stock and preferred stock include: • our actual or projected operating results, financial condition, cash flows and liquidity or changes in business strategy or prospects; • changes in government policies, regulations or laws; • the performance of our current properties and additional properties that we acquire; • our ability to make acquisitions on preferable terms or at all; • equity issuances by us, including issuances by us of shares of common stock and Series A Preferred Stock under our ATM Program, or share resales by our stockholders, or the perception that such issuances or resales may occur; • actual or anticipated accounting problems; • publication of research reports about us, the real estate industry or the cannabis industry; • changes in market valuations of similar companies; • adverse market reaction to any increased indebtedness we may incur in the future; • interest rate changes; • additions to or departures of our senior management team; • speculation in the press or investment community or negative press in general; • our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts; • failure to maintain our qualification as a REIT; • refusal of securities clearing firms to accept deposits of our securities; • a delisting of our common stock or preferred stock from the New York Stock Exchange (“NYSE”); • the realization of any of the other risk factors presented in this report; • actions by institutional stockholders; • price and volume fluctuations in the stock market generally; and • market and economic conditions generally, including the current state of the credit and capital markets and the market and economic conditions.
Cannabis retail stores and dispensaries entail risks that could adversely impact our financial condition and results of operations, and that are in addition to risks associated with regulated cannabis cultivation and processing facilities, including but not limited to: ● the impact of the continued evolution of the retail distribution model for cannabis and customer preferences, including the impact of e-commerce and home delivery on demand for cannabis retail space; ● negative perceptions by customers of the safety, convenience and attractiveness of cannabis dispensaries; ● the handling of significant cash transactions and cannabis inventory at the property, which may increase security risks associated with dispensary operations; ● local real estate conditions (such as an oversupply of, or a reduction in demand for, cannabis retail space); ● our and our tenants’ ability to procure and maintain appropriate levels of property and casualty insurance; and ● risks associated with data breaches through cyberattacks, cyber intrusions or otherwise that expose customer personal information at dispensaries, which may result in liability and reputational damage to our tenants and our company.
Cannabis retail stores and dispensaries entail risks that could adversely impact our financial condition and results of operations, and that are in addition to risks associated with regulated cannabis cultivation and processing facilities, including but not limited to: • the impact of the continued evolution of the retail distribution model for cannabis and customer preferences, including the impact of e-commerce and home delivery on demand for cannabis retail space; • negative perceptions by customers of the safety, convenience and attractiveness of cannabis dispensaries; 35 Table of Contents • the handling of significant cash transactions and cannabis inventory at the property, which may increase security risks associated with dispensary operations; • local real estate conditions (such as an oversupply of, or a reduction in demand for, cannabis retail space); • our and our tenants’ ability to procure and maintain appropriate levels of property and casualty insurance; and • risks associated with data breaches through cyberattacks, cyber intrusions or otherwise that expose customer personal information at dispensaries, which may result in liability and reputational damage to our tenants and our company.
States may restrict the number of regulated cannabis businesses permitted; impose significant taxes on regulated cannabis products, in addition to taxes imposed by local municipalities; take limited enforcement actions against non-licensed cannabis operators; restrict the method by which cannabis can be consumed; restrict the ability of alternative health care providers to recommend medical cannabis for treatment; limit the medical conditions that are eligible for cannabis 10 Table of Contents treatment; or require registration of doctors and/or patients, each of which can limit growth of the regulated cannabis industry in those states.
States may restrict the number of regulated cannabis businesses permitted; impose significant taxes on regulated cannabis products, in addition to taxes imposed by local municipalities; take limited enforcement actions against non-licensed cannabis operators; restrict 12 Table of Contents the method by which cannabis can be consumed; restrict the ability of alternative health care providers to recommend medical cannabis for treatment; limit the medical conditions that are eligible for cannabis treatment; or require registration of doctors and/or patients, each of which can limit growth of the regulated cannabis industry in those states.
The “control share” provisions of the MGCL provide that, subject to certain exceptions, a holder of “control shares” of a Maryland corporation (defined as shares which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) has no voting rights with respect to such shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding 47 Table of Contents votes entitled to be cast by the acquirer of control shares, our officers and our personnel who are also our directors.
The “control share” provisions of the MGCL provide that, subject to certain exceptions, a holder of “control shares” of a Maryland corporation (defined as shares which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) has no voting rights with respect to such shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and our personnel who are also our directors.
The Sessions Memo states that “these principles require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” The Sessions Memo went on to state that given the DOJ’s well-established general principles, “previous nationwide guidance specific to marijuana is unnecessary and is rescinded, effective immediately.” Although there have not been any identified prosecutions of state law compliant cannabis entities, there can be no assurance that the federal government will not enforce federal laws relating to cannabis in the future and it remains unclear what impact the Sessions Memo will have on the regulated cannabis industry, if any.
The Sessions Memo states that “these principles require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” The Sessions Memo went on to state that given the DOJ’s well- 18 Table of Contents established general principles, “previous nationwide guidance specific to marijuana is unnecessary and is rescinded, effective immediately.” Although there have not been any identified prosecutions of state law compliant cannabis entities, there can be no assurance that the federal government will not enforce federal laws relating to cannabis in the future and it remains unclear what impact the Sessions Memo will have on the regulated cannabis industry, if any.
If the Service were to take the position that, through our rental agreements with our state-licensed cannabis tenants, we are primarily or vicariously liable under federal law for “trafficking” a Schedule 1 substance (cannabis) under section 280E of the Code or for any other violations of the CSA, the Service may seek to apply the provisions of Section 280E to our company and disallow certain tax deductions, including for employee salaries, depreciation or interest expense.
If the Service were to take the position that, through our rental agreements with our state-licensed cannabis tenants, we are primarily or vicariously liable under federal law for “trafficking” a Schedule I substance (cannabis) under section 280E of the Code or for any other violations of the CSA, the Service may seek to apply the provisions of Section 280E to our company and disallow certain tax deductions, including for employee salaries, depreciation or interest expense.
All employment decisions are based on qualifications, merit and business needs, without regard to race, color, creed, gender, religion, sex, national origin, ancestry, pregnancy, age, marital status, registered domestic partner status, sexual orientation, gender identity, protected medical condition, genetic information, physical or mental disability, veteran status, or any other status protected by the laws or regulations in the locations where we operate. ​ ITEM IA.
All employment decisions are based on qualifications, merit and business needs, without regard to race, color, creed, gender, religion, sex, national origin, ancestry, pregnancy, age, marital status, registered domestic partner status, sexual orientation, gender identity, protected medical condition, genetic information, physical or mental disability, veteran status, or any other status protected by the laws or regulations in the locations where we operate.
Available Information We make available to the public free of charge through our website our Definitive Proxy Statement, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the SEC.
Available Information We make available to the public free of charge through our website our Definitive Proxy Statement, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the SEC.
RISK FACTORS Certain factors may have a material adverse effect on our business, financial condition, and results of operations. You should consider carefully the risks and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes.
ITEM IA. RISK FACTORS Certain factors may have a material adverse effect on our business, financial condition, and results of operations. You should consider carefully the risks and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes.
McIntosh , the United States Circuit Court of Appeals for the Ninth Circuit held that this provision prohibits the DOJ from spending funds from relevant appropriations acts to prosecute individuals who engage in conduct permitted by state medical-use cannabis laws and who strictly comply with such laws.
In USA vs. McIntosh, the United States Circuit Court of Appeals for the Ninth Circuit held that this provision prohibits the DOJ from spending funds from relevant appropriations acts to prosecute individuals who engage in conduct permitted by state medical-use cannabis laws and who strictly comply with such laws.
As of December 31, 2024, we owned properties in 19 states, and we expect that our acquisition opportunities will continue to expand as additional states establish regulated cannabis programs and license new operators. ● Providing Expansion Capital to Existing Tenants as an Additional Source of Income.
As of December 31, 2025, we owned properties in 19 states, and we expect that our acquisition opportunities will continue to expand as additional states establish regulated cannabis programs and license new operators. • Providing Expansion Capital to Existing Tenants as an Additional Source of Income.
This guidance essentially characterized as inefficient the use of federal law enforcement resources to prosecute those complying with state laws allowing the use, manufacture and distribution of cannabis where 16 Table of Contents states have enacted laws legalizing cannabis in some form and have also implemented strong and effective regulatory and enforcement systems to control the cultivation, processing, distribution, sale and possession of cannabis, conduct in compliance with those laws and regulations was not a priority for the DOJ.
This guidance essentially characterized as inefficient the use of federal law enforcement resources to prosecute those complying with state laws allowing the use, manufacture and distribution of cannabis where states have enacted laws legalizing cannabis in some form and have also implemented strong and effective regulatory and enforcement systems to control the cultivation, processing, distribution, sale and possession of cannabis, conduct in compliance with those laws and regulations was not a priority for the DOJ.
For one of our properties located in San Bernardino, California, as of December 31, 2024, we are evaluating alternative non-cannabis uses for the property, due in part to changes in the zoning of the property that no longer allow for regulated cannabis cultivation and processing.
For one of our properties located in San Bernardino, California, as of December 31, 2025, we are evaluating alternative non-cannabis uses for the property, due in part to changes in the zoning of the property that no longer allow for regulated cannabis cultivation and processing.
Federal and state banking regulators closed two U.S. banks in March 2023, and another U.S. bank in May 2023, with which we have no banking, financing or other business relationships, precipitating financial industry and capital markets turmoil centered on concerns about the stability and solvency of other banks and financial institutions and the attendant risk they may be closed and/or forced by governmental agencies into receivership or sale.
Federal and state banking regulators closed two U.S. banks in March 2023, and another U.S. bank in May 2023, with which we have no banking, financing or other business relationships, precipitating financial industry and capital markets turmoil centered on concerns about the stability and solvency of other banks and financial institutions and the attendant risk 45 Table of Contents they may be closed and/or forced by governmental agencies into receivership or sale.
In the event of a default by a tenant, we may also experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property as operators of cannabis cultivation and production facilities are generally subject to extensive state licensing requirements, including required state and local authorizations for a new tenant to take over operations at a facility.
In the event of a default by a tenant, we may also experience delays 33 Table of Contents in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property as operators of cannabis cultivation and production facilities are generally subject to extensive state licensing requirements, including required state and local authorizations for a new tenant to take over operations at a facility.
Commonly referred to as the “Rohrabacher-Blumenauer Amendment”, this so-called “rider” provision has been appended to the Consolidated Appropriations Acts since 2015. Under the terms of the Rohrabacher-Blumenauer rider, the federal government is prohibited from using congressionally appropriated funds to enforce federal cannabis laws against regulated medical cannabis actors operating in compliance with state and local law.
Commonly referred to as the “Rohrabacher-Blumenauer Amendment”, this so-called “rider” provision has been appended to the Consolidated Appropriations Acts since 2015. Under the terms of the Rohrabacher-Blumenauer rider, the federal government is prohibited from using congressionally appropriated funds to enforce federal cannabis laws against 19 Table of Contents regulated medical cannabis actors operating in compliance with state and local law.
If a property owner were to assert such a claim against us, we may be required to devote significant 42 Table of Contents resources and costs to defending ourselves against such a claim, and if a property owner were to be successful on such a claim, our tenants may be unable to continue to operate their business in its current form at the property, which could materially adversely impact the tenant’s business and the value of our property, our business and financial results and the trading price of our securities.
If a property owner were to assert such a claim against us, we may be required to devote significant resources and costs to defending ourselves against such a claim, and if a property owner were to be successful on such a claim, our tenants may be unable to continue to operate their business in its current form at the property, which could materially adversely impact the tenant’s business and the value of our property, our business and financial results and the trading price of our securities.
In addition, as of December 31, 2024, 24 states, plus the District of Columbia, have legalized cannabis for adult-use. Following the approval of state-regulated cannabis, state programs must be developed and businesses must be licensed before commencing cannabis sales.
In addition, as of December 31, 2025, 24 states, plus the District of Columbia, have legalized cannabis for adult-use. Following the approval of state-regulated cannabis, state programs must be developed and businesses must be licensed before commencing cannabis sales.
We face significant competition from a diverse mix of market participants, including but not limited to, other companies with similar business models, independent investors, hedge funds and other real estate investors, hard money lenders, and cannabis operators themselves, all of whom may compete with us in our efforts to acquire real estate zoned for regulated cannabis facilities.
We face significant competition from a diverse mix of market participants, including but not limited to, other companies with similar business models, independent investors, hedge funds and other real estate investors, hard money 17 Table of Contents lenders, and cannabis operators themselves, all of whom may compete with us in our efforts to acquire real estate zoned for regulated cannabis facilities.
Any one of these factors could slow or halt additional legislative authorization of cannabis, which could harm our business prospects. ​ For example, we believe that California’s taxation of regulated cannabis at local and state governmental levels and ineffective enforcement policy with respect to illicit cannabis sales have significantly limited the growth and profitability 40 Table of Contents of operators in that state.
Any one of these factors could slow or halt additional legislative authorization of cannabis, which could harm our business prospects. For example, we believe that California’s taxation of regulated cannabis at local and state governmental levels and ineffective enforcement policy with respect to illicit cannabis sales have significantly limited the growth and profitability of operators in that state.
In the event of a default by a tenant, we may also experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property as operators of regulated cannabis cultivation and production facilities are generally subject to extensive state licensing requirements, including limited licenses in certain states.
In the event of a default by a tenant, we may also experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property as operators of regulated 27 Table of Contents cannabis cultivation and production facilities are generally subject to extensive state licensing requirements, including limited licenses in certain states.
If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset which could have an adverse effect on our results of operations in the period in which the impairment charge is recorded. We face significant risks associated with the development and redevelopment of properties that we acquire.
If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset which could have an adverse effect on our results of operations in the period in which the impairment charge is recorded. 29 Table of Contents We face significant risks associated with the development and redevelopment of properties that we acquire.
According to the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”), U.S. REIT 2024 capital raising was higher than 2022 and 2023, but remained lower than 2019-2021 levels. Tenant Concentration As of December 31, 2024, all of our rental revenues were derived from 109 properties.
According to the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”), U.S. REIT 2025 capital raising was higher than 2022 and 2023, but remained lower than 2019-2021 and 2024 levels. Tenant Concentration As of December 31, 2025, all of our rental revenues were derived from 111 properties.
We also compete as a provider of capital to regulated cannabis operators with alternative financing sources to these companies, including both equity and debt financing alternatives. For example, many larger, publicly traded multi-state cannabis operators are able to raise significant capital through public equity offerings, in addition to access to significant debt financing options.
We also compete as a provider of capital to regulated cannabis operators with alternative financing sources to these companies, including both equity and debt financing alternatives. For example, many larger, publicly traded multi-state 31 Table of Contents cannabis operators are able to raise significant capital through public equity offerings, in addition to access to significant debt financing options.
Regulated cannabis operators have experienced, among other things: ● federal, state and local taxation and regulatory burdens; 26 Table of Contents ● declines in unit pricing for regulated cannabis products; ● ineffective state and local law enforcement efforts to curtail the illicit production and sale of cannabis; and ● limited access to capital on acceptable terms or at all.
Regulated cannabis operators have experienced, among other things: • federal, state and local taxation and regulatory burdens; • declines in unit pricing for regulated cannabis products; • ineffective state and local law enforcement efforts to curtail the illicit production and sale of cannabis; and • limited access to capital on acceptable terms or at all.
Payments of principal and interest on our Notes due 2026 and borrowings that we may incur in the future, including pursuant to the Revolving Credit Facility, may leave us with insufficient cash resources to operate our properties or to pay the distributions currently contemplated or necessary to satisfy the requirements for REIT qualification.
Payments of principal and interest on our Notes due 2026 and borrowings that we may incur in the future, including pursuant to the Credit Facilities, may leave us with insufficient cash resources to operate our properties or to pay the distributions currently contemplated or necessary to satisfy the requirements for REIT qualification.
“Prohibited transactions” generally include sales or other dispositions of property (other than property treated as foreclosure property under the Code) that is held as inventory or primarily for sale to customers in the ordinary course of a trade or business by a REIT, either directly or indirectly through certain pass-through subsidiaries.
“Prohibited transactions” generally include sales or other dispositions of property (other than property treated as foreclosure property under the Code) that is held as inventory or primarily for sale to customers in the ordinary course of a trade or business by a REIT, either directly or 58 Table of Contents indirectly through certain pass-through subsidiaries.
Progress in the regulated cannabis industry is not assured and any number of factors could slow or halt progress in this area. 9 Table of Contents Market Opportunity The Regulated Cannabis Industry Overview In the United States, the development and growth of the regulated cannabis industry has generally been driven by state law and regulation, and accordingly, the market varies on a state-by-state basis.
Progress in the regulated cannabis industry is not assured and any number of factors could slow or halt progress in this area. Market Opportunity The Regulated Cannabis Industry Overview In the United States, the development and growth of the regulated cannabis industry has generally been driven by state law and regulation, and accordingly, the market varies on a state-by-state basis.
The realization of any of the risks above or other delays in development and redevelopment activities at a property may also materially adversely impact our tenant’s ability to commence, continue or expand its operations, which may 29 Table of Contents result in that tenant defaulting on its rent obligations to us.
The realization of any of the risks above or other delays in development and redevelopment activities at a property may also materially adversely impact our tenant’s ability to commence, continue or expand its operations, which may result in that tenant defaulting on its rent obligations to us.
These cannabis-related SARs are divided into three categories - cannabis limited, cannabis priority, and cannabis terminated - based on the financial institution’s belief that the business in question follows state law, is operating outside of compliance with state law, or where the banking 39 Table of Contents relationship has been terminated, respectively.
These cannabis-related SARs are divided into three categories - cannabis limited, cannabis priority, and cannabis terminated - based on the financial institution’s belief that the business in question follows state law, is operating outside of compliance with state law, or where the banking relationship has been terminated, respectively.
Recent bankruptcy rulings have denied bankruptcies for dispensaries upon the justification that businesses cannot violate federal law and then claim the benefits of federal bankruptcy for the same activity and upon the justification that courts cannot 43 Table of Contents ask a bankruptcy trustee to take possession of, and distribute cannabis assets as such action would violate the CSA.
Recent bankruptcy rulings have denied bankruptcies for dispensaries upon the justification that businesses cannot violate federal law and then claim the benefits of federal bankruptcy for the same activity and upon the justification that courts cannot ask a bankruptcy trustee to take possession of, and distribute cannabis assets as such action would violate the CSA.
In October 2023, our Operating Partnership entered into a loan and security agreement (the “Loan Agreement”) with a federally regulated commercial bank, as lender and as agent for lenders that become party thereto from time to time, which matures on October 23, 2026.
Revolving Credit Facility In October 2023, our Operating Partnership entered into a loan and security agreement (the “Loan Agreement”) with a federally regulated commercial bank, as lender and as agent for lenders that become party thereto from time to time, which matures on October 23, 2026.
If we issue limited partnership interests in our Operating Partnership in exchange for property, the per unit value attributable to such interests will be determined based on negotiations with the property seller and, therefore, may not reflect the fair market value of such limited partnership interests if a public market for such limited partnership interests existed.
If we issue limited partnership interests in our Operating Partnership in exchange for property, the per unit value attributable to such interests will be determined based on negotiations with the property seller and, therefore, may not 52 Table of Contents reflect the fair market value of such limited partnership interests if a public market for such limited partnership interests existed.
As a result of these and other factors, if our tenants default 18 Table of Contents under their leases, we may not be able to find new tenants that can successfully engage in the cultivation, processing or dispensing of regulated cannabis on the properties.
As a result of these and other factors, if our tenants default under their leases, we may not be able to find new tenants that can successfully engage in the cultivation, processing or dispensing of regulated cannabis on the properties.
For example, a number of states permit licensed adult-use cannabis operations, and our leases with tenants in those states allow for adult-use cannabis operations to be conducted at the properties in compliance with state and local laws. Our ability to grow our business depends on state laws pertaining to the cannabis industry.
For example, a number of states permit licensed adult-use cannabis operations, and our leases with tenants in those states allow for adult-use cannabis operations to be conducted at the properties in compliance with state and local laws. 43 Table of Contents Our ability to grow our business depends on state laws pertaining to the cannabis industry.
Under our charter and Maryland General Corporation Law (the “MGCL”), our stockholders generally have a right to vote only on the following matters: ● the election or removal of directors; ● the amendment of our charter, except that our board of directors may amend our charter without stockholder approval to: o change our name; o change the name or other designation or the par value of any class or series of stock and the aggregate par value of our stock; 46 Table of Contents o increase or decrease the aggregate number of shares of stock that we have the authority to issue; o increase or decrease the number of our shares of any class or series of stock that we have the authority to issue; and o effect certain reverse stock splits; ● our liquidation and dissolution; and ● our being a party to a merger, consolidation, sale or other disposition of all or substantially all of our assets or statutory share exchange.
Under our charter and Maryland General Corporation Law (the “MGCL”), our stockholders generally have a right to vote only on the following matters: • the election or removal of directors; • the amendment of our charter, except that our board of directors may amend our charter without stockholder approval to: ◦ change our name; ◦ change the name or other designation or the par value of any class or series of stock and the aggregate par value of our stock; ◦ increase or decrease the aggregate number of shares of stock that we have the authority to issue; ◦ increase or decrease the number of our shares of any class or series of stock that we have the authority to issue; and ◦ effect certain reverse stock splits; • our liquidation and dissolution; and • our being a party to a merger, consolidation, sale or other disposition of all or substantially all of our assets or statutory share exchange. 50 Table of Contents All other matters are subject to the discretion of our board of directors.
See each of the discussions under Item 1A, “Risk Factors,” under the captions “Many of our existing tenants are, and we expect that many of our future tenants will be, companies with limited histories of operations and may be unable to pay rent with funds from operations or at all, which could adversely affect our cash available to make distributions to our stockholders or otherwise impair the value of our common stock,” “Continuing unfavorable market dynamics affecting the regulated cannabis industry could adversely affect our business, liquidity and financial condition, and overall results of operations, ” and “Because we lease our properties to a limited number of tenants, and to the extent we 13 Table of Contents depend on a limited number of tenants in the future, the inability of any single tenant to make its lease payments could adversely affect our business and our ability to make distributions to our stockholders.” Geographic Concentration The following table sets forth certain state-by-state information regarding our property portfolio for the year ended and as of December 31, 2024 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contractual Rent ​ ​ ​ ​ ​ ​ ​ Collected for Percentage ​ ​ ​ Number of ​ Rentable ​ Total Invested and ​ the Year Ended of ​ State ​ Properties ​ Sq.
See each of the discussions under Item 1A, “Risk Factors,” under the captions “Many of our existing tenants are, and we expect that many of our future tenants will be, companies with limited histories of operations and may be unable to pay rent with funds from operations or at all, which could adversely affect our cash available to make distributions to our stockholders or otherwise impair the value of our common stock,” “Continuing unfavorable market dynamics affecting the regulated cannabis industry could adversely affect our business, liquidity and financial condition, and overall results of operations,” and “Because we lease our properties to a limited number of tenants, and to the extent we depend on a limited number of tenants in the future, the inability of any single tenant to make its lease payments could adversely affect our business and our ability to make distributions to our stockholders.” 15 Table of Contents Geographic Concentration The following table sets forth certain state-by-state information regarding our property portfolio as of and for the year ended December 31, 2025 (dollars in thousands): State Number of Properties Rentable Sq.
The content of our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.
The content of our website is not incorporated by reference into this Annual Report on 23 Table of Contents Form 10-K or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.
In the event that some or all of these regulations or enforcement actions are imposed, we do not know what the impact this would have on the cannabis industry, including what costs, requirements and possible prohibitions may be enforced.
In the event that some or all of these regulations or enforcement actions are imposed, we do not know what the impact this would have on the cannabis industry, including what costs, 44 Table of Contents requirements and possible prohibitions may be enforced.
If any one of these events were to occur, our financial condition, results of operations, cash flow, and our ability to make distributions to our stockholders could be materially and adversely affected. 45 Table of Contents A downgrade in our investment grade credit rating could materially adversely affect our business and financial condition.
If any one of these events were to occur, our financial condition, results of operations, cash flow, and our ability to make distributions to our stockholders could be materially and adversely affected. A downgrade in our investment grade credit rating could materially adversely affect our business and financial condition.
As such, our tenant may conduct adult-use cannabis operations at the property it leases from us, which in turn could expose that tenant, us and our property to different and greater risks, including heightened risks of enforcement of federal laws.
As such, our tenant 14 Table of Contents may conduct adult-use cannabis operations at the property it leases from us, which in turn could expose that tenant, us and our property to different and greater risks, including heightened risks of enforcement of federal laws.
Licenses, permits and approvals must be obtained from 20 Table of Contents governmental authorities requiring such licenses, permits and approvals before chemicals and materials can be used at grow facilities. Reports on the usage of such chemicals and materials must be submitted pursuant to applicable laws, ordinances, and regulations and the terms of the specific licenses, permits and approvals.
Licenses, permits and approvals must be obtained from governmental authorities requiring such licenses, permits and approvals before chemicals and materials can be used at grow facilities. Reports on the usage of such chemicals and materials must be submitted pursuant to applicable laws, ordinances, and regulations and the terms of the specific licenses, permits and approvals.
In addition, federal money laundering statutes and Bank Secrecy Act regulations discourage financial institutions from working with any organization that sells a controlled substance, regardless of whether the state it resides in permits cannabis sales.
In addition, federal money laundering statutes and Bank Secrecy Act regulations discourage financial institutions from working with any organization that sells a controlled substance, regardless of whether the state it resides in permits cannabis sales. Both the U.S.
We rely on our management team to perform due diligence investigations of our 25 Table of Contents potential tenants, related guarantors and their properties, operations and prospects, of which there is generally little or no publicly available operating and financial information.
We rely on our management team to perform due diligence investigations of our potential tenants, related guarantors and their properties, operations and prospects, of which there is generally little or no publicly available operating and financial information.
We intend to distribute our net income to our stockholders in a manner intended to satisfy the REIT 90% distribution requirement and to avoid U.S. federal income tax and the 4% nondeductible excise tax. However, we can 54 Table of Contents provide no assurances that we will have sufficient cash or other liquid assets to meet these requirements.
We intend to distribute our net income to our stockholders in a manner intended to satisfy the REIT 90% distribution requirement and to avoid U.S. federal income tax and the 4% nondeductible excise tax. However, we can provide no assurances that we will have sufficient cash or other liquid assets to meet these requirements.
The indenture governing the Notes due 2026 and the Loan Agreement governing the Revolving Credit Facility each contains financial and operating covenants that, among other things, restrict our ability to take specific actions, even if we believe them to be in our best interest, including restrictions on our ability to (1) consummate a merger, consolidation or sale of all or substantially all of our assets and (2) incur additional secured and unsecured indebtedness.
The indenture governing the Notes due 2026 and the Loan Agreements governing the Credit Facilities each contains financial and operating covenants that, among other things, restrict our ability to take specific actions, even if we believe them to be in our best interest, including restrictions on our ability to (1) consummate a merger, consolidation or sale of all or substantially all of our assets and (2) incur additional secured and unsecured indebtedness.
We are an internally-managed REIT focused on the acquisition, ownership and management of specialized industrial properties in the United States. Our properties are leased to experienced, state-licensed operators for their regulated cannabis facilities. We have acquired and intend to continue to acquire our properties through sale-leaseback transactions and third-party purchases.
We are an internally-managed REIT focused on the acquisition, ownership and management of specialized industrial and commercial properties in the United States. Our properties are primarily leased to experienced, state-licensed operators for their regulated cannabis facilities. We have acquired and expect to continue to acquire our cannabis properties through sale-leaseback transactions and third-party purchases.
Lease payment defaults by any of our tenants or a significant decline in the value of any single property would materially adversely affect our business, financial position and results of operations, including our ability to make distributions to our stockholders.
Lease payment defaults by any of our tenants or a significant decline in the value of any single property would materially advers ely affect our business, financial position and results of operations, including our ability to make distributions to our stockholders.
If one or more of our tenants are unable to renew or otherwise maintain its licenses or other state and 33 Table of Contents local authorizations necessary to continue its cannabis operations, such tenants may default on their lease payments to us.
If one or more of our tenants are unable to renew or otherwise maintain its licenses or other state and local authorizations necessary to continue its cannabis operations, such tenants may default on their lease payments to us.
In many instances, we will generally not be entitled to 15 Table of Contents financial results or other credit-related data from our tenants. See the section “Risks Related to Our Business” under Item 1A, “Risk Factors.” Competition The current market for properties that meet our investment objectives is limited.
In many instances, we will generally not be entitled to financial results or other credit-related data from our tenants. See the section “Risks Related to Our Business” under Item 1A, “Risk Factors.” Competition The current market for properties that meet our investment objectives is limited.
In August 2023, the U.S. Department of Health and Human Services (“HHS”) recommended to the DEA that cannabis be reclassified from a Schedule I drug to a Schedule III drug under the CSA. HHS based this recommendation on a Food and Drug Administration (“FDA”) review of cannabis’ classification pursuant to President Biden’s executive order in October 2022.
Department of Health and Human Services (“HHS”) recommended to the DEA that cannabis be reclassified from a Schedule I drug to a Schedule III drug under the CSA. HHS based this recommendation on a Food and Drug Administration (“FDA”) review of cannabis’ classification pursuant to President Biden’s executive order in October 2022.
It is possible that any distributions declared will be paid from our cash on hand or future issuances of shares of our common stock or preferred stock, which would constitute a return of capital to our stockholders.
It is possible that any 55 Table of Contents distributions declared will be paid from our cash on hand or future issuances of shares of our common stock or preferred stock, which would constitute a return of capital to our stockholders.
Furthermore, while we target the acquisition of medical-use cannabis facilities, our leases do not prohibit cannabis cultivation for adult-use that is permissible under the state and local laws where our facilities are located.
Furthermore, while we target the acquisition of medical-use cannabis facilities, our leases do 42 Table of Contents not prohibit cannabis cultivation for adult-use that is permissible under the state and local laws where our facilities are located.
If the federal government decides to initiate forfeiture proceedings against cannabis businesses, such as the cannabis facilities that we have acquired and intend to acquire, our investment in those properties may be lost. We may have difficulty accessing bankruptcy courts. As discussed above, cannabis is illegal under federal law.
If the federal government decides to initiate forfeiture proceedings against cannabis businesses, such as the cannabis facilities that we have acquired and intend to acquire, our investment in those properties may be lost. 46 Table of Contents We may have difficulty accessing bankruptcy courts. As discussed above, cannabis is illegal under federal law.
If general economic instability or downturn leads to an inability to borrow at attractive rates or at all, our 44 Table of Contents ability to obtain capital to finance the purchase of real estate assets could be negatively impacted.
If general economic instability or downturn leads to an inability to borrow at attractive rates or at all, our ability to obtain capital to finance the purchase of real estate assets could be negatively impacted.
If our primary business were to change in a manner that would require us register as an investment company under the Investment Company Act, we would have to comply with substantial regulation under the Investment Company Act which could restrict the manner in which we operate and finance our business and could materially and adversely affect our business operations and results.
If our primary business were to change in a manner that would 53 Table of Contents require us register as an investment company under the Investment Company Act, we would have to comply with substantial regulation under the Investment Company Act which could restrict the manner in which we operate and finance our business and could materially and adversely affect our business operations and results.
In addition, because we are a holding company, your claims as stockholders will be structurally subordinated to all existing and future liabilities and 48 Table of Contents obligations of our Operating Partnership and its subsidiaries.
In addition, because we are a holding company, your claims as stockholders will be structurally subordinated to all existing and future liabilities and obligations of our Operating Partnership and its subsidiaries.
Further, prosecution of financial institutions of offenses under the Bank Secrecy Act based on transactions 41 Table of Contents involving cannabis proceeds does not require an underlying cannabis-related conviction under federal or state law.
Further, prosecution of financial institutions of offenses under the Bank Secrecy Act based on transactions involving cannabis proceeds does not require an underlying cannabis-related conviction under federal or state law.
In the FinCEN Hemp 19 Table of Contents Statement and FinCEN Hemp Guidance, FinCEN directed banks, within the context of cannabis-related businesses, to continue relying on and following the guidance in the FinCEN Memorandum. The FinCEN Hemp Statement and FinCEN Hemp Guidance do not replace or supersede the FinCEN Marijuana-Related Guidance.
In the FinCEN Hemp Statement and FinCEN Hemp Guidance, FinCEN directed banks, within the context of cannabis-related businesses, to continue relying on and following the guidance in the FinCEN Memorandum. The FinCEN Hemp Statement and FinCEN Hemp Guidance do not replace or supersede the FinCEN Marijuana-Related Guidance.
Because we lease our properties to a limited number of tenants, and to the extent we depend on a limited number of tenants in the future, the inability of any single tenant to make its lease payments could adversely affect our business and our ability to make distributions to our stockholders. ​ As of December 31, 2024, we owned 109 properties.
Because we lease our properties to a limited number of tenants, and to the extent we depend on a limited number of tenants in the future, the inability of any single tenant to make its lease payments could adversely affect our business and our ability to make distributions to our stockholders. As of December 31, 2025, we owned 111 properties.
We rely on technology to run our business, and as such we are subject to risk from cyber incidents, including cyberattacks attempting to gain unauthorized access to our systems to disrupt operations, corrupt data or steal 58 Table of Contents confidential information, and other electronic security breaches.
We rely on technology to run our business, and as such we are subject to risk from cyber incidents, including cyberattacks attempting to gain unauthorized access to our systems to disrupt operations, corrupt data or steal confidential information, and other electronic security breaches.
Similarly, if our proposed tenants are unable to access banking services, they will not be able to enter into triple-net leasing arrangements with us, as our leases will require rent payments to be made by check or wire transfer.
Similarly, if our proposed 21 Table of Contents tenants are unable to access banking services, they will not be able to enter into triple-net leasing arrangements with us, as our leases will require rent payments to be made by check or wire transfer.
The terms governing our Notes due 2026 and the Revolving Credit Facility include restrictive covenants relating to our operations, which could limit our ability to respond to changing market conditions and our ability to make distributions to our stockholders.
The terms governing our Notes due 2026 and the Credit Facilities include restrictive covenants relating to our operations, which could limit our ability to respond to changing market conditions and our ability to make distributions to our stockholders.
As of December 31, 2024, 41 states, plus the District of Columbia, have passed laws allowing their citizens to use medical cannabis. The first state to permit the use of cannabis for medicinal purposes was California in 1996, upon adoption of the Compassionate Care Act.
As of December 31, 2025, 42 states, plus the District of Columbia, have passed laws allowing their citizens to use medical cannabis. The first state to permit the use of cannabis for medicinal purposes was California in 1996, upon adoption of the Compassionate Care Act.
If 57 Table of Contents such tax deductions are disallowed, we would be unable to meet the distribution requirements applicable to REITs under the Code, which could cause us to incur U.S. federal income tax and fail to qualify as a REIT.
If such tax deductions are disallowed, we would be unable to meet the distribution requirements applicable to REITs under the Code, which could cause us to incur U.S. federal income tax and fail to qualify as a REIT.
Our ability to comply with these covenants and other provisions relating to our indenture governing the Notes due 2026 and the Loan Agreement governing the Revolving Credit Facility may be affected by changes in our operating and financial performance, changes in general business and economic conditions, adverse regulatory developments or other events adversely impacting us.
Our ability to comply with these covenants and other provisions relating to our indenture governing the Notes due 2026 and the Loan Agreements governing the Credit Facilities may be affected by changes in our operating and financial performance, changes in general business and economic conditions, adverse regulatory developments or other events adversely impacting us.
Legislative, regulatory or administrative changes could adversely affect us or our stockholders. At any time, the U.S. federal income tax laws or Treasury Regulations governing REITs or the administrative interpretations of those laws or regulations may be changed, possibly with retroactive effect, and may adversely affect us and our stockholders.
At any time, the U.S. federal income tax laws or Treasury Regulations governing REITs or the administrative interpretations of those laws or regulations may be changed, possibly with retroactive effect, and may adversely affect us and our stockholders.
The following table sets forth certain information regarding the top ten tenants in our property portfolio that represented the largest total invested and committed capital as of and for the year ended December 31, 2024 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contractual Rent ​ ​ ​ Total Invested Collected for Percentage ​ ​ ​ Number of ​ and Committed the Year Ended of ​ Tenant (1) ​ Properties ​ Capital (2) ​ December 31, 2024 (3) Total ​ PharmaCann Inc.
The following table sets forth certain information regarding the top ten tenants in our property portfolio that represented the largest total invested and committed capital as of December 31, 2025 (dollars in thousands): Tenant (1) Number of Properties Total Invested and Committed Capital (2) Contractual Rent Collected for the Year Ended December 31, 2025 (3) Percentage of Total Ascend Wellness Holdings, Inc.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment and our risk profile using various methods including, for example, using manual and automated tools, analyzing reports of threats and threat actors, conducting scans of the threat environment, evaluating our industry’s risk profile, and conducting threat and vulnerability assessments. ​ Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards, and/or policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including risk assessments, incident detection and response, vulnerability management, disaster recovery and business continuity plans, internal controls within our accounting and financial reporting functions, encryption of data, network security controls, access controls, physical security, systems monitoring, employee training, and penetration testing. ​ To operate our business, we utilize certain third-party service providers to perform a variety of functions.
Biggest changeDepending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards, and/or policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including risk assessments, incident detection and response, vulnerability management, disaster recovery and business continuity plans, internal controls within our accounting and financial reporting functions, encryption of data, network security controls, access controls, physical security, systems monitoring, employee training, and penetration testing.
Our business operations rely on the secure collection, storage, transmission, and other processing of proprietary, confidential, and sensitive data. ​ We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third-party hosted services, communications systems, hardware and software, and our critical data, including confidential information that is proprietary, strategic or competitive in nature, and tenant data (“Information Systems and Data”). ​ We rely on a multidisciplinary team, as described further below, to identify, assess, and manage cybersecurity threats and risks.
We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third-party hosted services, communications systems, hardware and software, and our critical data, including confidential information that is proprietary, strategic or competitive in nature, and tenant data (“Information Systems and Data”). 61 Table of Contents We rely on a multidisciplinary team, as described further below, to identify, assess, and manage cybersecurity threats and risks.
Risk factors” in this annual report on Form 10-K, including “The occurrence of cyber incidents or cyberattacks could disrupt our operations, result in the loss of confidential information and/or damage our business relationships and reputation,” for additional discussion about cybersecurity-related risks. ​ Governance ​ Our board of directors holds oversight responsibility over our strategy and risk management, including material risks related to cybersecurity threats.
Risk factors” in this annual report on Form 10-K, including “The occurrence of cyber incidents or cyberattacks could disrupt our operations, result in the loss of confidential information and/or damage our business relationships and reputation,” for additional discussion about cybersecurity-related risks.
The audit committee holds quarterly meetings and receives periodic reports from management, including our Chief Operating Officer and third-party information technology expert, concerning our significant cybersecurity threats and risks and the processes we have implemented to address them. ​ ITEM 2. PROPERTIES Information pertaining to our properties can be found under Item 1 and Schedule III. ​
The audit committee holds quarterly meetings and receives periodic reports from management, including our Chief Operating Officer and third-party information technology expert, concerning our significant cybersecurity threats and risks and the processes we have implemented to address them.
Since 2016, we have retained a third-party information technology specialist to develop and maintain our information technology infrastructure and network, who has extensive experience in the development of business processes, system infrastructure design and cybersecurity for large-scale, institutional real estate companies. ​ Management is responsible for helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel.
Since 2016, we have retained a third-party information technology specialist to develop and maintain our information technology infrastructure and network, who has extensive experience in the development of business processes, system infrastructure design and cybersecurity for large-scale, institutional real estate companies.
This oversight is executed directly by the Board of Directors and through its committees. The audit committee of the board of directors oversees the management of systemic risks, including cybersecurity, in accordance with its charter.
Governance Our board of directors holds oversight responsibility over our strategy and risk management, including material risks related to cybersecurity threats. This oversight is executed directly by the Board of Directors and through its committees. The audit committee of the board of directors oversees the management of systemic risks, including cybersecurity, in accordance with its charter.
We use these systems, among others, to manage our tenant and vendor relationships, for internal communications, for accounting and record-keeping functions, and for many other key aspects of our business.
We use these systems, among others, to manage our tenant and vendor relationships, for internal communications, for accounting and record-keeping functions, and for many other key aspects of our business. Our business operations rely on the secure collection, storage, transmission, and other processing of proprietary, confidential, and sensitive data.
This evaluation considers factors such as the nature and scope of the incident, and its effects on operations, assets, or reputation.
Our management team also evaluates the potential impact of cybersecurity incidents to determine materiality. This evaluation considers factors such as the nature and scope of the incident, and its effects on operations, assets, or reputation.
Management is responsible for approving cybersecurity processes, reviewing cybersecurity assessments and other cybersecurity-related matters, and responding to cybersecurity incidents, including reporting to the audit committee for certain cybersecurity incidents. Our management team also evaluates the potential impact of cybersecurity incidents to determine materiality.
Management is responsible for helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel. Management is responsible for approving cybersecurity processes, reviewing cybersecurity assessments and other cybersecurity-related matters, and responding to cybersecurity incidents, including reporting to the audit committee for certain cybersecurity incidents.
Depending on the nature of the services provided, the sensitivity and quantity of information processed, and the identity of the service provider, our vendor management process may include reviewing the cybersecurity practices of such provider, conducting security assessments, and conducting periodic reassessments during their engagement. ​ We are not aware of any risks from cybersecurity threats, including as a result of any cybersecurity incidents, which have materially affected or are reasonably likely to materially affect us, including our business strategy, results of 59 Table of Contents operations, or financial condition.
Depending on the nature of the services provided, the sensitivity and quantity of information processed, and the identity of the service provider, our vendor management process may include reviewing the cybersecurity practices of such provider, conducting security assessments, and conducting periodic reassessments during their engagement.
We seek to engage reliable, reputable service providers that maintain cybersecurity programs.
To operate our business, we utilize certain third-party service providers to perform a variety of functions. We seek to engage reliable, reputable service providers that maintain cybersecurity programs.
Added
We identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment and our risk profile using various methods including, for example, using manual and automated tools, analyzing reports of threats and threat actors, conducting scans of the threat environment, evaluating our industry’s risk profile, and conducting threat and vulnerability assessments.
Added
We are not aware of any risks from cybersecurity threats, including as a result of any cybersecurity incidents, which have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. Refer to “Item 1A.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeNote that historic stock price performance is not necessarily indicative of future stock price performance. The stock performance graph should not be deemed filed or incorporated by reference into any other filing made by us under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate the stock performance graph by reference in another filing.
Biggest changeThe stock performance graph should not be deemed filed or incorporated by reference into any other filing made by us under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate the stock performance graph by reference in another filing. 64 Table of Contents Source: SNL Financial Unregistered Sales of Equity Securities During the year ended December 31, 2025, we did not sell any equity securities that were not registered under the Securities Act of 1933.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NYSE under the symbol “IIPR.” As of February 14, 2025, there were 32 holders of record of our common shares. This number excludes our common shares owned by stockholders holding under nominee security position listings.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NYSE under the symbol “IIPR.” As of February 19, 2026, there were 36 holders of record of our common shares. This number excludes our common shares owned by stockholders holding under nominee security position listings.
Information about our equity compensation plans and other related stockholder matters is incorporated by reference in Item 12 of Part III of this Annual Report on Form 10-K. 61 Table of Contents Stock Performance Graph The following graph shows a comparison from January 1, 2020 to December 31, 2024 of cumulative total stockholder return, calculated on a dividends reinvested basis, for Innovative Industrial Properties, Inc., the S&P 500 Stock Index, or the S&P 500, and the MSCI US REIT Index, which includes all tax-qualified equity REITs listed in the United States.
Stock Performance Graph The following graph shows a comparison from January 1, 2021 to December 31, 2025 of cumulative total stockholder return, calculated on a dividends reinvested basis, for Innovative Industrial Properties, Inc., the S&P 500 Stock Index, or the S&P 500, and the MSCI US REIT Index, which includes all tax-qualified equity REITs listed in the United States.
Removed
Source: SNL Financial ​ Recent Sales of Unregistered Securities During the year ended December 31, 2024, we issued 28,408 shares of our common stock upon exchange by holders of $4.3 million of outstanding principal amount of our Exchangeable Senior Notes.
Added
Information about our equity compensation plans and other related stockholder matters is incorporated by reference in Item 12 of Part III of this Annual Report on Form 10-K.
Removed
Such shares of our common stock were issued in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended. ​ For information regarding our Exchangeable Senior Notes, see Note 7 “Debt” in the notes to our consolidated financial statements. ​
Added
Note that historic stock price performance is not necessarily indicative of future stock price performance.
Added
Issuer Purchases of Equity Securities In March 2025, our Board of Directors authorized a share repurchase program of up to $100.0 million of the Company’s common stock. The repurchase program expires on March 17, 2026, and may be extended, suspended, modified or discontinued at any time at the Company’s discretion.
Added
During the year ended December 31, 2025, we repurchased and retired 371,538 shares of common stock for $20.1 million. No shares of common stock were repurchased and retired during the years ended December 31, 2024 and 2023. As of December 31, 2025, $79.9 million remained available for purchase under the share purchase plan.
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ITEM 6. [RESERVED] Not applicable. 65 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changePrior to the lease modifications on January 1, 2024, which extended the initial lease terms, the leases were classified as operating leases and the lease payments received were recognized as rental revenue and therefore, included in net income attributable to common stockholder. ​ 75 Table of Contents ​ The tables below are reconciliations of quarterly net income attributable to common stockholders to FFO, Normalized FFO and AFFO for the years ended December 31, 2024 and 2023 (in thousands, except share and per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended (1) ​ December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 Net income attributable to common stockholders ​ $ 39,461 $ 39,651 ​ $ 41,655 $ 39,090 Real estate depreciation and amortization ​ 18,240 ​ 17,944 ​ 17,473 ​ 17,150 Disposition-contingent lease termination fee, net of loss on sale of real estate (2) ​ — ​ ​ — ​ ​ (451) ​ ​ — FFO attributable to common stockholders (basic) ​ ​ 57,701 ​ ​ 57,595 ​ ​ 58,677 ​ ​ 56,240 Cash and non-cash interest expense on Exchangeable Senior Notes ​ ​ — ​ ​ — ​ ​ — ​ ​ 28 FFO attributable to common stockholders (diluted) ​ ​ 57,701 ​ ​ 57,595 ​ ​ 58,677 ​ ​ 56,268 Litigation-related expense ​ ​ 268 ​ ​ 210 ​ ​ 164 ​ ​ 146 Normalized FFO attributable to common stockholders (diluted) ​ ​ 57,969 ​ ​ 57,805 ​ ​ 58,841 ​ ​ 56,414 Interest income on seller-financed note (3) ​ ​ 30 ​ ​ 268 ​ ​ 403 ​ ​ 403 Deferred lease payments received on sales-type leases (4) ​ ​ 568 ​ ​ 1,452 ​ ​ 1,462 ​ ​ 1,456 Stock-based compensation ​ 4,315 ​ ​ 4,316 ​ ​ 4,371 ​ ​ 4,315 Non-cash interest expense ​ ​ 456 ​ ​ 419 ​ ​ 401 ​ ​ 388 Above-market lease amortization ​ 23 ​ ​ 23 ​ ​ 23 ​ ​ 23 AFFO attributable to common stockholders (diluted) ​ $ 63,361 ​ $ 64,283 ​ $ 65,501 ​ $ 62,999 FFO per common share – diluted ​ $ 2.02 ​ $ 2.02 ​ ​ 2.06 ​ ​ 1.98 Normalized FFO per common share – diluted ​ $ 2.03 ​ $ 2.02 ​ ​ 2.06 ​ ​ 1.98 AFFO per common share – diluted ​ $ 2.22 ​ $ 2.25 ​ ​ 2.29 ​ ​ 2.21 Weighted-average common shares outstanding – basic ​ 28,254,565 ​ ​ 28,254,565 ​ ​ 28,250,843 ​ ​ 28,145,017 Restricted stock and RSUs ​ ​ 299,770 ​ ​ 299,770 ​ ​ 300,582 ​ ​ 278,890 PSUs ​ ​ — ​ ​ 25,352 ​ ​ 20,713 ​ ​ — Dilutive effect of Exchangeable Senior Notes ​ ​ — ​ ​ — ​ ​ — ​ ​ 38,079 Weighted-average common shares outstanding – diluted ​ 28,554,335 ​ 28,579,687 ​ 28,572,138 ​ 28,461,986 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended (1) ​ December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 Net income attributable to common stockholders ​ $ 41,295 $ 41,256 ​ $ 40,931 $ 40,754 Real estate depreciation and amortization ​ ​ 17,098 ​ ​ 16,678 ​ ​ 16,704 ​ ​ 16,714 FFO attributable to common stockholders (basic) ​ ​ 58,393 ​ ​ 57,934 ​ ​ 57,635 ​ ​ 57,468 Cash and non-cash interest expense on Exchangeable Senior Notes ​ ​ 50 ​ ​ 50 ​ ​ 50 ​ ​ 69 FFO attributable to common stockholders (diluted) ​ ​ 58,443 ​ ​ 57,984 ​ ​ 57,685 ​ ​ 57,537 Litigation-related expense ​ ​ 152 ​ ​ 1,112 ​ ​ 670 ​ ​ 546 Loss (gain) on exchange of Exchangeable Senior Notes ​ ​ — ​ ​ — ​ ​ — ​ ​ (22) Normalized FFO attributable to common stockholders (diluted) ​ ​ 58,595 ​ ​ 59,096 ​ ​ 58,355 ​ ​ 58,061 Interest income on seller-financed note (3) ​ ​ 403 ​ ​ 402 ​ ​ 403 ​ ​ 134 Stock-based compensation ​ ​ 4,934 ​ ​ 4,934 ​ ​ 4,884 ​ ​ 4,829 Non-cash interest expense ​ ​ 383 ​ ​ 335 ​ ​ 331 ​ ​ 326 Above-market lease amortization ​ ​ 23 ​ ​ 23 ​ ​ 23 ​ ​ 23 AFFO attributable to common stockholders (diluted) ​ $ 64,338 ​ $ 64,790 ​ $ 63,996 ​ $ 63,373 FFO per common share – diluted ​ $ 2.07 ​ ​ 2.05 ​ ​ 2.04 ​ ​ 2.04 Normalized FFO per common share – diluted ​ $ 2.07 ​ ​ 2.09 ​ ​ 2.07 ​ ​ 2.06 AFFO per common share – diluted ​ $ 2.28 ​ ​ 2.29 ​ ​ 2.26 ​ ​ 2.25 Weighted-average common shares outstanding – basic ​ 27,996,393 ​ ​ 27,983,004 ​ ​ 27,981,517 ​ ​ 27,949,747 Restricted stock and RSUs ​ ​ 206,667 ​ ​ 206,919 ​ ​ 201,462 ​ ​ 171,741 Dilutive effect of Exchangeable Senior Notes ​ ​ 76,774 ​ ​ 75,682 ​ ​ 74,260 ​ ​ 102,210 Weighted-average common shares outstanding – diluted ​ 28,279,834 ​ 28,265,605 ​ 28,257,239 ​ 28,223,698 (1) The sum of quarterly financial data may vary from annual data due to rounding and differences in the dilutive effect of potentially issuable shares of each reporting period.
Biggest changePrior to the lease modifications on January 1, 2024, which extended the initial lease terms, the leases were classified as operating leases and the lease payments received were recognized as rental revenue and therefore, included in net income attributable to common stockholders. 78 Table of Contents The tables below are reconciliations of quarterly net income attributable to common stockholders to FFO, Normalized FFO and AFFO for the years ended December 31, 2025 and 2024 (in thousands, except share and per share amounts): Three Months Ended (1) December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 Net income attributable to common stockholders $ 30,705 $ 28,288 $ 25,146 $ 30,296 Real estate depreciation and amortization 18,538 18,639 18,500 18,391 Impairment loss on real estate — — — 3,527 Loss on sale of real estate 326 — — — FFO attributable to common stockholders (basic and diluted) 49,569 46,927 43,646 52,214 Litigation-related expense 585 604 413 406 Loss (gain) on partial repayment of Notes due 2026 — — — (32) Income on seller-financed notes (2) 223 (2,375) 1,164 153 Deferred lease payments received on sales-type leases (3) — — 5 20 Normalized FFO attributable to common stockholders (diluted) 50,377 45,156 45,228 52,761 Stock-based compensation 2,698 2,684 2,672 2,078 Non-cash interest expense 568 485 476 470 Non-cash accretion of life science investments (333) — — — Above-market lease amortization 23 23 23 23 AFFO attributable to common stockholders (diluted) $ 53,333 $ 48,348 $ 48,399 $ 55,332 FFO per common share – diluted $ 1.75 $ 1.66 $ 1.54 $ 1.83 Normalized FFO per common share – diluted $ 1.78 $ 1.60 $ 1.60 $ 1.85 AFFO per common share – diluted $ 1.88 $ 1.71 $ 1.71 $ 1.94 Weighted average common shares outstanding – basic 27,913,384 27,912,881 27,924,092 28,275,549 Restricted stock and RSUs 390,146 390,719 393,601 312,473 Weighted average common shares outstanding – diluted 28,303,530 28,303,600 28,317,693 28,588,022 79 Table of Contents Three Months Ended (1) December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 Net income attributable to common stockholders $ 39,461 $ 39,651 $ 41,655 $ 39,090 Real estate depreciation and amortization 18,240 17,944 17,473 17,150 Disposition-contingent lease termination fee, net of loss on sale of real estate (4) — — (451) — FFO attributable to common stockholders (basic) 57,701 57,595 58,677 56,240 Cash and non-cash interest expense on Exchangeable Senior Notes — — — 28 FFO attributable to common stockholders (diluted) 57,701 57,595 58,677 56,268 Litigation-related expense 268 210 164 146 Income on seller-financed notes (2) 30 268 403 403 Deferred lease payments received on sales-type leases (3) 568 1,452 1,462 1,456 Normalized FFO attributable to common stockholders (diluted) 58,567 59,525 60,706 58,273 Stock-based compensation 4,315 4,316 4,371 4,315 Non-cash interest expense 456 419 401 388 Above-market lease amortization 23 23 23 23 AFFO attributable to common stockholders (diluted) $ 63,361 $ 64,283 $ 65,501 $ 62,999 FFO per common share – diluted $ 2.02 $ 2.02 $ 2.05 $ 1.98 Normalized FFO per common share – diluted $ 2.05 $ 2.08 $ 2.12 $ 2.05 AFFO per common share – diluted $ 2.22 $ 2.25 $ 2.29 $ 2.21 Weighted average common shares outstanding – basic 28,254,565 28,254,565 28,250,843 28,145,017 Restricted stock and RSUs 299,770 299,770 300,582 278,890 PSUs — 25,352 20,713 — Dilutive effect of Exchangeable Senior Notes — — — 38,079 Weighted average common shares outstanding – diluted 28,554,335 28,579,687 28,572,138 28,461,986 ________________________________________________________ (1) The sum of quarterly financial data may vary from annual data due to rounding and differences in the dilutive effect of potentially issuable shares of each reporting period.
For the three months ended September 30 and June 30, 2024, 25,352 shares and 20,713 shares, respectively, issuable upon vesting of the PSUs were dilutive, as the performance thresholds for vesting of these PSUs were met as measured as of the respective periods.
For the three months ended September 30, 2024 and June 30, 2024, 25,352 shares and 20,713 shares, respectively, issuable upon vesting of the PSUs were dilutive, as the performance thresholds for vesting of these PSUs were met as measured as of the respective periods.
(3) Amount reflects the non-refundable lease payments received on two sales-type leases which are recognized as a deposit liability starting on January 1, 2024, and is included in other liabilities in our consolidated balance sheets as of December 31, 2024, as the transaction did not qualify for recognition as a completed sale (see Note 2 “Lease Accounting” to our consolidated financial statements included in this report for more information).
(3) Amount reflects the non-refundable lease payments received on two sales-type leases which are recognized as a deposit liability starting on January 1, 2024, and is included in other liabilities in our consolidated balance sheets as of December 31, 2025 and 2024 , as the transaction did not qualify for recognition as a completed sale (see Note 2 “Lease Accounting” to our consolidated financial statements included in this report for more information).
In addition, this competition may put pressure on us to reduce the rental rates below those that we expect to charge for the properties that we acquire, which would adversely affect our financial results. 65 Table of Contents Operating Expenses Our operating expenses include general and administrative expenses, including personnel costs, stock-based compensation, and legal, accounting and other expenses related to corporate governance, public reporting and compliance with the various provisions of U.S. securities laws.
In addition, this competition may put pressure on us to reduce the rental rates below those that we expect to charge for the properties that we acquire, which would adversely affect our financial results. 68 Table of Contents Operating Expenses Our operating expenses include general and administrative expenses, including personnel costs, stock-based compensation, and legal, accounting and other expenses related to corporate governance, public reporting and compliance with the various provisions of U.S. securities laws.
For a discussion of such risk factors, see Item 1A, “Risk Factors.” Overview We are an internally-managed REIT focused on the acquisition, ownership and management of specialized industrial properties in the United States. Our properties are leased to experienced, state-licensed operators for their regulated cannabis facilities.
For a discussion of such risk factors, see Item 1A, “Risk Factors.” Overview We are an internally-managed REIT focused on the acquisition, ownership and management of specialized industrial and commercial properties in the United States. Our properties are primarily leased to experienced, state-licensed operators for their regulated cannabis facilities.
Management believes that it was in compliance with those covenants as of December 31, 2024. In addition, the terms of the indenture provide that if the debt rating on the Notes due 2026 is downgraded or withdrawn entirely, interest on the Notes due 2026 will increase to a range of 6.0% to 6.5% based on such debt rating.
Management believes that it was in compliance with those covenants as of December 31, 2025. In addition, the terms of the indenture provide that if the debt rating on the Notes due 2026 is downgraded or withdrawn entirely, interest on the Notes due 2026 will increase to a range of 6.0% to 6.5% based on such debt rating.
(4) Amount reflects the non-refundable lease payments received on two sales-type leases which are recognized as a deposit liability starting on January 1, 2024, and is included in other liabilities in our consolidated balance sheets as of December 31, 2024, as the transaction did not qualify for recognition as a completed sale (see Note 2 “Lease Accounting” to our consolidated financial statements included in this report for more information).
(3) Amount reflects the non-refundable lease payments received on two sales-type leases which are recognized as a deposit liability starting on January 1, 2024, and is included in other liabilities in our consolidated balance sheets as of December 31, 2025 and 2024, as the transaction did not qualify for recognition as a completed sale (see Note 2 “Lease Accounting” to our consolidated financial statements included in this report for more information).
The year-over-year decrease in purchases of investments in real estate, funding of draws for improvements and construction, and funding of construction loan and other investments was due to smaller acquisitions and lower development activities as certain projects were completed during 2024.
The year-over-year decrease in purchases of investments in real estate, funding of draws for improvements and construction, and funding of construction loan and other investments was due to smaller acquisitions and lower development activities as certain projects were completed during 2025.
Cash flows provided by operating activities were generally from contractual rent and tenant reimbursements from our properties, partially offset by our general and administrative expense, interest expense, property expenses in excess of tenant reimbursements and property expenses at properties that were not leased.
Cash flows provided by operating activities were primarily from contractual rent and tenant reimbursements from our properties, partially offset by our general and administrative expense, interest expense, property expenses in excess of tenant reimbursements and property expenses at properties that were not leased.
When we conclude that we are the owner of improvements for accounting purposes using the factors discussed above, we record the cost to construct the improvements as our capital asset. We evaluate our real estate assets for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a given asset may not be recoverable.
When we conclude that we are the owner of improvements for accounting purposes using the factors discussed above, we record the cost to construct the improvements as our capital asset. 81 Table of Contents We evaluate our real estate assets for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a given asset may not be recoverable.
We sought to obtain an investment grade rating to facilitate access to the investment grade unsecured debt market as part of our overall strategy to maximize our financial flexibility and manage our overall cost of capital. On May 25, 2021, our Operating Partnership issued $300.0 million aggregate principal amount of Notes due 2026.
We sought to obtain an investment grade rating to facilitate access to the investment grade unsecured debt market as part of our overall strategy to maximize our financial flexibility and manage our overall cost of capital. In May 2021, our Operating Partnership issued $300.0 million aggregate principal amount of Notes due 2026.
Our critical accounting estimates are defined as accounting estimates or assumptions made in accordance with GAAP, which involve a significant level of estimation uncertainty or subjectivity and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
Our critical accounting estimates are defined as accounting estimates or assumptions made in accordance with GAAP, which involve a significant level of estimation uncertainty or subjectivity and have had or are reasonably likely to have a material 80 Table of Contents impact on our financial condition or results of operations.
No other properties accounted for more than 5% of our net real estate held for investment at December 31, 2024.
No other properties accounted for more than 5% of our net real estate held for investment at December 31, 2025.
Investing Activities Cash flows used in investing activities for the year ended December 31, 2024 included $82.6 million of purchases of investments in real estate, funding of draws for improvements and construction, and funding of construction loan and other investments in the aggregate, partially offset by $9.1 million in proceeds related to the sale of our Los Angeles, California property and $17.5 million of net maturities of short-term investments.
Cash flows used in investing activities for the year ended December 31, 2024 were $56.0 million, of which $82.6 million was related to the purchases of investments in real estate, funding of draws for improvements and construction, and funding of construction loan and other investments in the aggregate, partially offset by $9.1 million in net proceeds related to the sale of our Los Angeles, California property and $17.5 million of net maturities of short-term investments.
For further discussion of our significant accounting policies, see Note 2 “Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements” to our consolidated financial statements included in this report. Lease Accounting We account for our leases under Accounting Standards Codification 842, Leases, which requires significant estimates and judgments by management in its application.
For further discussion of our significant accounting policies, see Note 2 “Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements” to our consolidated financial statements included in this report. Lease Accounting We account for our leases as lessor under ASC 842, Leases, which requires significant estimates and judgments by management in its application.
On October 23, 2023, our Operating Partnership entered into a loan and security agreement (the “Loan Agreement”) with a federally regulated commercial bank, as lender and as agent for lenders that become party thereto from time to time.
Credit Facilities In October 2023, our Operating Partnership entered into a loan and security agreement (the “Loan Agreement”) with a federally regulated commercial bank, as lender and as agent for lenders that become party thereto from time to time.
The increase in depreciation and amortization expense was primarily related to depreciation on the two properties we acquired in 2024 and the placement into service of construction and improvements at certain of our properties. Loss on Sale of Real Estate.
The increase in depreciation and amortization expense was primarily related to depreciation on the two properties we acquired in 2024, one property acquired in 2025 and the placement into service of construction and improvements at certain of our properties. Impairment loss on real estate .
As of December 31, 2024, we had invested $2.4 billion in the aggregate (consisting of purchase price and funding of draws for improvements submitted by tenants, if any, but excluding transaction costs) and had committed an additional $38.3 million to fund draws to certain tenants and vendors for improvements at our properties.
As of December 31, 2025, we had invested $2.5 billion in the aggregate (consisting of purchase price and funding of draws for improvements submitted by tenants, if any, but excluding transaction costs) and had committed an additional $6.5 million to fund draws to certain tenants and vendors for improvements at our properties.
See Note 2 “Summary of Significant Accounting Policies and Procedures” in the notes to the consolidated financial statements for further information regarding the tenants in our portfolio that represented the largest percentage of our total rental revenues for the year ended December 31, 2024.
See Note 2 “Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements” in the notes to the consolidated financial statements for further information regarding the tenants in our portfolio that represented the largest percentage of our total rental revenues for the year ended December 31, 2025.
Indicators we use to determine whether an impairment evaluation is necessary include: ● deterioration in rental rates for a specific property; ● deterioration of a given rental submarket; ● significant change in strategy or use of a specific property or any other event that could result in a decreased holding period, including classifying a property as held for sale, or significant development delay; ● evidence of material physical damage to the property; and ● default by a significant tenant when any of the other indicators above are present. ​ When we evaluate for potential impairment our real estate assets to be held and used, we first evaluate whether there are any indicators of impairment.
Indicators we use to determine whether an impairment evaluation is necessary include: • deterioration in rental rates for a specific property; • deterioration of a given rental submarket; • significant change in strategy or use of a specific property or any other event that could result in a decreased holding period, including classifying a property as held for sale, or significant development delay; • evidence of material physical damage to the property; and • default by a significant tenant when any of the other indicators above are present.
We seek to manage our portfolio-level risk through geographic diversification and by minimizing dependence on any single property or tenant. At December 31, 2024, our largest property was located in New York and accounted for 5.5% of our net real estate held for investment.
Many of our tenants are tenants at multiple properties. We seek to manage our portfolio-level risk through geographic diversification and by minimizing dependence on any single property or tenant. At December 31, 2025, our largest property was located in New York and accounted for 5.5% of our net real estate held for investment.
During 2024, we declared cash dividends on our common stock totaling $7.52 per share, and cash dividends on our Series A Preferred Stock totaling $2.25 per share.
During 2025, we declared cash dividends on our common stock totaling $7.60 per share, and cash dividends on our Series A Preferred Stock totaling $2.25 per share.
If sustained, this could have a material adverse effect on our business, financial condition and results of operations, including our ability to continue to make acquisitions of new properties and fund investments for improvements at existing properties.
If sustained, this could also have a material adverse effect on our business, financial condition and results of operations, including our ability to refinance our existing indebtedness, fund our obligations to purchase IQHQ Preferred Stock, and continue to make acquisitions of new properties and fund investments for improvements at existing properties.
Other than for the three months ended December 31, 2024, September 30, 2024 and June 30, 2024, FFO (diluted), Normalized FFO, AFFO and FFO, Normalized FFO and AFFO per diluted share include the dilutive impact of the assumed full exchange of the Exchangeable Senior Notes for shares of common stock.
For the years ended December 31, 2024 and 2023, and for the three months ended March 31, 2024, FFO (diluted), Normalized FFO, AFFO and FFO, Normalized FFO and AFFO per diluted share include the dilutive impact of the assumed full exchange of the Exchangeable Senior Notes for shares of common stock.
For the year ended December 31, 2024, we applied $7.7 million of security deposits for payment of contractual rent on properties leased to six tenants. For the year ended December 31, 2023, we applied $8.7 million of security deposits for payment of contractual rent on properties leased to five tenants.
For the year ended December 31, 2025, we applied $6.6 million of security deposits for payment of contractual rent on properties leased to seven tenants. For the year ended December 31, 2024, we applied $7.7 million of security deposits for payment of contractual rent on properties leased to six tenants. Other Revenues.
Of the $38.3 million committed to fund draws to certain tenants and vendors for improvements at our properties, $11.4 million was incurred but not funded as of December 31, 2024. Of these properties, we include 106 properties in our operating portfolio, which were 98.3% leased as of December 31, 2024, with a weighted-average remaining lease term of 13.7 years.
Of the $6.5 million committed to fund draws to certain tenants and vendors for improvements at our properties, $3.0 million was incurred but not funded as of December 31, 2025. Of these properties, we include 109 properties in our operating portfolio, which were 96.7% leased as of December 31, 2025, with a weighted-average remaining lease term of 12.8 years.
We compute normalized funds from operations (“Normalized FFO”) by adjusting FFO, as defined by NAREIT, to exclude certain GAAP income and expense amounts that we believe are infrequent and unusual in nature and/or not 73 Table of Contents related to our core real estate operations.
For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share. 76 Table of Contents We compute normalized funds from operations (“Normalized FFO”) by adjusting FFO, as defined by NAREIT, to exclude certain GAAP income and expense amounts that we believe are infrequent and unusual in nature and/or not related to our core real estate operations.
The Notes due 2026 are the Operating Partnership’s general unsecured obligations, and rank equally in right of payment with all of the Operating Partnership’s existing and future senior unsecured indebtedness, including the Exchangeable Senior Notes which matured in February 2024.
The Notes due 2026 are the Operating Partnership’s general unsecured and unsubordinated obligations, and rank equally in right of payment with all of the Operating Partnership’s future senior unsecured indebtedness.
As of December 31, 2024, we had 22 full-time employees. As of December 31, 2024, we owned 109 properties comprising 9.0 million square feet (including 666,000 rentable square feet under development/redevelopment) in 19 states.
As of December 31, 2025, we had 23 full-time employees. As of December 31, 2025, we owned 111 properties comprising 8.9 million square feet (including 303,000 rentable square feet under development/redevelopment) in 19 states.
After completing this process, we determined that for each of the operating properties evaluated, undiscounted cash flows over the holding period were in excess of carrying value and, therefore, we did not record any impairment losses for these properties for the years ended December 31, 2024, 2023 and 2022.
For all other operating properties that were evaluated, we determined that the undiscounted cash flows over the holding period were in excess of carrying value and, therefore, we did not record any impairment losses for these properties for the year ended December 31, 2025.
Interest income for the year ended December 31, 2024 increased by $2.6 million, or 30%, to $11.0 million, compared to $8.4 million for the year ended December 31, 2023.
Interest and other income for the year ended December 31, 2025 increased by $2.0 million, or 46%, to $6.4 million, compared to $4.4 million for year ended December 31, 2024.
We have leased and expect to continue to lease our properties on a triple-net lease basis, where the tenant is generally responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, real estate taxes and insurance. We were incorporated in Maryland on June 15, 2016.
These properties are generally leased, and we expect to continue leasing them, on a triple-net lease basis, pursuant to which the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, real estate taxes and insurance.
This source of revenue represents our primary source of liquidity to fund our dividends, Notes due 2026 interest payments, repayments of borrowings and interest payments under our Revolving Credit Facility, general and administrative expenses, property development and redevelopment activities, property operating expenses and other expenses incurred related to managing our existing portfolio and investing in additional properties.
This source of revenue represents our primary source of liquidity to fund the acquisition of additional properties, the development and redevelopment of existing properties, the funding of our remaining investment in IQHQ Preferred Stock, dividends to our stockholders, scheduled debt service under our Notes due 2026, repayment of borrowings and interest payments under our Credit Facilities, general and administrative expenses, property development and redevelopment activities, property operating expenses and other expenses incurred related to managing our existing portfolio and investing in additional properties.
FFO, Normalized FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of operations. 74 Table of Contents The table below is a reconciliation of net income attributable to common stockholders to FFO, Normalized FFO and AFFO for the years ended December 31, 2024, 2023 and 2022 (in thousands, except share and per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 2022 Net income attributable to common stockholders ​ $ 159,857 $ 164,236 $ 153,034 Real estate depreciation and amortization ​ 70,807 ​ 67,194 ​ 61,303 Loss (gain) on sale of real estate ​ ​ — ​ ​ — ​ ​ (3,601) Disposition-contingent lease termination fee, net of loss on sale of real estate (1) ​ (451) ​ — ​ — FFO attributable to common stockholders (basic) ​ ​ 230,213 ​ ​ 231,430 ​ ​ 210,736 Cash and non-cash interest expense on Exchangeable Senior Notes ​ ​ 28 ​ ​ 219 ​ ​ 546 FFO attributable to common stockholders (diluted) ​ ​ 230,241 ​ ​ 231,649 ​ ​ 211,282 Financing expense ​ ​ — ​ ​ — ​ ​ 367 Litigation-related expense ​ ​ 788 ​ ​ 2,480 ​ ​ 3,010 Loss (gain) on exchange of Exchangeable Senior Notes ​ ​ — ​ ​ (22) ​ ​ 125 Normalized FFO attributable to common stockholders (diluted) ​ ​ 231,029 ​ ​ 234,107 ​ ​ 214,784 Interest income on seller-financed note (2) ​ ​ 1,104 ​ ​ 1,342 ​ ​ — Deferred lease payments received on sales-type leases (3) ​ ​ 4,938 ​ ​ — ​ ​ — Stock-based compensation ​ 17,317 ​ 19,581 ​ 17,507 Non-cash interest expense ​ 1,664 ​ 1,375 ​ 1,255 Above-market lease amortization ​ ​ 92 ​ ​ 92 ​ ​ 91 AFFO attributable to common stockholders (diluted) ​ $ 256,144 ​ $ 256,497 ​ $ 233,637 FFO per common share – diluted ​ $ 8.07 ​ $ 8.20 ​ $ 7.64 Normalized FFO per common share – diluted ​ $ 8.10 ​ $ 8.29 ​ $ 7.76 AFFO per common share – diluted ​ $ 8.98 ​ $ 9.08 ​ $ 8.45 Weighted average common shares outstanding – basic ​ 28,226,402 ​ 27,977,807 ​ 27,345,047 Restricted stock and RSUs ​ ​ 294,780 ​ ​ 196,821 ​ ​ 116,046 Dilutive effect of Exchangeable Senior Notes ​ ​ 9,468 ​ ​ 81,169 ​ ​ 202,076 Weighted average common shares outstanding – diluted ​ 28,530,650 ​ 28,255,797 ​ 27,663,169 ​ (1) Amount reflects the $3.9 million disposition-contingent lease termination fee received concurrently with the sale of our property in Los Angeles, California, net of the loss on sale of real estate of $3.4 million (see Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information).
FFO, Normalized FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of operations. 77 Table of Contents The table below is a reconciliation of net income attributable to common stockholders to FFO, Normalized FFO and AFFO for the years ended December 31, 2025, 2024 and 2023 (in thousands, except share and per share amounts): Years Ended December 31, 2025 2024 2023 Net income attributable to common stockholders $ 114,435 $ 159,857 $ 164,236 Real estate depreciation and amortization 74,068 70,807 67,194 Impairment loss on real estate 3,527 — — Loss on sale of real estate/(Disposition-contingent lease termination fee, net of loss on sale of real estate) (1) 326 (451) — FFO attributable to common stockholders (basic) 192,356 230,213 231,430 Cash and non-cash interest expense on Exchangeable Senior Notes — 28 219 FFO attributable to common stockholders (diluted) 192,356 230,241 231,649 Litigation-related expense 2,008 788 2,480 Loss (gain) on exchange of Exchangeable Senior Notes — — (22) Loss (gain) on partial repayment of Notes due 2026 (32) — — Income on seller-financed notes (2) (835) 1,104 1,342 Deferred lease payments received on sales-type leases (3) 25 4,938 — Normalized FFO attributable to common stockholders (diluted) 193,522 237,071 235,449 Stock-based compensation 10,132 17,317 19,581 Non-cash interest expense 1,999 1,664 1,375 Non-cash accretion of life science investments (333) — — Above-market lease amortization 92 92 92 AFFO attributable to common stockholders (diluted) $ 205,412 $ 256,144 $ 256,497 FFO per common share – diluted $ 6.78 $ 8.07 $ 8.20 Normalized FFO per common share – diluted $ 6.82 $ 8.31 $ 8.33 AFFO per common share – diluted $ 7.24 $ 8.98 $ 9.08 Weighted average common shares outstanding – basic 28,005,228 28,226,402 27,977,807 Restricted stock and RSUs 371,999 294,780 196,821 Dilutive effect of Exchangeable Senior Notes — 9,468 81,169 Weighted average common shares outstanding – diluted 28,377,227 28,530,650 28,255,797 ________________________________________________________ (1) For the year ended December 31, 2024, amount reflects the $3.9 million disposition-contingent lease termination fee received concurrently with the sale of our property in Los Angeles, California, net of the loss on sale of real estate of $3.4 million (see Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information).
Sources and Uses of Cash We derive substantially all of our revenues from the leasing of our properties and collecting rental income, which includes operating expense reimbursements, based on contractual arrangements with our tenants.
As of December 31, 2025, we had cash and cash equivalents of $47.6 million. We derive substantially all of our revenues from leasing our properties and collecting rental income, which includes operating expense reimbursements, based on contractual arrangements with our tenants.
Our investment guidelines also provide that our aggregate borrowings (secured and unsecured) will not exceed 50% of the cost of our tangible assets at the time of any new borrowing, subject to our board of directors’ discretion. In recent years, financial markets have been volatile in general, which has also significantly reduced our access to capital.
Our investment guidelines also provide that our aggregate borrowings (secured and unsecured) will not exceed 50% of the cost of our tangible assets at the time of any new borrowing, subject to our board of directors’ discretion.
Our undiscounted cash flow and fair value calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flow and property fair values, including determining our estimated holding period.
Our undiscounted cash flow and fair value calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flow and property fair values, including determining our estimated holding period. We are also required to make a number of assumptions relating to future economic and market events and prospective operating trends.
A decrease of 5% in the estimated unguaranteed residual value of our properties would result in a change to the lease classification of one lease that was modified during the year ended December 31, 2024.
A decrease of 5% in the estimated unguaranteed residual value of our properties would not change the lease classification of any new leases or leases that were modified during the year ended December 31, 2025.
In order for us to qualify as a REIT under the Code, the relevant sections of our charter provide that, subject to certain exceptions, no person or entity may own, or be deemed to own, by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% (in value or number of shares, whichever is more restrictive) of the aggregate of our outstanding shares of stock or Series A Preferred Stock or more than 9.8% (in value or number of shares, whichever is more restrictive) of our outstanding common stock or any class or series of our outstanding preferred stock. 66 Table of Contents Results of Operations Investments See Note 6 “Investments in Real Estate” in the notes to the consolidated financial statements for information regarding our investments in real estate and property portfolio activity during the year ended December 31, 2024.
In order for us to qualify as a REIT under the Code, the relevant sections of our charter provide that, subject to certain exceptions, no person or entity may own, or be deemed to own, by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% (in value or number of shares, whichever is more restrictive) of the aggregate of our outstanding shares of stock or Series A Preferred Stock or more than 9.8% (in value or number of shares, whichever is more restrictive) of our outstanding common stock or any class or series of our outstanding preferred stock.
The increase in cash flows provided by operating activities from 2023 to 2024 was primarily due to the $3.9 million disposition-contingent lease termination fee that was received concurrently with the sale of our property in Los Angeles, California.
Cash flows provided by operating activities for the year ended December 31, 2024 also included a one-time $3.9 million disposition-contingent lease termination fee that was received concurrently with the sale of our property in Los Angeles, California.
Property expenses for the year ended December 31, 2024 increased by $3.6 million, or 14%, to $28.5 million, compared to $24.9 million for the year ended December 31, 2023.
Property Expenses. Property expenses for the year ended December 31, 2025 increased by $1.7 million, or 6%, to $30.2 million, compared to $28.5 million for the year ended December 31, 2024.
Financing Activities Cash flows used in financing activities for the year ended December 31, 2024 were $197.9 million, primarily related to dividend payments of $213.5 million to common and preferred stockholders, principal payment on the Exchangeable Senior Notes of $4.4 million, and $1.4 million related to the net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees and payment of deferred financing costs, partially offset by $11.8 million in net proceeds from the issuance of our common stock and $9.6 million in net proceeds from the issuance of our Series A Preferred Stock pursuant to our ATM program.
Cash flows used in financing activities for the year ended December 31, 2024 were $197.9 million, primarily related to dividend payments of $213.5 million to common and preferred stockholders and principal payment on the Exchangeable Senior Notes of $4.4 million, partially offset by $11.8 million in net proceeds from the issuance of our common stock and $9.6 million in net proceeds from the issuance of our Series A Preferred Stock pursuant to our ATM program. 72 Table of Contents Liquidity and Capital Resources Sources and Uses of Cash Liquidity is a measure of our ability to meet potential cash requirements.
As a result, certain regulated cannabis operators have consolidated operations or shuttered certain operations to reduce costs, which could have a negative impact on operators’ demand for regulated cannabis facilities, including our existing tenants.
As a result, certain regulated cannabis operators have consolidated operations or shuttered certain operations to reduce costs, which could have a negative impact on operators’ demand for regulated cannabis facilities, including our existing tenants. Significant Tenants and Concentrations of Risk As of December 31, 2025, we owned 111 properties located in 19 states.
Determining whether expenditures meet the criteria for capitalization and the assignment of depreciable lives requires management to exercise significant judgment. The determination of whether we are or the tenant is the owner of improvements for accounting purposes is subject to significant judgment. In making that determination, we consider numerous factors and perform a detailed evaluation of each individual lease.
The determination of whether we are or the tenant is the owner of improvements for accounting purposes is subject to judgment. In making that determination, we consider numerous factors and perform a detailed evaluation of each individual lease. No one factor is determinative in reaching a conclusion.
Other revenues for the years ended December 31, 2024 and 2023 consist of interest revenue related to leases for property acquisitions that did not satisfy the requirements for sale-leaseback accounting.
Other revenues for the years ended December 31, 2025 and 2024 primarily consist of interest revenue related to leases for property acquisitions that did not satisfy the requirements for sale-leaseback accounting. The $1.1 million decrease in other revenue for the year ended December 31, 2025 was primarily due to non-collection of rent related to one property leased to 4Front.
Significant adverse changes in the critical accounting estimates and judgements used in the impairment evaluation would need to occur for the undiscounted cash flows over the holding period to be less than the carrying value for each operating property evaluated as of December 31, 2024.
Significant adverse changes in the critical accounting estimates used in the impairment evaluation are required for the undiscounted cash flows over the holding period to be less than the carrying value of these properties as of December 31, 2025. No impairment losses were recognized for the year ended December 31, 2024 and 2023.
Amount relates to the sale of one property in Los Angeles, California (see Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information). Interest Income .
Loss on sale of real estate for the year ended December 31, 2024 related to the sale of a property located in Los Angeles, California, which was sold in May 2024. See Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information. Interest and Other Income.
We continually monitor the commercial real estate and U.S. credit markets carefully and, if required, will make decisions to adjust our business strategy accordingly.
We continually monitor the commercial real estate and U.S. credit markets carefully and, if required, will make decisions to adjust our business strategy accordingly. Interest Rate Risk We are exposed to interest rate risk primarily through our variable-rate indebtedness, including amounts outstanding under our Revolving Credit Facility and our IIP Life Science Credit Facility.
Compensation expense for the year ended December 31, 2024 and 2023 included $17.3 million and $19.6 million, respectively, of non-cash stock-based compensation. Depreciation and Amortization Expense. Depreciation and amortization expense for the year ended December 31, 2024 increased by $3.6 million, or 5%, to $70.8 million, compared to $67.2 million for the year ended December 31, 2023.
Depreciation and amortization expense for the year ended December 31, 2025 increased by $3.3 million, or 5%, to $74.1 million, compared to $70.8 million for the year ended December 31, 2024.
Cash Flows The following summary discussion of our cash flows is based on the consolidated statements of cash flows in Item 8, “Financial Statements and Supplementary Data” and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2024 ​ 2023 Change Net cash provided by (used in) operating activities ​ $ 258,446 $ 255,543 ​ $ 2,903 Net cash provided by (used in) investing activities ​ (55,996) ​ (6,788) ​ (49,208) Net cash provided by (used in) financing activities ​ (197,904) ​ (195,628) ​ (2,276) Ending cash, cash equivalents and restricted cash ​ 146,245 ​ 141,699 ​ 4,546 ​ Operating Activities Cash flows provided by operating activities for the years ended December 31, 2024 and 2023 were $258.4 million and $255.5 million, respectively.
Preferred stock dividends increased by $2.0 million, or 111%, to $3.8 million for the year ended December 31, 2025, compared to $1.8 million for the year ended December 31, 2024 due to issuance of 1,016,852 shares of preferred stock during the year ended December 31, 2025. 71 Table of Contents Cash Flows The following summary discussion of our cash flows is based on the consolidated statements of cash flows in Item 8, “Financial Statements and Supplementary Data” and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below (in thousands): Year Ended December 31, 2025 2024 Change Net cash provided by (used in) operating activities $ 198,189 $ 258,446 $ (60,257) Net cash provided by (used in) investing activities (174,301) (55,996) (118,305) Net cash provided by (used in) financing activities (122,536) (197,904) 75,368 Ending cash and cash equivalents 47,597 146,245 (98,648) Operating Activities Cash flows provided by operating activities for the years ended December 31, 2025 and 2024 were $198.2 million and $258.4 million, respectively.
Cash flows used in investing activities for the year ended December 31, 2023 included $189.0 million of purchases of investments in real estate, funding of draws for improvements and construction, and funding of construction loan and other investments in the aggregate, partially offset by $182.2 million of net maturities of short-term investments.
Investing Activities Cash flows used in investing activities for the year ended December 31, 2025 were $174.3 million, of which $150.3 million was related to investments in life science financial instruments, $31.2 million was related to investments in real estate and funding of draws for improvements and construction funding at our properties, partially offset by $2.2 million in net proceeds related to the sale of two real estate properties and $5.0 million in proceeds related to the net purchases and maturities of short-term investments.
Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
(4) Amount reflects the $3.9 million disposition-contingent lease termination fee received concurrently with the sale of our property in Los Angeles, California, net of the loss on sale of real estate of $3.4 million (see Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information) Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
The use of different assumptions can affect the amount of consideration allocated to the acquired depreciable/amortizable asset, which in turn can impact our net income due to the recognition of the related depreciation/amortization expense in our consolidated statements of operations. ​ 77 Table of Contents We depreciate buildings and improvements where we are considered the owner for accounting purposes based on our evaluation of the estimated useful life of each specific asset, not to exceed 40 years.
The use of different assumptions can affect the amount of consideration allocated to the acquired depreciable/amortizable asset, which in turn can impact our net income due to the recognition of the related depreciation/amortization expense in our consolidated statements of operations.
The commitments discussed in this paragraph are excluded from the table of contractual obligations above, as improvement allowances generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease, there is no explicit time frame for incurring the obligations related to our contracts with vendors, and construction loan funding generally may be requested by the borrower from time to time, subject to satisfaction of certain conditions.
The commitments discussed in this paragraph are excluded from the table of contractual obligations above as there is no explicit time frame for incurring the obligations, which generally may be requested from time to time, subject to satisfaction of certain conditions.
As of December 31, 2024, we had no outstanding borrowings on our Revolving Credit Facility. Impact of Inflation The U.S. economy has experienced a sustained increase in inflation rates in recent years. We enter into leases that generally provide for fixed increases in rent.
Accordingly, we believe that a significant change in interest rates would not have a material effect on the consolidated financial statements. Impact of Inflation The U.S. economy has experienced a sustained increase in inflation rates in recent years. We enter into leases that generally provide for fixed increases in rent.
We do not include in our operating portfolio the following properties (all of which were under development/redevelopment as of December 31, 2024, and together are expected to comprise 491,000 rentable square feet upon completion of development/redevelopment): ● 63795 19th Avenue in Palm Springs, California (pre-leased); ● Inland Center Drive in San Bernardino, California; and ● Leah Avenue in San Marcos, Texas. ​ Factors Impacting Our Operating Results Our results of operations are affected by a number of factors and depend on the rental revenue we receive from the properties that we acquire, the timing of lease expirations, general market conditions, the regulatory environment in the cannabis industry, and the competitive environment for real estate assets that support the regulated cannabis industry. 63 Table of Contents Rental Revenues We receive income primarily from rental revenue generated by the properties that we acquire.
Factors Impacting Our Operating Results Our results of operations are affected by a number of factors and depend on the rental revenue we receive from the properties that we acquire, the timing of lease expirations, general market conditions, the regulatory environment in the cannabis industry, the regulatory and market conditions applicable to the life science industry, and the competitive environment for real estate assets supporting regulated cannabis operators and life science tenants. 66 Table of Contents Rental Revenues We receive income primarily from rental revenue generated by the properties that we acquire.
The common stock distribution with a record date of December 30, 2022 was a split-year distribution, with $0.33 allocable to 2022 for federal income tax purposes and $1.47 allocable to 2023 for federal income tax purposes. 72 Table of Contents Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2024 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due ​ ​ ​ ​ ​ ​ ​ ​ by Year Notes due 2026 Interest Office Rent Total 2025 ​ $ — ​ $ 16,500 ​ $ 526 ​ $ 17,026 2026 ​ ​ 300,000 ​ 6,646 ​ 543 ​ 307,189 2027 ​ ​ — ​ — ​ 45 ​ 45 2028 ​ ​ — ​ — ​ — ​ — 2029 ​ ​ — ​ — ​ — ​ — Thereafter ​ ​ — ​ — ​ — ​ — Total ​ $ 300,000 ​ $ 23,146 ​ $ 1,114 ​ $ 324,260 ​ As of December 31, 2024, we had (1) $37.1 million outstanding in commitments related to improvement allowances, which generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease; (2) $1.2 million outstanding in commitments related to contract with vendors for improvements at our properties; and (3) $0.2 million outstanding in commitments to fund a construction loan.
Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2025 (in thousands): Payments Due by Year Notes due 2026 Credit Facilities Interest Office Rent Total 2026 $ 291,215 $ 27,500 $ 13,132 $ 543 $ 332,390 2027 — — 4,639 45 4,684 2028 — 75,000 3,517 — 78,517 2029 — — — — — 2030 — — — — — Thereafter — — — — — Total $ 291,215 $ 102,500 $ 21,288 $ 588 $ 415,591 As of December 31, 2025, we had (1) $120 million remaining on our commitment to purchase up to $170 million of IQHQ Preferred Stock which is scheduled to be funded in various installments by June 30, 2027, subject to extension options exercisable by IQHQ; (2) $6.5 million outstanding in commitments related to improvement allowances, which generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease; and (3) $0.2 million outstanding in commitments to fund the Construction Loan.
During the year ended December 31, 2024, we sold 402,673 shares of our Series A Preferred Stock pursuant to the ATM Program for net proceeds of $9.6 million. ​ We intend to file an automatic shelf registration statement, which may permit us, from time to time, to offer and sell common stock, preferred stock, warrants, debt securities of our Operating Partnership and other securities to the extent necessary or advisable to meet our liquidity needs.
We have filed a registration statement with the SEC allowing us, from time to time, to offer and sell common stock, preferred stock, warrants, debt securities of our Operating Partnership and other securities to the extent necessary or advisable to meet our liquidity needs.
(2) Amount reflects the non-refundable interest paid on the seller-financed note issued to us by the buyer in connection with our disposition of a portfolio of four properties in southern California previously leased to affiliates of Vertical, which is recognized as a deposit liability and is included in other liabilities in our consolidated balance sheet as of December 31, 2024 and 2023, as the transaction did not qualify for recognition as a completed sale.
(2) Positive amounts represent non-refundable cash payments received pursuant to two seller-financed notes issued by us in connection with our disposition of certain properties. As the transactions did not qualify for recognition as completed sales under GAAP, the payments were initially recorded as a deposit liability and included in other liabilities on our consolidated balance sheet.
Our ability to continue to pay dividends is dependent upon our ability to continue to generate cash flows, service any debt obligations we have, including our Notes due 2026, and make accretive new investments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 ​ 2023 2022 Ordinary income distributions ​ $ 7.440000 $ 7.700000 ​ $ 6.929636 Long-term capital gain distributions (1) ​ — ​ — ​ 0.100364 Total ​ $ 7.440000 ​ $ 7.700000 ​ $ 7.030000 ​ (1) Unrecaptured Section 1250 Gain of $0.058864 represents additional characterization of and is part of long-term capital gain distributions for the year ended December 31, 2022. ​ The common stock distribution with a record date of December 31, 2024 was a split-year distribution, with $0.83 allocable to 2024 for federal income tax purposes and $1.07 allocable to 2025 for federal income tax purposes.
Year Ended December 31, 2025 2024 2023 Ordinary income distributions $ 6.143200 $ 7.440000 $ 7.700000 Return of capital 0.626800 — — Total $ 6.770000 $ 7.440000 $ 7.700000 75 Table of Contents The common stock distribution with a record date of December 31, 2024 was a split-year distribution, with $0.83 allocable to 2024 for federal income tax purposes and $1.07 allocable to 2025 for federal income tax purposes.
The decrease in other revenues for the year ended December 31, 2024 was primarily due to non-collection of $0.6 million in rent from one property, partially offset by the application of $0.2 million of security deposits. Expenses Property Expenses .
The decrease in cash flows provided by operating activities for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to lower net income and the application of $6.6 million of security deposits for contractual rent due to tenant defaults.
Such purchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. ​ In February 2024, we issued 28,408 shares of our common stock and paid $4.3 million in cash upon exchange by holders of $4.3 million principal amount of Exchangeable Senior Notes and paid off the remaining $0.1 million principal amount, in accordance with terms of the indenture for the Exchangeable Senior Notes. ​ In May 2024, we terminated the previously existing “at-the-market” offering program (the “Prior ATM Program”) and entered into new equity distribution agreements with four sales agents, pursuant to which we may offer and sell from time to time through an “at-the-market” offering program (the “ATM Program”), including on a forward basis, shares of our common stock and 9.00% Series A Cumulative Redeemable Preferred Stock, $0.001 par value per share (the “Series A Preferred Stock”) , up to an aggregate offering price of $500.0 million .
ATM Program We have an “at the market” equity offering program (“ATM Program”), pursuant to which we may offer and sell from time to time, including on a forward basis, shares of our common stock and 9.00% Series A Cumulative Redeemable Preferred Stock, $0.00 1 par value per share (the “Series A Preferred Stock”), up to an aggregate offering price of $500.0 million.
Property expenses related to leased properties are generally reimbursable to us by the tenants under the terms of the leases. General and Administrative Expense . General and administrative expense for the year ended December 31, 2024 decreased by $5.4 million, or 13%, to $37.4 million, compared to $42.8 million for the year ended December 31, 2023.
General and administrative expense for the year ended December 31, 2025 decreased by $3.7 million, or 10%, to $33.7 million, compared to $37.4 million for the year ended December 31, 2024.
These challenges include federal, state and local taxation burdens; ineffective enforcement policies with respect to the illicit cannabis market; declines in unit pricing for regulated cannabis products; limited access to capital; and inflation and supply chain constraints.
These include federal, state and local taxation burdens; competitive pressure from illicit, unlicensed cannabis operations; declines in unit pricing for regulated cannabis products; constrained access to capital; inflationary pressures; elevated interest rates; significant debt maturities; labor market constraints; supply chain disruptions; evolving trade policies; and broader U.S. consumer financial conditions.
The increase was primarily due to additional investment in existing properties, which resulted in higher property tax that we paid for our properties, as well as higher property expenses related to properties that we have regained possession of but not yet leased.
The increase was primarily driven by additional investment in existing properties, resulting in a $2.1 million increase in property tax expense, as well as a $0.8 million increase in expenses associated with properties that we took back possession of from defaulted tenants but not yet re-leased.
During the year ended December 31, 2024, we sold 123,224 shares of our common stock pursuant to the Prior ATM Program for net proceeds of $11.8 million.
During the year ended December 31, 2025, we sold 1,016,852 shares of our Series A Preferred Stock for net proceeds of $24.1 million. As of December 31, 2025, shares of the Company’s common stock and Series A Preferred Stock having an aggregate offering price of up to $464.9 million remain available for offer and sale pursuant to the ATM Program.
The Loan Agreement is subject to certain liquidity and operating covenants and includes customary representations and warranties, affirmative and negative covenants and events of default. There were no amounts outstanding under the Loan Agreement as of December 31, 2024.
The Loan Agreement also includes customary representations and warranties, affirmative and negative covenants and events of default. Management believes it was in compliance with these covenants as of 74 Table of Contents December 31, 2025. As of December 31, 2025, there were $27.5 million of borrowings outstanding under the Revolving Credit Facility.
According to Viridian Capital Advisors (“Viridian”), worldwide cannabis capital raises in 2024 increased slightly over 2023, with less than $2.3 billion in total capital raises, versus over $1.9 billion in 2023, $4.3 billion in 2022 and over $12.0 billion in 2021.
According to Viridian Capital Advisors (“Viridian”), worldwide cannabis capital raises in 2025 decreased modestly to $2.1 billion, compared to $2.3 billion in 2024, but remained well below levels observed in prior years, including over $4.3 billion in 2022.
Cash flows used in financing activities for the year ended December 31, 2023 were $195.6 million, primarily related to dividend payments of $204.1 million to common and preferred stockholders and $1.1 million related to the net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees 69 Table of Contents and payment of deferred financing costs, partially offset by $9.6 million in net proceeds from the issuance of our common stock.
Financing Activities Cash flows used in financing activities for the year ended December 31, 2025 were $122.5 million, primarily related to dividend payments of $219.5 million to common and preferred stockholders, $20.1 million related to repurchase of common stock and partial principal payments on the Notes due 2026 of $8.7 million, partially offset by net total draws on our two revolving credit facilities of $102.5 million and $24.1 million in net proceeds from the issuance of our Series A Preferred Stock pursuant to our ATM program.
Rental revenues for the year ended December 31, 2024 were $306.9 million, compared to $307.4 million for the year ended December 31, 2023, reflecting a decrease of $0.4 million or less than 1%.
Rental revenues for the year ended December 31, 2025 were $265.5 million, compared to $306.9 million for the year ended December 31, 2024, reflecting a decrease of $41.5 million, or 14%, year over year. The decrease was primarily driven by tenant defaults, resulting in a decrease of $46.9 million related to properties leased to PharmaCann, Gold Flora, TILT, and 4Front.
The increase in interest income was primarily due to an additional $3.3 million of interest received on our construction loan, which was partially offset by a $0.7 million decrease to interest earned on our interest-bearing cash and cash equivalents and short-term investments. 68 Table of Contents Interest Expense . Interest expense primarily consists of interest on our Notes due 2026.
The decrease was due to lower interest-bearing investments and lower rates earned on those investments. Interest Expense. Interest expense primarily consists of interest on our Notes due 2026 and interest on our Credit Facilities.
Our Revolving Credit Facility bears interest at a variable rate based on the greater of the prime rate and an applicable margin and a stipulated interest rate; therefore, if interest rates increase, our required payments on any amounts outstanding on our Revolving Credit Facility may also increase.
Borrowings under these facilities bear interest at variable rates based on the greater of prime rate or SOFR, as applicable, plus an applicable margin and stipulated rate. As a result, increases in market interest rates may increase our borrowing costs and adversely affect our results of operations and cash flows.
Comparison of the Years Ended December 31, 2024 and 2023 (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2024 2023 Change Revenues: ​ ​ ​ ​ ​ ​ Rental (including tenant reimbursements) ​ $ 306,936 ​ $ 307,349 ​ $ (413) Other ​ 1,581 ​ 2,157 ​ (576) Total revenues ​ 308,517 ​ 309,506 ​ (989) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ ​ Property expenses ​ 28,472 ​ 24,893 ​ 3,579 General and administrative expense ​ 37,444 ​ 42,832 ​ (5,388) Depreciation and amortization expense ​ 70,807 ​ 67,194 ​ 3,613 Total expenses ​ 136,723 ​ 134,919 ​ 1,804 Gain (loss) on sale of real estate ​ ​ (3,449) ​ ​ — ​ ​ (3,449) Income from operations ​ 168,345 ​ 174,587 ​ (6,242) Interest income ​ 10,988 ​ 8,446 ​ 2,542 Interest expense ​ ​ (17,672) ​ ​ (17,467) ​ ​ (205) Gain (loss) on exchange of Exchangeable Senior Notes ​ — ​ 22 ​ (22) Net income ​ 161,661 ​ 165,588 ​ (3,927) Preferred stock dividends ​ (1,804) ​ (1,352) ​ (452) Net income attributable to common stockholders ​ $ 159,857 ​ $ 164,236 ​ $ (4,379) ​ ​ Revenues Rental Revenues.
Comparison of the Years Ended December 31, 2024 and 2023 See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 21, 2025, for a comparison of the years ended December 31, 2024 and 2023. 69 Table of Contents Comparison of the Years Ended December 31, 2025 and 2024 (in thousands) Years Ended December 31, 2025 2024 Change Cannabis Portfolio Segment: Rental revenues (including tenant reimbursements) $ 265,486 $ 306,936 $ (41,450) Other revenues 469 1,581 (1,112) Property expenses (30,177) (28,472) (1,705) Depreciation and amortization expense (74,068) (70,807) (3,261) Impairment loss on real estate (3,527) — (3,527) Gain (loss) on sale of real estate (326) (3,449) 3,123 Interest and other income 6,413 4,388 2,025 Cannabis Portfolio Segment net income 164,270 210,177 (45,907) Life Science Portfolio Segment: Interest and other income 5,047 — 5,047 Life Science Portfolio Segment net income 5,047 — 5,047 Unallocated: General and administrative expense (33,735) (37,444) 3,709 Interest and other income 2,860 6,600 (3,740) Interest expense (20,195) (17,672) (2,523) Net income 118,247 161,661 (43,414) Preferred stock dividends (3,812) (1,804) (2,008) Net income attributable to common stockholders $ 114,435 $ 159,857 $ (45,422) Cannabis Portfolio Segment Rental Revenues.
See Note 7 “Debt” to our consolidated financial statements included in this report for more information. 71 Table of Contents In May 2024, we sold a property in Los Angeles, California for $9.1 million (excluding closing costs), received a disposition-contingent lease termination fee from the tenant concurrently with the closing of $3.9 million and received tenant reimbursement of our closing and other costs related to the sale of the property.
In addition, there was a decrease of $3.1 million related to properties that have been taken back or sold, a $3.9 million decrease from a one-time disposition-contingent lease termination fee that was collected during the year ended December 31, 2024 in connection with the sale of property in Los Angeles, California, and a $3.1 million decrease in tenant reimbursement revenue primarily due to tenant defaults.
The lower compensation was primarily due to the expiration of the performance share units (“PSUs”) granted in 2021 on December 31, 2023 (which were forfeited in their entirety as they failed to meet the threshold for any payout as of that date) resulting in a decrease of $4.0 million in PSU related stock-based compensation, which was partially offset by an increase to non-PSU related stock-based compensation for employees and directors.
The decrease was primarily attributable to lower non-cash stock-based compensation expense, which decreased by $7.2 million from $17.3 million for the year ended December 31, 2024 to $10.1 million for the year ended December 31, 2025, driven by the expiration of the performance share units (“PSUs”) granted in 2022 on December 31, 2024.
Removed
Conditions in Our Markets Positive or negative changes in regulatory, economic or other conditions, drought, and natural disasters in the markets where we acquire properties may affect our overall financial performance. Our tenants primarily operate in the regulated cannabis industry.
Added
We have acquired and expect to continue to acquire our cannabis properties through sale-leaseback transactions and third-party purchases.
Removed
Market dynamics and the regulatory regime in the states where they operate create challenges that impact our tenants’ businesses and may decrease future demand for regulated cannabis cultivation and production facilities.
Added
Outside of the cannabis sector, our leases may include different lease structures that do not require tenants to assume all property-related expenses. In addition to our cannabis-related real estate portfolio, we also have financial investments in the life science industry and intend to actively pursue acquisitions of properties within that sector as a key component of our growth strategy.
Removed
The resulting adverse impact on the Company’s and our tenants’ financial condition, results of operations, and cash flows depends on the extent and duration of these challenges in the regulated cannabis markets where we own properties, which are further described below.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAccordingly, we believe that a significant change in interest rates would not have a material effect on the consolidated financial statements. ​ 79 Table of Contents
Biggest changeAccordingly, we believe that a significant change in interest rates would not have a material effect on the consolidated financial statements. 83 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this Item 8 is incorporated by reference to our Financial Statements beginning on page F-1 of this report. ITEM 9.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our Notes due 2026 bear interest at a fixed rate of 5.50% per annum until maturity and is the only debt we have outstanding.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our Notes due 2026 bear interest at a fixed rate of 5.50% per annum until maturity.
Added
Our IIP Life Science Credit Facility bears interest at a variable rate based on the greater of SOFR and an applicable margin and a stipulated interest rate; therefore, if interest rates increase our required payments on any amounts outstanding under our IIP Life Science Credit Facility may also increase.
Added
At December 31, 2025, a 1% change in interest rates on our variable-rate debts would change our interest expense by $1.0 million. Our investment in IQHQ Preferred Stock carries a fixed annual dividend rate of 15.0%, consisting of a 10.0% cash dividend and an initial 5.0% PIK dividend.
Added
As the dividend is fixed, the investment is not directly exposed to changes in prevailing market interest rates. However, to the extent the Company funds purchases of IQHQ Preferred Stock with variable-rate debt or other interest-sensitive instruments, rising interest rates may increase its cost of capital, potentially resulting in a negative interest rate spread on this investment.
Added
Our investment in IQHQ Credit Facility pays a fixed interest rate of 13.5% per year, made up of 12.0% in cash and 1.5% PIK, with interest paid every quarter. As the rate is fixed, the interest income is not directly affected by changes in market interest rates.
Added
However, since the Company partially funded the IQHQ Credit Facility using variable-rate borrowings, rising interest rates may increase the Company’s cost of capital and reduce the overall return on the investment.
Added
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.

Other IIPR 10-K year-over-year comparisons