Innovative Industrial Property (IIPR) Shares Increase Profits and Revenue

Innovative industrial properties (NYSE: IIPR), a real estate investment trust (REIT) focused on the medical cannabis industry, posted strong results for the second quarter of 2021 after the market closed on Wednesday, August 4.

Shares gained 1.9% in Wednesday’s after-hours trading session. They returned 108% over the one-year period up to Wednesday’s regular trading session, compared to the S&P 50035.7% return over the same period.

Key figures for Innovative Industrial Properties

Metric

Q2 2021

Q2 2020

Change

Income

$ 48.9 million $ 24.3 million 101%

Operating result

$ 32.9 million $ 14.2 million 132%

Net revenue

$ 29.0 million $ 13.0 million 124%

Earnings per share (EPS)

$ 1.17 $ 0.73 60%

Funds from Adjusted Operations (AFFO) *

$ 43 million $ 21.0 million 104%

AFFO per share

$ 1.64 $ 1.19 38%

Data source: Innovative industrial properties. * Adjusted funds from operations is a closely watched metric for REITs as it is the primary driver of dividends.

The increase in revenue “was primarily due to the acquisition and rental of new properties, in addition to contractual rent increases at certain properties,” the company said in its earnings release. Wall Street was expecting EPS of $ 1.11 on revenue of $ 45.9 million as shown in my earnings overview, so IIP (as the company is sometimes called) comfortably beat the two. estimates.

As last quarter, per share data (EPS and AFFO per share) includes “the dilutive impact of the supposed full exchange of the $ 143.75 million of IIP exchangeable senior notes for common stock”.

The company ended the period with $ 156.3 million in cash and cash equivalents and $ 649.4 million in short-term investments, for a total of approximately $ 805.7 million. Its indebtedness represents 21% of its total gross assets, which total approximately $ 2.1 billion, and it has no unsecured debt.

For context, first-quarter revenue climbed 103% year-on-year to $ 42.9 million, EPS jumped 46% to $ 1.05, and AFFOs per share rose 31% to 1 , $ 47.

Image source: Getty Images.

What happened with innovative industrial properties during the quarter (and from the end of the quarter until August 4)

  • It paid a quarterly dividend of $ 1.40 per share on July 15, 2021 to shareholders of record on June 30, 2021, which represents an increase of approximately 32% from the previous year. The shares are returning around 2.6% as of the close of the market on Wednesday.
  • During the quarter, the company completed four real estate acquisitions: two in Michigan and one each in Pennsylvania and Massachusetts. This compares to three acquisitions in the first quarter, one of which was property only.
  • After the quarter ended (in August), she acquired another property in Illinois.
  • During the quarter (June), as shown in my overview of results: “[T]The company “has entered into a construction loan with a developer for the construction of a regulated cannabis cultivation and processing facility in California,” it said in the press release. The loan is expected to reach $ 18.5 million for the approximately 102,000 square foot building. The company has the option of purchasing the property once it is completed. ”

Here is the current snapshot of Innovative Industrial Properties’ portfolio, taken from the results release:

As of August 4, 2021, IIP owned 73 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia, and Washington [18 states], representing a total of approximately 6.8 million rentable square feet (including approximately 2.4 million rentable square feet under development / redevelopment), which has been 100% leased with a weighted average remaining term of the leases about 16.7 years old.

Look ahead

As usual, Innovative Industrial Properties had a strong quarter.

Investors should get more color on second quarter results and perhaps information on how the third quarter is going during the cannabis company’s analyst conference call, scheduled for Thursday, August 5 at 1:00 p.m. EDT.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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