Innovative Industrial Properties Reports Third Quarter 2025 Results

Executive Chairman Remarks

“We are pleased to have made our first investment outside of the cannabis industry during the third quarter with our $270 million financial investment into IQHQ, marking IIP’s return to growth and providing meaningful diversification and accretion for IIP's shareholders,” said Alan Gold, Executive Chairman of IIP. “In addition, the successful closing of our new $100 million credit facility reinforces our belief that our investment in the life science sector enhances both our access to, and cost of, capital. With a strong, low-leveraged balance sheet, this credit facility strengthens our financial flexibility and positions us to capitalize on the long-term growth of the life science industry.”

Third Quarter 2025 and Fourth Quarter to Date Highlights

Financial Results and Dividend

• Total revenues of $64.7 million and net income attributable to common stockholders of $28.3 million, or $0.97 per share (all per share amounts in this press release are reported on a diluted basis unless otherwise noted).
• Adjusted funds from operations ("AFFO") and normalized funds from operations ("Normalized FFO") of $48.3 million and $45.2 million, respectively.
• Paid a quarterly dividend of $1.90 per common share on October 15, 2025 to stockholders of record as of September 30, 2025. Since its inception, IIP has paid over $1.0 billion in common stock dividends to its stockholders.

IQHQ Investment

• In August, the Company announced a strategic and diversifying $270 million commitment to invest in IQHQ, Inc. ("IQHQ"), a premier life science real estate platform with over $5 billion in total assets. The investment is comprised of two discrete financial investments that together are expected to earn a weighted average interest rate of greater than 14% per annum:
  • A $100 million commitment to a revolving credit facility ("RCF") with an initial term of three years, which can be extended for an additional 12 months upon payment of an extension fee.
  • A commitment to purchase up to $170 million of preferred stock ("Preferred Stock") of IQHQ. The Preferred Stock investment is expected to be funded in multiple tranches through the second quarter of 2027, subject to extensions at the option of IQHQ.
  • Warrants in IQHQ, subject to the satisfaction of certain funding milestones of the Preferred Stock.
• In September, the Company closed on its initial investment into IQHQ, which totaled $105 million and was comprised of a $100 million investment into the RCF and a $5 million investment into the Preferred Stock. The remaining $165 million commitment of Preferred Stock is expected to be funded in multiple tranches between the fourth quarter of 2025 and the second quarter of 2027.

Portfolio Update - Lease Defaults

• In March 2025, the Company launched a strategic initiative aimed at improving long-term financial performance by replacing certain underperforming tenants with more financially stable, long-term operators. As part of this effort, it declared several tenants, including 4Front Ventures, Gold Flora, and TILT Holdings, in default for nonpayment of rent and is pursuing its legal rights, which may include evictions. Additionally, the Company commenced litigation against PharmaCann for its lease defaults and continues to actively seek possession of the properties located in New York, Illinois, Pennsylvania, and Ohio. The Company took back one of the PharmaCann retail properties in Colorado in September, and PharmaCann continues to pay full rent under the remaining four retail leases in Colorado. As previously disclosed, the Company has re-leased one property located in Warren, Michigan to Berry Green and, in August, the lease for the cultivation property in Massachusetts with PharmaCann was terminated and the Company took back possession of the property. The Company is actively working to recover amounts due from these tenants and to re-lease vacated properties.
• The Company previously declared a default under a secured promissory note in the aggregate principal amount of $16.1 million (the "MIH Note"). The MIH Note was issued to the Company by the purchaser of four properties in California, and the MIH Note was secured by such four properties. In September 2025, due to the borrower's continued default and voluntary surrender, the Company took back possession and ownership of the four properties through a deed in lieu of foreclosure.

Balance Sheet Highlights (at September 30, 2025)

• 13% debt to total gross assets, with $2.7 billion in total gross assets.
• Total liquidity was $79.4 million, consisting of cash and cash equivalents and short-term investments (each as reported in IIP’s consolidated balance sheet as of September 30, 2025) and availability under IIP’s revolving credit facility.
• Debt service coverage ratio of 11.7x (calculated in accordance with IIP’s 5.50% Unsecured Senior Notes due 2026).

Financing Activity

• Issued 246,028 shares of Series A Preferred Stock under IIP’s “at-the-market” equity offering program for $5.9 million in net proceeds.
• In October, closed on a new three-year, $100 million secured revolving credit facility (the “Secured Revolving Credit Facility”) with a federally regulated commercial bank. Borrowings under the Secured Revolving Credit Facility bear interest at one-month SOFR + 200 basis points (6.2% based on rates as of September 30, 2025) and is secured by the Company’s IQHQ investment. The Secured Revolving Credit Facility also includes a $35 million “accordion feature” that permits the Company to expand the borrowing capacity to a total of $135 million, subject to the addition of other lenders.

Property Portfolio Statistics (as of September 30, 2025)

• Total property portfolio comprises 112 properties across 19 states, with 9.0 million rentable square feet "RSF" (including 483,000 RSF under development / redevelopment), consisting of:
  • Operating portfolio: 109 properties, representing 8.5 million RSF.
  • Under development / redevelopment portfolio consists of three properties expected to comprise 491,000 RSF at completion and is as follows:
    • 236,000 square feet located at 63795 19th Avenue in Palm Springs, California (pre-leased)
    • 192,000 square feet located at Inland Center Drive in San Bernardino, California
    • 12-acre development site located at Leah Avenue in San Marcos, Texas

Financial Results

For the three months ended September 30, 2025, IIP generated total revenues of $64.7 million, compared to $76.5 million for the same period in 2024, a decrease of 15%. The decrease was primarily driven by a $14.9 million decrease due to tenant defaults for properties leased to PharmaCann, Gold Flora, TILT and 4Front. In addition, there was a decrease of $0.5 million related to properties that have been taken back or sold, and a decrease of $0.9 million in tenant reimbursement revenue primarily due to tenant defaults. These decreases were partially offset by a $1.4 million increase from the two properties acquired in 2024 and one property acquired in 2025, a $1.6 million increase from new leases on four existing properties, and a $1.6 million increase from annual contractual rent escalations.

For the three months ended September 30, 2025, IIP applied $0.8 million of security deposits for the payment of rent on two properties leased to Verdant and a Sacramento-based tenant. For the three months ended September 30, 2024, IIP applied $1.4 million of security deposits for payment of rent on six properties leased to 4Front, TILT and Emerald Growth.

For the three months ended September 30, 2025, interest and other income increased by $1.7 million to $4.4 million, compared to $2.7 million for the three months ended September 30, 2024. The increase was primarily driven by the recognition of $2.7 million of consideration previously received on the MIH Note, which was initially recorded as a deposit liability and included in other liabilities on our consolidated balance sheet as the transaction did not qualify for recognition as a completed sale under GAAP. In September 2025, IIP recognized $2.7 million of considerations received to date as interest and other income on our consolidated statements of income in connection with the termination of the MIH note.

Dividend

On September 15, 2025, the Board of Directors declared a third quarter 2025 dividend of $1.90 per common share, representing an annualized dividend of $7.60 per common share. The dividend was paid on October 15, 2025 to stockholders of record as of September 30, 2025.

Supplemental Information

Supplemental financial information is available in the Investor Relations section of IIP’s website at www.innovativeindustrialproperties.com.

Teleconference and Webcast

Innovative Industrial Properties, Inc. will conduct a conference call and webcast at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) on Tuesday, November 4, 2025 to discuss IIP’s financial results and operations for the third quarter ended September 30, 2025. The call will be open to all interested investors through a live audio webcast at the Investor Relations section of IIP’s website at www.innovativeindustrialproperties.com, or live by calling 1-877-328-5514 (domestic) or 1-412-902-6764 (international) and asking to be joined to the Innovative Industrial Properties, Inc. conference call. The complete webcast will be archived for 90 days on IIP’s website. A telephone playback of the conference call will also be available from 12:00 p.m. Pacific Time on Tuesday, November 4, 2025 until 12:00 p.m. Pacific Time on Tuesday, November 11, 2025, by calling 1-877-344-7529 (domestic), 855-669-9658 (Canada) or 1-412-317-0088 (international) and using access code 9148523.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a real estate investment trust (REIT) focused on the acquisition, ownership and management of specialized industrial properties and life science real estate. Additional information is available at www.innovativeindustrialproperties.com.

This press release contains statements that IIP believes to be “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than historical facts are forward-looking statements. When used in this press release, words such as IIP “expects,” “intends,” “plans,” “estimates,” “anticipates,” “believes” or “should” or the negative thereof or similar terminology are generally intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the risk factors discussed in the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2024, as updated by the Company’s subsequent reports filed with the Securities and Exchange Commission. Accordingly, there is no assurance that the Company's expectations will be realized. IIP disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws.