Innovation Industrial Properties IIPR is an industrial REIT focused on the acquisition of medicinal cannabis facilities. Currently 35 states in the US have legalized Marijuana for medical use with many speculating that number to increase as Marijuana becomes more socially accepted and legally accepted. IIPR owns 73 properties in 19 states in which they sign their tenants to long term leases (state chart is posted below). Regulated marrijuana industry is estimated to triple in revenue by 2025 from 12.4 Billion to 34 Billion per ArcView group. Their tenant base is top heavy with their top 5 tenants comprising 47% of their rental revenue. IIPR does a triple lease back contract with the Marijuana operators in which IIPR buys the property from the operators while simultaneously signing them to long term lease. IIPR owns the building and builds equity in the estate while the operators pay their leases, taxes and maintenance costs for the building, which is a huge advantage for IIPR. IIPR would have to sell the property or look for another tenant if needed but I don't see that being an issue with the 100% occupancy rate.
Now for the best part of the company, IIPR has grown its dividends an insane 1000% over the past 5 years starting at $.15 per share, per quarter now churning out $1.50 per share, per quarter. I focus my investing on dividend growth to allow my stocks to appreciate in price as well as dividends. The low yield is attractive right now as the company is growing, you can see that they are fastly increasing their dividends.
Debt (318 mil) to cash (682 mil) ratio is a very solid 2.14 so I feel very comfortable about this company continuing to grow. Shares outstanding have continuously increased as they build up funds to expand their property portfolio but that doesn't worry me because FFO and EPS have continued to grow or stay at the same level. IIPR has increased their FFO (funds from operations) steadily every year since 2016. FFO is more important to look at over PE ratio because FFO more accurately measures REITs compared to PE for other standard companies. IIPR is trading at a premium currently at a 40.6 FFO but that is because the near future has been baked in.
I am still holding on to IIPR but would like to add to it if there is a sell off in the market. I am still very bullish on IIPR largely because I believe that this is going to be the most profitable aspect of the marijuana industry with most companies failing to become profitable after several years. With more and more people pushing for weed to be legalized in more states/federally the upside is enormous with IIPR in a great position to dominate the industry.
IIPR has strong fundamentals and I have included some graphs below for those of you that are like me and learn better with visuals.
IIPR Recently has seen a pullback of 23% since their recent highs in late December which gives them a fair valuation as I don't see the company pulling back further with the high upside that is in this companies reach.
Please give me honest and fair feedback and I plan on doing more of these in the future (O AAPL MSFT VICI COST) are all companies that I'm considering doing in the future.