Innovative Industrial Properties: Falling Knife Worth Catching - Market Overreaction Triggers Richer Yields

Summary

• IIPR has lost nearly half of its value, thanks to the drastic PharmaCann default on all of its leases announced on December 20, 2024.
• The deep selloff is unsurprising indeed, given that the largest tenant comprises 17% of the cannabis REIT's rental revenues, as many investors likely feared a similar downward spiral as MPW.
• Even so, we believe that the correction triggers an excellent buying opportunity, thanks to IIPR's healthy balance sheet, high AFFO payout ratio, and richer dividend yields at 11.4%.
• While there may be some uncertainty surrounding a potential dividend cut in the near-term, we believe that IIPR is a falling knife worth catching for investors with a higher risk tolerance.
• We shall further discuss why.

Adam Gault

Innovative Industrial Properties: PharmaCann's Default Triggers Richer Yields Ahead - Buy The Plunge

We previously covered Innovative Industrial Properties (NYSE:IIPR) in August 2024, discussing its tailwinds from the potential cannabis rescheduling and the bullish support

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.