Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 10, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | INNOVATIVE INDUSTRIAL PROPERTIES INC | |
Entity Central Index Key | 1,677,576 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | IIPR | |
Entity Common Stock, Shares Outstanding | 6,782,079 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Real estate, at cost: | ||
Land | $ 11,514 | $ 11,514 |
Buildings and improvements | 51,315 | 51,315 |
Tenant improvements | 5,901 | 5,901 |
Total real estate, at cost | 68,730 | 68,730 |
Less accumulated depreciation | (1,418) | (942) |
Net real estate held for investment | 67,312 | 67,788 |
Cash and cash equivalents | 42,076 | 11,758 |
Short-term investments | 48,856 | 0 |
Prepaid insurance and other assets, net | 654 | 482 |
Total assets | 158,898 | 80,028 |
Liabilities and stockholders' equity | ||
Accounts payable and accrued expenses | 551 | 1,082 |
Dividends payable | 2,034 | 1,198 |
Offering cost liability | 0 | 41 |
Rents received in advance and tenant security deposits | 4,599 | 4,158 |
Total liabilities | 7,184 | 6,479 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity: | ||
Preferred stock, par value $0.001 per share, 50,000,000 shares authorized: 9.00% Series A cumulative redeemable preferred stock, $15,000 liquidation preference ($25.00 per share), 600,000 shares issued and outstanding at March 31, 2018 and December 31, 2017 | 14,009 | 14,009 |
Common stock, par value $0.001 per share, 50,000,000 shares authorized: 6,782,079 and 3,501,147 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively | 7 | 4 |
Additional paid-in capital | 141,217 | 64,000 |
Accumulated deficit | (3,519) | (4,464) |
Total stockholders' equity | 151,714 | 73,549 |
Total liabilities and stockholders' equity | $ 158,898 | $ 80,028 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares, Issued | 6,782,079 | 3,501,147 |
Common Stock, Shares, Outstanding | 6,782,079 | 3,501,147 |
Series A Preferred Stock [Member] | ||
Preferred Stock, Shares Issued | 600,000 | 600,000 |
Preferred Stock, Shares Outstanding | 600,000 | 600,000 |
Preferred Stock, Liquidation Preference, Value | $ 15,000 | $ 15,000 |
Preferred Stock, Dividend Rate, Percentage | 9.00% | 9.00% |
Preferred Stock, Liquidation Preference Per Share | $ 25 | $ 25 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||
Rental | $ 2,677 | $ 1,290 |
Tenant reimbursements | 87 | 0 |
Total revenues | 2,764 | 1,290 |
Expenses: | ||
Property expenses | 87 | 0 |
General and administrative expense | 1,477 | 1,755 |
Depreciation expense | 476 | 161 |
Total expenses | 2,040 | 1,916 |
Income / (loss) from operations | 724 | (626) |
Interest income | 221 | 35 |
Net income / (loss) | 945 | (591) |
Preferred stock dividend | (338) | 0 |
Net income / (loss) attributable to common stockholders | $ 607 | $ (591) |
Net income / (loss) attributable to common stockholders per share (Note 6): | ||
Basic | $ 0.10 | $ (0.18) |
Diluted | $ 0.09 | $ (0.18) |
Weighted average shares outstanding: | ||
Basic | 5,883,610 | 3,350,000 |
Diluted | 6,025,067 | 3,350,000 |
Dividends declared per common share | $ 0.25 | $ 0 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Stockholders' Equity - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands | Total | Series A Preferred Stock [Member] | Common Stock | Additional Paid-In-Capital | Accumulated Deficit |
Balance at Dec. 31, 2017 | $ 73,549 | $ 14,009 | $ 4 | $ 64,000 | $ (4,464) |
Balance (in shares) at Dec. 31, 2017 | 3,501,147 | ||||
Net proceeds from sale of common stock | 79,314 | 0 | $ 3 | 79,311 | 0 |
Net proceeds from sale of common stock (in shares) | 3,220,000 | ||||
Net issuance of unvested restricted stock | (390) | 0 | $ 0 | (390) | 0 |
Net issuance of unvested restricted stock (in shares) | 60,932 | ||||
Preferred stock dividend | (338) | 0 | $ 0 | (338) | 0 |
Common stock dividend | (1,696) | 0 | 0 | (1,696) | 0 |
Net income | 945 | 0 | 0 | 0 | 945 |
Stock-based compensation | 330 | 0 | 0 | 330 | 0 |
Balance at Mar. 31, 2018 | $ 151,714 | $ 14,009 | $ 7 | $ 141,217 | $ (3,519) |
Balance (in shares) at Mar. 31, 2018 | 6,782,079 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities | ||
Net income / (loss) | $ 945 | $ (591) |
Adjustments to reconcile net income / (loss) to net cash provided by operating activities | ||
Depreciation | 476 | 161 |
Stock-based compensation | 330 | 770 |
Amortization of discounts on short-term investments | (93) | 0 |
Changes in assets and liabilities | ||
Prepaid insurance and other assets, net | (213) | 7 |
Accounts payable and accrued expenses | (531) | 275 |
Rents received in advance and tenant security deposits | 441 | 2 |
Net cash provided by operating activities | 1,355 | 624 |
Cash flows from investing activities | ||
Purchases of short-term investments | (48,763) | 0 |
Net cash used in investing activities | (48,763) | 0 |
Cash flows from financing activities | ||
Issuance of common stock, net of offering costs | 79,314 | (276) |
Dividends paid to common stockholders | (875) | 0 |
Dividends paid to preferred stockholders | (323) | 0 |
Taxes paid related to net share settlement of equity awards | (390) | 0 |
Net cash provided by / (used in) financing activities | 77,726 | (276) |
Net increase in cash and cash equivalents | 30,318 | 348 |
Cash and cash equivalents, beginning of period | 11,758 | 33,003 |
Cash and cash equivalents, end of period | 42,076 | 33,351 |
Supplemental disclosure of non-cash financing activities: | ||
Accrual for common and preferred stock dividends declared | $ 2,034 | $ 0 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | 1. Organization As used herein, the terms "we", "us", "our" or the "Company" refer to Innovative Industrial Properties, Inc., a Maryland corporation, and any of our subsidiaries, including IIP Operating Partnership, LP, a Delaware limited partnership (our "Operating Partnership"). We acquire, own and manage specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. We have acquired our properties through sale-leaseback transactions and third-party purchases. We lease our properties on a triple-net lease basis, where 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, taxes and insurance. We were incorporated in Maryland on June 15, 2016, and have elected to be taxed as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), commencing with our taxable year ended December 31, 2017. We conduct our business through a traditional umbrella partnership real estate investment trust, or UPREIT structure, in which our properties are owned by our Operating Partnership, directly or through subsidiaries. We are the sole general partner of our Operating Partnership and own, directly or through a subsidiary, 100% of the limited partnership interests in our Operating Partnership. As of March 31, 2018, we had six full-time employees. As of March 31, 2018, we owned five properties that were 100% leased to state-licensed medical-use cannabis operators and comprising an aggregate of approximately 617,000 rentable square feet in New York, Maryland, Arizona and Minnesota. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | 2. Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. This interim financial information should be read in conjunction with the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2018. We believe that we have operated our business so as to qualify to be taxed as a REIT for U.S. federal income tax purposes. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income, we generally will not be required to pay federal corporate income taxes on such income. The income taxes recorded on our consolidated statement of operations represent amounts paid for city and state income and franchise taxes and are included in general and administrative expenses in the accompanying condensed consolidated statements of operations. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from these estimates and assumptions. Our investment in real estate is recorded at historical cost, less accumulated depreciation. Upon acquisition of a property, the tangible and intangible assets acquired and liabilities assumed are initially measured based upon their relative fair values. We estimate the fair value of land by reviewing comparable sales within the same submarket and/or region and the fair value of buildings on an as-if vacant basis. Acquisition costs are capitalized as incurred. All of our acquisitions to date were recorded as asset acquisitions. 35 We depreciate office equipment and furniture and fixtures over estimated useful lives ranging from three to six years. Another significant judgment must be made as to if, and when, impairment losses should be taken on a property when events or a change in circumstances indicate that the carrying amount of the asset may not be recoverable. A provision is made for impairment if estimated future operating cash flows (undiscounted and without interest charges) plus estimated disposition proceeds (undiscounted) are less than the current book value of the property. Key inputs that we utilize in this analysis include projected rental rates, estimated holding periods, capital expenditures and property sales capitalization rates. As of March 31, 2018, no impairment losses were recognized. Our tenant leases are triple-net leases, an arrangement under which the tenant maintains the property while paying us rent and property management fees. We account for our leases as operating leases. We recognize revenue for each of our properties on a cash basis due to the uncertainty of collectability of lease payments from each tenant due to its limited operating history and the uncertain regulatory environment in the United States relating to the medical-use cannabis industry. Contractually obligated reimbursements from tenants for recoverable real estate taxes and operating expenses are included in tenant reimbursements in the period when such costs are incurred. Contractually obligated real estate taxes that are paid directly by the tenant to the tax authorities are not reflected in our consolidated financial statements. Future contractual minimum rent (including base rent, supplemental base rent (for one of our properties in New York) and property management fees) under the operating leases as of March 31, 2018 for future periods is summarized as follows (in thousands): Year Contractual Minimum Rent 2018 (nine months ending December 31) $ 8,867 2019 12,170 2020 12,549 2021 12,898 2022 12,083 Thereafter 140,589 Total $ 199,156 . We consider all highly-liquid investments with original maturities of three months or less to be cash equivalents. As of March 31, 2018 and December 31, 2017, approximately $ 39.1 8.9 . Short-term investments generally consist of highly liquid, fixed income investments with an original maturity at the time of purchase of greater than three months. Such investments consist of certificate of deposits and obligations of the U.S. government. Investments are classified as held-to-maturity and stated at amortized cost. Stock-based compensation for equity awards is based on the grant date fair value of the equity investment and is recognized over the requisite service period. If awards are forfeited prior to vesting, we reverse any previously recognized expense related to such awards in the period during which the forfeiture occurs and reclassify any nonforfeitable dividends previously paid on these awards from retained earnings to compensation expense. In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation Stock Compensation; Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). The FASB issued ASU 2016-09 to simplify several aspects of the accounting for share-based payment transactions, including classification of awards as either equity or liabilities, estimation of forfeitures, and classification on the statement of cash flows. The Company’s adoption of ASU 2016-09 beginning on January 1, 2018 did not have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 outlines a comprehensive model for companies to use in accounting for revenue arising from contracts with customers, and will apply to transactions such as the sale of real estate. ASU 2014-09 is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company. The majority of our revenues related to rental income from leasing arrangements, which is excluded from ASU 2014-09. The Company is currently evaluating the impact that ASU 2014-09 will have on any non-lease components and revenues generated from activities other than leasing. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02") which introduces a lessee model that brings most leases on the balance sheet. Under this new standard the large majority of operating leases are expected to remain classified as operating leases, and lessors should continue to recognize lease income for those leases on a generally straight-line basis over the lease term. ASU 2016-02 is effective for years beginning after December 15, 2019 as a result of the Company’s election as an emerging growth company, using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are continuing to evaluate this guidance and the impact to us, as both lessor and lessee, on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments Credit Losses, which changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, companies will be required to use a new forward-looking "expected loss" model that generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, companies will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. Companies will have to disclose significantly more information, including information they use to track credit quality by year of origination for most financing receivables. Companies will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This standard is effective for years beginning after December 15, 2020 as a result of the Company’s election as an emerging growth company with early adoption permitted. The Company is in the initial stage of evaluating the impact of this new standard. In February 2017, the FASB has issued ASU 2017-05, Other Income Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("Subtopic 610-20"). A contract may involve the transfer of both nonfinancial assets and financial assets (e.g., cash and receivables). The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. The amendments are effective at the same time Topic 606, Revenue from Contracts with Customers, is effective. This new standard is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company. We do not expect this amendment to have an effect on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments, which clarifies or provides guidance relating to eight specific cash flow classification issues. The standard should be applied retrospectively for each period presented, as appropriate. This new standard is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company. The impact of this new guidance will depend on future transactions, though the impact will only be related to the classification of those items on the statement of cash flows and will not impact the Company’s cash flows or its consolidated results of operations. . Our properties are located in the states of New York, Maryland, Arizona and Minnesota. The ability of any of our tenants to honor the terms of its lease is dependent upon the economic, regulatory, competition, natural and social factors affecting the community in which that tenant operates. During the three months ended March 31, 2018, the tenant at one of our properties in New York and the tenant at our property in Maryland accounted for 50 24 43 25 22 100 100 We have deposited cash with a financial institution that is insured by the Federal Deposit Insurance Corporation ("FDIC") up to $ 250,000 . Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Common Stock | 3. Common Stock As of March 31, 2018, the Company was authorized to issue up to 50,000,000 0.001 6,782,079 On January 22, 2018, the Company issued 3,220,000 420,000 79.3 |
Preferred Stock
Preferred Stock | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Preferred Stock | 4. Preferred Stock The Company is authorized to issue up to 50,000,000 0.001 600,000 9.00 0.001 25.00 Generally, the Company is not permitted to redeem the Series A Preferred Stock prior to October 19, 2022, except in limited circumstances relating to the Company’s ability to qualify as a REIT and in certain other circumstances related to a change of control/delisting (as defined in the articles supplementary for the Series A Preferred Stock). On or after October 19, 2022, the Company may, at its option, redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $ 25.00 |
Dividends
Dividends | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Dividends | 5. Dividends The following table describes the dividends declared by the Company during the three months ended March 31, 2018: Declaration Security Class Amount Period Covered Dividend Dividend Amount (In thousands) March 15, 2018 Common Stock $ 0.25 January 1, 2018 to March 31, 2018 April 16, 2018 $ 1,696 March 15, 2018 Series A preferred stock $ 0.5625 January 15, 2018 to April 14, 2018 April 16, 2018 $ 338 |
Net Income _ (Loss) Per Share
Net Income / (Loss) Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net Income / (Loss) Per Share | 6. Net Income / (Loss) Per Share Grants of restricted stock of the Company in share-based payment transactions are considered participating securities prior to vesting and, therefore, are considered in computing basic earnings per share under the two-class method. The two-class method is an earnings allocation method for calculating earnings per share when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities. Earnings per basic share under the two-class method is calculated based on dividends declared on common shares and other participating securities (“distributed earnings”) and the rights of participating securities in any undistributed earnings, which represents net income remaining after deduction of dividends accruing during the period. The undistributed earnings are allocated to all outstanding common shares and participating securities based on the relative percentage of each security to the total number of outstanding participating securities. Earnings per basic share represents the summation of the distributed and undistributed earnings per share class divided by the total number of shares. Through March 31, 2018, all of the Company’s participating securities received dividends at an equal dividend rate per share. As a result, distributions to participating securities for the three months ended March 31, 2018 have been included in net income attributable to common stockholders to calculate net income per basic and diluted share. For the three months ended March 31, 2017, the Company incurred a net loss. As such, 175,564 For the Three Months Ended 2018 2017 Net income / (loss) $ 945 $ (591) Preferred stock dividend (338) Distribution to participating securities (37) Net income / (loss) attributable to common stockholders used to compute net income / (loss) per share $ 570 $ (591) Weighted average common share outstanding: Basic 5,883,610 3,350,000 Diluted 6,025,067 3,350,000 Net income / (loss) per share attributable to common stockholders: Basic $ 0.10 $ (0.18) Diluted $ 0.09 $ (0.18) |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 7. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Accounting guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2Includes other inputs that are directly or indirectly observable in the marketplace. Level 3Unobservable inputs that are supported by little or no market activities, therefore requiring an entity to develop its own assumptions. At March 31, 2018, cash equivalent instruments consisted of $ 7.1 The carrying amounts of financial instruments such as cash equivalents invested in certificates of deposit, receivables, accounts payable, accrued expenses and other liabilities approximate their relative fair values due to the short-term maturities and market rates of interest of these instruments. |
Common Stock Incentive Plan
Common Stock Incentive Plan | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Common Stock Incentive Plan | 8. Common Stock Incentive Plan Our board of directors adopted our 2016 Omnibus Incentive Plan (the "2016 Plan") to enable us to motivate, attract and retain the services of directors, employees and consultants considered essential to our long-term success. The 2016 Plan offers our directors, employees and consultants an opportunity to own our stock or rights that will reflect our growth, development and financial success. Under the terms of the 2016 Plan, the aggregate number of shares of our common stock subject to options, restricted stock, stock appreciation rights, restricted stock units and other awards, will be no more than 1,000,000 A summary of the activity under the 2016 Plan and related information is included in the table below. Unvested Weighted- Balance at December 31, 2017 106,839 $ 18.01 Granted 73,011 $ 29.45 Vested (20,635) $ 18.67 Forfeited (1) (12,079) $ 18.67 Balance at March 31, 2018 147,136 $ 23.54 (1) Shares that were forfeited to cover the employees’ tax withholding obligation upon vesting. The remaining unrecognized compensation cost of $ 3.2 2.4 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies Tenant Improvement Allowances. 5.0 1.3 Office and Equipment Leases . As of March 31, 2018, we had approximately $ 225,000 60,000 90,000 75,000 Environmental Matters . We follow the policy of monitoring our properties, both targeted acquisition and existing properties, for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist, we are not currently aware of any environmental liabilities that would have a material adverse effect on our financial condition, results of operations and cash flow, or that we believe would require disclosure or the recording of a loss contingency. Litigation . We may, from time to time, be a party to legal proceedings, which arise in the ordinary course of our business. We are not aware of any pending or threatened litigation that, if resolved against us, would have a material adverse effect on our consolidated financial position, results of operations or cash flows. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. Subsequent Events Subsequent to March 31, 2018, on April 6, 2018, we acquired a property in Pennsylvania for approximately $ 5.8 2.8 1.3 15 3.5 1.5 15 |
Summary of Significant Accoun17
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. This interim financial information should be read in conjunction with the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2018. |
Federal Income Taxes | Federal Income Taxes. We believe that we have operated our business so as to qualify to be taxed as a REIT for U.S. federal income tax purposes. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income, we generally will not be required to pay federal corporate income taxes on such income. The income taxes recorded on our consolidated statement of operations represent amounts paid for city and state income and franchise taxes and are included in general and administrative expenses in the accompanying condensed consolidated statements of operations. |
Use of Estimates | Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from these estimates and assumptions. |
Acquisition of Real Estate Properties | Acquisition of Real Estate Properties. Our investment in real estate is recorded at historical cost, less accumulated depreciation. Upon acquisition of a property, the tangible and intangible assets acquired and liabilities assumed are initially measured based upon their relative fair values. We estimate the fair value of land by reviewing comparable sales within the same submarket and/or region and the fair value of buildings on an as-if vacant basis. Acquisition costs are capitalized as incurred. All of our acquisitions to date were recorded as asset acquisitions. |
Depreciation | Depreciation. 35 We depreciate office equipment and furniture and fixtures over estimated useful lives ranging from three to six years. |
Provision for Impairment | Provision for Impairment. Another significant judgment must be made as to if, and when, impairment losses should be taken on a property when events or a change in circumstances indicate that the carrying amount of the asset may not be recoverable. A provision is made for impairment if estimated future operating cash flows (undiscounted and without interest charges) plus estimated disposition proceeds (undiscounted) are less than the current book value of the property. Key inputs that we utilize in this analysis include projected rental rates, estimated holding periods, capital expenditures and property sales capitalization rates. As of March 31, 2018, no impairment losses were recognized. |
Revenue Recognition and Accounts Receivable | Revenue Recognition. Our tenant leases are triple-net leases, an arrangement under which the tenant maintains the property while paying us rent and property management fees. We account for our leases as operating leases. We recognize revenue for each of our properties on a cash basis due to the uncertainty of collectability of lease payments from each tenant due to its limited operating history and the uncertain regulatory environment in the United States relating to the medical-use cannabis industry. Contractually obligated reimbursements from tenants for recoverable real estate taxes and operating expenses are included in tenant reimbursements in the period when such costs are incurred. Contractually obligated real estate taxes that are paid directly by the tenant to the tax authorities are not reflected in our consolidated financial statements. Future contractual minimum rent (including base rent, supplemental base rent (for one of our properties in New York) and property management fees) under the operating leases as of March 31, 2018 for future periods is summarized as follows (in thousands): Year Contractual Minimum Rent 2018 (nine months ending December 31) $ 8,867 2019 12,170 2020 12,549 2021 12,898 2022 12,083 Thereafter 140,589 Total $ 199,156 |
Cash and Cash Equivalents | Cash and Cash Equivalents . We consider all highly-liquid investments with original maturities of three months or less to be cash equivalents. As of March 31, 2018 and December 31, 2017, approximately $ 39.1 8.9 |
Short-Term Investments | Short-Term Investments . Short-term investments generally consist of highly liquid, fixed income investments with an original maturity at the time of purchase of greater than three months. Such investments consist of certificate of deposits and obligations of the U.S. government. Investments are classified as held-to-maturity and stated at amortized cost. |
Stock-Based Compensation | Stock-Based Compensation. Stock-based compensation for equity awards is based on the grant date fair value of the equity investment and is recognized over the requisite service period. If awards are forfeited prior to vesting, we reverse any previously recognized expense related to such awards in the period during which the forfeiture occurs and reclassify any nonforfeitable dividends previously paid on these awards from retained earnings to compensation expense. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements. In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation Stock Compensation; Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). The FASB issued ASU 2016-09 to simplify several aspects of the accounting for share-based payment transactions, including classification of awards as either equity or liabilities, estimation of forfeitures, and classification on the statement of cash flows. The Company’s adoption of ASU 2016-09 beginning on January 1, 2018 did not have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 outlines a comprehensive model for companies to use in accounting for revenue arising from contracts with customers, and will apply to transactions such as the sale of real estate. ASU 2014-09 is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company. The majority of our revenues related to rental income from leasing arrangements, which is excluded from ASU 2014-09. The Company is currently evaluating the impact that ASU 2014-09 will have on any non-lease components and revenues generated from activities other than leasing. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02") which introduces a lessee model that brings most leases on the balance sheet. Under this new standard the large majority of operating leases are expected to remain classified as operating leases, and lessors should continue to recognize lease income for those leases on a generally straight-line basis over the lease term. ASU 2016-02 is effective for years beginning after December 15, 2019 as a result of the Company’s election as an emerging growth company, using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are continuing to evaluate this guidance and the impact to us, as both lessor and lessee, on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments Credit Losses, which changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, companies will be required to use a new forward-looking "expected loss" model that generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, companies will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. Companies will have to disclose significantly more information, including information they use to track credit quality by year of origination for most financing receivables. Companies will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This standard is effective for years beginning after December 15, 2020 as a result of the Company’s election as an emerging growth company with early adoption permitted. The Company is in the initial stage of evaluating the impact of this new standard. In February 2017, the FASB has issued ASU 2017-05, Other Income Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("Subtopic 610-20"). A contract may involve the transfer of both nonfinancial assets and financial assets (e.g., cash and receivables). The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. The amendments are effective at the same time Topic 606, Revenue from Contracts with Customers, is effective. This new standard is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company. We do not expect this amendment to have an effect on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments, which clarifies or provides guidance relating to eight specific cash flow classification issues. The standard should be applied retrospectively for each period presented, as appropriate. This new standard is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company. The impact of this new guidance will depend on future transactions, though the impact will only be related to the classification of those items on the statement of cash flows and will not impact the Company’s cash flows or its consolidated results of operations. |
Concentration of Credit Risk | Concentration of Credit Risk . Our properties are located in the states of New York, Maryland, Arizona and Minnesota. The ability of any of our tenants to honor the terms of its lease is dependent upon the economic, regulatory, competition, natural and social factors affecting the community in which that tenant operates. During the three months ended March 31, 2018, the tenant at one of our properties in New York and the tenant at our property in Maryland accounted for 50 24 43 25 22 100 100 We have deposited cash with a financial institution that is insured by the Federal Deposit Insurance Corporation ("FDIC") up to $ 250,000 |
Reclassifications | Reclassifications . Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future contractual minimum rent (including base rent, supplemental base rent (for one of our properties in New York) and property management fees) under the operating leases as of March 31, 2018 for future periods is summarized as follows (in thousands): Year Contractual Minimum Rent 2018 (nine months ending December 31) $ 8,867 2019 12,170 2020 12,549 2021 12,898 2022 12,083 Thereafter 140,589 Total $ 199,156 |
Dividends (Tables)
Dividends (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of Dividends Payable | The following table describes the dividends declared by the Company during the three months ended March 31, 2018: Declaration Security Class Amount Period Covered Dividend Dividend Amount (In thousands) March 15, 2018 Common Stock $ 0.25 January 1, 2018 to March 31, 2018 April 16, 2018 $ 1,696 March 15, 2018 Series A preferred stock $ 0.5625 January 15, 2018 to April 14, 2018 April 16, 2018 $ 338 |
Net Income _ (Loss) Per Share (
Net Income / (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Computations of net income / (loss) per basic and diluted share (in thousands, except share data) were as follows: For the Three Months Ended 2018 2017 Net income / (loss) $ 945 $ (591) Preferred stock dividend (338) Distribution to participating securities (37) Net income / (loss) attributable to common stockholders used to compute net income / (loss) per share $ 570 $ (591) Weighted average common share outstanding: Basic 5,883,610 3,350,000 Diluted 6,025,067 3,350,000 Net income / (loss) per share attributable to common stockholders: Basic $ 0.10 $ (0.18) Diluted $ 0.09 $ (0.18) |
Common Stock Incentive Plan (Ta
Common Stock Incentive Plan (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | A summary of the activity under the 2016 Plan and related information is included in the table below. Unvested Weighted- Balance at December 31, 2017 106,839 $ 18.01 Granted 73,011 $ 29.45 Vested (20,635) $ 18.67 Forfeited (1) (12,079) $ 18.67 Balance at March 31, 2018 147,136 $ 23.54 (1) Shares that were forfeited to cover the employees’ tax withholding obligation upon vesting. |
Organization (Details Textual)
Organization (Details Textual) | Mar. 31, 2018a |
Iip Operating Partnership Lp [Member] | |
Percentage Leased | 100.00% |
Building [Member] | |
Net Rentable Area | 617,000 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Contractual Minimum Rent | |
2018 (nine months ending December 31) | $ 8,867 |
2,019 | 12,170 |
2,020 | 12,549 |
2,021 | 12,898 |
2,022 | 12,083 |
Thereafter | 140,589 |
Total | $ 199,156 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Details Textual) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Short-term Investments | $ 48,856,000 | $ 0 | |
Cash, FDIC Insured Amount | 250,000 | ||
Money Market Funds [Member] | |||
Short-term Investments | $ 39,100,000 | $ 8,900,000 | |
Building [Member] | |||
Property, Plant and Equipment, Useful Life | 35 years | ||
New York Propety [Member] | Rental Revenue, Net [Member] | |||
Concentration Risk, Percentage | 50.00% | 100.00% | |
New York Propety [Member] | Net Real Estate Held For Investment [Member] | |||
Concentration Risk, Percentage | 43.00% | 100.00% | |
Maryland Property [Member] | Rental Revenue, Net [Member] | |||
Concentration Risk, Percentage | 24.00% | ||
Maryland Property [Member] | Net Real Estate Held For Investment [Member] | |||
Concentration Risk, Percentage | 25.00% | ||
Arizona Property [Member] | Net Real Estate Held For Investment [Member] | |||
Concentration Risk, Percentage | 22.00% |
Common Stock (Details Textual)
Common Stock (Details Textual) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | ||
Jan. 22, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 | |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | |
Common Stock, Shares, Issued | 6,782,079 | 3,501,147 | |
Common Stock, Shares, Outstanding | 6,782,079 | 3,501,147 | |
Common Stock [Member] | |||
Common Stock, Shares Authorized | 50,000,000 | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | ||
Stock Issued During Period, Shares, New Issues | 3,220,000 | ||
Common Stock, Shares, Issued | 6,782,079 | ||
Common Stock, Shares, Outstanding | 6,782,079 | ||
Proceeds from Issuance or Sale of Equity | $ 79.3 | ||
Stock Issued During Period Share Purchase Of Common Stock | 420,000 |
Preferred Stock (Details Textua
Preferred Stock (Details Textual) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Oct. 19, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Oct. 19, 2022 | |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | ||
Proceeds from Issuance of Preferred Stock and Preference Stock | $ 14 | |||
Scenario, Forecast [Member] | ||||
Preferred Stock, Redemption Price Per Share | $ 25 | |||
Series A Preferred Stock [Member] | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | |||
Stock Issued During Period, Shares, New Issues | 600,000 | |||
Preferred Stock, Dividend Rate, Percentage | 9.00% | 9.00% | 9.00% | |
Shares Issued, Price Per Share | $ 25 |
Dividends (Details)
Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | |
Dividend Amount | $ 2,034 | $ 1,198 | $ 0 |
March 15, 2018 [Member] | |||
Declaration Date | Mar. 15, 2018 | ||
Dividends Declared Security Class | Common Stock | ||
Amount Per share | $ 0.25 | ||
Period Covered | January 1, 2018 to March 31, 2018 | ||
Dividend Payable Date | Apr. 16, 2018 | ||
Dividend Amount | $ 1,696 | ||
March 15, 2018 one [Member] | |||
Declaration Date | Mar. 15, 2018 | ||
Dividends Declared Security Class | Series A preferred stock | ||
Amount Per share | $ 0.5625 | ||
Period Covered | January 15, 2018 to April 14, 2018 | ||
Dividend Payable Date | Apr. 16, 2018 | ||
Dividend Amount | $ 338 |
Net Income _ (Loss) Per Share28
Net Income / (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net income / (loss) | $ 945 | $ (591) |
Preferred stock dividend | (338) | 0 |
Distributions to participating securities | (37) | 0 |
Net income / (loss) attributable to common stockholders used to compute net income / (loss) per share | $ 570 | $ (591) |
Weighted average common share outstanding: | ||
Basic | 5,883,610 | 3,350,000 |
Diluted | 6,025,067 | 3,350,000 |
Net income / (loss) per share attributable to common stockholders: | ||
Basic | $ 0.10 | $ (0.18) |
Diluted | $ 0.09 | $ (0.18) |
Net Income _ (Loss) Per Share29
Net Income / (Loss) Per Share (Details Textual) | 3 Months Ended |
Mar. 31, 2017shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 175,564 |
Fair Value of Financial Instr30
Fair Value of Financial Instruments (Details Textual) $ in Millions | Mar. 31, 2018USD ($) |
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | |
Cash and Cash Equivalents, Fair Value Disclosure | $ 7.1 |
Common Stock Incentive Plan (De
Common Stock Incentive Plan (Details) | 3 Months Ended | |
Mar. 31, 2018$ / sharesshares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unvested Restricted Shares, Beginning Balance | shares | 106,839 | |
Unvested Restricted Shares, Granted | shares | 73,011 | |
Unvested Restricted Shares, Vested | shares | (20,635) | |
Unvested Restricted Shares, Forfeited | shares | (12,079) | [1] |
Unvested Restricted Shares, Ending Balance | shares | 147,136 | |
Weighted-Average Date Fair Value, Beginning Balance | $ / shares | $ 18.01 | |
Weighted-Average Date Fair Value, Granted | $ / shares | 29.45 | |
Weighted-Average Date Fair Value, Vested | $ / shares | 18.67 | |
Weighted-Average Date Fair Value, Forfeited | $ / shares | 18.67 | [1] |
Weighted-Average Date Fair Value, Ending Balance | $ / shares | $ 23.54 | |
[1] | Shares that were forfeited to cover the employees’ tax withholding obligation upon vesting. |
Common Stock Incentive Plan (32
Common Stock Incentive Plan (Details Textual) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($)shares | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ | $ 3.2 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 4 months 24 days |
2016 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | shares | 1,000,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Textual) - USD ($) | 1 Months Ended | |
Apr. 30, 2018 | Mar. 31, 2018 | |
Other Commitments [Line Items] | ||
Tenant Improvement Payable | $ 5,000,000 | |
Subsequent Event [Member] | ||
Other Commitments [Line Items] | ||
Payments for Tenant Improvements | $ 1,300,000 | |
Office Lease [Member] | ||
Other Commitments [Line Items] | ||
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year | 60,000 | |
Operating Leases, Future Minimum Payments, Due in Two Years | 90,000 | |
Operating Leases, Future Minimum Payments, Due in Three Years | 75,000 | |
Operating Leases, Future Minimum Payments Due | $ 225,000 |
Subsequent Events (Details Text
Subsequent Events (Details Textual) - USD ($) $ in Thousands | Apr. 06, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Tenant Improvement Payable | $ 5,000 | ||
Real Estate Investment Property, at Cost | $ 68,730 | $ 68,730 | |
Annualized Base Rent Revenue | $ 1,300 | ||
Subsequent Event [Member] | Vireo Health, LLC [Member] | |||
Tenant Improvement Payable | $ 2,800 | ||
Sale Leaseback Transaction Rate | 15.00% | ||
Annual Increase Rate In Lease Rent | 3.50% | ||
Real Estate Investment Property, at Cost | $ 5,800 | ||
Sale Leaseback Transaction, Lease Terms | 15 years | ||
Property Management Fee, Percent Fee | 1.50% |