Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 09, 2022 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-37949 | |
Entity Registrant Name | Innovative Industrial Properties, Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 81-2963381 | |
Entity Address, Address Line One | 1389 Center Drive, Suite 200 | |
Entity Address, City or Town | Park City | |
Entity Address, State or Province | UT | |
Entity Address, Postal Zip Code | 84098 | |
City Area Code | 858 | |
Local Phone Number | 997-3332 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 27,972,947 | |
Entity Central Index Key | 0001677576 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | IIPR | |
Security Exchange Name | NYSE | |
Series A Preferred Stock | ||
Title of 12(b) Security | Series A Preferred Stock, par value $0.001 per share | |
Trading Symbol | IIPR-PA | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Real estate, at cost: | ||
Land | $ 140,187 | $ 122,386 |
Buildings and improvements | 1,261,651 | 979,417 |
Tenant improvements | 712,983 | 620,301 |
Construction in progress | 60,546 | |
Total real estate, at cost | 2,175,367 | 1,722,104 |
Less accumulated depreciation | (124,786) | (81,938) |
Net real estate held for investment | 2,050,581 | 1,640,166 |
Construction loan receivable | 17,698 | 12,916 |
Cash and cash equivalents | 76,943 | 81,096 |
Restricted cash | 1,580 | 5,323 |
Investments | 239,674 | 324,889 |
Right of use office lease asset | 1,831 | 1,068 |
In-place lease intangible assets, net | 9,320 | 9,148 |
Other assets, net | 33,107 | 9,996 |
Total assets | 2,430,734 | 2,084,602 |
Liabilities and stockholders' equity | ||
Exchangeable Senior Notes, net | 6,369 | 32,232 |
Notes due 2026, net | 294,794 | 293,860 |
Tenant improvements and construction funding payable | 35,195 | 46,274 |
Accounts payable and accrued expenses | 13,140 | 7,718 |
Dividends payable | 50,841 | 38,847 |
Rent received in advance and tenant security deposits | 61,488 | 52,805 |
Other liabilities | 1,992 | 1,167 |
Total liabilities | 463,819 | 472,903 |
Commitments and contingencies (Notes 6 and 11) | ||
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 September 30, 2022 and December 31, 2021 | 14,009 | 14,009 |
Common stock, par value $0.001 per share, 50,000,000 shares authorized: 27,973,694 and 25,612,541 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 28 | 26 |
Additional paid-in capital | 2,060,936 | 1,672,882 |
Dividends in excess of earnings | (108,058) | (75,218) |
Total stockholders' equity | 1,966,915 | 1,611,699 |
Total liabilities and stockholders' equity | $ 2,430,734 | $ 2,084,602 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Preferred stock, Par Value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Par Value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares Issued | 27,973,694 | 25,612,541 |
Common Stock, Shares Outstanding | 27,973,694 | 25,612,541 |
Series A Preferred Stock | ||
Preferred stock, Par Value (in dollars per share) | $ 0.001 | |
Preferred Stock, Dividend Rate, Percentage | 9% | 9% |
Preferred Stock, Liquidation Preference, Value | $ 15,000 | $ 15,000 |
Preferred Stock, Liquidation Preference Per Share | $ 25 | $ 25 |
Preferred Stock, Shares Issued | 600,000 | 600,000 |
Preferred Stock, Shares Outstanding | 600,000 | 600,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues: | ||||
Rental (including tenant reimbursements) | $ 70,345,000 | $ 53,856,000 | $ 204,454,000 | $ 145,608,000 |
Other | 538,000 | 1,444,000 | ||
Total revenues | 70,883,000 | 53,856,000 | 205,898,000 | 145,608,000 |
Expenses: | ||||
Property expenses | 2,823,000 | 1,365,000 | 7,232,000 | 2,617,000 |
General and administrative expense | 10,804,000 | 5,307,000 | 28,288,000 | 16,511,000 |
Depreciation and amortization expense | 15,900,000 | 10,891,000 | 45,001,000 | 29,571,000 |
Total expenses | 29,527,000 | 17,563,000 | 80,521,000 | 48,699,000 |
Income from operations | 41,356,000 | 36,293,000 | 125,377,000 | 96,909,000 |
Interest and other income | 773,000 | 110,000 | 1,411,000 | 325,000 |
Interest expense | (4,513,000) | (6,309,000) | (13,783,000) | (11,874,000) |
Loss on exchange of Exchangeable Senior Notes | (125,000) | |||
Net income | 37,616,000 | 30,094,000 | 112,880,000 | 85,360,000 |
Preferred stock dividends | (338,000) | (338,000) | (1,014,000) | (1,014,000) |
Net income attributable to common stockholders | $ 37,278,000 | $ 29,756,000 | $ 111,866,000 | $ 84,346,000 |
Net income attributable to common stockholders per share (Note 8): | ||||
Basic | $ 1.33 | $ 1.24 | $ 4.10 | $ 3.51 |
Diluted | $ 1.32 | $ 1.20 | $ 4.06 | $ 3.41 |
Weighted-average shares outstanding: | ||||
Basic | 27,938,568 | 23,890,537 | 27,144,953 | 23,889,903 |
Diluted | 28,157,934 | 26,260,704 | 27,496,151 | 26,257,504 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) | Series A Preferred Stock Preferred Stock | Common Stock | Additional Paid-In-Capital Adjustment | Additional Paid-In-Capital | Dividends in Excess of Earnings Adjustment | Dividends in Excess of Earnings | Adjustment | Total |
Balances at beginning of period at Dec. 31, 2020 | $ 14,009,000 | $ 24,000 | $ 1,559,059,000 | $ (48,120,000) | $ 1,524,972,000 | |||
Balances at beginning of period (in shares) at Dec. 31, 2020 | 23,936,928 | |||||||
Net income | 85,360,000 | 85,360,000 | ||||||
Issuance of unvested restricted stock, net of forfeitures | (3,384,000) | (3,384,000) | ||||||
Issuance of unvested restricted stock, net of forfeitures (in shares) | (8,624) | |||||||
Preferred stock dividend | (1,014,000) | (1,014,000) | ||||||
Common stock dividend | (101,227,000) | (101,227,000) | ||||||
Stock-based compensation | 6,424,000 | 6,424,000 | ||||||
Balances at end of period at Sep. 30, 2021 | 14,009,000 | $ 24,000 | 1,562,099,000 | (65,001,000) | 1,511,131,000 | |||
Balances at end of period (in shares) at Sep. 30, 2021 | 23,928,304 | |||||||
Balances at beginning of period at Jun. 30, 2021 | 14,009,000 | $ 24,000 | 1,559,908,000 | (58,774,000) | 1,515,167,000 | |||
Balances at beginning of period (in shares) at Jun. 30, 2021 | 23,928,304 | |||||||
Net income | 30,094,000 | 30,094,000 | ||||||
Preferred stock dividend | (338,000) | (338,000) | ||||||
Common stock dividend | (35,983,000) | (35,983,000) | ||||||
Stock-based compensation | 2,191,000 | 2,191,000 | ||||||
Balances at end of period at Sep. 30, 2021 | 14,009,000 | $ 24,000 | 1,562,099,000 | (65,001,000) | 1,511,131,000 | |||
Balances at end of period (in shares) at Sep. 30, 2021 | 23,928,304 | |||||||
Balances at beginning of period at Dec. 31, 2021 | 14,009,000 | $ 26,000 | $ (1,340,000) | 1,672,882,000 | $ 728,000 | (75,218,000) | $ (612,000) | 1,611,699,000 |
Balances at beginning of period (in shares) at Dec. 31, 2021 | 25,612,541 | |||||||
Net income | 112,880,000 | 112,880,000 | ||||||
Issuance of unvested restricted stock, net of forfeitures | (2,441,000) | (2,441,000) | ||||||
Issuance of unvested restricted stock, net of forfeitures (in shares) | 15,174 | |||||||
Exchange of Exchangeable Senior Notes | 26,682,000 | 26,682,000 | ||||||
Exchange of Exchangeable Senior Notes (in shares) | 413,166 | |||||||
Net proceeds from sale of common stock | $ 2,000 | 351,958,000 | 351,960,000 | |||||
Net proceeds from sale of common stock (in shares) | 1,932,813 | |||||||
Preferred stock dividend | (1,014,000) | (1,014,000) | ||||||
Common stock dividend | (145,434,000) | (145,434,000) | ||||||
Stock-based compensation | 13,195,000 | 13,195,000 | ||||||
Balances at end of period at Sep. 30, 2022 | 14,009,000 | $ 28,000 | 2,060,936,000 | (108,058,000) | 1,966,915,000 | |||
Balances at end of period (in shares) at Sep. 30, 2022 | 27,973,694 | |||||||
Balances at beginning of period at Jun. 30, 2022 | 14,009,000 | $ 28,000 | 2,056,568,000 | (94,833,000) | 1,975,772,000 | |||
Balances at beginning of period (in shares) at Jun. 30, 2022 | 27,973,429 | |||||||
Net income | 37,616,000 | 37,616,000 | ||||||
Exchange of Exchangeable Senior Notes | 17,000 | 17,000 | ||||||
Exchange of Exchangeable Senior Notes (in shares) | 265 | |||||||
Payment of common stock offering costs | (28,000) | (28,000) | ||||||
Preferred stock dividend | (338,000) | (338,000) | ||||||
Common stock dividend | (50,503,000) | (50,503,000) | ||||||
Stock-based compensation | 4,379,000 | 4,379,000 | ||||||
Balances at end of period at Sep. 30, 2022 | $ 14,009,000 | $ 28,000 | $ 2,060,936,000 | $ (108,058,000) | $ 1,966,915,000 | |||
Balances at end of period (in shares) at Sep. 30, 2022 | 27,973,694 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities | ||
Net income | $ 112,880,000 | $ 85,360,000 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 45,001,000 | 29,571,000 |
Loss on exchange of Exchangeable Senior Notes | 125,000 | |
Other non-cash adjustments | 158,000 | 97,000 |
Stock-based compensation | 13,195,000 | 6,424,000 |
Amortization of discounts on short-term investments | (1,068,000) | (283,000) |
Amortization of debt discount and issuance costs | 1,017,000 | 2,011,000 |
Changes in assets and liabilities | ||
Other assets, net | (6,555,000) | (3,598,000) |
Accounts payable, accrued expenses and other liabilities | 5,339,000 | 4,308,000 |
Rent received in advance and tenant security deposits | 8,683,000 | 17,069,000 |
Net cash provided by operating activities | 178,775,000 | 140,959,000 |
Cash flows from investing activities | ||
Purchases of investments in real estate | (150,090,000) | (130,853,000) |
Funding of draws for tenant improvements and construction | (316,469,000) | (254,182,000) |
Funding of construction loan and other investments | (21,360,000) | (12,077,000) |
Deposits in escrow for acquisitions | (100,000) | (1,500,000) |
Purchases of short-term investments | (278,717,000) | (499,862,000) |
Maturities of short-term investments | 365,000,000 | 565,000,000 |
Net cash used in investing activities | (401,736,000) | (333,474,000) |
Cash flows from financing activities | ||
Issuance of common stock, net of offering costs | 351,960,000 | |
Gross proceeds from issuance of Notes due 2026 | 300,000,000 | |
Payment of deferred financing costs from issuance of Notes due 2026 | (6,824,000) | |
Dividends paid to common stockholders | (133,440,000) | (94,971,000) |
Dividends paid to preferred stockholders | (1,014,000) | (1,014,000) |
Taxes paid related to net share settlement of equity awards | (2,441,000) | (3,384,000) |
Net cash provided by financing activities | 215,065,000 | 193,807,000 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (7,896,000) | 1,292,000 |
Cash, cash equivalents and restricted cash, beginning of period | 86,419,000 | 126,006,000 |
Cash, cash equivalents and restricted cash, end of period | 78,523,000 | 127,298,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | 8,997,000 | 5,391,000 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Accrual for draws for tenant improvements and construction funding | 35,195,000 | 61,674,000 |
Deposits applied for acquisitions | 25,000 | 200,000 |
Accrual for common and preferred stock dividends declared | 50,841,000 | $ 36,321,000 |
Exchange of Exchangeable Senior Notes for common stock | 26,682,000 | |
Operating lease liability for obtaining right of use asset | $ 1,017,000 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2022 | |
Organization | |
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 are an internally-managed real estate investment trust (“REIT”) focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated cannabis facilities. We have acquired and intend to continue to acquire our properties through sale-leaseback transactions and third-party purchases. We have leased and expect to continue to 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, real estate taxes and insurance. We were incorporated in Maryland on June 15, 2016. 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 subsidiaries, 100% of the limited partnership interests in our Operating Partnership. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | |
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | 2. Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements Basis of Presentation. 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, 2021. Any references to square footage or occupancy percentage, and any amounts derived from these values in these notes to the condensed consolidated financial statements, are outside the scope of our independent registered public accounting firm’s review. 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, 2022. Variable Interest Entities. Federal Income Taxes. Use of Estimates. Reportable Segment. Acquisition of Real Estate Properties. The fair value of acquired in-place leases is derived based on our assessment of estimated lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased. The amounts recorded for acquired in-place leases are reflected as in-place lease intangible assets, net on our condensed consolidated balance sheets and are amortized on a straight-line basis as a component of depreciation and amortization expense over the remaining term of the applicable leases. The fair value of the above-market component of an acquired in-place operating lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining non-cancellable lease term and (ii) our estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition measured over the remaining non-cancellable term of the lease. The amount recorded for one above-market operating lease is included in other assets, net on our condensed consolidated balance sheets and is amortized on a straight-line basis as a reduction of rental revenues over the remaining term of the applicable lease. Cost Capitalization and Depreciation. Amounts capitalized are depreciated over estimated useful lives determined by management. We depreciate buildings and improvements and tenant improvements based on our evaluation of the estimated useful life of each specific asset, not to exceed 40 years. For the three months ended September 30, 2022 and 2021, we recognized depreciation expense of approximately $15.7 million and $10.9 million, respectively, which is included in depreciation and amortization expense in our condensed consolidated statements of income. For the nine months ended September 30, 2022 and 2021, we recognized depreciation expense of approximately $44.4 million and $29.6 million, respectively, which is included in depreciation and amortization expense in our condensed consolidated statements of income. We depreciate office equipment and furniture and fixtures over estimated useful lives ranging from three Determining whether expenditures meet the criteria for capitalization and the assignment of depreciable lives requires management to exercise significant judgment. Project costs that are clearly associated with the acquisition and development or redevelopment of a real estate project, for which we are the accounting owner, are capitalized as a cost of that project. Expenditures that meet one or more of the following criteria generally qualify for capitalization: ● the expenditure provides benefit in future periods; and ● the expenditure extends the useful life of the asset beyond our original estimates. We define redevelopment properties as existing properties for which we expect to spend significant development and construction costs that are not reimbursements to tenants for improvements at the properties. When existing properties are determined to be redevelopment properties, the net carrying value of the buildings and improvements and tenant improvements are transferred to construction in progress while the redevelopment activities are in process. Costs capitalized to construction in progress related to redevelopment properties are transferred to buildings and improvements and tenant improvements at historical cost of the properties as the redevelopment project or phases of projects are placed in service. During the nine months ended September 30, 2022, we reclassified the net carrying value of buildings and improvements and tenant improvements totaling approximately $59.0 million to construction in progress in connection with the default by Kings Garden Inc. (“Kings Garden”) and the related litigation (see Note 11 “Commitments and Contingencies — Litigation — Kings Garden Lawsuit”). Provision for Impairment. Long-lived assets are individually evaluated for impairment when conditions exist that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Impairment indicators or triggering events for long-lived assets to be held and used are assessed by project and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations, current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, construction costs, available market information, current and historical operating results, known trends, current market/economic conditions that may affect the property, and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount to its estimated fair value. We may adjust depreciation of properties that are expected to be disposed of or redeveloped prior to the end of their useful lives. No impairment losses were recognized during the nine months ended September 30, 2022 and 2021. Revenue Recognition. Construction Loan. Cash and Cash Equivalents Restricted Cash Investments. Exchangeable Notes. allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonexchangeable debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the Exchangeable Senior Notes as of the date of issuance. We measured the estimated fair value of the debt component of our Exchangeable Senior Notes as of the date of issuance based on our estimated nonexchangeable debt borrowing rate with the assistance of a third-party valuation specialist as we do not have a history of borrowing arrangements and there is limited empirical data available related to the Company’s industry due to the regulatory uncertainty of the cannabis market in which the Company’s tenants operate. The equity component of our Exchangeable Senior Notes was reflected within additional paid-in capital on our condensed consolidated balance sheets, and the resulting debt discount was amortized over the period during which the Exchangeable Senior Notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense. In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models, and convertible debt proceeds, unless issued with a substantial premium or an embedded conversion feature, will no longer be allocated between debt and equity components. ASU 2020-06 also updates the earnings per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares. We adopted ASU 2020-06 on January 1, 2022 and recognized a cumulative-effect adjustment of approximately $728,000 to the opening balance of retained earnings and derecognized approximately $1.3 million of the remaining equity component relating to the outstanding principal balance of our Exchangeable Senior Notes at the date of adoption. Deferred Financing Costs. Stock-Based Compensation. Lease Accounting . As lessee, we recognized a liability to account for our future obligations and a corresponding right-of-use asset related to our corporate office lease. The lease liability was initially measured based on the present value of the future lease payments discounted using the estimated incremental borrowing rate of 7.25%, which was the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. In November 2021, we amended the lease to extend the term from April 2025 to January 2027 in connection with an expansion of the leased space which did not commence until February 2022. As a result of the lease amendment, we re-measured the lease liability relating to the existing leased space and measured the lease liability relating to the expansion space based on the present value of the respective future lease payments (excluding the extension option that we are not reasonably certain to exercise), discounted using the estimated incremental borrowing rate of 5.5%, which was the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Subsequently, the lease liability is accreted by applying a discount rate established at the lease commencement date to the lease liability balance as of the beginning of the period and is reduced by the payments made during the period. The right-of-use asset is measured based on the corresponding lease liability. We did not incur any initial direct leasing costs and any other consideration exchanged with the landlord prior to the commencement of the lease. Subsequently, the right-of-use asset is amortized on a straight-line basis during the lease term. For the three months ended September 30, 2022 and 2021, we recognized office lease expense of approximately $121,000 and $57,000, respectively, which are included in general and administrative expense in our condensed consolidated statements of income. For the nine months ended September 30, 2022 and 2021, we recognized office lease expense of approximately $344,000 and $171,000, respectively, which are included in general and administrative expense in our condensed consolidated statements of income. For the nine months ended September 30, 2022 and 2021, amounts paid and classified as operating activities in our condensed consolidated statements of cash flows for the office lease were approximately $282,000 and $176,000, respectively. As lessor, for each of our real estate transactions involving the leaseback of the related property to the seller or affiliates of the seller, we determine whether these transactions qualify as sale and leaseback transactions under the accounting guidance. For these transactions, we consider various inputs and assumptions including, but not necessarily limited to, lease terms, renewal options, discount rates, and other rights and provisions in the purchase and sale agreement, lease and other documentation to determine whether control has been transferred to the Company or remains with the lessee. A transaction involving a sale leaseback will be treated as a purchase of a real estate property if it is considered to transfer control of the underlying asset from the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control and will be classified as a sales-type lease if control of the underlying asset is transferred to the lessee. Otherwise, the lease is treated as an operating lease. These criteria also include estimates and assumptions regarding the fair value of the leased facilities, minimum lease payments, the economic useful life of the facilities, the existence of a purchase option, and certain other terms in the lease agreements. The lease accounting guidance requires accounting for a transaction as a financing in a sale leaseback when the seller-lessee is provided an option to purchase the property from the landlord at the tenant’s option. Substantially all of our leases continued to be classified as operating leases and we continue to record revenue for each of our properties on a cash basis. Our tenant reimbursable revenue and property expenses continue to be presented on a gross basis as rental revenues and as property expenses, respectively, on our condensed consolidated statements of income. Property taxes paid directly by the lessee to a third party continue to be excluded from our condensed consolidated financial statements. Lease amendments are evaluated to determine if the modification grants the lessee an additional right-of-use not included in the original lease and if the lease payments increase commensurate with the standalone price of the additional right-of-use, adjusted for the circumstances of the particular contract. If both conditions are present, the lease amendment is accounted for as a new lease that is separate from the original lease. Our leases generally contain options to extend the lease terms at the prevailing market rate or at the expiring rental rate at the time of expiration. Certain of our leases provide the lessee with a right of first refusal or right of first offer in the event we market the leased property for sale. Concentration of Credit Risk The following table sets forth the five tenants in our portfolio that represented the largest percentage of our total rental revenues for the three and nine months ended September 30, 2022 and 2021, including tenant reimbursements: For the Three Months Ended September 30, 2022 Percentage of Number of Rental Leases Revenue PharmaCann Inc. ("PharmaCann") 11 14 % SH Parent, Inc. ("Parallel") 4 10 % Ascend Wellness Holdings, Inc. ("Ascend") 4 10 % Green Thumb Industries, Inc. ("Green Thumb") 3 8 % Trulieve Cannabis Corp. ("Trulieve") 6 7 % For the Nine Months Ended September 30, 2022 Percentage of Number of Rental Leases Revenue PharmaCann 11 14 % Parallel 4 10 % Ascend 4 9 % Kings Garden (1) 6 7 % Trulieve 6 7 % For the Three Months Ended September 30, 2021 Percentage of Number of Rental Leases Revenue Parallel 4 12 % PharmaCann 5 12 % Kings Garden (1) 5 8 % Ascend 3 8 % Green Thumb 3 7 % For the Nine Months Ended September 30, 2021 Percentage of Number of Rental Leases Revenue PharmaCann 5 13 % Parallel 4 10 % Ascend 3 9 % Cresco Labs Inc. 5 8 % Kings Garden (1) 5 7 % (1) On July 13, 2022, Kings Garden defaulted on its obligations to pay rent at all of the properties it leases with us, and pursuant to a confidential, conditional settlement agreement executed on September 11, 2022 between us and Kings Garden, we terminated the leases for two properties that were in development or redevelopment as of September 30, 2022 and regained possession of those properties. We have recovered $10.0 million of funds paid to Kings Garden. See Note 11 “Commitments and Contingencies — Litigation — Kings Garden Lawsuit” to our condensed consolidated financial statements for more information. In each of the tables above, these leases include leases with affiliates of each entity, for which the entity has provided a corporate guaranty. As of September 30, 2022 and December 31, 2021, none of our properties individually represented more than 5% of our net real estate held for investment. We have deposited cash with a financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of September 30, 2022, we had cash accounts in excess of FDIC insured limits. We have not experienced any losses in such accounts. |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2022 | |
Common Stock. | |
Common Stock | 3. Common Stock As of September 30, 2022, the Company was authorized to issue up to 50,000,000 shares of common stock, par value $0.001 per share, and there were 27,973,694 shares of common stock issued In April 2022, we issued 1,815,790 shares of common stock in an underwritten public offering, including the exercise in full of the underwriters’ option to purchase an additional 236,842 shares, resulting in net proceeds of approximately $330.9 million. We are party to equity distribution agreements with certain sales agents, pursuant to which we may offer and sell from time to time through an “at-the-market” offering program (the “ATM Program”) up to $500.0 million in shares of our common stock. During the nine months ended September 30, 2022, we sold 117,023 shares of our common stock for net proceeds of approximately $21.1 million under the ATM Program, which includes the payment of approximately $434,000 to one sales agent as commission for such sales. During the three and nine months ended September 30, 2022, we issued 265 and 413,166 shares, respectively, of our common stock upon exchange by holders of approximately $17,000 and $26.9 million, respectively, of outstanding principal amount of our Exchangeable Senior Notes. |
Preferred Stock
Preferred Stock | 9 Months Ended |
Sep. 30, 2022 | |
Preferred Stock. | |
Preferred Stock | 4. Preferred Stock As of September 30, 2022, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $0.001 per share, and there were issued and outstanding |
Dividends
Dividends | 9 Months Ended |
Sep. 30, 2022 | |
Dividends | |
Dividends | 5. Dividends The following table describes the dividends declared by the Company during the nine months ended September 30, 2022: Amount Dividend Dividend Declaration Date Security Class Per Share Period Covered Paid Date Amount (In thousands) March 14, 2022 Common stock $ 1.75 January 1, 2022 to March 31, 2022 April 14, 2022 $ 45,830 March 14, 2022 Series A preferred stock $ 0.5625 January 15, 2022 to April 14, 2022 April 14, 2022 $ 338 June 15, 2022 Common stock $ 1.75 April 1, 2022 to June 30, 2022 July 15, 2022 $ 49,101 June 15, 2022 Series A preferred stock $ 0.5625 April 15, 2022 to July 14, 2022 July 15, 2022 $ 338 September 15, 2022 Common stock $ 1.80 July 1, 2022 to September 30, 2022 October 14, 2022 $ 50,503 September 15, 2022 Series A preferred stock $ 0.5625 July 15, 2022 to October 14, 2022 October 14, 2022 $ 338 |
Investments in Real Estate
Investments in Real Estate | 9 Months Ended |
Sep. 30, 2022 | |
Investments in Real Estate | |
Investments in Real Estate | 6. Investments in Real Estate Acquisitions The Company acquired the following properties during the nine months ended September 30, 2022 (dollars in thousands): Rentable Square Purchase Transaction Property Market Closing Date Feet (1) Price Costs Total 4Front MA Massachusetts January 28, 2022 57,000 $ 16,000 $ 20 $ 16,020 (2) Ascend NJ New Jersey February 10, 2022 114,000 35,400 8 35,408 (3) Verano PA Pennsylvania March 23, 2022 3,000 2,750 68 2,818 Kings Garden CA California March 25, 2022 23,000 8,158 11 8,169 (4) MCP MD Maryland April 13, 2022 84,000 25,000 290 25,290 (5) Harvest AZ Arizona April 27, 2022 17,000 5,238 11 5,249 (5) TILT MA Massachusetts May 16, 2022 104,000 40,000 32 40,032 (5) Texas Original TX Texas June 14, 2022 85,000 12,040 25 12,065 (5)(6) Curaleaf MA Massachusetts September 1, 2022 104,000 21,500 25 21,525 (7) Total 591,000 $ 166,086 $ 490 $ 166,576 (8) (1) Includes expected rentable square feet at completion of construction of certain properties. (2) The acquisition of the property did not satisfy the requirements for sale-leaseback accounting and therefore, the transaction is recognized as a note receivable and is included in other assets, net on our condensed consolidated balance sheet. (3) The tenant is expected to complete improvements at the property, for which we agreed to provide funding of up to $4.6 million. (4) The purchase price includes $1.8 million holdback held in an escrow account, which is subject to distribution to the seller upon seller’s completion of certain improvements at the property. As of September 30, 2022, we have distributed approximately $1.4 million of the holdback. The remaining approximately $400,000 is included in restricted cash on our condensed consolidated balance sheet. (5) The acquisitions of the MCP MD, Harvest AZ, TILT MA and Texas Original TX properties were made through consolidated VIEs utilizing Reverse 1031 Exchanges that were entered into at the time each of the properties was acquired. See Note 2 “Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements – Variable Interest Entities” for more information regarding the Company’s Reverse 1031 Exchanges and consolidation of VIEs. (6) The tenant is expected to complete improvements at the property, for which we agreed to provide funding of up to approximately $10.0 million. The purchase price includes approximately $908,000 attributable to the property which did not satisfy the requirements for sale-leaseback accounting; therefore, this amount is recognized as a note receivable and is included in other assets, net on our condensed consolidated balance sheet. (7) The purchase price includes approximately $1.0 million held in an escrow account, which is subject to distribution to the seller upon seller’s completion of certain improvements at the property and is included in restricted cash on our condensed consolidated balance sheet. (8) Approximately $16.9 million was included in other assets; $2.8 million was included in restricted cash; approximately $14.5 million was allocated to land; approximately $131.5 million was allocated to building and improvements; and approximately $798,000 was allocated to in-place leases. The properties acquired during the nine months ended September 30, 2022 generated approximately $6.6 million of rental revenues (including tenant reimbursements) and approximately $4.8 million of net operating income after deducting property and depreciation expenses. The properties acquired during the nine months ended September 30, 2021 generated approximately $11.9 million of rental revenue (including tenant reimbursements) and approximately $10.0 million of net operating income after deducting property and depreciation expenses. During the three and nine months ended September 30, 2022, the acquisition of the properties which did not satisfy the requirements for sale-leaseback accounting generated approximately $538,000 and $1.4 million of interest revenue, respectively, which is included in other revenue on our condensed consolidated statements of income. In addition, we acquired additional land adjacent to one of our existing properties in Pennsylvania on February 2, 2022. In connection with the acquisition, we amended the lease for the existing property to incorporate this land into the leased area and reduced the existing improvement allowance under the lease by an amount equal to the purchase price for the land, which was approximately $3.3 million. Acquired In-Place Lease Intangible Assets In-place lease intangible assets and related accumulated amortization as of September 30, 2022 and December 31, 2021 is as follows (in thousands): September 30, 2022 December 31, 2021 In-place lease intangible assets $ 9,979 $ 9,181 Accumulated amortization (659) (33) In-place lease intangible assets, net $ 9,320 $ 9,148 Amortization of in-place lease intangible assets classified in depreciation and amortization expense in our condensed consolidated statements of income was approximately $215,000 and $626,000 for the three and nine months ended September 30, 2022, respectively. No amortization expense was recognized for three and nine months ended September 30, 2021. The remaining weighted-average amortization period of the value of acquired in-place leases was approximately 10.9 years, and the estimated annual amortization of the value of the acquired in-place leases as of September 30, 2022 is as follows (in thousands): Year Amount 2022 (three months ending December 31) $ 215 2023 860 2024 860 2025 860 2026 860 Thereafter 5,665 Total $ 9,320 Above-Market Lease The above-market lease and related accumulated amortization included in other assets, net on our condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 is as follows (in thousands): September 30, 2022 December 31, 2021 Above-market lease $ 1,054 $ 1,054 Accumulated amortization (73) (4) Above-market lease, net $ 981 $ 1,050 The above-market lease is amortized on a straight-line basis as a reduction to rental revenues over the remaining lease term of approximately 10.6 years. For the three and nine months ended September 30, 2022, the amortization of the above-market lease was approximately $23,000 and $69,000, respectively. Additional Improvement Allowances In February 2022, we amended our lease with Green Peak Industries, Inc. at one of our Michigan properties, increasing the improvement allowance under the lease by $18.0 million to a total of approximately $47.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. In March 2022, we amended our lease with Holistic Industries Inc. (“Holistic”) at one of our Michigan properties, increasing the improvement allowance under the lease by $3.5 million to a total of $22.3 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. In March 2022, we amended our lease with a subsidiary of Ascend at one of our Michigan properties, increasing the improvement allowance under the lease by $4.4 million to a total of $19.4 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. In March 2022, we amended our lease with a subsidiary of Ascend at one of our Massachusetts properties, increasing the improvement allowance under the lease by $14.9 million to a total of approximately $37.2 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. In April 2022, we amended our lease and development agreement with PharmaCann at one of our New York properties, increasing the construction fund by $45.0 million to a total of approximately $78.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. In June 2022, we amended our lease with a subsidiary of Curaleaf Holdings, Inc. (“Curaleaf”) at one of our Illinois properties, increasing the improvement allowance under the lease by approximately $10.9 million to a total of $29.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. In June 2022, we amended our lease with Sozo Health, Inc. (“Sozo”) at one of our Michigan properties, increasing the improvement allowance by approximately $1.2 million to a total of approximately $7.0 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. In June 2022, we amended our lease with a subsidiary of Curaleaf at one of our Pennsylvania properties, increasing the improvement allowance by $35.0 million to a total of approximately $47.4 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. In June 2022, we amended our lease with a subsidiary of Green Thumb at one of our Pennsylvania properties, increasing the improvement allowance by $55.0 million to a total $74.3 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. Including all of our properties, during the nine months ended September 30, 2022, we capitalized costs of approximately $303.9 million and funded approximately $316.5 million relating to improvements and construction activities at our properties. Future contractual minimum rent (including base rent and property management fees) under the operating leases as of September 30, 2022 for future periods is summarized as follows (in thousands): Year Contractual Minimum Rent 2022 (three months ending December 31) $ 69,460 2023 287,080 2024 295,416 2025 304,199 2026 313,276 Thereafter 4,418,742 Total $ 5,688,173 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt | |
Debt | 7. Debt Exchangeable Senior Notes As of September 30, 2022, our Operating Partnership had outstanding approximately $6.4 million principal amount of 3.75% Exchangeable Senior Notes due 2024 (the “Exchangeable Senior Notes”). The Exchangeable Senior Notes are senior unsecured obligations of our Operating Partnership, are fully and unconditionally guaranteed by us and our Operating Partnership’s subsidiaries and are exchangeable for cash, shares of our common stock, or a combination of cash and shares of our common stock, at our Operating Partnership’s option, at any time prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date. The exchange rate for the Exchangeable Senior Notes at September 30, 2022 was 15.86813 shares of our common stock per $1,000 principal amount of Notes and the exchange price at September 30, 2022 was approximately $63.02 per share of our common stock. The exchange rate and exchange price are subject to adjustment in certain circumstances. The Exchangeable Senior Notes will pay interest semiannually on March 15 and September 15 of each year at a rate of 3.75% per annum and will mature on February 21, 2024, unless earlier exchanged or repurchased in accordance with their terms. Our Operating Partnership will not have the right to redeem the Exchangeable Senior Notes prior to maturity, but may be required to repurchase the Exchangeable Senior Notes from holders under certain circumstances. At September 30, 2022, the if-exchanged value of the Exchangeable Senior Notes exceeded the principal amount by approximately $2.6 million. During the three and nine months ended September 30, 2022, we issued 265 and 413,166 shares, respectively, of our common stock upon exchanges by holders of approximately $17,000 and $26.9 million, respectively, of outstanding principal amount of our Exchangeable Senior Notes. For the nine months ended September 30, 2022, we recognized a loss on the exchange totaling approximately $125,000 , resulting from the difference between the fair value and carrying value of the debt as of the date of the exchange. The issuance of the shares pursuant to the exchanges resulted in a non-cash increase to our additional paid-in capital account of approximately $17,000 and $26.7 million for the three and nine months ended September 30, 2022, respectively. The following table details our interest expense related to the Exchangeable Senior Notes (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Cash coupon $ 60 $ 1,348 $ 391 $ 4,042 Amortization of debt discount — 288 — 855 Amortization of issuance cost 12 249 83 739 Total interest expense $ 72 $ 1,885 $ 474 $ 5,636 The following table details the carrying value of our Exchangeable Senior Notes (in thousands): September 30, 2022 December 31, 2021 Principal amount $ 6,436 $ 33,373 Unamortized discount — (612) Unamortized issuance cost (67) (529) Carrying value $ 6,369 $ 32,232 Accrued interest payable for the Exchangeable Senior Notes as of September 30, 2022 and December 31, 2021 was approximately $10,000 and $365,000, respectively, and is included in accounts payable and accrued expenses on our condensed consolidated balance sheets. Notes due 2026 On May 25, 2021, our Operating Partnership issued $300.0 million aggregate principal amount of its 5.50% Senior Notes due 2026 (the “Notes due 2026”). The Notes due 2026 are senior unsecured obligations of our Operating Partnership, are fully and unconditionally guaranteed by us and our Operating Partnership’s subsidiaries and rank equally in right of payment with all of the Operating Partnership’s existing and future senior unsecured indebtedness, including the Exchangeable Senior Notes. However, the Notes due 2026 are effectively subordinated to any of the Company’s, the Operating Partnership’s and the Operating Partnership’s subsidiaries’ future secured indebtedness to the extent of the value of the assets securing such indebtedness. Interest at a rate of 5.50% per year is payable on May 15 and November 15 of each year, beginning on November 15, 2021, until the stated maturity date of May 25, 2026. The terms of the Notes due 2026 are governed by an indenture, dated May 25, 2021, among the Operating Partnership, as issuer, the Company and the Operating Partnership’s subsidiaries, as guarantors, TMI Trust Company, as trustee (as successor-in-interest to GLAS Trust Company LLC), and Securities Transfer Corporation, as registrar (as successor-in-interest to GLAS Trust Company LLC). The terms of the indenture provide that if the debt rating on the Notes due 2026 is downgraded or withdrawn entirely, interest on the Notes due 2026 will increase to a range of 6.0% to 6.5% based on such debt rating. In connection with the issuance of the Notes due 2026, we recorded approximately $6.8 million of issuance costs, which are being amortized using the effective interest method and recognized as non-cash interest expense over the term of the Notes due 2026. The following table details our interest expense related to the Notes due 2026 (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Cash coupon $ 4,125 $ 4,125 $ 12,375 $ 5,821 Amortization of issuance cost 316 299 934 417 Total interest expense $ 4,441 $ 4,424 $ 13,309 $ 6,238 The following table details the carrying value of our Notes due 2026 (in thousands): September 30, 2022 December 31, 2021 Principal amount $ 300,000 $ 300,000 Unamortized issuance cost (5,206) (6,140) Carrying value $ 294,794 $ 293,860 The Operating Partnership may redeem some or all of the Notes due 2026 at its option at any time at the applicable redemption price. If the Notes due 2026 are redeemed prior to February 25, 2026, the redemption price will be equal to 100% of the principal amount of the Notes due 2026 being redeemed, plus a make-whole premium and accrued and unpaid interest thereon to, but excluding, the applicable redemption date. If the Notes due 2026 are redeemed on or after February 25, 2026, the redemption price will be equal to 100% of the principal amount of the Notes due 2026 being redeemed, plus accrued and unpaid interest thereon to, but excluding, the applicable redemption date. The terms of the indenture for the Notes due 2026 require compliance with various financial covenants, including minimum level of debt service coverage and limits on the amount of total leverage and secured debt maintained by the Operating Partnership. Management believes that it was in compliance with those covenants as of September 30, 2022. Accrued interest payable for the Notes due 2026 as of September 30, 2022 and December 31, 2021 was approximately $6.2 million and $2.1 million, respectively, and is included in accounts payable and accrued expenses on our condensed consolidated balance sheets. The following table summarizes the principal payments on our outstanding indebtedness as of September 30, 2022 (in thousands): Payments Due by Year Amount 2022 (three months ended December 31) $ — 2023 — 2024 6,436 2025 — 2026 300,000 Thereafter — Total $ 306,436 |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Net Income Per Share | |
Net Income Per Share | 8. Net Income Per Share Grants of restricted stock and restricted stock units (“RSUs”) 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 September 30, 2022, all of the Company’s participating securities received dividends or dividend equivalents at an equal dividend rate per share or unit. As a result, distributions to participating securities for the three and nine months ended September 30, 2022 and 2021 have been included in net income attributable to common stockholders to calculate net income per basic and diluted share. The 100,799 and 235,753 shares necessary to settle the Exchangeable Senior Notes on the if-exchanged method basis were dilutive for the three and nine months ended September 30, 2022, respectively, and were included in the computation of diluted earnings per share. The 2,193,492 shares necessary to settle the Exchangeable Senior Notes on the if-exchanged method basis were dilutive for the three and nine months ended September 30, 2021, and were included in the computation of diluted earnings per share. For the three and nine months ended September 30, 2022, the performance share units (“PSUs”) granted to certain employees were not included in dilutive securities as the performance thresholds for vesting of the PSUs were not met as measured as of September 30, 2022. For the three and nine months ended September 30, 2021, 78,582 shares issuable upon vesting of PSUs granted to certain employees in January 2021 were included in dilutive securities, as the performance thresholds for the vesting of these PSUs were met as measured as of September 30, 2021 (see Note 10 for further discussion of PSUs). Computations of net income per basic and diluted share (in thousands, except share and per share data) were as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net income $ 37,616 $ 30,094 $ 112,880 $ 85,360 Preferred stock dividends (338) (338) (1,014) (1,014) Distribution to participating securities (213) (147) (622) (410) Net income attributable to common stockholders used to compute net income per share - basic 37,065 29,609 111,244 83,936 Dilutive effect of Exchangeable Senior Notes 72 1,885 474 5,636 Net income attributable to common stockholders used to compute net income per share - diluted $ 37,137 $ 31,494 $ 111,718 $ 89,572 Weighted-average common shares outstanding: Basic 27,938,568 23,890,537 27,144,953 23,889,903 Restricted stock and RSUs 118,567 98,093 115,445 95,527 PSUs — 78,582 — 78,582 Dilutive effect of Exchangeable Senior Notes 100,799 2,193,492 235,753 2,193,492 Diluted 28,157,934 26,260,704 27,496,151 26,257,504 Net income attributable to common stockholders per share: Basic $ 1.33 $ 1.24 $ 4.10 $ 3.51 Diluted $ 1.32 $ 1.20 $ 4.06 $ 3.41 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 9. 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 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Includes other inputs that are directly or indirectly observable in the marketplace. Level 3—Unobservable inputs that are supported by little or no market activities, therefore requiring an entity to develop its own assumptions. The following table presents the carrying value and approximate fair value of financial instruments at September 30, 2022 and December 31, 2021 (in thousands): At September 30, 2022 At December 31, 2021 Carrying Value Fair Value Carrying Value Fair Value Investments (1) $ 239,674 $ 239,126 $ 324,889 $ 324,772 Exchangeable Senior Notes (2) $ 6,369 $ 9,075 $ 32,232 $ 134,270 Notes due 2026 (2) $ 294,794 $ 267,267 $ 293,860 $ 318,486 (1) Short-term investments consisting of obligations of the U.S. government with an original maturity at the time of purchase of greater than three months are classified as held-to-maturity and valued using Level 1 inputs. (2) The fair value is determined based upon Level 2 inputs as the Exchangeable Senior Notes and Notes due 2026 were trading in the private market. As of September 30, 2022 and December 31, 2021, cash equivalent instruments consisted of $66.5 million and $72.0 million, respectively, in short-term money market funds that were measured using the net asset value per share that have not been classified using the fair value hierarchy. The fund invests primarily in short-term U.S. Treasury and government securities. Short-term investments consisting of certificate of deposits and obligations of the U.S. government are stated at amortized cost, which approximates their relative fair values due to the short-term maturities and market rates of interest of these instruments. The carrying amounts of financial instruments such as cash equivalents invested in certificates of deposit, obligations of the U.S. government with an original maturity at the time of purchase of less than or equal to three months, construction loan receivable, accounts payable, accrued expenses and other liabilities approximate their fair values due to the short-term maturities and market rates of interest of these instruments. |
Common Stock Incentive Plan
Common Stock Incentive Plan | 9 Months Ended |
Sep. 30, 2022 | |
Common Stock Incentive Plan | |
Common Stock Incentive Plan | 10. 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 shares. Any equity awards that lapse, expire, terminate, are canceled or are forfeited (including forfeitures in connection with satisfaction of tax withholdings obligations of the recipient) are re-credited to the 2016 Plan’s reserve for future issuance. The 2016 Plan automatically terminates on the date which is ten years following the effective date of the 2016 Plan. A summary of the restricted stock activity under the 2016 Plan and related information for the nine months ended September 30, 2022 is included in the table below: Weighted- Unvested Average Restricted Grant Date Fair Stock Value Balance at December 31, 2021 37,767 $ 92.49 Granted 21,645 $ 215.69 Vested (16,064) $ 80.47 Forfeited (1) (9,282) $ 56.94 Balance at March 31, 2022 34,066 $ 186.12 Granted 2,811 $ 128.11 Vested (1,987) $ 181.27 Balance at June 30, 2022 and September 30, 2022 34,890 $ 181.72 (1) Shares that were forfeited to cover the employees’ tax withholding obligation upon vesting . The remaining unrecognized compensation cost of approximately $4.4 million for restricted stock awards is expected to be recognized over a weighted-average amortization period of approximately 2.0 years as of September 30, 2022. The fair value of restricted stock that vested during the nine months ended September 30, 2022 was approximately $6.9 million. The following table summarizes our RSU activity for the nine months ended September 30, 2022. RSUs are issued as part of the Innovative Industrial Properties, Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”), which allows a select group of management and our non-employee directors to defer receiving certain of their cash and equity-based compensation. RSUs are subject to vesting conditions of the Deferred Compensation Plan and have the same economic rights as shares of restricted stock under the 2016 Plan: Weighted-Average Restricted Grant Date Fair Stock Units Value Balance at December 31, 2021 60,326 $ 120.24 Granted 20,853 $ 215.84 Balance at March 31, 2022 81,179 $ 144.79 Granted 2,498 $ 128.11 Balance at June 30, 2022 and September 30, 2022 83,677 $ 144.30 The remaining unrecognized compensation cost of approximately $5.5 million for RSU awards is expected to be recognized over an amortization period of approximately 1.8 years as of September 30, 2022. In January 2021, we issued 70,795 “target” PSUs to a select group of officers, which vest and are settled in shares of common stock (“2021 PSU Award Shares”) based on the Company’s total stockholder return over a period commencing on January 11, 2021 and ending on December 31, 2023 (the “2021 PSU Performance Period”) relative to two different comparator groups of companies. In January 2022, we issued 102,641 “target” PSUs to a select group of officers, which vest and are settled in shares of common stock (referred to herein together with the 2021 PSU Award Shares as the “Award Shares”) based on the Company’s total stockholder return over a period commencing on January 11, 2022 and ending on December 31, 2024 (referred to herein together with the 2021 PSU Performance Period as the “Performance Periods”) relative to two different comparator groups of companies. At the end of the applicable Performance Periods, a recipient of PSUs may receive as few as zero Award Shares or as many as 150% of the number of target PSUs in Award Shares, plus deemed dividends. PSUs will also be reduced as necessary so the total value at the vesting date does not exceed of the grant date PSU price, and if the Company’s absolute total stockholder return during the applicable Performance Periods is negative, the payout of Award Shares is capped at the target number of PSUs, notwithstanding the Company’s outperformance of comparator groups. No dividends are paid to the recipient during the applicable Performance Periods. At the end of the applicable Performance Periods, if the Company’s total stockholder return is such that the recipient earns Award Shares, the recipient will receive additional shares of common stock relating to dividends deemed to have been paid and reinvested on the Award Shares. The recipient of the Award Shares may not sell, transfer or otherwise dispose of the Award Shares for a one-year period following the vesting date of the Award Shares. The grant date fair values of the PSUs granted in January 2021 and January 2022 were $12.0 million and $20.0 million, respectively. The fair values were calculated using a Monte Carlo simulation pricing model based on the following assumptions: 2021 PSU Award 2022 PSU Award Fair Value Assumptions Fair Value Assumptions Valuation date January 6, 2021 January 7, 2022 Fair value per share on valuation date $169.51 $194.86 Expected term 3 years 3 years Expected price volatility 57.64% 55.99% Risk-free interest rate 0.20% 1.17% Discount for post vesting restriction 12.44% 12.22% The expected share price volatility was based on the historical volatility of our shares of common stock over a period of approximately the applicable Performance Periods. The risk-free interest rate was based on the zero-coupon risk-free interest rate derived from the Treasury Constant Maturities yield curve on the applicable valuation date. The discount for the post vesting restriction was estimated using the Finnerty model. Stock-based compensation for market-based PSU awards is based on the grant date fair value of the equity awards and is recognized over the applicable Performance Period. For the three and nine months ended September 30, 2022, we recognized stock-based compensation expense of approximately $2.7 million and $8.0 million, respectively, relating to PSU awards. For the three and nine months ended September 30, 2021, we recognized stock-based compensation expense of approximately $1.0 million and $3.0 million, respectively, relating to PSU awards. As of September 30, 2022, the remaining unrecognized compensation cost of approximately $20.0 million relating to PSU awards is expected to be recognized over the remaining Performance Period of approximately 2.0 years. As measured as of September 30, 2022, the performance thresholds for the vesting of the PSUs were not met for any of the applicable awards. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. Commitments and Contingencies Office Lease Year Amount 2022 (three months ending December 31) $ 121 2023 496 2024 511 2025 526 2026 543 Thereafter 45 Total future contractual lease payments 2,242 Effect of discounting (275) Office lease liability $ 1,967 Improvement Allowances Construction Loan. Environmental Matters. Litigation Class Action Lawsuit On April 25, 2022, a federal securities class action lawsuit was filed against the Company and certain of its officers. The case was named Michael V. Malozzi, individually and on behalf of others similarly situated v. Innovative Industrial Properties, Inc., Paul Smithers, Catherine Hastings and Andy Bui, Case No. 2-22-cv-02359, and alleges that we and certain of our officers made false or misleading statements regarding our business in violation of Section 10(b) of the Securities Exchange Act of 1934, as (the “Exchange Act”), SEC Rule 10b-5, and Section 20(a) of the Exchange Act. According to the filed complaint, the p On September 29, 2022, an Amended Class Action complaint was filed under the same Case Number, adding as defendants Alan D. Gold, Tracie J. Hager, and Benjamin C. Regin, and asserting causes of action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. According to the Amended Class Action Complaint, the plaintiff is seeking an undetermined amount of damages, interest, attorneys’ fees and costs and other relief on behalf of the putative classes of all persons who acquired shares of the Company’s common stock between August 7, 2020 and August 4, 2022. It is possible that similar lawsuits may yet be filed in the same or other courts that name the same or additional defendants. We intend to defend the lawsuit vigorously. However, at this time, we cannot predict the probable outcome of this action, and, accordingly, Derivative Action Lawsuit On July 26, 2022, a derivative action lawsuit was filed against the Company and certain of its officers and directors. The case was named John Rice, derivatively on behalf of Innovative Industrial Properties, Inc. v. Paul Smithers, Catherine Hastings, Andy Bui, Alan Gold, Gary Kreitzer, Mary Curran, Scott Shoemaker, David Stecher, and Innovative Industrial Properties, Inc., The plaintiffs are seeking declaratory relief, direction to reform and improve corporate governance and internal procedures, and an undetermined amount of damages, restitution, interest, and attorneys’ fees and costs. On September 6, 2022, the defendants in this action filed a Consent Motion to Stay the Proceedings, which was granted on October 11, 2022. On September 28, 2022, a second derivative action lawsuit was filed against the Company and certain of its officers and directors. The case was styled Karen Drover, derivatively on behalf of Innovative Industrial Properties, Inc. v. Paul Smithers, Catherine Hastings, Andy Bui, Alan Gold, Gary Kreitzer, Mary Curran, Scott Shoemaker, David Stecher, Defendants, and Innovative Industrial Properties Inc., Nominal Defendant Kings Garden Lawsuit On July 13, 2022, one of our tenants, Kings Garden Inc., defaulted on its obligations to pay base rent and property management fees under each of its six leases with our indirect, wholly owned subsidiary, IIP-CA 2 LP, and defaulted on its obligations to reimburse us for certain insurance premiums at the properties incurred by us that are payable by Kings Garden as operating expenses under such leases. For the three months ended September 30, 2022, Kings Garden’s monetary default under its lease with us was approximately $5.2 million in the aggregate, consisting of approximately $4.8 million of contractual base rents and property management fees and approximately $369,000 of insurance premiums and property taxes, but excluding applicable late charges and default interest. We applied a portion of the security deposits under the leases, totaling approximately $2.6 million, as payments for these amounts. On July 25, 2022, IIP-CA 2 LP filed a lawsuit against Kings Garden. The case was named IIP-CA 2 LP, a Delaware limited partnership v. Kings Garden Inc., a Nevada corporation, CK Endeavors, Inc., a California corporation, and JM Endeavors, Inc., a California corporation IIP-CA 2 LP, a Delaware limited partnership v. Kings Garden Inc., a Nevada corporation, CK Endeavors, Inc., a California corporation, JM Endeavors, Inc., a California corporation, Michael King, an individual, Gary LaSalle, an individual, Charles Kieley, an individual, and Laurie Kibby, an individual On September 11, 2022, the parties to the lawsuit entered into a confidential, conditional settlement agreement pertaining to matters related to the lawsuit. Pursuant to the conditional settlement agreement, Out of the amounts included in construction in progress at September 30, 2022, we expect to recover an additional approximately $6.0 million from Kings Garden, and we are in the process of investigating additional costs paid of approximately $9.8 million to determine whether these are potential overpayments. Although there is at least a reasonable possibility that a loss may have been incurred in connection with the default by Kings Garden and the related construction projects, as of September 30, 2022, we are unable to make such an estimate. We may, from time to time, be a party to other legal proceedings, which arise in the ordinary course of our business. Although the results of these proceedings, claims, inquiries, and investigations cannot be predicted with certainty, we do not believe that the final outcome of these matters is reasonably likely to have a material adverse effect on our business, financial condition, or results of operations. Regardless of final outcomes, however, any such proceedings, claims, inquiries, and investigations may nonetheless impose a significant burden on management and employees and may come with significant defense costs or unfavorable preliminary and interim rulings. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events | |
Subsequent Events | 12. Subsequent Events On October 11, 2022, we amended our lease with Sozo at one of our Michigan properties, pursuant to which we agreed to apply a part of the security deposit we hold for rental amounts due for the period from October 1, 2022 through December 31, 2022, which, absent the satisfaction of certain conditions, is subject to full repayment to us on January 1, 2023. On October 25, 2022, we amended our lease with Holistic at one of our Massachusetts properties, increasing the improvement allowance under the lease by $2.0 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. On October 27, 2022, we amended our lease with a subsidiary of 4Front Ventures Corp. (“4Front”) at one of our Illinois properties, providing 4Front an option, exercisable until November 11, 2022, to increase the improvement allowance under the lease by an amount between $15.0 million and up to $19.9 million. If 4Front exercises this option, the base rent under the lease will be adjusted accordingly and the term of the lease will be extended. On November 1, 2022, we sold a Pennsylvania industrial property that was leased to a subsidiary of Maitri Holdings, LLC for $23.5 million (approximately $461 per square foot), excluding transaction costs. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | |
Basis of Presentation | Basis of Presentation. 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, 2021. Any references to square footage or occupancy percentage, and any amounts derived from these values in these notes to the condensed consolidated financial statements, are outside the scope of our independent registered public accounting firm’s review. 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, 2022. |
Variable Interest Entities | Variable Interest Entities. |
Federal Income Taxes | Federal Income Taxes. |
Use of Estimates | Use of Estimates. |
Reportable Segment | Reportable Segment. |
Acquisition of Real Estate Properties | Acquisition of Real Estate Properties. The fair value of acquired in-place leases is derived based on our assessment of estimated lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased. The amounts recorded for acquired in-place leases are reflected as in-place lease intangible assets, net on our condensed consolidated balance sheets and are amortized on a straight-line basis as a component of depreciation and amortization expense over the remaining term of the applicable leases. The fair value of the above-market component of an acquired in-place operating lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining non-cancellable lease term and (ii) our estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition measured over the remaining non-cancellable term of the lease. The amount recorded for one above-market operating lease is included in other assets, net on our condensed consolidated balance sheets and is amortized on a straight-line basis as a reduction of rental revenues over the remaining term of the applicable lease. |
Cost Capitalization and Depreciation | Cost Capitalization and Depreciation. Amounts capitalized are depreciated over estimated useful lives determined by management. We depreciate buildings and improvements and tenant improvements based on our evaluation of the estimated useful life of each specific asset, not to exceed 40 years. For the three months ended September 30, 2022 and 2021, we recognized depreciation expense of approximately $15.7 million and $10.9 million, respectively, which is included in depreciation and amortization expense in our condensed consolidated statements of income. For the nine months ended September 30, 2022 and 2021, we recognized depreciation expense of approximately $44.4 million and $29.6 million, respectively, which is included in depreciation and amortization expense in our condensed consolidated statements of income. We depreciate office equipment and furniture and fixtures over estimated useful lives ranging from three Determining whether expenditures meet the criteria for capitalization and the assignment of depreciable lives requires management to exercise significant judgment. Project costs that are clearly associated with the acquisition and development or redevelopment of a real estate project, for which we are the accounting owner, are capitalized as a cost of that project. Expenditures that meet one or more of the following criteria generally qualify for capitalization: ● the expenditure provides benefit in future periods; and ● the expenditure extends the useful life of the asset beyond our original estimates. We define redevelopment properties as existing properties for which we expect to spend significant development and construction costs that are not reimbursements to tenants for improvements at the properties. When existing properties are determined to be redevelopment properties, the net carrying value of the buildings and improvements and tenant improvements are transferred to construction in progress while the redevelopment activities are in process. Costs capitalized to construction in progress related to redevelopment properties are transferred to buildings and improvements and tenant improvements at historical cost of the properties as the redevelopment project or phases of projects are placed in service. During the nine months ended September 30, 2022, we reclassified the net carrying value of buildings and improvements and tenant improvements totaling approximately $59.0 million to construction in progress in connection with the default by Kings Garden Inc. (“Kings Garden”) and the related litigation (see Note 11 “Commitments and Contingencies — Litigation — Kings Garden Lawsuit”). |
Provision for Impairment | Provision for Impairment. Long-lived assets are individually evaluated for impairment when conditions exist that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Impairment indicators or triggering events for long-lived assets to be held and used are assessed by project and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations, current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, construction costs, available market information, current and historical operating results, known trends, current market/economic conditions that may affect the property, and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount to its estimated fair value. We may adjust depreciation of properties that are expected to be disposed of or redeveloped prior to the end of their useful lives. No impairment losses were recognized during the nine months ended September 30, 2022 and 2021. |
Revenue Recognition | Revenue Recognition. |
Construction Loan | Construction Loan. |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Restricted Cash | Restricted Cash |
Investments | Investments. |
Exchangeable Notes | Exchangeable Notes. allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonexchangeable debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the Exchangeable Senior Notes as of the date of issuance. We measured the estimated fair value of the debt component of our Exchangeable Senior Notes as of the date of issuance based on our estimated nonexchangeable debt borrowing rate with the assistance of a third-party valuation specialist as we do not have a history of borrowing arrangements and there is limited empirical data available related to the Company’s industry due to the regulatory uncertainty of the cannabis market in which the Company’s tenants operate. The equity component of our Exchangeable Senior Notes was reflected within additional paid-in capital on our condensed consolidated balance sheets, and the resulting debt discount was amortized over the period during which the Exchangeable Senior Notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense. In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models, and convertible debt proceeds, unless issued with a substantial premium or an embedded conversion feature, will no longer be allocated between debt and equity components. ASU 2020-06 also updates the earnings per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares. We adopted ASU 2020-06 on January 1, 2022 and recognized a cumulative-effect adjustment of approximately $728,000 to the opening balance of retained earnings and derecognized approximately $1.3 million of the remaining equity component relating to the outstanding principal balance of our Exchangeable Senior Notes at the date of adoption. |
Deferred Financing Costs | Deferred Financing Costs. |
Stock-Based Compensation | Stock-Based Compensation. |
Lease Accounting | Lease Accounting . As lessee, we recognized a liability to account for our future obligations and a corresponding right-of-use asset related to our corporate office lease. The lease liability was initially measured based on the present value of the future lease payments discounted using the estimated incremental borrowing rate of 7.25%, which was the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. In November 2021, we amended the lease to extend the term from April 2025 to January 2027 in connection with an expansion of the leased space which did not commence until February 2022. As a result of the lease amendment, we re-measured the lease liability relating to the existing leased space and measured the lease liability relating to the expansion space based on the present value of the respective future lease payments (excluding the extension option that we are not reasonably certain to exercise), discounted using the estimated incremental borrowing rate of 5.5%, which was the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Subsequently, the lease liability is accreted by applying a discount rate established at the lease commencement date to the lease liability balance as of the beginning of the period and is reduced by the payments made during the period. The right-of-use asset is measured based on the corresponding lease liability. We did not incur any initial direct leasing costs and any other consideration exchanged with the landlord prior to the commencement of the lease. Subsequently, the right-of-use asset is amortized on a straight-line basis during the lease term. For the three months ended September 30, 2022 and 2021, we recognized office lease expense of approximately $121,000 and $57,000, respectively, which are included in general and administrative expense in our condensed consolidated statements of income. For the nine months ended September 30, 2022 and 2021, we recognized office lease expense of approximately $344,000 and $171,000, respectively, which are included in general and administrative expense in our condensed consolidated statements of income. For the nine months ended September 30, 2022 and 2021, amounts paid and classified as operating activities in our condensed consolidated statements of cash flows for the office lease were approximately $282,000 and $176,000, respectively. As lessor, for each of our real estate transactions involving the leaseback of the related property to the seller or affiliates of the seller, we determine whether these transactions qualify as sale and leaseback transactions under the accounting guidance. For these transactions, we consider various inputs and assumptions including, but not necessarily limited to, lease terms, renewal options, discount rates, and other rights and provisions in the purchase and sale agreement, lease and other documentation to determine whether control has been transferred to the Company or remains with the lessee. A transaction involving a sale leaseback will be treated as a purchase of a real estate property if it is considered to transfer control of the underlying asset from the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control and will be classified as a sales-type lease if control of the underlying asset is transferred to the lessee. Otherwise, the lease is treated as an operating lease. These criteria also include estimates and assumptions regarding the fair value of the leased facilities, minimum lease payments, the economic useful life of the facilities, the existence of a purchase option, and certain other terms in the lease agreements. The lease accounting guidance requires accounting for a transaction as a financing in a sale leaseback when the seller-lessee is provided an option to purchase the property from the landlord at the tenant’s option. Substantially all of our leases continued to be classified as operating leases and we continue to record revenue for each of our properties on a cash basis. Our tenant reimbursable revenue and property expenses continue to be presented on a gross basis as rental revenues and as property expenses, respectively, on our condensed consolidated statements of income. Property taxes paid directly by the lessee to a third party continue to be excluded from our condensed consolidated financial statements. Lease amendments are evaluated to determine if the modification grants the lessee an additional right-of-use not included in the original lease and if the lease payments increase commensurate with the standalone price of the additional right-of-use, adjusted for the circumstances of the particular contract. If both conditions are present, the lease amendment is accounted for as a new lease that is separate from the original lease. Our leases generally contain options to extend the lease terms at the prevailing market rate or at the expiring rental rate at the time of expiration. Certain of our leases provide the lessee with a right of first refusal or right of first offer in the event we market the leased property for sale. |
Concentration of Credit Risk | Concentration of Credit Risk The following table sets forth the five tenants in our portfolio that represented the largest percentage of our total rental revenues for the three and nine months ended September 30, 2022 and 2021, including tenant reimbursements: For the Three Months Ended September 30, 2022 Percentage of Number of Rental Leases Revenue PharmaCann Inc. ("PharmaCann") 11 14 % SH Parent, Inc. ("Parallel") 4 10 % Ascend Wellness Holdings, Inc. ("Ascend") 4 10 % Green Thumb Industries, Inc. ("Green Thumb") 3 8 % Trulieve Cannabis Corp. ("Trulieve") 6 7 % For the Nine Months Ended September 30, 2022 Percentage of Number of Rental Leases Revenue PharmaCann 11 14 % Parallel 4 10 % Ascend 4 9 % Kings Garden (1) 6 7 % Trulieve 6 7 % For the Three Months Ended September 30, 2021 Percentage of Number of Rental Leases Revenue Parallel 4 12 % PharmaCann 5 12 % Kings Garden (1) 5 8 % Ascend 3 8 % Green Thumb 3 7 % For the Nine Months Ended September 30, 2021 Percentage of Number of Rental Leases Revenue PharmaCann 5 13 % Parallel 4 10 % Ascend 3 9 % Cresco Labs Inc. 5 8 % Kings Garden (1) 5 7 % (1) On July 13, 2022, Kings Garden defaulted on its obligations to pay rent at all of the properties it leases with us, and pursuant to a confidential, conditional settlement agreement executed on September 11, 2022 between us and Kings Garden, we terminated the leases for two properties that were in development or redevelopment as of September 30, 2022 and regained possession of those properties. We have recovered $10.0 million of funds paid to Kings Garden. See Note 11 “Commitments and Contingencies — Litigation — Kings Garden Lawsuit” to our condensed consolidated financial statements for more information. In each of the tables above, these leases include leases with affiliates of each entity, for which the entity has provided a corporate guaranty. As of September 30, 2022 and December 31, 2021, none of our properties individually represented more than 5% of our net real estate held for investment. We have deposited cash with a financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of September 30, 2022, we had cash accounts in excess of FDIC insured limits. We have not experienced any losses in such accounts. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | |
Schedule of tenants in the company's portfolio that represented the largest percentage of total rental revenue for each period presented, including tenant reimbursements | The following table sets forth the five tenants in our portfolio that represented the largest percentage of our total rental revenues for the three and nine months ended September 30, 2022 and 2021, including tenant reimbursements: For the Three Months Ended September 30, 2022 Percentage of Number of Rental Leases Revenue PharmaCann Inc. ("PharmaCann") 11 14 % SH Parent, Inc. ("Parallel") 4 10 % Ascend Wellness Holdings, Inc. ("Ascend") 4 10 % Green Thumb Industries, Inc. ("Green Thumb") 3 8 % Trulieve Cannabis Corp. ("Trulieve") 6 7 % For the Nine Months Ended September 30, 2022 Percentage of Number of Rental Leases Revenue PharmaCann 11 14 % Parallel 4 10 % Ascend 4 9 % Kings Garden (1) 6 7 % Trulieve 6 7 % For the Three Months Ended September 30, 2021 Percentage of Number of Rental Leases Revenue Parallel 4 12 % PharmaCann 5 12 % Kings Garden (1) 5 8 % Ascend 3 8 % Green Thumb 3 7 % For the Nine Months Ended September 30, 2021 Percentage of Number of Rental Leases Revenue PharmaCann 5 13 % Parallel 4 10 % Ascend 3 9 % Cresco Labs Inc. 5 8 % Kings Garden (1) 5 7 % (1) On July 13, 2022, Kings Garden defaulted on its obligations to pay rent at all of the properties it leases with us, and pursuant to a confidential, conditional settlement agreement executed on September 11, 2022 between us and Kings Garden, we terminated the leases for two properties that were in development or redevelopment as of September 30, 2022 and regained possession of those properties. We have recovered $10.0 million of funds paid to Kings Garden. See Note 11 “Commitments and Contingencies — Litigation — Kings Garden Lawsuit” to our condensed consolidated financial statements for more information. In each of the tables above, these leases include leases with affiliates of each entity, for which the entity has provided a corporate guaranty. |
Dividends (Tables)
Dividends (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Dividends | |
Schedule of dividends declared | The following table describes the dividends declared by the Company during the nine months ended September 30, 2022: Amount Dividend Dividend Declaration Date Security Class Per Share Period Covered Paid Date Amount (In thousands) March 14, 2022 Common stock $ 1.75 January 1, 2022 to March 31, 2022 April 14, 2022 $ 45,830 March 14, 2022 Series A preferred stock $ 0.5625 January 15, 2022 to April 14, 2022 April 14, 2022 $ 338 June 15, 2022 Common stock $ 1.75 April 1, 2022 to June 30, 2022 July 15, 2022 $ 49,101 June 15, 2022 Series A preferred stock $ 0.5625 April 15, 2022 to July 14, 2022 July 15, 2022 $ 338 September 15, 2022 Common stock $ 1.80 July 1, 2022 to September 30, 2022 October 14, 2022 $ 50,503 September 15, 2022 Series A preferred stock $ 0.5625 July 15, 2022 to October 14, 2022 October 14, 2022 $ 338 |
Investments in Real Estate (Tab
Investments in Real Estate (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Schedule of real estate properties | The Company acquired the following properties during the nine months ended September 30, 2022 (dollars in thousands): Rentable Square Purchase Transaction Property Market Closing Date Feet (1) Price Costs Total 4Front MA Massachusetts January 28, 2022 57,000 $ 16,000 $ 20 $ 16,020 (2) Ascend NJ New Jersey February 10, 2022 114,000 35,400 8 35,408 (3) Verano PA Pennsylvania March 23, 2022 3,000 2,750 68 2,818 Kings Garden CA California March 25, 2022 23,000 8,158 11 8,169 (4) MCP MD Maryland April 13, 2022 84,000 25,000 290 25,290 (5) Harvest AZ Arizona April 27, 2022 17,000 5,238 11 5,249 (5) TILT MA Massachusetts May 16, 2022 104,000 40,000 32 40,032 (5) Texas Original TX Texas June 14, 2022 85,000 12,040 25 12,065 (5)(6) Curaleaf MA Massachusetts September 1, 2022 104,000 21,500 25 21,525 (7) Total 591,000 $ 166,086 $ 490 $ 166,576 (8) (1) Includes expected rentable square feet at completion of construction of certain properties. (2) The acquisition of the property did not satisfy the requirements for sale-leaseback accounting and therefore, the transaction is recognized as a note receivable and is included in other assets, net on our condensed consolidated balance sheet. (3) The tenant is expected to complete improvements at the property, for which we agreed to provide funding of up to $4.6 million. (4) The purchase price includes $1.8 million holdback held in an escrow account, which is subject to distribution to the seller upon seller’s completion of certain improvements at the property. As of September 30, 2022, we have distributed approximately $1.4 million of the holdback. The remaining approximately $400,000 is included in restricted cash on our condensed consolidated balance sheet. (5) The acquisitions of the MCP MD, Harvest AZ, TILT MA and Texas Original TX properties were made through consolidated VIEs utilizing Reverse 1031 Exchanges that were entered into at the time each of the properties was acquired. See Note 2 “Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements – Variable Interest Entities” for more information regarding the Company’s Reverse 1031 Exchanges and consolidation of VIEs. (6) The tenant is expected to complete improvements at the property, for which we agreed to provide funding of up to approximately $10.0 million. The purchase price includes approximately $908,000 attributable to the property which did not satisfy the requirements for sale-leaseback accounting; therefore, this amount is recognized as a note receivable and is included in other assets, net on our condensed consolidated balance sheet. (7) The purchase price includes approximately $1.0 million held in an escrow account, which is subject to distribution to the seller upon seller’s completion of certain improvements at the property and is included in restricted cash on our condensed consolidated balance sheet. (8) Approximately $16.9 million was included in other assets; $2.8 million was included in restricted cash; approximately $14.5 million was allocated to land; approximately $131.5 million was allocated to building and improvements; and approximately $798,000 was allocated to in-place leases. |
Schedule of future contractual minimum rent | Future contractual minimum rent (including base rent and property management fees) under the operating leases as of September 30, 2022 for future periods is summarized as follows (in thousands): Year Contractual Minimum Rent 2022 (three months ending December 31) $ 69,460 2023 287,080 2024 295,416 2025 304,199 2026 313,276 Thereafter 4,418,742 Total $ 5,688,173 |
Acquired In-Place Lease Intangible Assets | |
Schedule of intangible assets and related accumulated amortization | In-place lease intangible assets and related accumulated amortization as of September 30, 2022 and December 31, 2021 is as follows (in thousands): September 30, 2022 December 31, 2021 In-place lease intangible assets $ 9,979 $ 9,181 Accumulated amortization (659) (33) In-place lease intangible assets, net $ 9,320 $ 9,148 |
Schedule of estimated annual amortization | No amortization expense was recognized for three and nine months ended September 30, 2021. The remaining weighted-average amortization period of the value of acquired in-place leases was approximately 10.9 years, and the estimated annual amortization of the value of the acquired in-place leases as of September 30, 2022 is as follows (in thousands): Year Amount 2022 (three months ending December 31) $ 215 2023 860 2024 860 2025 860 2026 860 Thereafter 5,665 Total $ 9,320 |
Above-Market Lease | |
Schedule of intangible assets and related accumulated amortization | The above-market lease and related accumulated amortization included in other assets, net on our condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 is as follows (in thousands): September 30, 2022 December 31, 2021 Above-market lease $ 1,054 $ 1,054 Accumulated amortization (73) (4) Above-market lease, net $ 981 $ 1,050 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Summary of principal payments on outstanding indebtedness | The following table summarizes the principal payments on our outstanding indebtedness as of September 30, 2022 (in thousands): Payments Due by Year Amount 2022 (three months ended December 31) $ — 2023 — 2024 6,436 2025 — 2026 300,000 Thereafter — Total $ 306,436 |
Exchangeable Senior Notes | |
Schedule of interest expense | The following table details our interest expense related to the Exchangeable Senior Notes (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Cash coupon $ 60 $ 1,348 $ 391 $ 4,042 Amortization of debt discount — 288 — 855 Amortization of issuance cost 12 249 83 739 Total interest expense $ 72 $ 1,885 $ 474 $ 5,636 |
Schedule of carrying value | The following table details the carrying value of our Exchangeable Senior Notes (in thousands): September 30, 2022 December 31, 2021 Principal amount $ 6,436 $ 33,373 Unamortized discount — (612) Unamortized issuance cost (67) (529) Carrying value $ 6,369 $ 32,232 |
Notes due 2026 | |
Schedule of interest expense | The following table details our interest expense related to the Notes due 2026 (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Cash coupon $ 4,125 $ 4,125 $ 12,375 $ 5,821 Amortization of issuance cost 316 299 934 417 Total interest expense $ 4,441 $ 4,424 $ 13,309 $ 6,238 |
Schedule of carrying value | The following table details the carrying value of our Notes due 2026 (in thousands): September 30, 2022 December 31, 2021 Principal amount $ 300,000 $ 300,000 Unamortized issuance cost (5,206) (6,140) Carrying value $ 294,794 $ 293,860 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Net Income Per Share | |
Schedule of earnings per share, basic and diluted | Computations of net income per basic and diluted share (in thousands, except share and per share data) were as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net income $ 37,616 $ 30,094 $ 112,880 $ 85,360 Preferred stock dividends (338) (338) (1,014) (1,014) Distribution to participating securities (213) (147) (622) (410) Net income attributable to common stockholders used to compute net income per share - basic 37,065 29,609 111,244 83,936 Dilutive effect of Exchangeable Senior Notes 72 1,885 474 5,636 Net income attributable to common stockholders used to compute net income per share - diluted $ 37,137 $ 31,494 $ 111,718 $ 89,572 Weighted-average common shares outstanding: Basic 27,938,568 23,890,537 27,144,953 23,889,903 Restricted stock and RSUs 118,567 98,093 115,445 95,527 PSUs — 78,582 — 78,582 Dilutive effect of Exchangeable Senior Notes 100,799 2,193,492 235,753 2,193,492 Diluted 28,157,934 26,260,704 27,496,151 26,257,504 Net income attributable to common stockholders per share: Basic $ 1.33 $ 1.24 $ 4.10 $ 3.51 Diluted $ 1.32 $ 1.20 $ 4.06 $ 3.41 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value of Financial Instruments | |
Schedule of condensed financial statements | The following table presents the carrying value and approximate fair value of financial instruments at September 30, 2022 and December 31, 2021 (in thousands): At September 30, 2022 At December 31, 2021 Carrying Value Fair Value Carrying Value Fair Value Investments (1) $ 239,674 $ 239,126 $ 324,889 $ 324,772 Exchangeable Senior Notes (2) $ 6,369 $ 9,075 $ 32,232 $ 134,270 Notes due 2026 (2) $ 294,794 $ 267,267 $ 293,860 $ 318,486 (1) Short-term investments consisting of obligations of the U.S. government with an original maturity at the time of purchase of greater than three months are classified as held-to-maturity and valued using Level 1 inputs. (2) The fair value is determined based upon Level 2 inputs as the Exchangeable Senior Notes and Notes due 2026 were trading in the private market. |
Common Stock Incentive Plan (Ta
Common Stock Incentive Plan (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Restricted Shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of the activity | A summary of the restricted stock activity under the 2016 Plan and related information for the nine months ended September 30, 2022 is included in the table below: Weighted- Unvested Average Restricted Grant Date Fair Stock Value Balance at December 31, 2021 37,767 $ 92.49 Granted 21,645 $ 215.69 Vested (16,064) $ 80.47 Forfeited (1) (9,282) $ 56.94 Balance at March 31, 2022 34,066 $ 186.12 Granted 2,811 $ 128.11 Vested (1,987) $ 181.27 Balance at June 30, 2022 and September 30, 2022 34,890 $ 181.72 (1) Shares that were forfeited to cover the employees’ tax withholding obligation upon vesting . |
RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of the activity | The following table summarizes our RSU activity for the nine months ended September 30, 2022. RSUs are issued as part of the Innovative Industrial Properties, Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”), which allows a select group of management and our non-employee directors to defer receiving certain of their cash and equity-based compensation. RSUs are subject to vesting conditions of the Deferred Compensation Plan and have the same economic rights as shares of restricted stock under the 2016 Plan: Weighted-Average Restricted Grant Date Fair Stock Units Value Balance at December 31, 2021 60,326 $ 120.24 Granted 20,853 $ 215.84 Balance at March 31, 2022 81,179 $ 144.79 Granted 2,498 $ 128.11 Balance at June 30, 2022 and September 30, 2022 83,677 $ 144.30 |
PSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of fair value assumptions | The grant date fair values of the PSUs granted in January 2021 and January 2022 were $12.0 million and $20.0 million, respectively. The fair values were calculated using a Monte Carlo simulation pricing model based on the following assumptions: 2021 PSU Award 2022 PSU Award Fair Value Assumptions Fair Value Assumptions Valuation date January 6, 2021 January 7, 2022 Fair value per share on valuation date $169.51 $194.86 Expected term 3 years 3 years Expected price volatility 57.64% 55.99% Risk-free interest rate 0.20% 1.17% Discount for post vesting restriction 12.44% 12.22% |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Schedule of future contractual lease payments | Office Lease Year Amount 2022 (three months ending December 31) $ 121 2023 496 2024 511 2025 526 2026 543 Thereafter 45 Total future contractual lease payments 2,242 Effect of discounting (275) Office lease liability $ 1,967 |
Organization (Details)
Organization (Details) | Sep. 30, 2022 |
Iip Operating Partnership Lp | |
Percentage Leased | 100% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements - Variable Interest Entities (Details) $ in Thousands | Sep. 30, 2022 USD ($) entity property | Feb. 02, 2022 USD ($) |
Purchase Price | $ 166,086 | $ 3,300 |
Variable Interest Entities | ||
Number of properties acquired | property | 4 | |
Purchase Price | $ 82,300 | |
Number of VIEs | entity | 4 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements - Additional Information (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Jan. 01, 2019 | Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) property | Sep. 30, 2022 USD ($) property segment | Sep. 30, 2021 USD ($) property | Dec. 31, 2021 USD ($) | Nov. 30, 2021 | Jun. 30, 2021 USD ($) | Dec. 31, 2018 | |
Number of Reportable Segments | segment | 1 | ||||||||
Total investment in property | $ 2,050,581,000 | $ 2,050,581,000 | $ 1,640,166,000 | ||||||
Depreciation expense | 15,700,000 | $ 10,900,000 | 44,400,000 | $ 29,600,000 | |||||
Impairment loss | 0 | 0 | |||||||
Maximum construction loan agreed to lend | $ 18,500,000 | ||||||||
Construction loan funded | 17,698,000 | 17,698,000 | 12,916,000 | ||||||
Cash equivalents | $ 66,500,000 | 66,500,000 | 72,000,000 | ||||||
Lease, Practical Expedients, Package [true false] | true | ||||||||
Incremental borrowing rate | 5.50% | 7.25% | |||||||
Amounts paid and classified as operating activities for the office lease | $ 282,000 | $ 176,000 | |||||||
Number of properties lease terminated | property | 2 | 2 | 2 | 2 | |||||
Adjustment | Accounting Standards Update 2020-06 | |||||||||
Accumulated deficit | 728,000 | ||||||||
Equity Components | $ 1,300,000 | ||||||||
Geographic Concentration Risk | Net real estate held for investment | |||||||||
Concentration Risk, Threshold Percentage | 5% | 5% | |||||||
General and administrative expense | |||||||||
Office lease expense | $ 121,000 | $ 57,000 | $ 344,000 | $ 171,000 | |||||
Maximum | |||||||||
Cash, FDIC Insured Amount | 250,000 | $ 250,000 | |||||||
Building and Improvements | |||||||||
Property, Plant and Equipment, Useful Life | 40 years | ||||||||
Office equipment and furniture and fixtures | Minimum | |||||||||
Property, Plant and Equipment, Useful Life | 3 years | ||||||||
Office equipment and furniture and fixtures | Maximum | |||||||||
Property, Plant and Equipment, Useful Life | 7 years | ||||||||
Construction in Progress [Member] | Kings Garden Lawsuit | Kings Garden. | Adjustment | |||||||||
Total investment in property | $ 59,000,000 | $ 59,000,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements - Concentration of Credit Risk (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 property lease tenant | Sep. 30, 2021 lease | Sep. 30, 2022 USD ($) lease property tenant | Sep. 30, 2021 lease | |
Concentration Risk [Line Items] | ||||
Number of Properties | property | 111 | 111 | ||
Kings Garden Lawsuit | ||||
Concentration Risk [Line Items] | ||||
Funds recovered | $ | $ 10 | |||
Rental revenues (including tenant reimbursements) | Customer concentration | ||||
Concentration Risk [Line Items] | ||||
Number of Tenants | tenant | 5 | 5 | ||
Rental revenues (including tenant reimbursements) | Customer concentration | PharmaCann | ||||
Concentration Risk [Line Items] | ||||
Number of Leases | 11 | 5 | 11 | 5 |
Percentage of Rental Revenue | 14% | 12% | 14% | 13% |
Rental revenues (including tenant reimbursements) | Customer concentration | Parallel | ||||
Concentration Risk [Line Items] | ||||
Number of Leases | 4 | 4 | 4 | 4 |
Percentage of Rental Revenue | 10% | 12% | 10% | 10% |
Rental revenues (including tenant reimbursements) | Customer concentration | Ascend | ||||
Concentration Risk [Line Items] | ||||
Number of Leases | 4 | 3 | 4 | 3 |
Percentage of Rental Revenue | 10% | 8% | 9% | 9% |
Rental revenues (including tenant reimbursements) | Customer concentration | Cresco Labs Inc. | ||||
Concentration Risk [Line Items] | ||||
Number of Leases | 5 | |||
Percentage of Rental Revenue | 8% | |||
Rental revenues (including tenant reimbursements) | Customer concentration | Kings Garden | ||||
Concentration Risk [Line Items] | ||||
Number of Leases | 5 | 6 | 5 | |
Percentage of Rental Revenue | 8% | 7% | 7% | |
Rental revenues (including tenant reimbursements) | Customer concentration | Trulieve | ||||
Concentration Risk [Line Items] | ||||
Number of Leases | 6 | 6 | ||
Percentage of Rental Revenue | 7% | 7% | ||
Rental revenues (including tenant reimbursements) | Customer concentration | Green Thumb | ||||
Concentration Risk [Line Items] | ||||
Number of Leases | 3 | 3 | ||
Percentage of Rental Revenue | 8% | 7% |
Common Stock (Details)
Common Stock (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Apr. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 | 50,000,000 | |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | |
Common Stock, Shares Issued | 27,973,694 | 27,973,694 | 25,612,541 | |
Common Stock, Shares Outstanding | 27,973,694 | 27,973,694 | 25,612,541 | |
Number of shares issued | 1,815,790 | |||
Issuance of common stock, net of offering costs | $ 330,900,000 | $ 351,960,000 | ||
Number of shares issued upon conversion | 265 | 413,166 | ||
Outstanding principal amount | $ 17,000 | $ 26,900,000 | ||
At The Market Offerings | ||||
Maximum number of common stock issuable | 500,000,000 | 500,000,000 | ||
Number of shares issued | 117,023 | |||
Issuance of common stock, net of offering costs | $ 21,100,000 | |||
Payment of stock offering costs | $ 434,000 | |||
Over-Allotment Option | ||||
Number of shares issued | 236,842 |
Preferred Stock (Details)
Preferred Stock (Details) - $ / shares | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | 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 | |
Series A Preferred Stock | |||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | ||
Preferred Stock, Shares Issued | 600,000 | 600,000 | |
Preferred Stock, Shares Outstanding | 600,000 | 600,000 | |
Preferred Stock, Dividend Rate, Percentage | 9% | 9% | |
Preferred Stock, Voting Rights | Holders of the Series A Preferred Stock generally have no voting rights except for limited voting rights if the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances. | ||
Series A Preferred Stock | Forecast | |||
Preferred Stock, Redemption Price Per Share | $ 25 |
Dividends (Details)
Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |||||||
Oct. 14, 2022 | Sep. 15, 2022 | Jul. 15, 2022 | Jun. 15, 2022 | Apr. 14, 2022 | Mar. 14, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Dividends declared per common share | $ 1.80 | $ 1.75 | $ 1.75 | |||||
Dividends declared per Series A preferred stock | $ 0.5625 | $ 0.5625 | $ 0.5625 | |||||
Dividend amount - Common stock | $ 49,101 | $ 45,830 | $ 133,440 | $ 94,971 | ||||
Dividend amount - Series A preferred stock | $ 338 | $ 338 | $ 1,014 | $ 1,014 | ||||
Subsequent event | ||||||||
Dividend amount - Common stock | $ 50,503 | |||||||
Dividend amount - Series A preferred stock | $ 338 |
Investments in Real Estate (Det
Investments in Real Estate (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 USD ($) ft² | Feb. 02, 2022 USD ($) | |
Rentable Square Feet | ft² | 591,000 | |
Initial Purchase Price | $ 166,086 | $ 3,300 |
Transaction Costs | 490 | |
Total | $ 166,576 | |
4Front MA | ||
Rentable Square Feet | ft² | 57,000 | |
Initial Purchase Price | $ 16,000 | |
Transaction Costs | 20 | |
Total | $ 16,020 | |
Ascend NJ | ||
Rentable Square Feet | ft² | 114,000 | |
Initial Purchase Price | $ 35,400 | |
Transaction Costs | 8 | |
Total | $ 35,408 | |
Verano PA | ||
Rentable Square Feet | ft² | 3,000 | |
Initial Purchase Price | $ 2,750 | |
Transaction Costs | 68 | |
Total | $ 2,818 | |
Kings Garden CA | ||
Rentable Square Feet | ft² | 23,000 | |
Initial Purchase Price | $ 8,158 | |
Transaction Costs | 11 | |
Total | $ 8,169 | |
MCP MD | ||
Rentable Square Feet | ft² | 84,000 | |
Initial Purchase Price | $ 25,000 | |
Transaction Costs | 290 | |
Total | $ 25,290 | |
Harvest AZ | ||
Rentable Square Feet | ft² | 17,000 | |
Initial Purchase Price | $ 5,238 | |
Transaction Costs | 11 | |
Total | $ 5,249 | |
TILT MA | ||
Rentable Square Feet | ft² | 104,000 | |
Initial Purchase Price | $ 40,000 | |
Transaction Costs | 32 | |
Total | $ 40,032 | |
Texas Original TX | ||
Rentable Square Feet | ft² | 85,000 | |
Initial Purchase Price | $ 12,040 | |
Transaction Costs | 25 | |
Total | $ 12,065 | |
Curaleaf MA | ||
Rentable Square Feet | ft² | 104,000 | |
Initial Purchase Price | $ 21,500 | |
Transaction Costs | 25 | |
Total | $ 21,525 |
Investments in Real Estate - Ad
Investments in Real Estate - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Jun. 30, 2022 | Apr. 30, 2022 | Mar. 31, 2022 | Feb. 28, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Feb. 02, 2022 | Dec. 31, 2021 | |
Rental (including tenant reimbursements) | $ 70,345,000 | $ 53,856,000 | $ 204,454,000 | $ 145,608,000 | ||||||
Operating Income (Loss) | 41,356,000 | 36,293,000 | 125,377,000 | 96,909,000 | ||||||
Purchase Price | 166,086,000 | 166,086,000 | $ 3,300,000 | |||||||
Real estate property cost | 303,900,000 | 303,900,000 | ||||||||
Tenant improvements and construction activities funded | 316,500,000 | 316,500,000 | ||||||||
Total Property Acquisitions | 166,576,000 | 166,576,000 | ||||||||
Other Revenue | ||||||||||
Interest revenue | 538,000 | 1,400,000 | ||||||||
Other assets | ||||||||||
Total Property Acquisitions | 16,900,000 | 16,900,000 | ||||||||
Restricted Cash. | ||||||||||
Total Property Acquisitions | 2,800,000 | 2,800,000 | ||||||||
Acquired In-Place Lease Intangible Assets | ||||||||||
Initial value | 9,320,000 | 9,320,000 | $ 9,148,000 | |||||||
Amortization expense | 215,000 | $ 0 | $ 626,000 | 0 | ||||||
Weighted-average amortization period (in years) | 10 years 10 months 24 days | |||||||||
Total Property Acquisitions | 798,000 | $ 798,000 | ||||||||
Above-Market Lease | ||||||||||
Initial value | 981,000 | $ 981,000 | $ 1,050,000 | |||||||
Amortization period (in years) | 10 years 7 months 6 days | |||||||||
Amortization expense | 23,000 | $ 69,000 | ||||||||
Land | ||||||||||
Total Property Acquisitions | 14,500,000 | 14,500,000 | ||||||||
Building and Improvements | ||||||||||
Total Property Acquisitions | 131,500,000 | 131,500,000 | ||||||||
Properties Acquired In 2022 | ||||||||||
Rental (including tenant reimbursements) | 6,600,000 | |||||||||
Operating Income (Loss) | 4,800,000 | |||||||||
Properties Acquired In 2021 | ||||||||||
Rental (including tenant reimbursements) | 11,900,000 | |||||||||
Operating Income (Loss) | $ 10,000,000 | |||||||||
PharmaCann | New York Properties | ||||||||||
Increase amount of tenant improvement allowance | $ 45,000,000 | |||||||||
Tenant improvement allowance | $ 78,500,000 | |||||||||
Curaleaf | Pennsylvania properties | ||||||||||
Increase amount of tenant improvement allowance | $ 35,000,000 | |||||||||
Tenant improvement allowance | 47,400,000 | |||||||||
Curaleaf | Illinois properties | ||||||||||
Increase amount of tenant improvement allowance | 10,900,000 | |||||||||
Tenant improvement allowance | 29,500,000 | |||||||||
Ascend | Michigan Properties | ||||||||||
Increase amount of tenant improvement allowance | $ 4,400,000 | |||||||||
Tenant improvement allowance | 19,400,000 | |||||||||
Ascend | Massachusetts properties | ||||||||||
Increase amount of tenant improvement allowance | 14,900,000 | |||||||||
Tenant improvement allowance | 37,200,000 | |||||||||
Ascend | Maximum | ||||||||||
Agreed funding for redevelopment of building | 4,600,000 | 4,600,000 | ||||||||
Green Thumb | Pennsylvania properties | ||||||||||
Increase amount of tenant improvement allowance | 55,000,000 | |||||||||
Tenant improvement allowance | 74,300,000 | |||||||||
Holistic At Massachusetts | Michigan Properties | ||||||||||
Increase amount of tenant improvement allowance | 3,500,000 | |||||||||
Tenant improvement allowance | $ 22,300,000 | |||||||||
Green Peak Industries LLC [Member] | Michigan Properties | ||||||||||
Increase amount of tenant improvement allowance | $ 18,000,000 | |||||||||
Tenant improvement allowance | $ 47,500,000 | |||||||||
Kings Garden CA | ||||||||||
Purchase price holdback | 1,400,000 | 1,400,000 | ||||||||
Purchase price holdback held in escrow account | 1,800,000 | 1,800,000 | ||||||||
Purchase Price | 8,158,000 | 8,158,000 | ||||||||
Total Property Acquisitions | 8,169,000 | 8,169,000 | ||||||||
Kings Garden CA | Restricted Cash. | ||||||||||
Investment purchase price holdback | 400,000 | 400,000 | ||||||||
Texas Original TX | ||||||||||
Agreed funding for redevelopment of building | 10,000,000 | 10,000,000 | ||||||||
Purchase Price | 12,040,000 | 12,040,000 | ||||||||
Total Property Acquisitions | 12,065,000 | 12,065,000 | ||||||||
Texas Original TX | Other assets | ||||||||||
Investment purchase price, not part of construction | 908,000 | 908,000 | ||||||||
Sozo Health, Inc. [Member] | Michigan Properties | ||||||||||
Increase amount of tenant improvement allowance | 1,200,000 | |||||||||
Tenant improvement allowance | $ 7,000,000 | |||||||||
4Front MA | ||||||||||
Purchase Price | 16,000,000 | 16,000,000 | ||||||||
Total Property Acquisitions | 16,020,000 | 16,020,000 | ||||||||
Curaleaf MA | ||||||||||
Purchase price holdback held in escrow account | 1,000,000 | 1,000,000 | ||||||||
Purchase Price | 21,500,000 | 21,500,000 | ||||||||
Total Property Acquisitions | $ 21,525,000 | $ 21,525,000 |
Investments in Real Estate - In
Investments in Real Estate - Intangible assets and related accumulated amortization (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Acquired In-Place Lease Intangible Assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 9,979 | $ 9,181 |
Accumulated amortization | (659) | (33) |
Net | 9,320 | 9,148 |
Above-Market Lease | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 1,054 | 1,054 |
Accumulated amortization | (73) | (4) |
Net | $ 981 | $ 1,050 |
Investments in Real Estate - Es
Investments in Real Estate - Estimated annual amortization (Details) - Acquired In-Place Lease Intangible Assets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2022 (three months ending December 31) | $ 215 | |
2023 | 860 | |
2024 | 860 | |
2025 | 860 | |
2026 | 860 | |
Thereafter | 5,665 | |
Net | $ 9,320 | $ 9,148 |
Investments in Real Estate - Fu
Investments in Real Estate - Future Contractual Minimum Rent (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Contractual Minimum Rent | |
2022 (three months ending December 31) | $ 69,460 |
2023 | 287,080 |
2024 | 295,416 |
2025 | 304,199 |
2026 | 313,276 |
Thereafter | 4,418,742 |
Total | $ 5,688,173 |
Debt - Exchangeable Senior Note
Debt - Exchangeable Senior Notes - Additional Information (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) | |
Number of shares issued upon conversion | shares | 265 | 413,166 | |
Loss on exchange of Exchangeable Senior Notes | $ 125,000 | ||
Threshold Limit of Convertible Debt for Issue of Shares | $ 2,600,000 | 2,600,000 | |
Outstanding principal amount | 17,000 | 26,900,000 | |
Exchange of Exchangeable Senior Notes | 17,000 | 26,682,000 | |
Additional Paid-In-Capital | |||
Exchange of Exchangeable Senior Notes | $ 17,000 | $ 26,682,000 | |
Exchangeable Senior Notes | |||
Interest rate | 3.75% | 3.75% | |
Exchangeable Senior Notes | Accounts payable and accrued expenses | |||
Accrued interest payable | $ 10,000 | $ 10,000 | $ 365,000 |
Exchangeable Senior Notes | Common Stock | |||
Debt Instrument, Convertible, Conversion Ratio | 15.86813 | ||
Conversion of Stock, Amount Converted | $ 1,000 | ||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 63.02 | $ 63.02 |
Debt - Exchangeable Senior No_2
Debt - Exchangeable Senior Notes - Interest expense (Details) - Exchangeable Senior Notes - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Cash coupon | $ 60 | $ 1,348 | $ 391 | $ 4,042 |
Amortization of debt discount | 288 | 855 | ||
Amortization of issuance cost | 12 | 249 | 83 | 739 |
Total interest expense | $ 72 | $ 1,885 | $ 474 | $ 5,636 |
Debt - Exchangeable Senior No_3
Debt - Exchangeable Senior Notes - Carrying value (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Principal amount | $ 306,436 | |
Exchangeable Senior Notes | ||
Principal amount | 6,436 | $ 33,373 |
Unamortized discount | (612) | |
Unamortized issuance cost | (67) | (529) |
Carrying value | $ 6,369 | $ 32,232 |
Debt - Notes due 2026 (Details)
Debt - Notes due 2026 (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
May 25, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | May 05, 2021 | |
Principal amount | $ 306,436 | |||
Notes due 2026 | ||||
Principal amount | $ 300,000 | $ 300,000 | $ 300,000 | |
Interest rate | 5.50% | 5.50% | ||
Issuance costs | $ 6,800 | |||
Notes due 2026 | Minimum | ||||
Debt instrument change in debt rating interest rate | 6% | |||
Notes due 2026 | Maximum | ||||
Debt instrument change in debt rating interest rate | 6.50% | |||
Notes due 2026 | Redeemed Prior To February 25, 2026 | ||||
Percentage of principal amount redeemed | 100% | |||
Notes due 2026 | Redeemed On Or After February 25, 2026 | ||||
Percentage of principal amount redeemed | 100% | |||
Notes due 2026 | Accounts payable and accrued expenses | ||||
Accrued interest payable | $ 6,200 | $ 2,100 |
Debt - Notes due 2026 - Interes
Debt - Notes due 2026 - Interest expense (Details) - Notes due 2026 - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Cash coupon | $ 4,125 | $ 4,125 | $ 12,375 | $ 5,821 |
Amortization of issuance cost | 316 | 299 | 934 | 417 |
Total interest expense | $ 4,441 | $ 4,424 | $ 13,309 | $ 6,238 |
Debt - Notes due 2026 - Carryin
Debt - Notes due 2026 - Carrying value (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | May 25, 2021 |
Principal amount | $ 306,436 | ||
Notes due 2026 | |||
Principal amount | 300,000 | $ 300,000 | $ 300,000 |
Unamortized issuance cost | (5,206) | (6,140) | |
Carrying value | $ 294,794 | $ 293,860 |
Debt - Principal Payments (Deta
Debt - Principal Payments (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Debt | |
2024 | $ 6,436 |
2026 | 300,000 |
Total | $ 306,436 |
Net Income Per Share - Addition
Net Income Per Share - Additional information (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Dilutive effect of Exchangeable Senior Notes | 100,799 | 2,193,492 | 235,753 | 2,193,492 |
PSUs | ||||
Antidilutive securities excluded from computation | 0 | 0 | ||
Dilutive effect of PSUs | 78,582 | 78,582 |
Net Income Per Share - Computat
Net Income Per Share - Computations of net income per basic and diluted share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net income | $ 37,616 | $ 30,094 | $ 112,880 | $ 85,360 |
Preferred stock dividends | (338) | (338) | (1,014) | (1,014) |
Distribution to participating securities | (213) | (147) | (622) | (410) |
Net income attributable to common stockholders used to compute net income per share - basic | 37,065 | 29,609 | 111,244 | 83,936 |
Dilutive effect of Exchangeable Senior Notes | 72 | 1,885 | 474 | 5,636 |
Net income attributable to common stockholders used to compute net income per share - diluted | $ 37,137 | $ 31,494 | $ 111,718 | $ 89,572 |
Weighted-average common shares outstanding: | ||||
Basic | 27,938,568 | 23,890,537 | 27,144,953 | 23,889,903 |
Dilutive effect of Exchangeable Senior Notes | 100,799 | 2,193,492 | 235,753 | 2,193,492 |
Diluted | 28,157,934 | 26,260,704 | 27,496,151 | 26,257,504 |
Net income attributable to common stockholders per share: | ||||
Basic | $ 1.33 | $ 1.24 | $ 4.10 | $ 3.51 |
Diluted | $ 1.32 | $ 1.20 | $ 4.06 | $ 3.41 |
Restricted stock and RSUs | ||||
Weighted-average common shares outstanding: | ||||
Restricted stock and RSUs | 118,567 | 98,093 | 115,445 | 95,527 |
PSUs | ||||
Weighted-average common shares outstanding: | ||||
Restricted stock and RSUs | 78,582 | 78,582 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value of Financial Instruments | ||
Investments, Carrying Value | $ 239,674 | $ 324,889 |
Exchangeable Senior Notes, Carrying Value | 6,369 | 32,232 |
Notes due 2026, Carrying Value | 294,794 | 293,860 |
Investments, Fair Value | 239,126 | 324,772 |
Exchangeable Senior Notes, Fair Value | 9,075 | 134,270 |
Notes due 2026, Fair Value | $ 267,267 | $ 318,486 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Money market funds | ||
Cash and Cash Equivalents, Fair Value Disclosure | $ 66.5 | $ 72 |
Common Stock Incentive Plan - A
Common Stock Incentive Plan - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | Mar. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | |
Restricted Shares | |||||
Unrecognized compensation cost | $ 4,400,000 | $ 4,400,000 | |||
Amortization period | 2 years | ||||
Fair value of restricted stock | $ 6,900,000 | ||||
Granted | 21,645 | 2,811 | |||
RSUs | |||||
Unrecognized compensation cost | $ 5,500,000 | $ 5,500,000 | |||
Amortization period | 1 year 9 months 18 days | ||||
Granted | 20,853 | 2,498 | |||
PSUs | |||||
Amortization period | 2 years | ||||
Granted | 102,641 | 70,795 | |||
Maximum total value at the at the vesting date as a percentage of the grant date price | 800% | ||||
Dividends | $ 0 | ||||
Minimum Term of Holding of Vested Shares | 1 year | ||||
Granted date fair value | $ 20,000,000 | $ 12,000,000 | |||
PSUs | Minimum | |||||
Percentage of Number of Target Awards and Deemed Dividend | 0% | ||||
PSUs | Maximum | |||||
Percentage of Number of Target Awards and Deemed Dividend | 150% | ||||
2016 Plan | |||||
Expiration term | 10 years | ||||
2016 Plan | Maximum | |||||
Number of shares authorized | 1,000,000 | 1,000,000 |
Common Stock Incentive Plan -_2
Common Stock Incentive Plan - Activity (Details) - $ / shares | 3 Months Ended | 6 Months Ended |
Mar. 31, 2022 | Sep. 30, 2022 | |
Restricted Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares, Beginning Balance | 37,767 | 34,066 |
Granted | 21,645 | 2,811 |
Vested | (16,064) | (1,987) |
Forfeited | (9,282) | |
Shares, Ending Balance | 34,066 | 34,890 |
Weighted-Average Grant Date Fair Value, Beginning Balance | $ 92.49 | $ 186.12 |
Weighted-Average Grant Date Fair Value, Granted | 215.69 | 128.11 |
Weighted-Average Grant Date Fair Value, Vested | 80.47 | 181.27 |
Weighted-Average Grant Date Fair Value, Forfeited | 56.94 | |
Weighted-Average Grant Date Fair Value, Ending Balance | $ 186.12 | $ 181.72 |
RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares, Beginning Balance | 60,326 | 81,179 |
Granted | 20,853 | 2,498 |
Shares, Ending Balance | 81,179 | 83,677 |
Weighted-Average Grant Date Fair Value, Beginning Balance | $ 120.24 | $ 144.79 |
Weighted-Average Grant Date Fair Value, Granted | 215.84 | 128.11 |
Weighted-Average Grant Date Fair Value, Ending Balance | $ 144.79 | $ 144.30 |
Common Stock Incentive Plan - S
Common Stock Incentive Plan - Summary of Fair Value Assumption (Details) - PSUs - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jan. 31, 2022 | Jan. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Fair value per share on valuation date | $ 194.86 | $ 169.51 | ||||
Expected term | 3 years | 3 years | ||||
Expected price volatility | 55.99% | 57.64% | ||||
Risk-free interest rate | 1.17% | 0.20% | ||||
Discount for post vesting restriction | 12.22% | 12.44% | ||||
Stock-based compensation expense | $ 2.7 | $ 1 | $ 8 | $ 3 | ||
Unrecognized compensation cost | $ 20 | $ 20 | ||||
Remaining Performance Period | 2 years |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Commitments and Contingencies | |
2022 (three months ending December 31) | $ 121 |
2023 | 496 |
2024 | 511 |
2025 | 526 |
2026 | 543 |
Thereafter | 45 |
Total future contractual lease payments | 2,242 |
Effect of discounting | (275) |
Office lease liability | $ 1,967 |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | 9 Months Ended | |||
Sep. 30, 2022 USD ($) property | Jul. 13, 2022 property | Dec. 31, 2021 USD ($) | Sep. 30, 2021 property | |
Other Commitments [Line Items] | ||||
Construction in progress | $ 60,546,000 | |||
Number of properties lease terminated | property | 2 | 2 | ||
Class Action Lawsuit | ||||
Other Commitments [Line Items] | ||||
Amount accrued | $ 0 | |||
Amended Class Action Lawsuit | ||||
Other Commitments [Line Items] | ||||
Amount accrued | 0 | |||
Derivative Action Lawsuit | ||||
Other Commitments [Line Items] | ||||
Amount accrued | 0 | |||
Kings Garden Lawsuit | ||||
Other Commitments [Line Items] | ||||
Funds recovered | 10,000,000 | |||
Additional recover expected | 6,000,000 | |||
Investigating additional costs | $ 9,800,000 | |||
Kings Garden. | Kings Garden Lawsuit | ||||
Other Commitments [Line Items] | ||||
Number of leased properties | property | 6 | 6 | ||
Monetary default | $ 5,200,000 | |||
Base rent and property management fee | 4,800,000 | |||
Insurance premium (excluding late charges and default interest) | 369,000 | |||
Security deposit applied as payments for defaulted lease | 2,600,000 | |||
Construction in progress | $ 38,500,000 | |||
Buildings and improvements and tenant improvements | $ 11,500,000 | |||
Number of leased properties that are operational | property | 4 | |||
Number of leased properties with expansion project | property | 1 | |||
Number of leased properties that were in development or redevelopment | property | 2 | |||
Commitments related to improvement allowances | ||||
Other Commitments [Line Items] | ||||
Other Commitment | $ 127,600,000 | |||
Commitments related to construction loan | ||||
Other Commitments [Line Items] | ||||
Other Commitment | $ 802,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event - USD ($) | Nov. 01, 2022 | Oct. 27, 2022 | Oct. 25, 2022 |
Pennsylvania industrial property leased to a subsidiary of Maitri Holdings, LLC | |||
Subsequent Event [Line Items] | |||
Sale value of property | $ 23,500,000 | ||
Sale price per square foot | $ 461 | ||
Holistic | Massachusetts properties | |||
Subsequent Event [Line Items] | |||
Increase amount of tenant improvement allowance | $ 2,000,000 | ||
Maximum | A subsidiary of 4Front Ventures Corp. | Illinois properties | |||
Subsequent Event [Line Items] | |||
Increase amount of tenant improvement allowance | $ 19,900,000 | ||
Minimum | A subsidiary of 4Front Ventures Corp. | Illinois properties | |||
Subsequent Event [Line Items] | |||
Increase amount of tenant improvement allowance | $ 15,000,000 |