IIPR - Earnings call transcript Q1 2020 | Innovative Industrial Properties, Inc.

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Operator

Good day, and welcome to the Innovative Industrial Properties' Inc. Q1, 2020 Earnings Conference Call. All participants will be in listen-only mode.[Operator Instructions] After today's presentation, there will be an opportunity to ask question. Please note this event is being recorded.

I would now like to turn the conference over to Brian Wolfe. ahead. go Please

Brian Wolfe

President joining Executive for Officer; Presenting are Regin, today Hastings, Thank Paul the Smithers, Gold, Vice Ben and Chairman; Financial Executive Investments. President Alan Chief you Officer; call. of and Catherine Chief

materially Act remind results Harbor Before made to that and Securities of due be Forward-Looking the during like meaning may the Reform may statements Statements call Private everyone within of we of conference of variety would actual risks, begin, factors. deemed other I differ XXXX to and today's the a Litigation Safe uncertainties

periodically the For business, risks a detailed the and discussion of Company as you whether or future on reports refer the uncertainties SEC. to otherwise. the obligation some or Company's news Company's well of information, disclaims Form the intention result with issued as yesterday ongoing or the revise filed forward-looking The update events of new of to release as and I filed any SEC any a statements X-K, with

will Alan. over to now Alan. call hand I the

Alan Gold

Brian, and welcome first call. you, our to earnings quarter XXXX everyone Thank

we we foremost, the It all on resulting caregivers we as has crisis, it frontlines extreme sincerest a health are and gratitude Coronavirus researchers and our across is medical in First to professionals, express of disruption. and the fighting time trying the are who want experiencing pandemic our to been globe. battle this economic

and have living light in updated changing share we our first are just through. Although the and our the call in for of environment chosen host on we results quarter the perspective industry rapidly have our had today we business financial March, to the call to last the provide

our financial results. To recap business and briefly on

existing amended over follow over which expansion months improvements, with the facilitate acquired our During representing leases tenant collectively property transactions continuous seven of one our $XXX and tenant states XXXX on totaling investments, and include million we the square both tenants partners existing additional feet to new first for in million with properties relationships. nine four in

Investments, and discuss recent President Regin, detail will our overall in portfolio. Vice more acquisitions Ben our our

we high today, square X.X of cannabis to over feet, a basis quality in states totaling As XX XX% licensed XX leased which long-term operators. million own on are properties

paid property dividend quarter of $X and representing portfolios In XXX% performance quarterly on on to over dividend first a April we operating stockholders addition, driven our share stock increase the by per continued of our XXXX acquisitions. pipeline execution XXth

does revenue, by also supported growth will at two all income also account quarter XXX% our additional of not take end rental completed in we and year-over-year was results. dividend to the acquisitions which detail regarding Catherine This net our financial $XX plus investments. into note tremendous more AFFO, million constituting provide after

on our medical provide Paul detail focusing pandemic this in use and current cannabis how to today, experience change. And some The and tremendous trends the authorities will on are call adapting. regulatory and and operators industry growth continues industry of our impact

economic our disruption. through We to of challenges posed and the health this and are be by stewards immense Company focused continuing long-term your in investment navigating crisis on resolutely

come. resilience continued its of we be strong to potential industry, provider Despite the estate years this these to challenges, believers to growth have key in a many continued for strong enable and emerging capital real and

that, With I to Paul. would over like Paul. the call turn to

Paul Smithers

Alan. Thanks,

pandemic crisis, during this developments COVID-XX of current during operators this focus environment for one, industry, plan the I to regulatory For on monitor and impact two, including on cannabis the call, we the continue and to regulated that industry the the closely. this of the crisis dynamics cannabis

change we this evolving of want and landscape you over regulations or can that now, even not no months, rapidly. while to the discussion like this would industry coming as be And there significantly a also days. assurance preface are I provide that to weeks noting developments landscape general will

regarding First COVID-XX the environment to regulatory as pertains pandemic. it the current

pandemic, during continue have to of tenants each developments monitor and we our state tenants with in been where touch our We operate. this and local

medical determined to majority be use either operate In and cannabis and of by use continue business orders. implication been as exception or has to situations, formally adult an can shutdown that an local general the state vast to essential

essential including throughout packaging, applied designation dispensing. The chain, processing, and has supply generally the been cultivation, distribution

but permitted been exceptions businesses non-essential. use cannabis the where use as continue Governor There to such certain businesses medical in as Massachusetts, operate, have shutdown to cannabis however, adult

While and from and recognize suffering alternative local businesses governments an use treatment medical importance has we are for state these see conditions categorizing to serious cannabis patients pleased the of essential. medical as

introduced have that include and distancing, other and These delivery consumers businesses online home ordering, purchasing significantly and authorities patients habits. pickup. and have restrictions Many curbside social altered

have But a serve patients dampening each effect had operators day. and general, can than adapted logistical others they Certain limiting implement for with technology more of social consumers operators, many the in and number readily significantly to restrictions the distancing have enhancements. sales on

long-term, uniform essential of the Over designation the as industry a positive key for their cannabis medical for medical patients this as use point businesses conditions. the cannabis and see nearly of very the further offering importance we in crisis of clear, managing medical during validation

petition are medical regarding that or we duty crisis. state we and While cannabis may during the certain the legalization level once issues across expect will not of side time, postpone on legalize for other of adult initiatives additional health state momentum pandemic drives increase continue if this cannabis shutdowns, states use the this legislature to use

growth good also State local have a pandemic illustrate and that can jobs further associated perspective, tremendous of From that provide supporting Government local believe economic importance and fallout communities. this we potential and businesses the

believe of prudent of authorities reasonable rules fostering local these other and to focus we enforcement which of be sensible things, State the trafficking. that to and against for on levels, growth among it regulated end at Federal, products To includes, cannabis businesses, disciplined illicit regulation taxation

the the outcome country worked the for make and pivots industry this across residents. the California, to models well and We states that like hope look support the at will definitive best create have regulated

like to businesses well, pandemic. we touch cannabis the would federal been place due been assistance assistance schedule federal XX on letter cannabis has programs of House regulated the issued April of this from the was to as myriad have of that A during of operators on Representatives to caucus. a substance. to denied and the spearheaded bipartisan one Congress to XXth, put in members Further, support cannabis status controlled congressional by

of the outbreak relief federal regulated industry formally "the included Coronavirus is in next to government This Quoting cannabis the from permit funds. round the letter COVID-XX letter, requested time that no sources growth and way of that economic and financial reality in support” the the businesses for families thousands state stability to stand policy of are need workers our legal and cannabis of be

takes more the in necessary couldn't Congress DC. of that agree are to industry states of this across Washington We and thousands of XX a workers importance hundreds industry participate and the steps hopeful that directly this understands protect in and

dynamics industry pandemic. during regarding Secondly, this

As has of in onset media and as March, been stockpile noted spending potentially crisis consumers increased the of at pushing in to a COVID-XX of to patients dramatically pandemic. the this result supplies the the spread response regulated cannabis in

state lines, dramatic. drop Massachusetts or since as geographies pre a of closure use However, more sales the dropped of trend has this prices sales expected in operations, in like adult cannabis and been below normalized places have result most

businesses, As capacity. have regulated reduced measures we most essential while noted sales social been distancing restrictions cannabis and previously, operations have designated

well, what downturn other really industry. significant first here seeing experienced industry regulated out are dynamics cannabis by We and is the as play the economic

capital in of We now the to the been and expect has continued challenges months consolidation number of theme continued operators. which cannabis a markets see industry, for a for

in differentiation We and provide also months environment strong come. the expect strong that sheets further to this brands will in balance

We unprecedented times this are certainly what living unprecedented is for truly in period young very and industry. an

developing expanding strong, we our well as of real focusing our in multi-state some on Ben detail. this, will of and positioned with estate light continued In describe operators strategy have partnerships

our that regulated one the of our we of country challenging While jobs in the and ingenuity continue cannabis our be more crisis when industry country. through throughout this and industries medical to and collective an is this be drivers top top the cannabis this We world. across industry professionals extremely growth crisis of overcome believe the the time thrive will one of will researchers, resilient and for the regulated good

turn will walk Ben, you now who call through acquisitions. recent Ben. to will our I over the

Ben Regin

Paul. Thanks,

nine real estate existing noted Alan we seven in establishment January operators relationships. partnerships of our since X, acquired states of have properties with and tenant representing As of top a expansion mix new

own under development tenant by today, As million square I state across we overall about plan redevelopment. XX of on X.X information some to or of state. and acquisitions each feet, feet approximately in in touch also states portfolio approximately representing provide each including million our our square the properties X.X XX

with aggregate. transaction acquisition is leading and markets employees. improvements with our properties be with XX manufacturing GTI we sale foot XXXX XX expected facilities Illinois, industrial investment locations operations square with a across the acquired GCI in Starting and in operator leaseback property million from XXX,XXX multi-state U.S XX $XX retail total licenses a tenant in the at to a the with

of medical leaseback transaction February, cannabis with last facility their their touch represented November which and cannabis following spec sale medical in transaction GTI third in later. year, will on in This sales our GCI Ohio facility with transaction for in processing Pennsylvania cultivation our processing I and

million which future As investment, properties our and for funding in of $XXX.X Illinois additional is XX.X requested property. we does total at which grassroots may include by be our million, six the own not committed today, including improvements tenant Litchfield

PharmaCann. in to Cresco GTI, properties, regulated and the top some operators Ascend at States, the six These cannabis or Labs, of Wellness, Grassroots, including least United

to products Limited of Xst the use regulatory commenced sales framework in adult As a adult with quarter sold $XXX nearly Licenses medical and cannabis remain has businesses on both of today, during Illinois million under first open. allowed January use use alone. Illinois

investment acquisition into tenant to Now we property lease with Wellness be in million aggregate. the at property the $XX expected acquired square industrial improvements entered and foot to with our long-term a in XXX,XXX total the month Massachusetts. Ascend Last and

MSO Ascend be expected integrated of Massachusetts, vertically of to on the East a Ohio, the cultivation Illinois, heart received year, Boston. and this Cannabis license Commission what Earlier approval the with from dispensers Michigan. is in provisional coast for the one largest Ascend its operations and Control Massachusetts retail in is downtown

acquisition Michigan. In from at in and previously including Cannabis represented Ascend cultivation Ascend large our Sector U.S late facilities investors, over million for transaction acquired several with of December, This third fund. having and $XX leases into funds and announced and European with processing their investment long-term Illinois least based strategic Ascend also raising the cannabis entered the

PharmaCann which As improvements of $XXX.X investment future and for the not today, is Massachusetts tenant own funding Industries, are true be in additional properties properties Holistic XX.X million we These the million, the leased including in at to include and committed cannabis four requested may States, regulated four our also some Curaleaf. operators by does which total leave owned of including our United property. wholly top Ascend,

adult keep This Massachusetts during Paul As is cannabis open noted, medical determined medical use applications, also for should position adult to cannabis impacted believe sales this in cannabis and purposes to reinforces cannabis allowed has a adult and which severely cannabis significant businesses the pandemic. very precipitated are and stores to increase during use medical be times. that use operators we these remain use also close such, purchases open use many as

We in believers themselves navigate long-term our regulated continued and to any crisis in of are Massachusetts firm the and strength position enduring through operators cannabis this success. the for abilities market event

to Florida. On

lease foot of cultivation the square recall, with $XX may a million Curaleaf. transaction originally facility you back October purchasing market Florida in As last we sale XXX,XXX entered and year, for

and In the in in investment greenhouse Parallel the Florida and With our at transaction for a $XX.X in square aggregate. improvements second our sale million lease with property we facility. tenant closed total back industrial expected acquisition be to foot March, property the on XXX,XXX in

$XXX is one Mars of until raised and CEO, to in XXXX in U.S. billion. led to has by the Parallel company Chairman Global for Beau Gum its Jr, Wrigley, and of XXXX in Wrigley, Chairman employees and over the held William is Parallel multi-state Jr who $XX sale leader than CEO Confectionery capital nationwide privately to-date. million the is with and operators largest more

largest akin The pharmacies. of the retail in industry Florida an markets Florida the open for growth medical medical cannabis cannabis essential dispensaries of to in service cannabis continued remain has as as the country. piece medical one

X,XXX with of there qualified the As throughout were May qualified XXX,XXX physicians. patients over Xst, state over

in Michigan. property property sale the Last tenant transaction the the Labs we industrial lease-back to with investment and foot aggregate. our square acquired improvements XXX,XXX with for at Now in total Cresco $XX expected a month million be of in acquisition

has XX Cresco of companies cannabis one across acquisitions, XX operations largest nine is XX XX States its retail licenses United States. Cresco cannabis in dispensaries pending licensed the operational cannabis cannabis and licensed with States. facilities, in vertically-integrated With the production

sale in licensed with leases acquisitions facilities and Cresco in processing transaction for of lease cultivation This prior Illinois marks our with fourth and acquisition Cresco in cannabis lease-back three Ohio.

today, our we committed future for own total funding Michigan is As tenant of in for improvements including the investment million. $XXX.X properties

allowed to not businesses adult today, both pickup and remain is to purchases was allowing limiting open. use use That purchases. Michigan has of As and cannabis delivery in-store medical and curbside

In square in feet comprising Now Cresco a we entered XX,XXX property long-term January acquired for space with into a Ohio. of Ohio lease industrial approximately Labs. and

expected property, of lease acquired for in be to the and in a investment reimbursement property GTI, with be to January, the a million, investment and total also improvements expected improvements property approximately Our our with in million. is tenant and the we acquisition tenant executed total including long-term $X.X Ohio in $XX.X

own investment million. funding have Ohio for improvements is in XX,XXX including we in registered first been made state's tenant XX,XXX properties end of of total of cannabis caregivers their our in medical the used cannabis and March, Ohio committed patients the over $XX program. as for As over the today, and and sales market future four dispensaries in Medical XXXX

health Ohio orders. medicine essential, deemed stay-at-home states, cannabis as other exempt the of under from category to medical officials Similar the and

other increasing Ohio similar curbside phone to While patient. pickup, by temporarily purchases states, medical patients home per authorities to on over taken authorizing to allowing permitted, regulatory steps video, not or pre-order allowing recommend phone delivery is and have the limits cannabis physicians including

into marked with expected a square also XX,XXX of Virginia comprise property industrial the our of market completion space entry the approximately we upon of January, acquisition In to development.

Our of $XX.X total the completion property be investment development. to is in for expected including million, funding

executed our cultivation and with We cultivation, executed Leaf Leaf cannabis a the is sale processing Medical Green with Medical and second Pennsylvania dispensing. will This lease-back processing and Green transaction medical XXXX facility. lease transaction a having property for for used be long-term in utilized their

property, Pennsylvania licenses of $XX.X to integrated our is investment with process in one dispense cannabis holds million. Leaf Together our medical in with vertically Green Virginia. expected Green Leaf properties cultivate, total five and

the approved in the Virginia last possession very on While level. stages, Governor the Virginia continued bill in state, decriminalize early cannabis state its to a is marking month progress

cultivation well processing we dispensary Finally, acquiring acquired our and their Colorado after LivWell, second two and with facility. sale marking in lease-back locations transactions Michigan live third and

approximately tenant expected is investment Our total improvements for million. including reimbursements be expected to $X.X

severe cannabis has Colorado of as operators is authorized losses. medical home the stay with and open. job use adult the to remain other Though use generally and disruptions industry orders, states, effects feeling economic the at

cancellation slowdowns tourism in for to billion XXXXa over sales XXX. the Severe were surrounding regulated in the pandemic statewide $X.X cannabis high. and Prior of including events events, record

them new strong transactions the real come. in Continuing sheet. overall we utilize solutions of and our with strong pipeline, our complete to tenants for capital look active ones and our strength of and to we estate continue sharing terms balance see our number to negotiations a of In additional very as the to both demand forward existing operators, months

turn to With it over will that, Catherine. Catherine. I

Catherine Hastings

would Ben. we and subsequent to and results like the for tenants, on monitoring have industry. of pandemic, with each economic the impact I after updates then quarter the speaking provide our summarize Thanks, on our made some and decisions the of disruption current briefly

of increase rent properties. adjustments increase leasing base the last improvement and driven tenant at revenues properties, total for certain that by new generated was the primarily acquisition $XX.X with allowances year. properties tenants in of in escalations QX a million provided XXX% quarter, certain contractual additional from We resulted rent to approximately The of

at our is include which properties total remaining security that full deposit with our the revenues noted California rent. for in have application Southern receivership. an As the March lease in Angeles, Los release, application the property, for them in we for And part California also our of to leased deposit under of press of Vertical security

from quarters the executed for the As only of after the and leases of revenues the we partial course end executed leases during of revenues the no the quarter. past in have or QX reflects revenue quarter, acquisitions and indicated

also for off months. abatements deferrals next impacted And the are to the certain by under leases rent few or that burn our in were expected quarter revenues

leases basis. to cash As for account a our continue on we all of

notes For Funds exchangeable depreciation operations XX, ended $XX.X net net we non-cash three income was related income $XX.X back which the months interest March for to funds expense adds or senior of recorded million. compensation XXXX, stock adds million. million. Adjusted which property from operations, $XX.X and back non-cash from expense to based

XXX% three the ended quarter. from year For the screw months prior XXXX, funds XX, March adjusted operations from

stockholders March per our quarter. stock of $X April first of record year's QX share common a we the of dividend XXX% XXXXcommon On XXth, from to reflects increase dividends paid The prior quarterly XX. as

hold of deposit provides time July April, those period XX rata in rent Deferral we pay march this under we pro In worked as the been structured Throughout deposit apply unprecedented the through discussions, a provide period generally to an in we to of lease full. our to with each deferred progress have of discussions Xst. portion security tenants and of month repayment with temporary security universal our tenants each time. have rent for starting the of rent three and in XX over remains deferrals of light we April

hold these for million to $X.X total May of X% of annualized $XXX,XXX approximately were our a in The QX. reported to as amount amendments, April, cash deferred total of Pursuant represents June. million total rent for for and of payment amendments rent $X.X of total from a the and deposits in revenues, we applied security that was these of

public ATM offering and about soul on underwriters raising additional And proceeds under previously we million, Also including aftermarket of in January, our with of completed or respect raised purchase of equity January to of $XXX million net shares. offering to we proceeds exercise in options $XX about common financing established our net program. follow the a stock activity, program

grateful our these We closely for working best focused proceeds and from through stakeholders unprecedented our even on all recent tenants raises equity and with continued other our of come support the are end. stronger and navigate truly to with the tenants investing the times on out

that among I of secured is our very approximately notes composition gross debt, leveraged with total balance Finally, assets, of consisting that our conservatively remain exchangeable senior and leveraged, truly note A to companies. unique and XX% like we sheet would rate real estate no

notes million equating of of cash do interest fixed notes and cash quarter billion debt $X.X sheet total exchangeable per until X.XX%, the to are have mature balance interest Those only a Those the have on approximately not rate totaling assets as end. of $X a exchangeable payments year XXXX. over we

that, to with it back And I Alan. Alan. will turn

Alan Gold

Thanks Catherine.

navigate this I things a want to few continue closing. in we As highlight challenging to time,

provide We our that are access medical key accomplished. these teams And cannabis tenants to to their operate difficult times. have proud for our to everything tenants of and patients during use continuing thank

well We but and only make with best-in-class industry weather conviction bright its with are remain this with real us footing the tenant and to tremendous utmost puts investments that conditions, to in a our capitalized to these estate steadfast in not of the industry on support balance a future. continue very long-term sheet strong support operators. We believe

continued thank personally as to in stockholders for and want stewards of I your investment. support us our trusting your

that to role every best our We will very day. have in and do continue

questions? to open you it Operator, questions. the call would could I with open for that, for like up Now please

Operator

first comes [Operator from with Catherwood question Instructions] Thank ahead. BTIG. Please Our go Tom you

Thomas Catherwood

morning you Thank and everybody. good

Alan Gold

Tom. morning Good

Thomas Catherwood

being terms in on mixed. you the know data, I medical made comment and cannabis it So, Paul, of sales

the their does external cycle? is that those think local is closures but competition. stages License seen obviously need Or par kind that given, challenged Or CapEx where do and a with have the of that more the issue it you with there early to driving Colorado other factors are with California, there of But it in tenants for dispensary concentration and tenants you of kind Nevada and regulations, a geographic market when deferrals of some of Limited have on are black sales more that We with there strong states, it have are deferment? in data?

Alan Gold

this an There - sort of Tom, So for tenants of tenants or multiple reasons is those having three having issue. are some each each Alan. our of

from to gone California a tenant, a have We tenant. Michigan a Colorado to Pennsylvania tenant tenant

can described with but does, talk and issues it one emerging we of of through, an as state it then deal the tenant tenants the so it you go does And and with, some about having and each is, start of with themselves. some kind why it to

turn the I'm go Ben it through to going three to over to tenants.

Ben Regin

Tom. Hey

then Vertical the impacts stage construction Medicinals are in curbside Michigan, Green distancing, Pennsylvania. model. are in disruption social really Peak So number home factors California, delivery the to the of level particular earlier in tenants to as at Maitri And and seeing from facilities for pickup you and Wellness a you shifting retail

As level well to when Vertical’s example. affect and as, have you potential collection it can that comes retail issues impacted our for California the business wholesale

is each it tenant. factors So different for

the depth and all level support rent teams these be very a have through to of navigate We management of in to through of with and our discussions was each competence had able times. high these in particular tenants challenging referrals these to thought three in it uprooting

Thomas Catherwood

Appreciate that thank color. Got I to want you. Ben, it.

seem early then, engaged From stages and REITs it it statements already of that to engaging have you deferral all perspective with have your sounds the other I taking here, evaluating of the reported guess in like So their your from tenants be many tenants. another requests. with

evaluating? there large referral my And are percent be? requests So could so, if is, are question a that you that of more how

Alan Gold

reporting are - we As and tenants I the with in our as XX% we last our are are tenants positive the periods. in that EBITDA generate of Keeping confident dealt our with we I talked the over are, fairly over issues mind to I of of tenants that our XX% think have. we we tenants that majority XX think have reported have might said, all

general especially And states that going to that specifically portfolio, of going in these And about of so, economy tenants very their maximum that are given the at some regulations believe the now of revenues. reopening we the we are we is in of and growth some the of tenants the are fairly forward, quality of beginning our these from confident these remove preventing we the opening to believe and states. our are prospects allow achieving the fact in excited of our,

Thomas Catherwood

that idea you. being to the a to point, enough three construction through of those last dispensary's tenants kind Got is allow that a months On complete. of while to window and reopening reopen carry some and

Alan Gold

we And that is evaluated Yes. it. how

Thomas Catherwood

then acquisitions or Curaleaf Got is you deals has investment with focus put currently you it. and And of regarding interest have work already the up all year-to-date. have put, including shifted looks $XXX Grassroots onset at COVID? shaping to your XXXX roughly like million and the your How since from pipeline

Alan Gold

I into three just slow six time - month in a a the able think, capital, that on we to acquisitions down a we be when six period. things months we bit bit said perhaps place to are we that little raised six, our little capital we our So would around indicated

Although we going to to are I think that, backend. but more the achieve

I pipeline to strong. very be think our continues

talk And this? don't about for that Ben, you why

Ben Regin

echo right is, that grow. continues I very pipeline a Yes, strong now, is to

We a still lot type solution. capital of high are quality There continuing out operators businesses. there continued this for very grow to a their is demand of seeing

support to very country companies be and able be continue the with to and is their selective critical disciplined facilities top the very And and ability to in operations. their to mission business. these support out to real the And we build important capital work have estate

Thomas Catherwood

Got it. it That me. everyone. is for Thanks

Alan Gold

Tom. Thanks

Operator

comes Fortune Roth question from Partners. Please go next with Our Capital Scott ahead.

Scott Fortune

the morning Good and thank and congrats quarter. on you

XXX not the of in XXX Following up paid unfunded cash. options fund XXX million and give about million fund million, XX tenant commitments that, on the counting on around million, about you

slowed that kind the us color new final XXX kind for on on the more be just type Are the about of delays drawdown So you TI going the or seeing then delays that acquisition moving developed pipeline capital. down into And the forward? follow-on COVID we blind forward confirm providing to of gets environment million the can pipeline that. of

Alan Gold

deal going then I'm Cat with question deal and So COVID part first -. have happen displays with the will second and question to the your of your regarding deal we

Catherine Hastings

at dollars we our million raised a almost XXX XXX We about way little The capital today. capital little in uncommitted capital that look of over uncommitted under a Yes. really billion a we million. and placed have

think million of about election to, your to numbers be to the So of $XX tenant at that really including be is Alan. the two And may not improvements I additional operators request. then able

Alan Gold

as And construction the activities. and Yes. impact COVID pipeline to on maybe

I think Ben, why that? don't you with deal

Ben Regin

Yes.

are we So pipeline. we are, start about to the likely

We and high we conditions, that the given types very of in to selective capital are pursue extremely demand type are for saying, discipline this economic in willing continuing see like to investments challenging which continue move environment. were forward and we we to be with of the

Scott Fortune

that as of kind around covering Great, still from existing lot a is XX% Is you you going of new up EBITDA nice are space or kind represents still our of seeing, of add lot as companies opportunities of margin private positive is follow-up I come say? a of XX% structurally kind on there pipeline moving would that Ben, coming going forward clients. pipeline a to forward you numbers going that said are Are or for the think good, tenants think radar your forward. some

Ben Regin

Yes.

We are to continuing both. see

We existing they are to in their business other been expand our expand operations. current as growers within states. into a plan of their or states of has part a organic tenants or always continue as our their facilities our growth lot existing support to their our And see big expand portfolio, footprints

on potential a extremely investment successful that like And we with of in are you that, industry opportunity. and are top seeing that coming mentioned, new are to tenants, the new operators us

nice a well is new it us So, coming as to as for potential tenant investments. new of existing relationships growers

Scott Fortune

looking property. last X COVID What tenants. for portfolio. that additional here for assume of finish color being you with that Okay. to payments, then get now these of DionyMed kind Thank on helping are line these then outlook at the just the process put some to rent color. the pressure across any tenants And lot though or the tenants on small of a for Kind we for you forward continues of is that question, of and challenges not these one dovetailing it tenants kind overall step this. going meet next And the able for tenants percentage for of continue even are

being send the are Just and down step looking in from that how at standpoint the not interest tenants road or risk. being through, DionyMed, property, that versus being as kind me for recommissioned is these you of the there repurchased next potential purchased

Alan Gold

Alright.

about clear should So, could before position that, I can or talk payments. run. was, make in make that the tenants long we tenants, to the with these their be to for working me let financial Paul put these tenants rent and we DionyMed, felt these better is turn it by tenants What over

the of a that have and going it and make believe But, of we position this position to the very that today. ability we made Now, aren’t tenants receivership the was forward their the let's we in the that or into clear best combinations interests do that was existing continue going rent our of combinations tenants of know company. pay to

about going to Paul now beyond I'm to And to talk turn that. it over

Paul Smithers

Sure. Hi Scott.

as about you positive. very can as our So what property I is well tell

have next with report that negotiations a a multi-state to the in place weeks. advanced We are qualified, in And to we hopeful operator. we happy are very deal in are few

very So, moving positively in we direction. that are

Scott Fortune

the jump will good. guys. in I appreciate Okay, back Thanks it. queue. I

Alan Gold

Scott. Thanks

Paul Smithers

Thanks.

Operator

Capital. go Please Eric Des ahead. question with Our Lauriers next comes Craig-Hallum from

Eric Des Lauriers

follow-up questions, your for Great. Alright. bit a Thanks pipeline. on A of guys. taking my

about like us can of your tenant how terms exposure increasing guys help think GTI? quality risk tenant to minimizing tenants understand, versus higher you your base diversifying In you

Alan Gold

about I that and an that think is thing talked very is strong. Well, think remained we yields And our I I first pipelines one fact talk have - when point. the that very haven't that about we important mean, is high

are We north pipelines XX%. transaction a seeing in still our opportunities and with close to XX the certainly yields of

going continue in in are them we to obviously to we grow within then forward. tenants there time And XX Keeping us of tenants for partner for our a diversified with fairly we expects grower, new terms be transaction, but that well to added the diversification, the grower that mind good not be is we that a base, believe with current every only that. add

we we business going today the our why we those. I that XX portfolio is we we so forward. go in of of the couple hopefully, And highest to believe have we are that top XX excited focused seven to basis have And and as of why growers hoping quality modeling on growers. the last and the our are forward add were

it next And this that So couple looking growers is take be that But advantage capital It within important support basis tenant a diversify that of of continue is in it. to by how we at our over is we expand our emerging intend to continue important to also base. us existing to as industry. are do to providing years. able for and the very controlled we additional them do they

Eric Des Lauriers

of exposure high geographic plans that a of License Okay, you. Are at your Limited to that markets is very of at guys bit is it to looking makes sense. quality increase basis terms your states? helpful. Thank tenants following a that. on in this then That follow-up a Or really is, growth Thanks. And point. kind to just different more you looking

Alan Gold

you Paul, why that? don't take

Paul Smithers

Eric. Sure. Thanks

So And the Florida, to states, License to it highly in might New be of the portfolio follow Limited like do both. MSOs ranked going our a and they we are states to we Jersey. the continue we I mean, little bit continue like.

avoid We Oregon's Washington. the continue to and

see nothing to space. that in navigating So many game new we changed has current our respect. tenants our of plan But do those

Alan Gold

the we that focused add still States. just remain on United will I And

Eric Des Lauriers

Okay, great. Thanks guys.

Alan Gold

you Thank Eric.

Operator

question John next from with Massocca Please Our ahead. go Thalmann. comes Ladenburg

John Massocca

morning. Good

Paul Smithers

morning. Good

Alan Gold

John. Hey

John Massocca

just DionyMed former get the properties speaking, have goes you broader there? of to hard what of a property. of kind to need that formulate cannabis follow-up reconnected, and broadly receivership. is of you can a without lot points to ongoing obviously maybe be touching recoveries you they of little it But tenant a do know DionyMed into thought questions. in think at there a is that Do historical And bit any have data process So on kind kind the I a kind little discussions

Alan Gold

we that within tremendous very we They beginning believe specific a operate from facilities. that special them purpose focused as And have grow them asset high as to that facilities. and being These allow these related they unique a And So, mission the facility improvements very dispensary. or quality long-term value. have facilities have class estate. a critical and their real have on are the cannabis that facilities product,

be you to improvements If we translate they not tenant. that the different, are another in that had repurposing for to something asking that the repurposed and of absolutely believe would of the that type majority

John Massocca

alternative or for cultivators really on focused retailing? additional repurposing Definitely cannabis for

Alan Gold

high that would from receivership, a last that within certainly grower And especially built been that to the the acquiring would go were confident if that to highly of one facility, out grower growers. be that out built with are very be the license fully associated in demand happened the has into case. other a it years, couple be We

we be so are between improvements in these reusable great fungible and demand. and believe that would and And generic tenants

John Massocca

lot the attractive, environment kind a does cannabis there? of table when the bit I kind And then a in economically just same we of that and of and in are capital of investing dislocation fact period say uncertainty competitors have that M&A there of and of that people maybe just don't a of kind Is given resilience option or kind generally, it giving And broader Understood. the maybe capital. of estate is the still access less to other the I space. little know that kind competitors, make yours in your still something people on real in current to kind of of terms is a cost potentially of but that the kind out - in capital growth of markets

Alan Gold

or - think competitors acquiring with working we them. I the a question of open So is, our be with joining would one to

strong are for growers very and we looking portfolio right and proud to additional the We portfolio adding us that path is the supporting have of that a a growers and pipeline, have growers very our And believe we the and strong right today. group very are our we existing the tenants of our grow. plan to right business

John Massocca

maybe the remarks. then And and one if in last sorry I one prepared Understand. quick missed

You cultivation assets? guys to or portfolio, essentially access color for for of open your your specifically all kind distribution Massachusetts, have the some kind but on of assets gave retail are

Alan Gold

do we million X.X have square under feet development. So facilities of

are those some completed and open, functional dispensaries. and operating, I the they So But aren't couple be one obviously, operating a be, Of assets they ability are specific there if in tenant okay. can closed if of Ben has that think that the their state them. might allows

Ben Regin

facilities retail of vast have with operate able procedures have to the the the to but place side, certain been continue disruptions majority We in seen address our on to put -.

Alan Gold

Okay.

John Massocca

Understood. the for very color. I me. guys it That appreciate really much. is Thank you

Alan Gold

John. you Thank

Ben Regin

Thanks John.

Operator

session. turn question-and-answer would our any to closing over the remarks. back concludes to Gold This like Alan for conference I

Alan Gold

for would reiterate you. here our Well, we to Thank thank want just of and like for to team that, we of with work. to And thankful, call. more tenants. how thank dedication And am how conclude and importantly, I are I want going everybody today, you. us I our And I proud joining say hard that their the

Operator

you for now concluded. attending today's presentation. Thank is conference The

disconnect. now may You

Innovative Industrial Properties (IIPR) 7 May 202020 Q1 Earnings call transcript