IIPR - Earnings call transcript Q3 2020 | Innovative Industrial Properties, Inc.

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Operator

Hello, and welcome to the Innovative Industrial Properties, Inc. FY Q4 2020 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to your host today, Brian Wolfe. Mr. ahead. go please Wolfe,

Brian Wolfe

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

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

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

Alan Gold

the you, our Thank back recap, are through everyone. from and on views of forward cannabis to both we evolution And proud as the regulated the and so half serve. industry our XXXX. and our results XXXX into a the certainly to whole. lot recap a a continued Brian, to providing we company's is look of welcome, of Today, industry, activities There

sets the this be last less year to world, that Multiple faced of major the truly and this what our year, ready With the which a the society minds at challenges end the than much our the the have ingenuity we of brings strong very over testament to as are a cannabis demonstrated impossible. achieving and States effective industry tunnel economic in we of First onset the faced. scientists, industry has great light from resilience distribution vaccines and to country in that of believe foremost, see the of that young remarkable one a on United the highly one thrilled the pandemic, has across display for arguably we the disruption many and regulated quicker. hope all sustained first the

estimated to over operators of which well-positioned in vast investments real $XX just XXXX. estate continue regulated to we go-to a were their States acquisitions footprints in while additional their retrenching and their annually in As to the highlighted individualized in we services cannabis our their We billion service of with new in totaling existing an in designated XXXX $XXX portfolio in over the state particularly compassionate, essential the to of modifying million. patients also in time, at regulated property suffered through continue have an deepen and this path, maximize calls, quickest new one expand unprecedented and been its history, economic the businesses vast ensure cannabis majority the and United employees. on our sales customers, continued, made recent jurisdictions, operations. $XX on them billion and not XX% growing safety the health environment country prior And growth cannabis the with continued experienced, as and operations regulated customers local operators crisis as XX were in in and a their ways from as proud as have whole health adept environment tenant this world majority partner to tremendous deepest of contractions industry designed and a the in industries to but has in XXXX partner, over to And only patients, and year

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

that the our our property. Holistic partner year-end for Pennsylvania, And yesterday, entire was in in long-term the Industries, lease this release our Now Massachusetts, licenses issued press property and early executed Michigan property. long-term not noted portfolio January, Los leased we one and as at in with for Angeles, was California property in tenant a operational our them the Maryland, acquired

a the tenant contractual year, executed first any from XX, to to dividend whole. addition due share Aside the paid our partners, their having property, our no quarter increase we have quality since ability the in last XXXX. XXXX partial the is a all Los this new XX% adapt over And our of January we fourth of cannabis tenant normal, as deferrals have paid of other believe California a stockholders dividend dividend IPO of testament to XXXX ninth Southern period. per representing Reflecting the the quarter tenant rent our to which than quarterly and $X.XX in XXXX, rent our and for industry and paid rent July common one resiliency two to base in on regulated of resiliency that of fourth December our since tenant tenants through increase Angeles exceptional months portfolio we in our a and strength

activity. steadfast billion tenant and regulatory developments forging of stockholders, also financial while also in our mind. the of capital our with cannabis would regarding for company top initiatives, partners expansion like proceeds operators raising continued industry. top-tier provide to the their industry also are support us providing net course, our I in last front, in the tenant financing their partnerships over thank of owners will our Catherine detail over year all the to in support, And new results more On long-term personally $X

demographic over cannabis legalize level adult having With states medical and cannabis. momentum the seen on past new majority for the have legalized use five legalized across states cannabis, passed to XX also medical-use measures use every adult legalizing in continued XX decade in having continued the or states cannabis, nearly strong we support the November, state as resulting

provide Paul will detail cannabis We proposals are front. many Congress that and additional closely the in monitoring on legislation, regarding

Now cannabis before I I support of we you, your deep Paul, in these and forward for appreciation recent serving you for reiterate the this transformative to to our come. With Paul? over amazing developments high-growth industry to our the to throughout like company, owners, to over the turn detail of provide many years look I'd our additional who want long-term four that, call will for years call on turn to the industry. legislative Paul,

Paul Smithers

Thanks, Alan.

one, from the to two, and on developments recent views most conjunction update I recent environment; plan an industry, election on this the cycle; the crisis in three, recent results. this election call, of For provide industry including: health federal our during dynamics with regulatory regulated the cannabis state and

we As evolving mentioned industry while call, rapidly. not and this And be regulations you general developments assurance like to significantly last can with on to our change. no preface I'd are there will current a landscape that provide noting also discussion, want that this landscape,

from state most First, elections the results recent in November.

shaping prior state on As in the we year was discussed front. pre-pandemic watershed to be another legalization up calls, XXXX

in or face additional number the cannabis alone adult-use programs ability approvals as at in Jersey to November, United person. programs significantly a programs of shorter periods of $X shelter-in-place greatly place revenues in the Carolina, approve to Nebraska. Dakota approval Even totals. that states on signatures and to XXXX, the New in adult state voters programs such Mexico, billion Virginia. organizers implement Furthermore, a measures no potentially a passed programs with in Island adult-use of several with same been as experiences of that over to the be time which state enable Montana In a and new five Kentucky, sufficient from gather Connecticut, postponed. and and add in years' And approved choose, And challenges, result, Mississippi. are these a of including historically adult-use well States, forward a Texas, programs initiatives programs and these are Arizona, than in numerous both noteworthy, side, programs, Alabama, just However, establishing tracking may over program legalize as And New move and few towards to impacted XX on for the models November, medical new the Rhode than side, had expect states states medical in medical-use adult-use time, both York, new South to we effectively new medical-use to across have case. we orders New U.S. South new will Kansas has the the expected medical-use less first to In time. with

and of U.S. XX having and XX for reflected states adult seen the most populous states rapid legalized for shown use, include for XX% tremendous having medical continued citizens is cannabis use these adoption majority industry. adult-use poll. of U.S. cannabis of course, the overwhelming the after the citizens support in plus legalized states as future D.C. support this cannabis for and legalization poll cannabis With for Of some states across potential medical-use among and

federal views environment. our Second, current on regulatory the

the more along in supporting would which on both XX-XX Harris, saying would of cycle respect tax cannabis-related own reform the goes different social House, in it accelerating administration control, the and content cannabis. of in recent to to is to opinion a notable with competing Democratic last Senate that predicting A the programs, federal the COVID the national state agenda and during all vaccine IRS are terms horizon. there under continued the in continuing their on universal changing Section are adult-use election crisis focused new a the for notably of Congress in There with cannabis believe of dramatic It working programs, in few as the and support with cannabis and of items near state-run that of the rollouts numerous the really most COVID that on Kamala serving draconian spans with review. designation we Act, clear financial bills the economy most said, topic protect cannabis much we With House. a and this is getting interference, White of of the any majority impact affiliations compliant of XXXX, be the stages House brought medical mitigating in include across pending of demographics tiebreaker cannabis including That that control cannabis years from and as new in shift cannabis all we without at of with pertains opinion families. a popular numerous states of said, changes Act programs and types federal do The combination state administration challenging, as nearer. Congress a timing, the the the and are to MORE President, And popular enact Vice bills free institutions party Act the bills pandemic will That particular, legislation, STATES essential and decade, experience to policies, know, health guard with Democratic that there additional XXXE descheduling licensed operators. operators. passed Code safety December, federal equity. by state Banking SAFE The and focus which of provide of

In closely course, STATES and monitoring see bills of voting our and the XXX like bills bills the bills of Congress we the further the dynamics such had dynamics. SAFE tax and near-term the is are horizon. the addressed this just Act, and the where our the as status issue Congress administration, on the both as view, We perhaps Act in including evolving of senate view, certain

value terms state in recent market by and programs continued the ahead. the illicit in year, and unprecedented including recent residents from In and in market months tenants cycle, economic best-in-class the With The health a Finally, years programs, the therapeutic of tenants, faced take a particular, to to capital election state array regulated raising programs growth have economic industry a exhibit a to including decline, year. opportunities fueled cannabis position country this year XXXX, continuing of regarding the in the cannabis' have across of legal see growth many operators, results in the by full cannabis XX% themselves federal the additional this challenges of to advantages and introduction M&A expansion to of in general, history have months states and continued wide industry we and throughout of strong demand, from of of as established sustained regulated unique was year. and a activity continue recent the past that focused medical half acceptance the resiliency sustained our growing adoption the our of dynamics cannabis and in second over they on market XXXX projected across grown recognition new the prior into in transition in and and conditions. over the U.S.

side cash of This has in Colorado Solution, Care's tenant our acquisition included other of M&A our North Pennsylvania, Care's trend XXXX. for Dakota several which Green December, announcements in tenant, including the acquisition tenants, and million acquire our recent acquire Columbia other Curaleaf's plan we million and stock. Grassroots announcement tenant Illinois, $XXX Columbia the early last Cresco's $XXX announced in the and tenant, the Wellness since deals been are to in On tenant Leaf, attracting like numerous to our Green other for and of our tenant, our tenant our Bluma our months,

trend we market consolidation as operators continue this this in top accelerate have and January, to December continued to gain We seen and see the really expect share.

in of also especially cannabis hasten a is reflection we and industry, The cannabis tremendous the States in We government this of broad changes based of amazing the and support this resilience election cycle raising federal across composition industry. medical-use and are may changes. the of the a that regulated believe seeing which level regulatory federal activity, of United growth acceptance public the capital

on that North In that to which tenants, share is more of period. operators, well now billion as through fact, walk record alone, some capital that we the raising cannabis credit than capital many in who I'll the amount believe meaningful Ben, enhancement acquisitions you investments closed provides to of our Ben? lion's a January portfolio. follow-on over will double And an or tenant color overall as raises, the recent top-tier our went our course, announced previous to the of of in for almost $X.X American further including companies base. additional quality call turn our time and

Ben Regin

partnerships Thanks, five Paul. a made our four estate expansion in of top and we operator new with relationships. states, of representing Since acquisitions October X, of tenant real mix establishment existing

under square As weighted XX calls, of today, in square a and across provide XX I our years. and representing properties in X.X redevelopment, approximately on term touch information feet development including also our two some additional some of on remaining million average each excess states, the feet, approximately we by own or overall about each Similar of million roster state. I XX lease past to with our also detail acquisitions plan provide state tenant to portfolio and plan overall tenant portfolio. to

six the active is to the market We Kings property leased operators in not our commitments future the and flower nearly well properties million Kings million, over continue portfolio. November of transactions to Garden we With the with a one our in June development five billion is in recent Angeles a and investment have recall, feet, Kings on including state, sales consistently Garden projects rapid property, for overall its in the earlier California's the remarkable XXXX. $XXX world, one cannabis in is months operators and this commence and its concentrate regulated been and regular total development XXXX, one expected the re-leasing top to square expansion you over now quarterly our with path. cannabis fairly top was as and XX% of our of X.X representing two of XXXX company in California one achievement in transactions was fund ranking on of to month, $X.X U.S. California, under Los including the dividends approximately market in first redevelopment. with shareholders and overall leased to that largest Garden, of in continuing a to in in XXXX sales may represent of two the

of as with dramatically continue has I'll of them King proud and a into development that as look And highest-quality new with more since to through Industries product tenant great team are are tenant footprint go known Michael in Angeles. on deliver supporting later. detail expand of facilities production and We our the to and his a we them partners at redevelopment our partner to the capacity and are they for. team our forward ours we partner Holistic and property Holistic little announced, been thrilled Los previously to XXXX, state-of-the-art

operator, with Moving on lease nine the total leading long-term tenant X,XXX acquired a $XX integrated XX improvements locations Harvest of be XXX,XXX at Harvest Florida. million locations, employees entered multistate and Recreation, with XX cultivation about into and Health operations. expected industrial We vertically in property and approximately the its in retail space including property in acquisition the a processing to licensed comprising a aggregate. across square investment feet our with U.S. is operations and states, to over and

four add We are in properties and $XXX Florida, we tenants medical-use them expansion million, a Harvest overall in capacity leased patients. production closing market their the Parallel thrilled look own cannot improvements. be about including little and the Florida. the more Florida We investment at opportunity property, largest roster square and of on forward to the to cannabis of Harvest, and United Harvest qualified this is commitments thrilled Trulieve, in feet to totaling tenant to over facility. future in million tenant with supporting our Including X.X fund million to our representing States, total a one in base

in a XFront with with properties square new Washington, in feet. in to across as MSO in a acquired and of with Massachusetts, dispensing. Washington. operations XFront we to licensed we an transaction, that our six comprising for own and we tenant Massachusetts services Illinois, Including close, total excited with facility and and Ventures properties December, bring lease both Massachusetts. leading another lease California, partner, the a to our Massachusetts total cultivation, industrial of XXX,XXX investment We're Now $XX leading MSOs. Concurrently, of million long-term Wellness, processing footprint XFront, comprising in expanded square and a XFront In acquisition Cresco roster executed XXX,XXX Ascend a and exceptional being our and Trulieve, representing with PharmaCann Holistic, Labs, little $XXX over about XFront approximately property with feet million, tenants investments an

sales market in has well-developed, high-quality XFront that itself As in first acquisition and and is lease a noted, believe recreational And with our cannabis differentiated XFront marks XXXX. of mature its Washington. over state transaction we Washington in $X our the relatively manufacturing. billion cultivation of cost-effective,

to with We in are of quality partner excited state. a the tenant this

Finally, totaling provider of New funding in market Michigan key nondilutive them offer in in Pennsylvania; that and we and on investment which Massachusetts made would the exemplifies be being the $XX $X flexibility meet optimal, to our to with million others. at there to the to their investments investments to a Green opportunity. PharmaCann our in the like LivWell year, addition in Ohio; I This front, we expand Since the for and we've model million believe capture executed key grow a the touch differentiator in York; $X expansion to the follow-on to is on a to of follow-on tenants, follow-on that million at needs capital October million with Holistic, tenant time terms on to investment our follow-on properties, of follow-on appropriate mission existing our growth capital with times. our partners' investment a with have solutions last provide investments $XX with Thumb

tenants in as like Green Thumb for would top Kings account Curaleaf, today. touch PharmaCann, contractual of brief significant Holistic, our of I Parallel, rent include Leaf on Wellness, tenants tenants Labs, concentration Industries, a order Garden, Trulieve. update. Ascend Cresco X/X These Those as over XX of and Green Finally, most our to

Kings eight for numerous after to we Since them totaling New As PharmaCann you facilitate expansion executed fund IPO. we over commitments U.S., markets five them are where transactions is partner our growth in in Garden. with in it investment, some partner, largest Garden privately-owned, relates know, years Illinois, to proud their companies total discussed states we support Kings shortly started, the have the our team With largest activity, our partnered the additional in in properties then, their million. go Kings I in with about I X-plus Garden, $XXX.X to in licenses But investment their improvements, in our Ohio regulated Pennsylvania world. continued and York completed one PharmaCann to the of and detail property having cannabis representing the operators the York, New cannabis recent including Massachusetts, in growth market into additional sale-leaseback detail much and vertically-integrated in with December strategic here. are tenant California, so PharmaCann with we to of with as tremendous located opportunities. XXXX say, in won't we one future thrilled in to top needless with

Wellness. Ascend

We of XXXX have been Ascend's since commitment representing have partnered with and Michigan, real in Illinois, a estate total partner properties three and nearly Massachusetts $XXX Ascend on million.

assets expansion this of is Abner execute which opportunities tremendous MSO integrated with Illinois, developed world-class Labs. to Ohio, execute to these and additional throughout markets with to in a and in including Massachusetts million a in on strategic Abner Jersey. vertically New initiatives key effectively last a Cresco on Kurtin, pandemic, Illinois. raise capital strategic by led has is year $XX August a team fund continues Michigan, footprint Ascend,

Green we Illinois, last cultivation We advantage of of to Thumb operation Cresco continue a $XXX about opportunities. enviable extremely these transaction Florida's all-stock and throughout take closed facilities, retail Green total an a We Ben Cresco commitment Kovler, to with this Pennsylvania, announced the of XX states. Cresco's the a XX U.S. to largest recently And $XXX have mentioned and United cannabis have in manufacturing MSOs for a is well million Ohio partner by partner Bluma with and licenses position locations, with month. million. ours wholesaler branded is of success the to Ohio, acquire XXXX see and positioned equity is of states gain real $XXX Michigan million. market for on million in a million. previously, We institutional Wellness business Michigan $XXX share an investor, month, liquidity $XXX opportunities. since properties commitment of California, properties transaction and Pennsylvania, of they from Illinois, testament Industries five view on representing Holistic capital transaction been estate commitment and Cresco a raised partnered Maryland, future their as single of of products in $XXX representing the stock Massachusetts, as real largest Thumb States, its Led in total own operations total across and Holistic. the and million leased in to to tenant in Earlier representing one XX Massachusetts, which of a about five is

Maryland and million. leased lease of global nationwide Curaleaf over XXX of largest guarantees most raise sites, founded with Massachusetts, Parallel in XX operations XXX CAD our financing an as of $XXX publicly-traded cultivation sites and with in expansion truly the have a billion. operator the for in Last at Josh opportunities. the by and year to The team nearly month, from back of of are William an a commitment closed billion. strategic oversubscribed I capital X,XXX successful in executed the by Holistic own operates million, California, Curaleaf. received summer. and Texas, all XXXX transaction announced Curaleaf who time the success, a representing for and for over a want look dispensaries, approximately represented team is and by to his about processing We is of for acquired led rentable $X.X $XXX property implied week valuation by a largest this the in their with expected With the Beau last D.C. Green tracking a Maryland, has in $XX properties million additional one CEO partnered was and investment is expansion highly includes Corp. Michigan, we an excess employees. Virginia, investors with Acquisition his MSOs, number confectionery forward close of XX locations million, Wrigley, congratulate to Mars property which Parallel vertically-integrated of closing our states, million $XXX two about we million. developed Jr. of leader Ceres has commitment a $XX to that with in and month out Leaf Pennsylvania privately-owned, include Leaf transformational Having California Curaleaf. tremendous grateful pending in and and operations footprint capital, We in in closed of processing previously own Chairman we Nevada, great Northeast mid-Atlantic XX North for to with and Virginia. previously properties cultivation, New total continues one this his operations for Massachusetts, transaction Holistic over in merger for raised as Maryland, served capital XX nearly market the Green region on acquisition total on originally Washington, and Our September commitment this industry's raises a history, leased to in properties representing commitment recent earlier footprint debt across Wrigley Company, team mentioned, our a this led transactions history. with a Parallel and acquired own feet Midwest since leased to Leaf. XXXX in two which, Green Pennsylvania, was Pennsylvania the Dakota in total Beau retail We representing in as second of Pennsylvania look the Illinois, Los last Florida, Parallel. and is with Curaleaf Genderson Josh now by in of led square and gum $XX Parallel. million. across further to in at retail Parallel in and Jersey, Florida, Pennsylvania, and extraction, Capital. leader four $XXX Paul which lease Ohio These the corporate leased Curaleaf Grassroots, to properties Altmore XXXX and Angeles. XXX,XXX

may expected remarks, that definitive his Columbia agreement of Care the of XXXX. as in Leaf you and at And in is in of last for had to the to very in to cash Columbia Green Paul Green our at transaction our recall, As end properties, the that stock, signed one Colorado close announced alluded Solution acquire XXXX. year, it a $XXX summer other Care acquired and tenants million of one

awarded one of expand cultivation. Virginia operates We XXX experienced Pennsylvania, properties lease to continues top two also representing in XX recently a million. and tenant at Green dominant of feet MSOs, the out partner two Care, expect facilities of Led million the with retail million. ours Massachusetts, for Cannabis EU. Program the dispensary Massachusetts, forma XX in leased our to Columbia a to its Trulieve, U.S., representing over by investment national little is West square and permits California. largest to about acquisition reach. in Jersey for of total properties and was cannabis and the jurisdictions a we is Columbia the Care Medical is also operator several it in properties in $XX tenants in most of Florida, Columbia New Connecticut and and pro Trulieve of Leaf, New largest the Florida as market a $XX Rounding Kim its Care medical XX Trulieve operating commitment would CEO, licenses and cannabis total Rivers, locations with

a we accomplished I'll roster that, proud during are it all few our With challenging turn to on our extremely of have what that would XX over replicate tremendous tenant tenant feel in only that and time years. short a years, touched Catherine. this property top established in and we Catherine? have of partners coming we to tenants, be footprint While

Catherine Hastings

adjustments tenant in regulated continued from to busy was XXX% that rent the really unprecedented Thanks, by It's been QX year increase Ben. last market and allowances in full of and fourth contractual properties, its primarily tenants quarter, and has times during quarter, increase additional rent properties our total resulted the for leasing these million acquisition the quarter yet of cannabis of The another at and at driven certain XXXX. escalations for of $XX.X new both the show revenues approximately are improvement results provided to generated We resiliency base which financial a properties. certain reflected year.

than mentioned, tenant of the Angeles for two our frame and months for portfolio any quarter XXXX for California the tenants. and other rent As rent deferrals payments during that partial contractually time collected across our of no ongoing we've for and due that XXX% first made property one Southern total other Los XXXX have Alan fourth in

as past, note leases of closely reflects our the our under deferrals business executed properties tenant our regular partial and leases quarter. we're and account rent the for revenue are lease of that in basis. revenues And communications X% quarter we certain impacted that after total executed of acquisitions from revenues QX the of the than leases course, in during quarters I quarter abatements as management. would made no the at the continued gross leases the all cash And with less the that or Regarding indicated their payments, our on represent were of year-end. that they for revenues, have and monitoring a we for tenant's only by to assets the And partial end also

net XXXX, months of we million. recorded three December ended the $XX XX, For income

reported XXXX AFFO. our were that net fourth we've the exchangeable As time for noted first earnings other income, press considered notes our date, release all purposes to for calculating dilutive in in the versus of FFO periods and quarter

as been they'd notes common back noncash This approximately expense adding price, million stock XXXX exchange to for a cash diluted notes in adding As resulted fourth $X.X at the by the approximately the essentially share if decreased fully reported and for then result, per the results, treated $X.XX. and AFFO interest exchanged X.X the current to the exchangeable quarter for are for shares also diluted count. FFO our million of quarter diluted exchangeable share which

AFFO as want QX measures. it we and FFO difficult and to as highlight apples-to-apples an other this So period relates especially makes comparison it between results to the item, any

XXXX, the purposes. as antidilutive the exchangeable of as notes As presented, treat AFFO periods, measures. antidilutive for well, the purposes notes FFO exchangeable other in all were note for years To and accounting including all

the and adds income, depreciation property we which stock the record of $X.XX stock-based XX. common December compensation funds back notes share on $XX.X reflects quarterly from from was to million. funds stockholders which from The a and year's On million. operations, per dividend operations, to was adds XX, back dividend both interest for of exchangeable paid prior common as quarter. our noncash quarter, FFO XXXX the January expense of QX So $XX.X XX% increase fourth net fourth noncash Adjusted cash to

continues portfolio a of AFFO to in XX% to past, on the As a payout we've of the target basis. ratio Board XX% dividend stabilized indicated

of as our We properties under to tenant into allowances fund to leases. development our many real also construction improvement continued in improvements or offered our estate operators

either we to redeveloping to market or noted, expansion facility critical funding growing As to demands. an address improvements facility a previously existing cannabis these are

As mentioned, our partner for Ben to capital for we've with tenant expansion of leases facilities amend base in additional operators proud increase our rent. continue a previously to at the corresponding to many and provide been

we million relating ended year funded capitalized approximately offering to to ATM, XXXX, to December into our respect activity. with at-the-market, November, improvements us $XXX entered common shares of XXX or construction And costs our program, tenant to million In properties. the stock. activity sell a the million, new During up $XXX XX, of we financing at allowing and and approximately

IPO, million we've to capital we proceeds have our capital total stock from raised available exchangeable million billion through ATM bringing and approximately approximately of approximately our leases raised or program, During the place Series program. offerings, fourth raised $XXX quarter, XX% To today. date, ATM our our $X.X of senior in and capital $XXX aggregate to net our the preferred follow-on committed billion under around stock, common $X.X notes the our approximately A of net

I'd of the assets our on most debt have rate X.XX%, of that, The interest the we at billion senior it back X% with to last of to assets cash a cash I'll the secured not notes do exchangeable have until gross year-end. than fixed sheet note less only continue year highlighted have consisting REIT as Alan. equating of notes our and no the total turn as of that This Alan? and interest one on to total of per exchangeable balance Finally, call, year-end. with gross of to totaling space $X.X mature is balance approximately our debt And payments $X.X in sheets like XXXX. leveraged conservatively we million

Alan Gold

execute of Thanks, tenant tenant four partners Catherine. operations, I'd the most like well to a just and note I is the society. have footprint years following that truly In in continue of one exceptional roster our in what we property years with developed company's experienced have a think exceptionally to we challenging over closing. as

in as which four of industry, nearly throughout health it support tremendous industry. We has future see well that capitalized a we your that every of continue in this other your stockholders investment. young truly to apart core stewards us future we believe balance from belief And want and be as last our has our very thank resilience the sets with any of strong, year, continued for demonstrated progressively economic crisis validated to and opportunities. asset entrusting that sheet a -- for the flexible the unique I a years, personally tremendous each

Operator, do day. to that questions. I'd to continue Answers very up in open that, our up could every please we'll Questions best the for With you call questions. role and have it and like to We open

Operator

first the from question Tom And Catherwood with Instructions] comes [Operator BTIG.

Tom Catherwood

are prices capital capital viewing speaks absolutely given and forward? tenants you and operators U.S., in obviously, kind it Just to Paul, going improved estate sales Stock this to increased But real capital, your how access as interest. of part from access with that. along investor your have standpoint, building to stack of their touched positive -- on Ben as news, on it off really for the of what capital touched raising well, you cannabis the

Alan Gold

is are this best in stronger industry by interest we The they sell still the very providing. higher that. greater we in most dilutive tenants. this all of for about and excited capital related are we significantly balance end, mean, nondiluted a But their are and the I business The than the are is industry. and sheets cost providing companies more for that cost-effective piece when what Tom, Alan. of really much capital public our incurring and investors So the

program. accretively. seeing to it capital a greater very is very be to our We overall continued believe So we're opportunities -- for and the more interest in capital and that of industry able us to provide -- strong in what more much creating larger, growing our place

Tom Catherwood

in same is through I Along those the in acquisitions, XXXX of appreciate time. of pace lines, terms that. period your XXXX ahead of

bit a And little some of deals these look chunkier. new

you pipeline spaced best out to your XXXX? compares right a give also a how deals bit more, sense larger still Can with operators. So little us now but the of

Alan Gold

Certainly. couple a points. And on I think you've of hit

the time think be but and continues of to I probably I we're going a We a to able can been to efficient in are think organization our spend continue basis. model pace. capital. little -- these deal think this And they're all, talk First transactions design. -- organization know capital deal the of the we we you that I'm -- type model to our average that size unique those that are million, million that The of to the we north we've -- say we that place add to I that for a and think highly range. transactions But with that size transactions, -- average we And positioned our Ben, There partners think chunky after in ways -- want to acquisitions. to there have we because able provide place period tenants capital, bit size on to are consistently on able raising the a believe business in uniquely -- $XX about been is that of north that after have that, strong transactions. X-month that something? uniquely that do raise Especially very we've We a our capital confident creating capital. to been range. and pipeline, robust. to X- type because we chunky. the industry capital to focuses chunky $XX be by large-size of are are projects a And the type pipeline, the capacity do a very do mean, raising size competitors, unique that type on very we're larger leaseback has business well and larger tenant smaller

Ben Regin

Alan what said. just Tom, Sure. echoing

Alan industry. to growth which increase. that continuing in uniquely the And industry market of see well tremendous again, source overall, to proven are continues to positioned feel as nondilutive The we the the best We are and cost-effective exciting. mentioned, capital are very addressable is we

Tom Catherwood

of think seeing Ben, outlook. of in increase its something office you utilizing part I well, preselling And as that estate Appreciate activity some real Are said, and mentioned to Or just some some sort industry. like of had back together market transactions, that? for that that. looking is the way companies at that of that in finance any Appreciate M&A early still assets as into it way Blackstone that's Paul sales something too made the XXXX. you of these in tying the a kind with the it yet? equity Is

Alan Gold

their -- is will targets, our be for acquisitions. and have that looking which still nondilutive most at acquisition large out effective that and or looking activity We on key as capital, So We is them outlook think -- capital think we Paul component has that, I think to using robust. with the balance M&A on a been sheet mean, unique help many we large -- been the the are our to the our is tenants have of described, to there, continue. and think continuing way the tenants

Tom Catherwood

And new me, that key is some it. wholesale companies diversification deferral this diversifying business, that and XQ serves one there. I of they on of were Got to clients? back to Or still idea bringing from Vertical. appreciated then of ones, and last tied one the their trouble If client the that of to quick partial having memory they as do. just kind in was Is new away gave able kind which one for this working me, is moving were the something through? a they're some payment commentary you just Cath, one your

Alan Gold

for And general. very is industry to I'll that industry that a maybe very we're Ben. remarkable overall a portfolio. proud we're feat evolve. The even -- really Tom, or to say young our continues and a answer So have But in in leased Cath young of very XXX%

continue that about models to fact generate different maximize been XXX% has excited we've to portfolio opportunity. the leased. are And able really business a that AFFO XXX% with tenants to year-over-year their look been at Our we growth

So Cath or Ben, who would like this?

Catherine Hastings

Yes.

those those Tom, rent So -- one back three April. provide did there. was we that Yes, thanks, operators It's assets in to Alan. that program of really that Vertical limited COVID feel we well relief are positioned

continuing them than I We to portfolio. as to are and to they less of try X% are the They Vertical get continue facility remarked, total operate current. work from with today. our And

Operator

with next question the And Piper from Santos comes Sandler. Daniel

Daniel Santos

about kind So the with of guys important that metrics of the issue to specific isn't aren't indicates I'll you at dependent. sort assets it tenants. that there to just collection or sort that keep more I how that bit and idea more. business, of cash I in general, dig But to be follow? that more investor in with has get the about your mean, of disclose qualitatively the tenant ways, health can understand appreciate other which and can some that's is issue, comfortable we we, talked the with can the is of cash I but If most tenants a community metric, you some what have on comfortable your correctly, there a of for portfolio. of into the look quantitatively sort an get past the their all kind situation in limitations sort same We location and

Alan Gold

So of tenant the variety one I we And It to tried different simple with a side type a the the question. type we've our that more -- to business. Because -- affected and products. focused one of model it very focused the tenants We of nondilutive one what because to of $X.X are that real brand the -- effect -- happening we're they broader business brand to that say this we than focusing have very XX of once And own mean, do that in -- COVID. variety to of I I specific have their worth this more really was location is different revenue. through while including I help over time. industry. of of -- And growing specific, business that's I capital don't we And and primary appreciate strong as business we going it of model the I think it. think, were, X% brand what's and of believe the anything providing tenant, of they've and, say that cost-effective -- billion think have opposed But that, providing location business a industry, creating they're the that of wholesale more is a on and by that think, during one less estate property, this different our being on has best a of again, This represents models. is we're doing but issue to on, asset, over to them. working the on

Daniel Santos

had little sort can look your this mean, of piece had more totally Right. of we year, two the to right, that I of some to I you've I or that And collections. XXX% again, you've a forward, a bit portfolio. But metrics comfortable of it tenants? as now And at look health is things But that that small of are rent of had underlying guess, we disclose. some get the get there sort with sort you've sort I tenants appreciate

Alan Gold

the rent. than metric had fact been here the than we've that entire that the as in AFFO, figure that collected really through industry, just from fact focus tenants it have health -- XX focus their perhaps Other public of but to you Other market. And a raise So capital tenants I'm we've the have investors can think to country, than we on the the growth the and the our XXX% the on only other able gives in top metric out is the of also -- state we could of I trying to maybe other private not I and offices, year-over-year than one and capital. family talking. ability raise that our on I'm that mean, XXX% that. that's fact

itself, growth of That's a the fact at the in of could sales also north that on growing focus the is in year-over-year XX%. strong thing. still You industry really

that top think our strong you from country. And I XX metric. in Paul, of revenue mentioned XX% tenants entire add? do comes the over the Ben That's want another very that to

Paul Smithers

pandemic go I the Yes. tenant would industry. that, tremendous results was -- performance cannabis the most the growth XXXX I essential And operate, on our designation itself. the see And of year. in just those tremendous industry would to our excel as of operators allowed look a and operators is importantly, which really to I further at we of early think, did. produce the industry and services they And we states just

that I yes, add on top that would just things the So enumerated. Alan of

Daniel Santos

on pretty the is a question dilution next model. ATM, my business then said you a you in sort And ways, between of helpful. and have That's balance lot simple of Like Okay. acquisitions.

dilution But You of income. are assets. raise to hit things of the the you before the get you're benefit going perfectly buy equity, take timed, sort you unless those

be XX a I could the being and thinking your you way is should going we presumably And you between without model of about that forward? the about the gap that earnings? guess, ATM ended So long-winded, I we too it acquisitions, can future? guess, we Or then, close how funded be cash, the b, we which in how with as a, thinking there that dilution quarter kind given

Alan Gold

warehouse or I to a on a down recall access the ability access think of line on if the that, later or So raise credit warehouse We to have facility. capital remember line that don't pay then kind we credit to Dan, credit and credit line. you don't have acquisitions you to capital a

we So is about our that created go the And dividend is really cost forward. that credit we think the of of you capital capital our excess as can cost for facility our ourselves.

to in to able gives it. that ability to in believe ability been note the continue to of it's be that at XXXX period our X- a end that gives commit the very partners really ATM tenant they move that we Remembering, the when that access a after the a the raising that the place that need capital at X-month of we to think to type our give through transactions. to those facility We we we us don't the be and pipeline tenant can have time when available. warehouse new strength raising through the that. and our consistent -- that the capital to have able I It accomplish credit partners important again, do the to confidence we've to capital, capital confidence transaction,

of that best we to that the placed that of worth that model taken time. we period over will do acquisition did move that all believe take range capital, I care as and we're think We is way that sheet balance be the able that do within in to assume doing. XX% type we XX%, to on X- transactions between we when to in is very well X-month forward. believe put our we'll of of transactions targeted XXXX, continue is do And capital it million yield that with to dilution raise accretive get $XXX and we

Catherine Hastings

sheet been I already we out, tend on that to hold And our to just committed. balance point cash also that's too, Yes. Dan, wanted

that over out balance construction, fund we we're when as going properties. for are that on have actually time that a remember until it commitment So into our the sheet making cash available sits improvements we

have investments think been $XXX indicated million future have today cash that prepared of we about that I we'd today. those committed not remarks, in my So for

Operator

from Capital. next ROTH the And Fortune Scott with comes question

Scott Fortune

tenants I limited the is are follow-up of of tenant licenses pipeline kind kind or with breakdown that existing moving The bit kind the percentage a tenant the wanted on beauty lot and a new that of opportunities. outlook new expansions the capped. to of are forward these of space and of facilities little

capital these kind it's ones do great? of more the here, within percentage would existing tenants going are states over a the from potential the if getting as more can run to But so little lot for tenant long flushed pipeline that And these on of a you color more standpoint. be well new to provide each operators with that and state provide

Alan Gold

commit pipeline the look Sure. I business in way at a grower, new mean, is is bring we -- I -- think is our strong in model when a very best that that tenant to not grow we base. only to we support the with part of now helping move current growers And to transaction, that but that we helping as them XX our have are they to them forward.

of from capital. consideration say, add because can would And with business lot you commitment be new able growers. greater historical to transactions acquisitions, existing them very see As that of carefully probably, of were XX% to I with future and our our to we a repeat growers than tend provide

So maybe turn over Ben about I'll that, what it we to where -- to talk with perhaps we see our in pipeline.

Ben Regin

Yes, sure. Scott. Hey,

very we've expansion our top the the closed in majority lot becomes nice see industry on existing and beneficial online capital outside then the coming I needs of there with inside our proven a to continue also the overall, with mix really pipeline the business think, new a by mutually and lot business the of industry across we with in is And relationship, that So our markets transactions the follow-on that, a of partners. a lot and out portfolio. fact really, tenants. vast current of It of a on with

Alan Gold

ago, move down, as tenants, know be comes I'd do different And challenging conditions add? goes could sometimes the and what of five four our to for forward. market it we very that market while and we them. also you Cath, all want months they're enjoying you there was up, now, Right. remind Scott, capital And the for or that just -- or even availability

Catherine Hastings

I Yes. that that Scott, grow are -- to just opportunities. acquisitions a I facility we these capital, identifying operators operations market this the their to too, to in, a wanted expansion When is much think state having they unique -- includes have -- markets programs. addition where for our want industry, very when in of these

well a great we portfolio. for weighted And our think us already length amendments seen XX existing interest I at to lease properties $XXX already on our continue that's a a properties so to as year of that expansion opportunity great use well get did an to for amendments over average own. increase that that looking as base our in the that's in lease And million today And our capital great in for rent our extension. to We of years, we've last portfolio. were testament of growth

Scott Fortune

New board Jersey I very are York undersupplied. and new a portfolio. color. New states states of lot are here, legalize the to X% mean, as appreciate X%, sense, day, And only here. we especially are states Makes coming see looking on every of those I the

with or me. like although And large of One tenants the any you landscape, of [indiscernible] From done? how is rate year? the compressions question from little tenants we it that your What some the So seeing rates last potentially debt see way. have a a a seeing you are cap model different will the during debt competitive competitive for also cap Are that that seems offerings type. raises move the compressing some standpoint?

Alan Gold

able up have stymied. continue New that that there do a quick team continue I only having but a in think a $X.X -- some from strong pop seen been is we've lead. of there from We business I think, north the billion always on billion. through still actually of REIT But pretty we period to potential that We the we other York put in very and has from company for competitors, be size, excess I -- that grow the to to them industry time be. -- burned from maybe of and real estate because in long think competitors is to and amount is our of always strong billion, able any to the this $X very haven't then strong a $XX think are succeed together. we capital We've able and we're, not of raised cap other the X-year as and $X.X to will capital on capital, have able they run. be has focused less They that competition. been There been the than seen But that to, adapt, short And we cannabis been then quite pretty Exchange. of think million and effectively. continuously really we'll Stock medical said, -- compete market

Scott Fortune

seeing rates to the holding that the XX% cap guys XX% up, you're stated? So same you

Alan Gold

bit our very that think at that that be there kind have we are -- do competitive that, strong and think that can more of I certain this for range capital appropriate we believe very, to that We we type perhaps portfolio than in of pipeline we're -- tenants with yields. range, very are that continue to those continue access confident that to grow to in that's little point. Well, but our continues and a -- the

Operator

And the from next Lauriers comes from Craig-Hallum Capital. question Eric Des

Eric Des Lauriers

Okay. Great.

of kind of housekeeping. just one First bit

of Vertical, and very that So property so rents, their understand X% the the assets. much L.A. and healthy partial your is than these portfolio broader less in rent

small, guys an of is that much this QX? understanding So had on revenues impact how could quantify you in your rental

Catherine Hastings

for disclosed from we their So Vertical's rents the $XXX,XXX security that from deposits for used XXXX. -- available about was press in release

Eric Des Lauriers

Great. on of a Okay. follow-up previous the question. just And bit then a

budging provisions opportunities, guys obviously, do these So from it's that lower your rates and will of and we you buyback kind think to cap right logical SAFE of also of Where Banking some what lever maybe rates, up offset mean, durations, of if lower sort pipeline I impacting just impact competition see it's come in your really now. sort could can some aren't there. access hear your good But wondering rates that. whether banking fewer get -- sort can competition maybe pipeline? you pipeline, in it envision you that down. would where maybe Obviously, companies you debt, be just pretty

are competition bit increased a that the tough great? get or impacted on understand would help you're being potentially more tenants of kind to Just that starting factors by us in seeing negotiations, that what perhaps are be your

Alan Gold

the to the the very sale-leaseback creates from lease opportunity now we've effect. an doesn't our of And estate to which our on we yields. We've think early perhaps largest our type were capital. average I the does most Sure. some actually were lengths access really competition the modifying lease. they're that for years. not now And I business the And to to think -- to our lower can increases, other We're tenants -- changed comes competitors in believe we modest of But and some X% access of it have ask XX X.X%. on length average probably industry's doing has it the capital that for real that We've still do industry the and to mean XX And increased annual that from average We're from model the our years X%. of focused actually transactions. X.X% much. -- cost of seen -- our modification industry's

are another grown need And certain we our We on underneath in bring very [indiscernible] have we started focusing of -- and significantly. tenants group now of to highly at class that are those tenants out that on current we're focused looked a and that.

yields are year. And quite acquisition middle the expected that yields. of forward move our close to down we of we'll our think -- be which able we've to recently be very are closed, pleased as that right with We anticipated transactions we the the the throughout

time think to there I average this right lot still we're going is and have And between -- have think the do. a year. XX% long left to We on be we still year a of the between -- in acquisitions we XX%.

Eric Des Lauriers

good me That's last hear. to I here. Good. Okay. suppose, one for

of and your capital, space. entering Just larger dependence space time, some the industry, kind with tenants of growers while having kind on more of the of a the all at given and entering and alternative potential licensed more same less presumably tenants the takes puts maybe potential the

your when impact increased favoring over production as look it puts of more Any that relates you competition, takes, retail assets? dynamics So large to assets et shift traditional all assets reason versus do you kind assets? of any in changing sort those of strategy sort of of production for envision retail different at strategy those cetera, and to any

Alan Gold

not asset focused $X in size from from $X that our existing million million larger-sized retail earlier, of average growers. with in $X shied changed in I to to average We've if But transactions. focused and assets to $X on we're described million our the size. one range. away million that And -- retail has million transaction staying No. size And never $XX a as size doing any -- a is -- of

not the so past be see -- current last ones -- they that just -- with grown level as our of aren't within model not the XX So -- you where some names growing public are. group did portfolio. the might years. we as the to couple not -- grower change area the to our looking business we just that we growers. the of say don't our they've aren't months. growers we tenant careful as answer my to see that from quality. They're where current in are you as familiar or such current are because just in -- at the question other any the again, be over that growers that that significantly might new as financial I the are, last that the have to to very we've been They -- we same want at need Perhaps I as high-quality last same XX very same the they're indicate XX top

Operator

And the question John last Thalmann. Massocca comes from Ladenburg from

John Massocca

amendment my questions lease of have of of facilitate you landlords different some advantage those deals? some I for novo Most of ones. transactions pushing rates you guess, any would but that by higher couple yield the I de a being versus deals? Essentially, the recent on cap to have allow some answered, have do quick already are

Alan Gold

of can quality a what yield amendment. for We of appropriate of into think location, go tenant, the the capital transaction of transaction one us the and we path create different that yield you underwrite the novo transaction. deal de that the I quality terms complexity that all a is offer. the underwrite a our than evaluate we We have an think every don't to lease individually. that single that down and the intend goes the helping And would

that that what the aren't grown think in de focused novo what I thinking if asking. are -- that but type received have you aren't perhaps really that operators we're multistate new transactions have of on, were more past, you're those a if haven't growers -- that's license of

John Massocca

more particularly kind quarter-to-quarter about thumb quarters way bespoke it, from to deferrals robust the succinctly. rent to might first amount kind about of I of explained to maybe each and quarter-to-quarter abatements have has on understanding It the a was of quarter should one space. kind investment is the good to think you the how transaction, of pretty in of it perspective? is a as rent, for there affect you of the think think us follow best three starting next either then the quarter modeling or regards a that part out activity, No. answer, that's or of going rule And we of particularly in kind trying which Is with think said, impact whatever

Alan Gold

Okay.

because the I average on So I number do I rent or deferral of that completed our quarter think -- of have in question? has is the are some going transactions pipeline with think ongoing. perhaps is that's... where that And that an of sort to that construction that we that is development be you're think

John Massocca

Yes. Yes.

a kind maybe for think thumb rule Just good about rent when to what's that of impact? of

Catherine Hastings

Yes.

construction construction million large tenant improvement complete of many are tenant large or project, before acceleration this XX months before three abatement to And So in maybe John, taking projects typically projects. the were typically described before had construction. longer big beginning our past of smaller think mean, three the tenant elements fully tops, improvements. past, TI that is so rent projects. to we're if of XXXX, if large year, those maybe there's that a I in We I maybe -- This $XX months I year, be between between and committed many period to six think a offering if past in months, nine capital. really we've we've of were there a the it tends of on seen And that that improvements

periods XX that three that of of our to months amounts on we've abatements full some before capital of rent committed. the we're will And the mirror earning

John Massocca

very helpful. That's Okay.

Ben Regin

component Cath of or it any be our would sort said, think this is upwards that XX% given of to could Ben, hey, of just some will build what have pipeline time, I -- significant to I it. add at what development out

Operator

back conference And I to this Alan turn over concludes our Gold, Chairman, would the remarks. for Executive question-and-answer closing like to session. any

Alan Gold

but challenging period think stockholders our prospects and work It's once And and very certainly to the forward. for industry, been not only support, the our thank not I in again very part be -- year XXXX. their Thank of in to only again, Properties world and a you first the but unbelievable for positive your here like move the I'd Thank hopeful for hard of you. team we Industrial as XXXX the of time, in and in all. Innovative we continue about for

Operator

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

lines. disconnect now your may You

Innovative Industrial Properties (IIPR) 26 Feb 212020 Q3 Earnings call transcript