- Earnings call transcript Q3 2022

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Operator

Good day and welcome to the Innovative Industrial Properties, Inc. Q3 2022 Earnings Conference Call. [Operator Instructions]. Please note, today's event is being recorded. I would now like to turn the conference over to Brian Wolfe, General Counsel. sir. ahead, go Please

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

risks, other to XXXX, filed Please the everyone differ to the Before by in actual Forms during identify variety refer statements the Reform reports cause Private a forward-looking to within Securities today's specifically could which to the XX-K materially results of of recent deemed made contained the uncertainties the maybe Litigation that SEC, important differ factors. meaning forward-looking and that we those and call Safe the risk and like may begin, statements XX-Q, I'd due actual statements. remind results company conference documents Harbor of with most Act factors on the from of

publicly whether or of revise not or any obligated are statements, otherwise. information, to new forward-looking We result update future a as events

addition, financial FFO, adjusted information, and discuss normalized FFO today's such FFO. certain non-GAAP call, In as we will on

information, filed this I'll hand find yesterday in Alan? the well the over issued reconciliations our earnings with GAAP SEC. financial can You measure most directly our in as Alan. to as with release to the X-K comparable together call now

Alan Gold

Brian, and you, Thank welcome, everyone.

of industry portfolio, estate all of in are results, the of across flexible most We we the teams are estate conditions real pleased ourselves professionals and the with strongest to sector. We and balance industries well quarter conservative the high have cannabis context real positioned and that especially sheets a of this one of with report most financial the quality another the arguably one context in experienced solid believe macroeconomic in across operations we challenging experiencing.

XX% portfolio the collection excess and full third growth IIP's XXXX Vertical not we only operating rent. Garden XX, the their million to ended months QX XX% of Now the $XX of for year's nine paying quarter. for revenues September generated in Rent was in with total quarter, Kings over recap with contractual tenants prior

noted we a September, As agreement confidential our in filed entered with we into Kings conditional in Garden. settlement X-K

limited are months discuss, we we we provide can. further but the to expect to as in can this what information We as juncture at coming

For that agreement, four now, are to relinquishing Kings Garden occupy the to of under continues back us. development the of properties properties under that two while

We in this or per first the basis And acquired the one lease forward the marketing to private and in above property for just week, non-cannabis we of $XX.X a with square at market to property for sold earlier to all that look disposition, million report property state Bernardino that are month property current the are pleased Pennsylvania lease we a all was a an with our intent, and San operator. under for that for in property properties the property, funded environment, LOI, property XXXX executed the evaluating improvements. finalizing single which leased of We Maitri, With the including our of have including long-term letter about on uses selling uses. we possible foot, development, California in a over that respect $XXX we to operator. arrangement

risk-adjusted stockholders. potential to into transaction. We of recycle returns see additional our superior for that investments, to capital with pipeline opportunity are pleased on this execute we our And an

significant see capital. opportunities to continue We place to

under the in $XXX with also tightening additional new on the months own be September continue our significant highly pleased However, cost financial of with process our impact we conditions capital a placing just in having the are with year, capital. of over investments ended the nine acquisitions XX. progress we have of made million in course That of we patient and to selective said, the and

material course, of of continue in to to XXXX a industry, one assets, commercial with XX% we no the sheets XXx. debt until real total ratio estate service most Of excess coverage balance conservative maturities the in maintain and debt

have our operators' conviction As our dynamics. results of prospects the noted years all, cannabis Paul we a over industry have to the now estate. long-term continue real our the discuss industry to you call real I capital of estate reporting in turn throughout preeminent the of regulated to six deep as position will growth and we for provider to mission-critical Paul?

Paul Smithers

unabated, analysts would double-digit conviction cannabis the industry will coming growth emphasize to as first of the regulated that cannabis sales noted long-term like of continue with is Alan I Alan. over that years. our from U.S. Thanks, expectations annualized regulated industry growth the its

pricing As call, unit for certain sales cannabis we supply-demand driven be conditions. in at regulated basic the enforcement last illicit, including and months, we what to our cannabis reflective the factors, in decline of noted by we of licensing in a taxation by wholesale seen products dynamics, authorities, enforcement local past and level believe general of state on number have law states non-licensed structures, certain states on macroeconomic lack meaningful

monitoring the practice year California California. expect force cannabis to may to and continue very unit shifting of Attorney to depending on relatively market That impact illicit efforts legal market. its on In the degrees states price eradication have cannabis California dynamics with of We grows, seasonal one Attorney varying would illicit said, that the the against recent program that illicit specifics. the that large in on and Rob announced XX state's support uninhibited and focus goals California expand see illicit State do round across have with to task announced pricing we grows General, are Bonta's to seen prevention its a the market enforcement of October, cannabis compression day its closely on eradicating General

our operations, for operators we continued tenant product facilities aspects efficiency to require on that to this continue designed through As believe we and dual partners. compression mission-critical price before, focus and well brand our the both are noted will strength of goals achieve quality to of

note based and quality average should distinct while in availability. that wholesale licensing is higher-quality, over with some dynamics. structures provides of of with informative product have we pricing course value, Capital on advantage price compression vertically-integrated wide terms others operators heavily dependent As pricing ranges,

As adding restrictive we in volatility months That and frankly other pursued and last path we increasing over call, restrictive in seen, geopolitical the increasingly to outlook markets witnessed our in what on of the Federal continuing economic uncertain never rates volatile March policy has timeline financial not on the Ukraine, any have dissipated a began the past become way monetary and U.S. since issues inflationary as supply and stoke have environment have noted that Reserve a war country. we tightening tensions a see we from in a expectations. and to chain interest

As of and year. availability with this capital changed cost the other fundamentally cannabis for capital of course has operators the industries, over

noted very year, the cannabis to for raised. of continues be cannabis debt minimal with be versus And capital the XXXX. previously, we across operators focus relative industry the raising subdued strength this equity most As continues to

XX% versus terms XXXX, has to also supply period. fact, I'd and first two-thirds total raising of and Capital U.S. In during equity diminished compared raised, total raising last being third down down QX And of equity raised The Inflation Great depth of regulated in capital with year. public billion more that year note Total QX of Viridian in raising quarters for in was according $X.X Advisors, the during from noticeably debt cannabis in XXXX XXXX. well chain of by since capital both capital three for operators as was capital $XX.X than prior quarter the the capital billion terms QX the lowest of the Recession. markets to the issues. REIT raised

As our addition we costs of to in of driving and up prior and for budgets. activities inflation our call, costs, labor versus operators in noted input to construction in development, terms original redevelopment impact continues the

are and resulting completion. continued in addition, being certain in delayed supply chain their In projects issues shortages labor

environment capital Of longer developments generation, limited these can up have delays certain revenue current the obstacles effect of significant are these to legislation. resulting operators. put of combination course, take more in complete project projects in Federal requiring as with the availability, to In operator for complete. and to the capital be the

developments, Federal scheduled Secretary HHS and announcement it pardon to Federal review for as Biden's recent to simple while is to the there report substantive to President to of cannabis we Attorney on offenses touch Federal want movement initiate to terms prior law. do pertains is legislation, directive In cannabis possession General no how under the and Federal of

a attention While simple pardon this very small for offenses was announcement, majority are a thousand a state convictions for level. impacts vast itself of as the cohort at made cannabis few an certainly possession of Federal grabbing the

However, an administrations. action cannot subsequent constitute by be pardons undone that

the long therefore, very not of who laws to enforced action decide. to have is to the potential being government We the this legislative been And find factor what, this states unclear Federal any, And left so laws in the have is should in argument first a Federal cannabis And on ultimately, a Federal impact it efforts cannabis postulate with the in for landscape interesting a notification Federal various and change basis to cannabis, for will permanent an the years, process. it that some strictly there has to this as if the contributing this be pertaining sense, viewpoint. announcement time.

the travel, our consuming the way. discuss potential secretary cannabis I'd turn and review and now year-to-date. scheduling, of this of think President initiate and Ben? Ben the represent quarter terms a take significant call or is clinical and In like while investment the current will road along research, to to road to activity years over that rescheduling, to HHS to a in does litigation to requiring third Biden's we descheduling, it portfolio directive AG time of to course,

Ben Regin

Paul. Thanks,

I'd discussing cover tenant portfolio property investments call, addition roster this our characteristics certain For in and to to of like year-to-date. our

properties, or the portfolio own two our X.X continues the agreement Kings properties with progress have you projects the rentable portfolio settlement consisting for XXX comprising As comprising and we this feet. in project million square property to know, occupy XX pursuant bifurcated we Garden one to our property Beginning Kings across leased and previously our at between development operating construction of states, quarter, expansion them. Garden, CIP, XXX to

contractual large defaults For contractually And Vertical, of and less that making management a as rent. property our fees invested capital ended the than rent and uncollected X% our time. majority Garden in July that XX, Southern in partial we've due of a total in The been contributed X% Kings of prior XXXX, XX% over collected ours from noted base portfolio. operating months to tenant of approximately nine of September in has we've California payments rents, represents calls,

over little with the an development. lease. one under month lease to marketing, were pursuant noted, forward the that working the properties properties two that in we Kings Alan a at prospective to We of with settlement agreement for finalizing possession tenant a Garden, As signed regained LOI of look and of towards

are San California our and Bernardino the and we uses, maximize property, to For the of non-cannabis size given exploring including possible all value location current of the the asset environment. market asset,

approximately Our to cost we foot, to costs. fund operating total below $XXX commitments basis, is equates per future substantially replacement square portfolios improvements, including believe which

state capital. our our either or public portfolio, operators with invested of properties and capital in Our XX% tenants as capital, Across XX invested committed operating XX% under committed were our facilities, of Of accounts properties tenants more conducting activities processing portfolio, make company up of makes of our for properties XX XX% cultivation more total facilities representing capital. capital, our capital. our invested of XXX invested up or XX% capital, no September cultivation partial and XX% XX.X than our our for multi X.X combined square than total operating or weighted of split our one approximately our with feet, state years X% of representing processing operating of invested a or our for retail full with of is X% invested and portfolio portfolio our average representing development lease one between million portfolio. locations redevelopment accounts invested XX operating rentable XX% the and/or tenants No and and or constituting nine as of retail approximately length of operating XX XX,

conditions. the to real progress as for And value believe our monitor operators months. in tremendous to mission-critical We their portfolio continue current in and ability we'll coming their as continue closely estate the to well our weather

total lease quarters year, properties, the funding of investment for first and investment we a improvements of in $XXX In executed acquired provide at of this about properties terms three million. nine amendments to nine commitment representing activity,

operator originally to for as Alan Maitri, in we private noted, state a week, earlier In leased first $XXX selling approximately on the operating funded portfolio we square single $XX.X property executed the of course our what above we per addition, Pennsylvania a which property this improvements. foot, our and and originally for $XXX XXXX disposition million acquired that square or is square above average foot per well of per including price foot property paid

are into other Pennsylvania our in the we returns. in transaction capital opportunities strategically superior believers view, presented While risk-adjusted recycle attractive opportunity an market, firm this to with

While we markets evolution and course continue make are on properties, our that of on ownership the opportunities and our long-term will individual based to portfolio themselves. evaluate the of focused of state strategic decisions present we

that favorable, In this place in as our the ability capital. the that, raise continue of we terms to capital than on industry to that deployment I'll investment Catherine. determine on expected call, opportunities pace it additional noted reasonably forecasting of turn investment to of With the last we capital as terms in always, on to is be focus to And activity, to be challenging. over light lighter we activity Catherine? we as quarters prior significantly expect

Catherine Hastings

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

and contractual Kings we quarter, totaling $X.X million for Garden in includes the in property not $XXX,XXX tenant and insurance. fees Vertical, and reimbursements base rents property from During rents and management collect did taxes which approximately million $X.X

by defaults in Garden decrease. obligations partially its held apply approximately did pay, this to by for rent, we million to security us Kings from deposits However, offset $X.X

of indicated for And the have nine investments to scheduled only quarter. impacted over will quarters and reflects to continue leases, account leases certain basis. were partial we past, QX in as six our we cash the by quarter our the revenues the all from during revenue on As acquisitions also of the phase-in continue rent revenues phase-ins our a to next which executed under months, for

the Garden XXXX, to for filed related impacted we expenses related and quarter months or this $XX ended September by income incurred in $X attributable common million to Net million For three lawsuit net the $X.XX earlier the XX, diluted Kings per income of recorded stockholders year. was litigation share. shareholder

common normalized You'll unsecured non-cash, stock-based non-cash to October as expense for quarterly senior $XX $X.XX share. per FFO. of quarter, annualized normalized equivalent note $X.XX FFO adds have common this related funds our million we from operations or added an $X.XX dividend FFO was XX, diluted of of that, expense Adjusted share quarter, per dividend for this the notes from On and our record back of interest of to our XXth, which share. we September back calculation to per stockholders to to paid compensation

of months, our in year. on continues each to to prior a Directors press to of Board of every basis. we target QX dividend As adjustments in our stock adjustments ratio payout releases, Board and AFFO noted be a XX% on six level portfolio generally the stabilized of our evaluates XX% declared to dividend QX with common quarterly expected any The

QX, quarter for For ratio payout was our the XX.X%.

for to or issue We development our construction also our allowances to draws operators under leases. continue improvement

in our we draws have for efficient As improvements improvements approximately submitted QX properties. products we activity In of funded this extensively of and $XX and noted on call, are scale. discussed quality construction at previously million production XXXX, critical cannabis these for at the

and As Paul to of up for development mentioned, for operators, redevelopment addition inflation activities. construction input costs and in is driving impacting labor costs

and the development economy war given times economic longer have we supply seeing That's construction example construction amplified response face, materials for similar delays further other outbreaks. to redevelopment the lead portfolio, our Ukraine, and ongoing by to and in broader also in disruptions, in continues generally, believe projects certain recent are countries projects downs been the We months which which in certain may just rolling lock with of in one that no $X.X next unsecured to COVID in continued electrical or of with $XXX end, seen We've properties year, the total redevelopment assets, after solely maturities up these a year this year, debt, $XXX total million an under gross not maturing is for delivery had debt or order quarter delays. million consisting of with of property placed. approximately XXXX. to until debt, plus billion to in we switchgear a and take At development about for

little annual Our XXx. fixed debt was million ratio over a $X have ratio basis grade million, of end, or to and total assets at rating in a gross on obligation $XX.X XX% an maintained debt quarter excess total interest investment per credit and cash service quarter. We've coverage our was

thoughts we'd in with it Hurricane damage. the turn our Ian. like Alan. Florida kept with our impacted are tenant sustained that We've Finally, back by in aftermath, Alan? properties contact to to the up and minimal leading hurricane that, our landfall close and through with those note of to operators And I'll

Alan Gold

Thanks, and following of strong I'd for all to and up questions. value questions? open like value cannabis on your it note the and conviction call the is of promise owners enhancement regulated open the Company that, in as as through Catherine. industry the for effectively and in of singularly up please is as company, benefit. With protection cannabis growth inevitable our you could We of focused like team's our all flows certainly long-term the team you of of Operator, industry. to ever manage closing: I'd appreciate long-term Our this to the serving to company the commitment the owners day every the regulated the to our

Operator

First question Catherwood with Tom from comes BTIG. Instructions] [Operator

Tom Catherwood

quarter. was color getting this at this something you Was that interesting to of were Kind sale. transaction? this of some Can you there was with more starting What evaluating Maybe inquiry? of and reverse is, the decided transaction? your this your some portfolio see I'm a driver kind of behind around the prune kind asset the Maitri what Very to provide assets?

Paul Smithers

a one very are of those question mind Keeping XX% that state XX% are being and single interesting Maitri operators in single It's or our of good MSOs state a only tenants question. operators. and

we So, for tenants, opportunity between are given all operators. our which I the to owners, dynamics forward to that transact. is redeploy and get think investors yielding, in was about it transaction, or we and do be our of move trader win-win the the focused, a in back their to for with capital to win-win with reduced took beneficial, long-term higher the state upon And for situation eliminate quality able the industry they've highly an lease and ourselves they even better my contact we and came but a And long-term primarily them lease, a single and structure, of it where the need constant us operators.

Tom Catherwood

remarks. And obviously, operators mentioned seeing uncertainty, their are then But or given maybe spending plans? capital prepared in you economic delay the your cannabis you pause

Paul Smithers

the there and looking the double four states that that with I states all this coming nascent, while to -- think in I by one and ballot, positive to into new use, to industries expected think or up The new online. cannabis continuing this And that to their new still expected itself opportunities. to thing operations. different week. all adult states to still expected revenue tremendous continue on -- all has are The I using coming the I that are growth that or reevaluate taking are That's don't five growth sense. industry are is XXXX. are and are industry coming this is grow. industry cannabis And time companies think states is are is time think demand, there that are revenues about And the -- approve there's are

Tom Catherwood

are the of -- Understood debt operators especially points Paul, expansions state similar the a deals to are to before you and up, was cannabis been on that with that the yields plus in these makes operators looking for been they've those mentioned sense, recently, market? looking kind programs. in Has or And push seen turning sale leaseback of there had XXX people expansion that yields invariably as that, fund that basis rate yesterday. move transactions hike we've

Paul Smithers

the generally, Yes, I commensurate with think, we Tom, think the rest I seen have an environment. of uptick

want that mentioned color pipeline yields. very we And at you do remains still As specific these on the increased to give Ben, more even that? any strong

Ben Regin

are We're opportunities. Sure. quality of a capital. demand so a capital yields and execute for to earlier seeing very question’s recycle I tremendous mean, were similar as back into uptick for to extremely attractive, part our transaction in Paul the said, seeing to the your capital on that we excited high Maitri we why

Tom Catherwood

that along put And to me, then one color. to capital Appreciate same of those of for thinking last lines work. available

capital to larger two On the like than Are of to basis committed these $XX developments, in almost $XX is projects Kings looks your or your million. kind quarter part now million uncommitted the is down Garden amounts those the earmarked developments? capital lower assets last of availability those and still amounts

Brian Wolfe

I through. talk availability the about months use in -- is capital look very ubiquitous excited We that or kind the to our we there talk very we opportunities way it in can that's still we have, we we said, think want any cash and ahead. and be things don't to to. and come we're very the settlement about and still that pipeline, in that, want way any careful as strong the operators. point. of And this But have working work I Ben with we our at uncommitted we anywhere. goes will about in of is that certainly are cash it one, It's strong in

Operator

Goldfarb question go from Piper comes Alexander Please Jaffray. ahead. with next The

Alexander Goldfarb

morning Good there. out

Just a few questions.

are great. worth Pittsburgh reuse certainly Obviously, the or get to economics But maybe ability useful the of one the your sites questions. just sense a sense backfill other? the Just warehouse, just that continuing a great First, the around thoughts see of less? it's is more the would to and of on to the Can on trades. whether you be not give line and one of or

Paul Smithers

at we Pittsburgh paid on a first, originally certainly Well, Okay. transaction, than price that higher for. sold we the

data on we square certainly our strong is, Also very one is and country. in of per there point. many basis what we that sold it across market in assets a foot have So for other higher the than

we Kings the the asset have economics of we with on development This the just and have we asset we sure very of as lease. nothing just Garden, people that that are to quickly actually understand very transaction. that we're LOI. until make associated we a Third, -- is very, definitive as can finalize intent letter with associated very, have pleased the a pleased letter done I intent moving with to with that, want from is that, agreement. economics But we are the

Alexander Goldfarb

compare What what that uses? about reevaluate to would you're be? the for does basis remaining alternative uses going your How alternative one to

Paul Smithers

Well, the buildings is, basis the past. traded in we industrial market in other for the what think commercial it below in

quality one that of XXX asset. that's to The thing. all this the Freeway, Freeway So that play has on good the adjacent that visibility, it's fact a the fact Freeway

preliminary and in maximize hope trying in stages have next to for the to to more We shareholders, come months. the XX to value are we our of that XX information

Alexander Goldfarb

Okay.

quarter and fourth it should quarter security the call think Is deposits down, thinking X whatever we sort left about on is question fourth Next any there remaining? Or being go forward. just million? security about roughly deposits, of and

Paul Smithers

are referring clarify left you to? in what Can you

Alexander Goldfarb

that. about Sorry deposits? security use we still have. Landline, You

by the quarterly deposits? be deposits was the for applied fourth to quarter, So have Garden those rents Kings the deposits You the case. quarters sounds down exhausted going guys the it amount against were that assuming rent, the episode of third that in that applied security security of security those you I'm you've

Paul Smithers

Yes.

due settlement. We applied not have we're full security able deposit. comment conditional the beyond our to But to that,

Alexander Goldfarb

the that talked got about cetera. AG markets Colorado, out see other all curious, you guys either have One going California. two market. illegal tremendous or just price to is back And the Oregon, et competition then Michigan, just licenses there to But Washington, that had unlimited or going in the you questions. California, good It's comments out after these

view and exposure you tenants to one are going markets unlimited, markets, is would to those the the expand markets? all company, in two, grow exposure the all you these as in? current reduce you're your continue Your Or that to licensed or that

Paul Smithers

the I is of we've that yes, which rent, locations, geographic high and on tenant are think And in quality of markets, tenants. current facilities the so mission these we're operators. critical I mission why those But focused are geographic in as locations they're investments, maybe are benefiting broader We tenants portfolios our one of make has to, we you tenants the for the our multi of generate tenants. what that when helped operators, of market. any highest facilities. location critical collect reported, XX% state collected all today. we've one believe But quality specific fact we're So we're from a market of understand than us rents, what that think as the you focused want making that making And these them the to sure you we on and that

over in you the public combined financial third our of And a see tenants end a tenants quarter. within have of As supplement, XX of as market public our as within XX the on second think of tenants over the $X.X top top billion $X.X tenants fact, can our Page at the matter I tenants billion and of of cap an over EBITDA all quarter. reported reported XX run the annual the quarter, adjusted the tenants, lastly, end $X.X of top rate positive revenue of second XX billion. our of public And

market have on up MSOs, or any is tenants individual why So any of time. period strong a might we what very of the we're focus and saying because in have we down that

Alexander Goldfarb

tenants if don't not change have your on there. or curious people who are you any quality the Have because And just that obviously extreme street. of whereas really? been buy whereby because getting controls, your so the seeing then just product dispensaries versus a seeing news. there final the the buying licensed trust question, getting seen Sentinel, in tenants obviously, of products street on the any people in uptick the is been a quality that anything I'm you big in are benefiting, what's bigger there's sort know Are mixed demand they're issue

Alan Gold

Well, lot don't are factors that but with and in any to scrutiny sense, and data any that the is there tenants is XXXX. go a is environmental, double does in I an product, produce increased has that products our environmental say out tremendous there are revenues. through have what we regulations so to interesting a, an think product sure is interesting expected pesticide their that we associated and that free, can think provide. say situation They and tenants amount of guests confidence and do I by think making the revenues any point product we the specifically that's only but factor not a product our that that, one say the is can that of

Operator

Scott comes question ROTH next Fortune with Capital. Our from

Scott Fortune

Just kind of increased or about to for side, But your overall capitalized the potential this your sale a sale leaseback cost top on deals capital some around we their cannabis the that pipeline. here, that XX%, industry MSOs are capital, seen the want cutting for many calls here quantify of it's We've follow-up two from XX% for comments so cost and incoming CapEx in quarters interests just plans and of around well of more year demand couple causing for demand ago? rate. for opportunity is overall pipeline versus or of pipeline last the leaseback these kind saw

Alan Gold

strong pipeline know tenant factors. on commit strong, Yes, have follow-up our transaction, Ben that. for this. that continues a to no, yes number it's strong, But very to and partners I'll and a is mean we execute One, on our it I when be we -- of

think a this And time. period great very have that of so long And cannabis demand continued a estate the for has stems at tenure longest very that reputation from we, And real fall capital team I industry. we guess the I to there rates. think think very actually, management in I And and reputation. in just been attractive industry a I you're strong have the over. for going is Ben

Ben Regin

we our mean tremendous I Scott, are to sure. demand continuing Yes, capital. for see

challenging capitalize we're flexible the industry have, that the And in team that of opportunities of just extremely through we recognize source environment. to able sheet being balance lot and amount industry. Alan tremendous a think value given, a on ability the very our excited top to in the management I reputation, the operators value as capital we about non-dilutive our have bring of we that the strong, place, mentioned, very in in

Scott Fortune

health kind follow-up tenant then here Appreciate this of of base on of just type the capital market. the a color. in the And

you and single of with is the the debt smaller two kind mentioned a with and You you there. process tenants kind companies through potentially operator of that tenants there? state of Do debt Can those an kind potential small to are guys operators of meet you the recourse us more go little obligations, and your liquidation. debt here companies or of pressure outside the on drawn the work the side, obviously, of down there step for IIP maybe work to of might defaulting what that lenders of type have defaults Is forced the lenders process on accounts under with?

Paul Smithers

isn't they've there loan, lease pay don't, we as I our I defaults isn't to on mean, somebody think, there our default necessarily rent. on a continued long as no, --

think these look to but partners to certainly and general. I tenants, debt and the with of debt are to tenants really obligations, pay in of they succeed operations any of continue the continue their only help the Now lenders them quasi overall one just back many not structure these

their and to our benefit. their And so partnerships work, that I relationships works think and that's how

Scott Fortune

to little institutional real efforts capital tenant right? here, There some Can And Stock Got seeing it. last for Exchange listing, around steps probably potentially coming quick by there. uplifting mean, Memo if is there? statement or kind little base administration, tenants Biden Paul. that with the and question on the more of C I listening? explicit exchanges your the are discussions get thoughts light with nice in with in of for provide for USA provide up, capital markets portfolio that then move Harbor Federal job a color, provide York with plus around, board new help IIP, Safe But, the you more potential me, to with potential the more your your Just your enough the specific to exchanges in help with need you tenant base. to comfort of New it's listing out kind color a Does a free the your uplifting? a SAFE Cole for cover on language on of Growth you besides color the with forward bit more to Canopy what structure maybe Can the little

Paul Smithers

Sure.

answer -- not federal significant up the movement to open de-scheduling think I some is re-scheduling unless there short is exchanges. or said going yes, level, Scott they're the So the that, the exchanges have until at is -- there

up them. Canopy note Toronto we then interesting. That's did to with USA question the NASDAQ the but the is So is doing Exchange. listed did object Canopy that what's

is Now this play operation, it to week. That's interesting there Exchange. of going but fluid that's Toronto the to be the see is any to if as latest a

to said any committee, I think, what unless As got Schumer don't of amount and Sherrod the are Sunday has Plus Brown's it's banking, can the SAFE for protection he not or close” language those significant when think reexamine to far be path Plus, of talking of and would he Harbor type some Biden's “very Safe think I SAFE if bills they pass exchanges, put the that's Senator tremendous or for want to does on language. right part don't Senator mean, have were going not Plus getting SAFE. But But that SAFE, SAFE any some lame a or to we deep the that But exchanges, language go equity if in SAFE movement the far favor with passing to look SAFE, dig pass. because through we down SAFE Schumer as at announcement and I as chance credibility duck. along a does we now, know as about he's said better obviously, has to there's with going social to the scheduling

back same the equity last we're capital that two versus we've access. had for to years, the the So social market bow old

duck market if very in to Smart SAFE without simple be that, a think Scott capital lame going done is Money, I So something says gets access.

Operator

[Operator Instructions] The next question comes from Eric Des Lauriers Capital. with Craig-Hallum

Eric Des Lauriers

a as on disposition. Pennsylvania one follow-up First the

single what you're any you XX% portfolio for we your capital. of those other obviously, for Should are of to additional of properties potential potential state just called single sort available think operators might wondering available properties for that how only the color you the in state sale out Just on how represents belonging guys that potentially of about sale, of sale, sort overall one they as thinking for consider, operators? Just as your be properties?

Alan Gold

to not we've just require, strategic recently behind unless that it. I trying at that a don't, reason anything we're we mean, I think sell there's looking

Or that be think be, I could we and in our that. that our selling could at we asset. have that looking pleased date. asset have it that you at development, for we at one held we're of developing San if Bernardino could we look is held looking with general, And makes think assets tenants or our sale, very on But quality we'll assets I to in be strategically sense. the two

Catherine Hastings

answer that question? more your does you have questions? Eric, Do

Eric Des Lauriers

was does. mute. it on Yes, Thank you. I you. Thank

of you bid these agreeance rates investors noticing more second seeing all rates? same guess described in your Are strong would And potential ask characterize of markets higher the narrowing for your here? negotiations cap sort the on and but these your as acquisition widening are sort a at previously pipeline readjust the properties? potential question, widespread to a bit I demand, then, of You've activity, an that way you strong with decreased a essentially first spreads. you despite the spread of as of sort question, as

Alan Gold

the future and think a way to we operators answer we've best that acquisition available that we're think, are, being bit I to opportunistic quarter-over-quarter can, that to, from us do capital general a at acquisitions the that our that steward an from to to model. deploying capital access very judicious program have Where us the I I do the as is opportunistic. have market said, consistent in a though on of deploying more we're but gone to, careful thoughts be we that being of to capital, very investors the that that looking our capital the best even we I as very way requires being and positively think to capital, become

Eric Des Lauriers

that certainly Okay, sense. makes

pace, XXXX, three, understanding XXXX thinking that maybe cashed So to the like not sort I the us, given we to continue of I then that, is suppose, be we but opposed should go kind quarter more as in terms way about cetera, or this discontinued more a probably guess get of correctly? acquisition you latter, acquisition if I'm opportunistic et thinking about a guidance four know, the up you're of and have normal it former be two, okay, pace proper but of on, wall, than our anything

Alan Gold

me because some pace for a our just once become Right. in can you offline uncertainty ball to and at in conversation. should good happen it's much Unless believe clearer is And XXXX you we can think certainly quarter, that take take your tell to more if and But in that have clear. crystal then we what's of can, the and actually that than going we a going lot mine, to first really uncertainty we that that acquisition there's discuss then the happens, time market that point.

Operator

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

Alan Gold

support. your continued work I our most I'd for your the importantly, and and to you want All in. you thank Very the questions interesting you. who asked these call, times their hard Thank all we're have And support people dedicated stockholders all that team on thank and certainly thank want good during for continued to the questions.

And We that, thank so with sign all. you, off.

Operator

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

disconnect. now may You

Innovative Industrial Properties (IIPR) 3 Nov 222022 Q3 Earnings call transcript