INNOVATIVE INDUSTRIAL PROPERTIES INC (IIPR): what the price assumes
boothcheck covers INNOVATIVE INDUSTRIAL PROPERTIES INC (IIPR) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-06-27.
Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/IIPR
Headline
| Field | Value |
|---|---|
| Ticker | IIPR |
| Company | INNOVATIVE INDUSTRIAL PROPERTIES INC |
| Current price | $60.70/sh |
| Composition | Cannabis Portfolio 98% / Life Science Portfolio 2% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | reit |
| Price-to-FFO | 9.1x |
| FFO yield | 11.0% |
The price sits below what even a 5%/yr funds-from-operations decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 11.1% cost of equity with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.79σ |
| cohort percentile (of 105 peers) | 14 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and relative-multiple and growth-DCF value, while asset-based lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.64x | 5 | expensive |
| Earnings | 0.89x | 5 | justifies |
| Relative | 0.53x | 6 | justifies |
| Growth | 0.85x | 5 | justifies |
Families that justify the price: Earnings, Relative, Growth Families that call it expensive: Asset
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.1%); the inversion above states its own rate.
Per-Model Detail (n=21)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $59.49 | 1.02x | yes | FCF base $0.2B, growth -10% (input: historical growth), terminal g 0.5%, WACC 8.1%, 5yr projection |
| DCF Exit Multiple | Growth | $71.42 | 0.85x | yes | Exit EV/EBITDA: 7.8x / 9.8x / 11.8x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $134.54 | 0.45x | yes | P/E 24.6x (blended: static sector reference 35x + trailing (TTM) 9x), scenarios: 20.8x / 24.6x / 28.4x (bear / base = reference held flat / bull), EV/EBITDA 15.93x |
| Simple DDM | Growth | $275.44 | 0.22x | yes | DPS $7.56, g=6.3% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $219.96 | 0.28x | yes | Stage 1: 15% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $45.56 | 1.33x | yes | BV/sh $66.55, ROE (TTM) 6.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $37.01 | 1.64x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $25.25 | 2.40x | yes | Rev $0.3B, growth -13% (input: historical growth; tapered), Terminal P/S: 5.5x / 6.6x / 7.6x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $101.25 | 0.60x | yes | FFO/share $6.75, growth 15% (input: historical FFO/share growth, 8y median), PEG=0.96 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $45.88 | 1.32x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.16B × (1−21%) / WACC 8.1% → EPV (no growth) |
| Residual Income | Asset | $35.85 | 1.69x | yes | BV $66.55 + 5yr PV of (ROE (TTM) 6.3% − Kₑ 9.3%) × BV; BV grows 4.1%/yr |
| Graham Number | Asset | $100.54 | 0.60x | yes | √(22.5 × FFO/share $6.75 × BVPS $66.55) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $131.24 | 0.46x | yes | EBITDA $0.20B × sector EV/EBITDA 20.0x |
| FCF Yield | Earnings | $68.55 | 0.89x | yes | FCF $200.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $64.51 | 0.94x | yes | SBC-adj FCF $0.19B (FCF $0.20B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $217.80 | 0.28x | yes | FFO/share $6.75 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $10.11 | 6.00x | yes | BV $66.55 × (ROIC 1.2% / WACC 8.1%) |
| P/Sales Sector | Relative | $55.48 | 1.09x | yes | Revenue $0.26B × sector P/S 6.0x |
| PEG Fair Value | Relative | $151.88 | 0.40x | yes | FFO/share $6.75 × (PEG 1.5 × growth 15.0% (input: historical FFO/share growth, 8y median)) → PE 22.5x |
| Earnings Yield | Earnings | $72.97 | 0.83x | yes | FFO/share $6.75 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | $96.76 | 0.63x | yes | FFO/share $6.75 × 14.3x P/FFO (route cohort median, n=85); FFO $0.19B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 28M |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt (REIT basis) | $304.6m |
| Net debt / FFO | 1.59x |
| Fixed-charge coverage (FFO basis) | 9.7x |
| Funds from operations (trailing) | $192.0m |
| Share count CAGR (dilution) | 2.0% |
| Burning cash | no |
REIT basis: leverage is read against funds from operations (FFO), not depreciation-gutted operating income. The header's implied growth runs on ADJUSTED FFO — FFO minus recurring maintenance capex — so the header's multiple and this leverage ratio use bases that differ by that capex; neither substitutes for the other.
Bullet Takeaways
- Innovative Industrial Properties is a REIT that owns specialized cannabis-cultivation real estate and leases it back to operators on long triple-net terms, a niche where it was the first mover and remains the largest landlord.
- The defining risk is tenant credit: defaults at operators including PharmaCann, TILT, and 4Front have cut rental income, and Q1 2026 revenue fell 3.8% to $69.0 million largely on a $6.9 million tenant-default hit.
- Watch cannabis rescheduling; the DEA's move to reclassify cannabis to Schedule III would let operators deduct ordinary business expenses, improving their cash flow and their ability to pay rent, the single biggest swing factor for the tenant base.
Bull Case
The moat is regulatory and first-mover, and it shows up directly in the economics. Cannabis remains federally restricted, which means traditional banks and mortgage lenders largely will not finance cultivation facilities. That left a financing vacuum, and Innovative Industrial Properties filled it by buying the buildings outright and leasing them back to operators on long triple-net terms, where the tenant pays the taxes, insurance, and maintenance. Because conventional capital cannot easily compete for these assets, IIPR has been able to write leases at high yields, which is why the portfolio threw off roughly $205 million of adjusted funds from operations in 2025 on a relatively small asset base. A landlord earning that kind of yield because its competitors are structurally locked out of the market has a real, if regulation-dependent, advantage.
The balance sheet is the second pillar, and it is unusually conservative for a REIT. Fixed-charge coverage runs near 9.7 times, meaning operating cash flow covers interest and preferred obligations almost ten times over. Most REITs lever heavily against their property; IIPR has kept debt low, which means it can absorb tenant problems without the forced-sale dynamics that sink over-leveraged landlords. That conservatism is what lets management keep paying the dividend, declared at $1.90 per share for the first quarter of 2026, an annualized $7.60, even while it works through defaults.
The valuation is where the bull case sharpens. The stock trades near 9 times adjusted funds from operations, well below the roughly 13 times its broader REIT peer group commands, and below most of the methods' read of fair value. For a REIT, that gap is the setup: if the tenant defaults are bottoming rather than worsening, the cash flow stabilizes and the multiple has room to re-rate toward the peer group. The catalyst the bulls point to is cannabis rescheduling to Schedule III, which would let operators deduct ordinary business expenses and materially improve their cash flow and rent-paying ability. The bull case is a cheap, lightly levered, high-yield landlord whose tenant problems are the thing the low price already reflects, with a regulatory tailwind that could turn the tenant base from a liability into a strength.
Bear Case
The fragility here is not the balance sheet's debt; it is the quality of the cash flow that fills it. IIPR's revenue is rent from cannabis operators, and that tenant base has been failing to pay. Defaults at PharmaCann, TILT, and 4Front, and more recently Medical Investor Holdings, have cut rental inflows, and the damage is recent and ongoing: Q1 2026 revenue fell 3.8% to $69.0 million, driven primarily by a $6.9 million decrease tied to tenant defaults. The full-year 2025 numbers showed declines across revenue, net income, FFO, and AFFO for the same reason. A triple-net lease only protects the landlord if the tenant pays; when the operator goes bankrupt, the long lease term that looked like security becomes a vacant specialized building in a market where the next tenant is also a struggling cannabis grower.
The structural problem is concentration in a single distressed industry. IIPR's tenants are not a diversified mix of credit-worthy businesses; they are cannabis operators, most of them small, all of them squeezed by the same federal tax treatment that taxes them on gross profit rather than net income. The high lease yields that make the bull case are high precisely because the credit risk is high. When a landlord's entire rent roll depends on one industry's ability to survive a punishing tax regime, the diversification that normally cushions a REIT is absent. Re-leasing a defaulted cultivation facility means finding another operator in the same stressed pool, often at a lower rent, which is the dynamic that has been grinding down the cash flow.
That is why the cheapness can be a trap rather than an opportunity. The stock trades below most valuation methods because the market is pricing continued erosion, and the dividend, at an annualized $7.60 against adjusted funds from operations that have been falling, leaves a thinner margin than the headline yield suggests. The share count has also been creeping higher, about 2% a year, so per-share cash flow faces dilution on top of the revenue pressure. The Schedule III rescheduling could rescue the tenant base, but it is a regulatory outcome outside the company's control and not yet enacted. The bear case is that IIPR is a concentrated bet on the financial health of small cannabis operators, dressed as a real-estate investment, and the low multiple reflects a cash-flow stream that is still shrinking.
Valuation
A REIT is valued on its adjusted funds from operations, the cash earnings after the recurring capital spending that keeps the buildings leasable, not on an operating multiple. On that basis IIPR trades near 9 times adjusted funds from operations, a multiple so low the price sits below what even a steady mid-single-digit decline in funds from operations would warrant. That is the unusual starting point: the market is not paying for growth here, it is discounting decline. Against its REIT peer group, IIPR sits in the lower half of the price-to-adjusted-funds-from-operations range, and against its own record the assumed pace is within what it has delivered.
The methods we use to triangulate mostly land above the current price, which marks this as a value-supported name rather than a growth bet. The one family that says expensive is the asset-based lens, where book value per share is about $66.55 against the $59.50 price (June 27, 2026), but a REIT carrying property at depreciated cost understates the cash the property generates, so the asset read is the least informative of the four here. The pattern, cheap on cash earnings and peers, rich only on a depreciation-distorted book value, is the classic shape of a beaten-down REIT the market expects to keep bleeding.
For a REIT, leverage is read against funds from operations rather than against depreciation-gutted operating income, and on that measure IIPR is conservative: fixed-charge coverage near 9.7 times means cash flow covers interest and preferred dividends almost ten times over. That low leverage is the real downside support, because it means the company is not forced to sell assets or cut the dividend at the first sign of trouble. The dividend itself, an annualized $7.60 per share, is the return the buyer is underwriting, and its safety depends entirely on whether tenant defaults stabilize. The buyer at this price is paying a low multiple for a lightly levered, high-yield landlord whose value turns on one question: whether the cannabis tenant base is bottoming or still deteriorating.
Catalysts
The recent results trace the tenant-default story directly. For full-year 2025, FFO attributable to common stockholders was $192.4 million, normalized FFO $193.5 million, and AFFO $205.4 million, all down year over year, with lower rental revenue from tenant defaults the key driver. The pressure continued into Q1 2026: FFO of $48.3 million, normalized FFO of $50.6 million, and AFFO of $53.4 million, each modestly below the prior-year quarter, as revenue fell 3.8% to $69.0 million on a $6.9 million tenant-default decrease. The board held the quarterly dividend at $1.90 per share, an annualized $7.60. In March 2025 the company launched a tenant replacement and renewal initiative aimed at stabilizing the portfolio.
The largest forward catalyst is regulatory rather than operational. The DEA's proposal to reschedule cannabis to Schedule III would let cannabis businesses deduct standard business expenses, which currently they cannot, materially improving operator cash flow and their ability to pay rent. Because IIPR's entire rent roll depends on the financial health of cannabis operators, rescheduling is the single most important external development for the stock, and management has pointed to it as a factor in recent default resolutions. The events to watch are the progress of rescheduling and each quarter's rent-collection and default disclosures, which together determine whether the cash flow has found a floor.
Peer Cohorts (Per Segment, With Filing Citations)
Cannabis Portfolio (reported)
- EPRT (Essential Properties Realty Trust, Inc.)
- FY2025 10-K: …a stable and predictable base of revenue from which to grow our portfolio. As of December 31, 2025, our portfolio consisted of 2,300 properties, with total annualized base rent of $555.0 million, which was purposefully selected by our management team in accordance with our focused and disciplined investment strategy.…
- FY2025 10-K: …The Chief Financial Officer and our external cybersecurity consultant also consider and make recommendations on security policies and procedures, security service requirements and risk mitigation strategies to the Nominating and Corporate Governance Committee . Item 2. Properties. Our Real Estate Investment Portfolio…
- NNN (NNN REIT, INC.)
- FY2025 10-K: …credit facility ("Credit Facility") or senior unsecured term loan ("Term Loan") or proceeds from the sale of Properties. As of December 31, 2025, NNN had $5,822,000 of cash, cash equivalents and restricted cash or cash held in escrow, and $851,900,000 and $300,000,000 were available for future borrowings under the…
- FY2025 10-K: , Consolidated Financial Statements for a summary and the anticipated impact of each accounting pronouncement on NNN's financial position and results of operations. 27 Results of Operations Property Analysis General. The following table summarizes the Property Portfolio as of December 31: 2025 2024 Properties Owned:…
- FCPT (Four Corners Property Trust, Inc.)
- FY2025 10-K: …our strategy includes investing in additional restaurant and retail properties to grow and diversify our existing portfolio. We expect this acquisition strategy will decrease our reliance on Darden over time. We intend to purchase properties that are well located, occupied by durable concepts, with creditworthy…
- FY2025 10-K: 10-K false FY 0001650132 P7Y P2Y http://fasb.org/us-gaap/2025#IntangibleAssetsNetExcludingGoodwill http://fasb.org/us-gaap/2025#IntangibleAssetsNetExcludingGoodwill http://fasb.org/us-gaap/2025#AdvanceRent http://fasb.org/us-gaap/2025#AdvanceRent http://fasb.org/us-gaap/2025#AdvanceRent…
- O (REALTY INCOME CORP)
- FY2025 10-K: …tool and a disciplined source of internal growth. During 2025, we recognized approximately $48.9 million in income from lease terminations. Our disposition strategy is an extension of this active investment management approach and is supported by a variety of data‑driven tools. We seek to enhance portfolio quality…
- FY2025 10-K: …and Commercial Paper Programs , to the consolidated financial statements for further details. Term Loan Amendment In November 2025, we entered into a term loan agreement that amends and restates the previous agreement governing our $1.5 billion multi-currency term loan, dated January 6, 2023. The agreement provides…
- ADC (Agree Realty Corporation)
- FY2025 10-K: …months up to two times, for a maximum maturity of August 2029. The weighted-average maturity of the Commercial Paper Notes outstanding at December 31, 2025 was less than one month. (2) The 2031 Unsecured Term Loan matures in May 2031. No amounts had been drawn under the delayed draw, $350.0 million loan as of…
- FY2025 10-K: …employees, which aims to raise their awareness and knowledge of cybersecurity threats and challenges, and to enhance their skills and competencies in preventing and responding to the cybersecurity incidents. The program covers the Company's cybersecurity policies, guidelines, cybersecurity best practice guidelines,…
- STAG (STAG Industrial, Inc.)
- FY2025 10-K: …over the long term (i.e. the shortening and fattening of the supply chain); and 35 Table of Contents • the general quality of the transportation infrastructure in the United States. Overall, demand across the industrial market is moderating relative to recent peaks. Vacancy and availability rates are near historical…
- FY2025 10-K: 2025, our Operating Portfolio was approximately 97.2% leased. Straight-line Rent Change on new and renewal leases together grew approximately 38.2% and 41.8% during the years ended December 31, 2025 and 2024, respectively, and our Cash Rent Change on new and renewal leases together grew approximately 24.0% and 28.3%…
- GTY (GETTY REALTY CORP.)
- FY2025 10-K: …2025-01-01 2025-12-31 0001052752 gty:AccumulatedDepreciationAndAmortizationDescriptionMember gty:PhiladelphiaOneMember stpr:PA 2025-01-01 2025-12-31 0001052752 stpr:VA gty:AccumulatedDepreciationAndAmortizationDescriptionMember gty:FairfaxOneMember 2025-12-31 0001052752…
- FY2025 10-K: …2025-01-01 2025-12-31 0001052752 gty:AccumulatedDepreciationAndAmortizationDescriptionMember gty:KansasCityMember stpr:MO 2025-01-01 2025-12-31 0001052752 gty:AccumulatedDepreciationAndAmortizationDescriptionMember stpr:SC gty:WestColumbiaOneMember 2025-01-01 2025-12-31 0001052752…
Life Science Portfolio (reported)
- ARE (ALEXANDRIA REAL ESTATE EQUITIES, INC.)
- FY2025 10-K: …foreign innovation or relocate operations to more favorable regulatory or cost environments, the long-term fundamentals of the U.S. life science real estate market could weaken. This may lead to asset devaluation, reduced investor confidence, and a more challenging environment for sustaining growth and delivering…
- FY2025 10-K: …science community in their respective markets. We believe that our expertise, experience, reputation, and key relationships in the real estate and life science industries provide Alexandria with significant competitive advantages in attracting new business opportunities. Our ability to retain talent further supports…
- DOC (Healthpeak Properties, Inc.)
- FY2025 10-K: Segment Adjusted NOI by Reportable Segment (1) Outpatient medical $ 795,843 Lab 567,358 Senior housing 176,741 _______________________________________ (1) Our Adjusted NOI for our reportable segments, which we also refer to as Total Portfolio Adjusted NOI for our reportable segments, includes results of operations…
- FY2025 10-K: …31, 2025, we had various lab tenants that each represented 1% or less of total revenues. Senior Housing Our senior housing segment includes life plan communities and our SWF SH JV, an interest in an unconsolidated joint venture with a sovereign wealth fund that owns 19 senior housing assets. In January 2026, we…
- HR (HEALTHCARE REALTY TRUST INCORPORATED)
- FY2025 10-K: …benefits, including: • Health benefits and 401(k) eligibility starting on the first day of employment; • Dollar-for-dollar match on 401(k) contributions up to $2,800, encouraging higher employee savings; • 100% of long-term disability and life insurance premiums paid; and • Tuition reimbursement up to $3,000 annually…
- FY2025 10-K: …Many of the Company's leases are dependent on the viability of associated health systems. Revenue concentrations relating to these leases expose the Company to risks related to the financial condition of the associated health systems . Most of the Company's properties on or adjacent to hospital campuses are largely…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
IIPR Q1 2026 results, 8-K · IIPR 2026 commentary · IIPR FY2025 results, 8-K · IIPR 2025 results, 8-K · IIPR 2025 commentary