Industry Overview - The cannabis sector is evolving in early 2026, characterized by volatility and pricing pressure for multi-state operators, leading investors to focus on ancillary cannabis stocks instead of direct plant-touching companies [1][3] - Ancillary companies provide essential services such as real estate, financing, or infrastructure support, which can mitigate regulatory risks and offer more stable cash-flow models compared to retail operators [2] Earnings and Market Activity - March 2026 is anticipated to be a pivotal month with earnings updates and ongoing debates about federal reform, while state-level markets remain active and expanding, supporting demand for facilities and capital [3] Investment Metrics - Ancillary cannabis stocks are often evaluated based on fundamentals like AFFO, net interest income, and dividend coverage, making cash flow stability, tenant health, and balance sheet strength critical metrics for investors [4] Key Companies - **Innovative Industrial Properties, Inc. (IIPR)**: A cannabis-focused REIT owning 111 properties across 19 states, generating $66.7 million in revenue and $30.7 million in net income in its latest quarter, with an AFFO per share of $1.88 and a declared dividend of $1.90 per share [6][9] - **NewLake Capital Partners, Inc. (NLCP)**: A smaller cannabis-focused REIT with 34 properties across 12 states, reporting $12.6 million in revenue and $6.7 million in net income, with an adjusted FFO of $11.0 million [10][14] - **Chicago Atlantic Real Estate Finance, Inc. (REFI)**: Operates as a lender to cannabis operators, with a loan portfolio of approximately $400 million, generating net interest income of $13.7 million and a declared dividend of $0.47 per share [15][19] Risk Factors - Tenant credit quality is a significant variable for IIPR, while NLCP's rental income depends on operator performance, making tenant diversification crucial [8][13] - REFI's high yield of 16.5% reflects elevated industry risk but also indicates strong income potential, necessitating close monitoring of borrower performance [20]

Shares of leading cannabis-focused real estate investment trust (REIT) Innovative Industrial Properties (IIPR 3.04%) are up 16% this week as of 3 p.m. ET on Friday after the company announced fourth-quarter earnings. While revenue and funds from operations (FFO) each declined 13% in Q4, these figures easily exceeded Wall Street's expectations, helping push shares higher. A lot of this slowdown stems from litigation tied to defaults will that keep resolving with time, so the drop in revenue and FFO is worse ...

Core Viewpoint - Innovative Industrial Properties (IIPR) has shown significant recovery from its lows and is at a pivotal point in managing tenants in default, indicating potential for further stock appreciation despite recent gains [1]. Company Summary - IIPR's stock has not fully reflected the optimism in its recovery, suggesting that there may still be room for growth in its valuation [1]. - The company is focused on maintaining strong relationships with tenants and addressing defaults effectively, which is crucial for its financial health [1]. Analyst Insights - Julian Lin, a financial analyst, emphasizes the importance of identifying undervalued companies with sustainable growth potential, particularly those with robust balance sheets and effective management [1]. - Lin leads an investment group that prioritizes stocks with a high likelihood of outperforming the S&P 500, combining growth strategies with strict valuation criteria to enhance investment safety [1].

Core Insights - The article emphasizes the importance of unique insights and knowledge in stock analysis, aiming to provide contrasting views on investment portfolios [1] Group 1 - The analyst expresses a commitment to sharing personal opinions and insights without any financial compensation from the companies mentioned [2] - The analysis is intended for informational purposes only, highlighting the necessity for investors to conduct their own research and due diligence [3] - There is a disclaimer regarding past performance not guaranteeing future results, indicating that the views expressed may not represent the entire platform [4]

Financial Data and Key Metrics Changes - For the full year 2025, the company generated total revenues of $266 million and AFFO of $205 million, with a cash flow from operations of approximately $200 million [4][5] - In Q4 2025, total revenues were $66.7 million, and AFFO totaled $53.3 million, or $1.88 per share, representing a 10% improvement compared to Q3 2025 AFFO of $1.71 per share [20][21] - The company raised over $145 million of attractively priced debt and preferred equity since October 2025, including a new $100 million revolving credit facility [21][22] Business Line Data and Key Metrics Changes - The company executed new leases at 4 properties totaling approximately 339,000 sq ft in 2025, reinforcing the quality of its assets [5][12] - The strategic investment in IQHQ amounted to $275 million, with $150 million funded to date, indicating a focus on diversifying the portfolio [5][18] Market Data and Key Metrics Changes - The life science sector is showing early signs of renewed momentum, with improving capital availability and increased strategic activity among large pharmaceutical companies [6][19] - The current construction pipeline for life science real estate is at its lowest level since early 2019, indicating a stabilization in the market [18][19] Company Strategy and Development Direction - The company is focused on a diversified portfolio across cannabis and life science, aiming to strengthen its platform and deliver long-term value for shareholders [7][8] - The recent executive order to reschedule cannabis to Schedule III is viewed as a significant regulatory development that could improve operator cash flows and strengthen credit profiles [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals supporting the life science sector and noted that discussions at the J.P. Morgan Healthcare Conference reinforced this conviction [6][19] - The company believes it is at an inflection point regarding previously non-performing assets and expects future quarters to reflect earnings upside from re-leasing efforts [11][12] Other Important Information - The company exited 2025 with total liquidity exceeding $105 million, including cash and availability under credit facilities [6][22] - Legal proceedings related to non-performing tenants are ongoing, with significant progress reported in receivership cases [11][12] Q&A Session Summary Question: Are cannabis operators looking to expand again, or are they looking to move up the quality spectrum with new space? - Management indicated that experienced operators are taking advantage of weaker competitors, and there are unique opportunities in the market [28][29] Question: How does the approach differ between competitive states like Massachusetts and Michigan? - Management noted that understanding the nuances of each market is crucial, and they focus on identifying successful operators [33][34] Question: Can you provide details on new rental rates for 4Front assets compared to prior rates? - Management stated that rental rates vary widely, with some deals significantly below prior rates and others close to them [41][42] Question: What is the outlook for legal costs this year? - Management indicated that legal costs are hard to estimate but are primarily related to tenant defaults and receivership processes [66][69]

INNOVATIVE INDUSTRIAL PROPERTIES NYSE: IIPR INNOVATIVEINDUSTRIALPROPERTIES.COM COMPANY PRESENTATION – FEBRUARY 2026 1 Innovative Industrial Properties FORWARD LOOKING STATEMENTS This presentation and our associated comments includes "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) that are subject to risks and uncertainties. In pa ...

Core Viewpoint - Innovative Industrial Properties (IIPR) received a 'strong buy' rating despite its shares trading in the high triple digits, indicating a potential misalignment between market perception and intrinsic value [1]. Group 1: Company Insights - The investment strategy focuses on identifying Real Estate Investment Trusts (REITs) that are currently out-of-favor, suggesting a contrarian approach to investing [1]. - The analysis emphasizes the importance of fundamental economic insights to assess the true intrinsic value of stocks, which is crucial for long-term investment decisions [1]. Group 2: Market Context - The article reflects a broader trend in the market where certain stocks, like IIPR, may be undervalued despite high trading prices, presenting potential investment opportunities [1].

Financial Performance - Rental revenues decreased by 14% to $265.5 million in 2025 from $306.9 million in 2024[40] - Net income attributable to common stockholders fell by 28% to $114.4 million in 2025 compared to $159.9 million in 2024[40] - Adjusted funds from operations (AFFO) attributable to common stockholders decreased by 20% to $205.4 million in 2025 from $256.1 million in 2024[40] - The company declared dividends per share of $7.60 in 2025, a slight increase of 1% from $7.52 in 2024[40] Investments and Financing - The company committed to invest up to $170 million in IQHQ REIT, purchasing 50,000 shares of preferred stock for a total of $50 million[26][27] - The IQHQ Credit Facility has an initial term of three years with a fixed interest rate of 13.5%, including 12.0% payable in cash and 1.5% PIK[32] - As of December 31, 2025, the remaining balance of the company's committed investment in IQHQ Preferred Stock totaled $120 million, expected to be funded in multiple tranches[29] - The Revolving Credit Facility was increased from $50 million to $87.5 million in November 2024, with $27.5 million of borrowings outstanding as of December 31, 2025[45] - The company repurchased 371,538 shares of common stock for $20.1 million under a share repurchase program authorized in March 2025[42] - The IIP Life Science Credit Facility provides a revolving line of credit up to $100.0 million, with the potential to increase to $135.0 million under certain conditions, maturing on October 3, 2028[46] - As of December 31, 2025, the company had $75.0 million in borrowings under the IIP Life Science Credit Facility, with an interest rate of 6.1%[46] Property and Portfolio Management - The company owns 111 properties across 19 states, with a total rentable square footage of 8,565,000, and a contractual rent collected of $243.743 million for the year ended December 31, 2025[49] - The operating portfolio is 96.7% leased with a weighted-average remaining lease term of 12.8 years, subject to contractual rental rate increases[52] - As of December 31, 2025, the company derived rental revenues from 111 properties, with total invested and committed capital amounting to $1.5 billion and contractual rent collected of $171.7 million, representing 75% of total[77] - The top ten tenants accounted for 75% of total rental revenues, with Ascend Wellness Holdings, Inc. contributing 13% and PharmaCann Inc. contributing 4%[77] Market and Industry Trends - The regulated cannabis industry in the U.S. is projected to grow from $31.4 billion in 2024 to $44.4 billion by 2029, representing a compound annual growth rate of approximately 7.2%[61] - In 2025, worldwide cannabis capital raises decreased to $2.1 billion from $2.3 billion in 2024, significantly lower than $4.3 billion in 2022[75] - Mergers and acquisitions activity in the North American regulated cannabis industry increased to approximately $2.1 billion in 2025, up from $1.2 billion in 2024[75] Tenant and Operational Risks - The company reported that inflation and supply chain constraints have negatively impacted tenant costs, leading to cost overruns and delays in project completions[73] - As of December 31, 2025, PharmaCann defaulted on rent obligations totaling $29.2 million across multiple leases, representing approximately 9.9% of the company's annualized contractual rent due[84] - The company declared defaults on leases with tenants accounting for approximately 11.6% of annualized contractual rent due, totaling $31.3 million[85] - The company expects many tenants to continue incurring losses in 2026, relying on cash on hand or asset sale proceeds for rent payments[80] - Many existing and future tenants are companies with limited operational histories, potentially unable to pay rent from operations, adversely affecting cash available for distributions[163] - The cannabis industry faces unfavorable market dynamics, impacting tenants' ability to make lease payments, leading to increased default rates[169] Regulatory and Compliance Challenges - The company operates in a highly regulated cannabis industry, requiring licenses for cultivation, processing, and dispensing, with local laws varying significantly[122] - There is a significant risk that federal authorities may enforce current federal law against cannabis, adversely affecting the company's business and financial condition[123] - Financial institutions face challenges in providing services to cannabis-related businesses due to federal laws, including the Bank Secrecy Act, which mandates reporting of suspicious activities[126] - The FinCEN Memorandum outlines requirements for financial institutions to serve cannabis businesses, but it is not legally binding and may be modified or rescinded at any time[130] - Many banks are hesitant to offer banking services to cannabis-related businesses, which could increase operational costs and pose logistical challenges for the company[131] Environmental and Operational Risks - The company’s properties are subject to various agricultural regulations, including water usage and chemical application, which could impact operational compliance and costs[135] - Environmental laws and regulations may impose significant costs and liabilities on the company, especially for properties repurposed for cannabis operations[142] - Changes in zoning and land use regulations could prevent the company from leasing properties for cannabis cultivation in the future[144] - Properties require adequate water and power supplies for cannabis cultivation; interruptions could adversely affect leasing and returns[218] - Indoor cannabis cultivation is power-intensive; power supply interruptions may harm tenant crops and affect lease payments, impacting cash flows[219] Strategic Growth and Competition - The company aims to maximize stockholder returns through regular distributions and sustainable long-term growth in cash flows driven by increased rents and disciplined portfolio expansion[53] - The company focuses on acquiring specialized industrial properties, particularly in states with established regulated cannabis programs, to generate stable and increasing rental income[58] - The current market for properties suitable for regulated cannabis operators is limited, with increased competition from various market participants[103] - The company faces competition from other companies, independent investors, and cannabis operators, which may lead to higher acquisition costs for desirable properties[106] - The company’s growth strategy focuses on acquiring specialized industrial real estate assets, particularly regulated cannabis facilities, but faces risks related to the ability to consummate acquisitions on advantageous terms[196] Legal and Litigation Risks - The company is currently subject to securities lawsuits and an SEC investigation, which may divert management's attention and adversely affect financial condition[185] - The company has not established reserves for potential liabilities related to pending litigation or SEC investigations, which could adversely affect cash flows[189] Future Outlook and Concerns - The company’s independent auditor expressed substantial doubt about its ability to continue as a going concern without refinancing or additional financing[162] - Rising interest rates could increase capital costs and reduce investment returns, adversely affecting distributions to shareholders[162] - The company’s property portfolio is geographically concentrated, increasing risk exposure to local market conditions[158] - Changes in federal regulations could lead to increased access to capital markets for competitors, impacting the company's competitive position[194] - The impact of global pandemics on operations and tenant businesses remains uncertain, potentially affecting cash flows and distributions to stockholders[199]

分组1 - Innovative Industrial Properties (IIPR) reported quarterly funds from operations (FFO) of $1.88 per share, exceeding the Zacks Consensus Estimate of $1.81 per share, but down from $2.22 per share a year ago, representing an FFO surprise of +4.06% [1] - The company posted revenues of $66.66 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 0.31%, but down from $76.74 million year-over-year [2] - Over the last four quarters, the company has surpassed consensus FFO estimates two times and topped consensus revenue estimates four times [2] 分组2 - The stock has underperformed the market, losing about 3.5% since the beginning of the year compared to the S&P 500's gain of 0.9% [3] - The current consensus FFO estimate for the coming quarter is $1.78 on revenues of $65.95 million, and for the current fiscal year, it is $7.33 on revenues of $272.06 million [7] - The Zacks Industry Rank for REIT and Equity Trust - Other is currently in the bottom 35% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Exhibit 99.1 Innovative Industrial Properties Reports Fourth Quarter and Full Year 2025 Results Raised $146 Million of Attractively Priced Debt and Preferred Equity Since October 2025 Executed leases for 337,000 square feet in Q4'25 and Q1'26 To Date SAN DIEGO, CA – February 23, 2026 – Innovative Industrial Properties, Inc. (NYSE: IIPR) ("IIP" or the "Company") announced today results for the fourth quarter and full year ended December 31, 2025. Executive Chairman Remarks "During 2025, we made significant p ...