Financial Data and Key Metrics Changes - For Q2 2025, total revenues were $62.9 million, a 12% decrease from Q1 2025, primarily due to tenant defaults [18] - Adjusted funds from operations (AFFO) for Q2 was $48.4 million or $1.71 per share, also a 12% decrease compared to Q1 2025 [18] - The company maintains a strong balance sheet with $2.6 billion in primarily unencumbered gross assets and a low debt to gross assets ratio of 11% [19] Business Line Data and Key Metrics Changes - The company is focused on optimizing occupancy across its cannabis portfolio while facing challenges from tenant defaults [7][8] - The investment in IQHQ, a life science REIT, is expected to be highly accretive to AFFO with a blended yield exceeding 14% [5][6] Market Data and Key Metrics Changes - The cannabis industry is forecasted to grow at a compounded annual growth rate of approximately 7% from 2024 to 2029, reaching $44 billion by 2029 [7] - The life science fundraising in 2025 is on track to be the highest since 2021, indicating strong investor confidence in the sector [5] Company Strategy and Development Direction - The company is diversifying its portfolio by investing in the life science sector through IQHQ, while continuing to evaluate opportunities in the cannabis industry [4][5] - The management team emphasizes the importance of maintaining a conservative financial profile and pursuing high-quality investments with attractive risk-adjusted returns [19][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the persistent macroeconomic uncertainty and regulatory challenges in the cannabis industry but remains optimistic about long-term growth [7][12] - The company is actively pursuing legal remedies to enhance the performance of its real estate portfolio amid tenant defaults [8][10] Other Important Information - The company has closed on a $7.8 million acquisition in Maryland and completed two dispositions totaling $10.8 million in Michigan and California [15] - The company repurchased 367,000 shares of common stock at a weighted average price of $53.98 per share for a total cost of $19.8 million [19] Q&A Session Summary Question: Can you walk us through the real estate investment case specifically for IQHQ? - Management clarified that the investment is in an operating company within the life science sector, not directly in real estate, and highlighted the potential recovery in the life science industry [22][23] Question: What attracted you to IQHQ specifically? - The management noted that IQHQ's portfolio is well-positioned to capitalize on AI demand and the future growth of the life science industry [27][28] Question: How does the investment in IQHQ compare to share buybacks? - Management stated that the investment is expected to provide a higher return than the current dividend yield, emphasizing the importance of overall cost of capital [33][34] Question: How does the decision to diversify capital away from cannabis relate to dividends? - Management indicated that the investment in IQHQ was strategically evaluated to provide current income and yield while addressing underlying issues in the cannabis sector [41][44] Question: What is the current cash yield on the revolver investment? - The current cash yield on the investment is stated to be north of 10% [64]

Industry Overview - The Chinese life sciences industry is undergoing rapid transformation driven by policy relaxation, technological innovation, and the emergence of domestic companies [10][20] - The government has eased foreign investment restrictions in gene and cell therapy, allowing wholly foreign-owned hospitals in major cities [11][21] - Local governments in cities like Beijing, Shanghai, and Shenzhen are implementing targeted subsidies and fast-track approval processes to support biotechnology development [11][26] Innovation and Company Growth - Chinese life sciences companies are shifting from generic drug production to innovative therapies, with firms like CanSino Biologics and BeiGene leading in CAR-T cell therapy and artificial intelligence-assisted research [12][29] - These companies are attracting international investment and licensing agreements, enhancing China's position in the global life sciences arena [12][39] Real Estate Development and Regional Hubs - Innovation hubs such as Suzhou BioBay and Shanghai Zhangjiang Hi-Tech Park provide comprehensive support, including shared laboratories and venture capital access [13][34] - Emerging second-tier cities like Chengdu and Ningbo are expanding growth corridors in the life sciences sector [13][33] Owner Perspective - Evolving Real Estate Models - Real estate developers are adapting to industry-specific needs through light-asset models and flexible leasing arrangements [15][45] - While first-tier cities face saturation, demand remains robust in central and western regions, with a focus on sustainability and compliance [15][45] Tenant Perspective - Growth, Innovation, and Challenges - Life sciences tenants are navigating regulatory reforms and increased compliance requirements while localizing production and R&D [16][46] - There is a strong demand for GMP-certified laboratories and modular production facilities, with tenants prioritizing location advantages and sustainability certifications [16][46] Future Outlook - High-Value Growth and Real Estate Evolution - Future growth opportunities lie in AI-driven drug development, personalized medicine, and advanced therapies [17][20] - The life sciences real estate sector is transitioning from generic parks to specialized, digitally-enabled facilities with high compliance and flexibility [17][20]