Alex Pettee, CFA
Innovative Industrial Properties: A High-Flying Cannabis REIT
Our inaugural "Small-Cap REIT Spotlight" report focuses on Innovative Industrial Properties, a truly "high-flying" REIT focused on a unique segment of the real estate market: cannabis cultivation facilities.
One of the newest and fastest-growing REITs, IIPR was founded in 2016 with just a single property but has been on a continuous acquisition-spree over the last three years.
IIPR serves as a de facto lender to the cash-strapped (and generally unprofitable) cannabis cultivators who struggle to finance their businesses due to the intensely challenging competitive and regulatory environment.
Growing nearly as fast as its asset portfolio (and surely faster than the plants growing inside of them) has been the share price, which has more than quadrupled since the start of 2017.
Trading at sky-high valuations, IIPR is a highly speculative - but immensely interesting - REIT by any measure. We discuss the firm's business strategy and the economics of cannabis-focused real estate ownership.