Innovative Industrial Properties (IIPR) reports Q2 2020
After the close yesterday, IIPR reported topline growth of 183% YoY at $24.3M, in line with FactSet Consensus of $24.3M, while net income grew 322% YoY to $13.0M. In Q2 2020, IIPR acquired eight properties, totaling approximately 775,000 rentable square feet (including expected rentable square feet upon completion of properties under development), located in CA, MA, MI, NJ, and PA – these properties were an aggregate investment of approximately $191.5 million. The cannabis REIT made new tenant relationships with the likes of Columbia Care and Curaleaf.
Notably, on rent collections during COVID:
- “As reported in IIPR’s first quarter earnings release, during this coronavirus pandemic, IIPR worked with three of its 23 tenants to provide temporary rent deferrals, structured to apply a portion of the security deposit IIPR holds under each lease to pay April rent in full, defer rent for May and June in full, and provide for the pro rata repayment of the security deposit and deferred rent over an 18 month time period starting July 1. All three tenants paid rent in full for July, including pro rata repayments of the security deposit and deferred rent.”
- “IIPR collected 100% of contractual rent due for each of the months of April, May, June, and July 2020 across IIPR’s total portfolio (other than the tenant at IIP’s Los Angeles, California property that is in receivership), and has not executed rent deferrals for any additional tenants, other than the three tenants described above.”
The stock is up 2.4% in after hours trading. Management will host their earnings call at 1:00 PM EST today.
Innovative Industrial Properties (IIPR) is on the Hedgeye Cannabis LONG Bias List.
In Thailand, easing regulations on cannabis
Earlier this week, Thailand’s Cabinet approved a proposal from the country’s Public Health Ministry to allow health professional, farmers, and medial patient to cultivate, export, import, distribute, and possess cannabis and cannabis-derived products. The country, known for its severe anti-drug policies, still needs to send the draft law to their Parliament before it becomes law.
Thailand, and the APAC region at large, is still in early stages with federal and consumer acceptance of cannabis. Thailand only legalized medical cannabis in February of last year; this proposed amendment would expand medical cannabis development beyond government units and suggests a softening in sentiment.
Behavioral changes by Colorado’s youth since legalization
In a recent report, the Colorado Department of Public Health and Environment (CDPHE) stated, “Youth marijuana use has not significantly changed since legalization, but the way youth are using marijuana is changing. In 2019, 20.6% of youth said they use marijuana compared to 19.4% in 2017. More youth are now vaping marijuana -- 10.6% in 2019 compared to 5.1% in 2015. Dabbing rose from 4.3% in 2015 to 20.4% in 2019.”
The report suggests that recreational legalization won’t necessarily lead to a statistically significant increase in youth usage as feared by cannabis prohibitionists.
