SAN DIEGO--(BUSINESS WIRE)--Innovative Industrial Properties, Inc. (NYSE: IIPR) (the "Company") announced today results for the quarter ended December 31, 2016 and for the period from June 15, 2016 (date of incorporation) through December 31, 2016.
Fourth Quarter 2016 Highlights
The Company completed its initial public offering on the New York Stock Exchange.
The Company acquired a 127,000 square foot industrial property in a sale-leaseback transaction with PharmaCann LLC (the "Initial Property").
The Company generated total revenues of $321,000 and rental revenues of $180,000, reflecting the pro rata rent paid by PharmaCann at its Initial Property in December 2016.
Initial Public Offering
On December 5, 2016, the Company completed its initial public offering on the New York Stock Exchange, issuing an aggregate of 3,350,000 shares of common stock and receiving approximately $61.1 million of net proceeds. Approximately $30.0 million of the net proceeds from the Company's initial public offering were utilized to purchase the Initial Property. At December 31, 2016, the Company had cash and cash equivalents of approximately $33.0 million.
Acquisition Activity and Pipeline
On December 19, 2016, the Company completed the acquisition of the Initial Property in New York in a sale-leaseback transaction with PharmaCann for approximately $30.0 million. Concurrent with the closing of the acquisition, the Company entered into a triple-net lease with PharmaCann, as tenant, which includes the following terms:
PharmaCann is responsible for paying for all structural repairs, maintenance expenses, insurance and taxes related to the Initial Property.
The term of the lease is 15 years, with two options to extend the term for two five-year periods.
The initial base rent is $319,580 per month, subject to annual increases at a rate based on the higher of (i) 4% or (ii) 75% of the consumer price index.
The Company receives a property management fee equal to 1.5% of the then-current base rent throughout the term, and supplemental base rent for the first five years of the term at a rate of $105,477 per month.
Together, the annualized initial base rent, property management fee and supplemental base rent equate to approximately 17.2% of the purchase price of the Initial Property.
As of March 22, 2017, the Company had identified and was in various stages of reviewing approximately $120 million of additional potential properties for acquisition, which amount is estimated based on sellers’ asking prices for the properties, ongoing negotiations with sellers, the Company's assessment of the values of such properties after taking into account the current and expected lease revenue, operating history, age and condition of the property, and other relevant factors. There can be no assurance that the Company will consummate the acquisition of any of the properties in its current acquisition pipeline on the terms anticipated, or at all.
For the fourth quarter 2016 and for the period from June 15, 2016 (date of incorporation) through December 31, 2016, the Company had total revenues of $321,000 and rental revenues of $180,000. Rental revenues reflect the pro rata rent paid for the month of December by PharmaCann at the Company's Initial Property, which was the only property that the Company owned as of December 31, 2016. The Company began real estate operations after closing its initial public offering and purchasing the Initial Property in December 2016.
For the fourth quarter 2016 and for the period from June 15, 2016 (date of incorporation) through December 31, 2016, the Company recorded a net loss of $4.2 million ($2.80 per basic and diluted share) and $4.4 million ($4.56 per basic and diluted share), respectively, which includes $3.5 million and $3.7 million, respectively, of a one-time, non-cash expense related to the redemption of the Company's Class B common stock. All shares of the Company's Class B common stock were initially purchased by the founders of the Company at par value ($0.001 per share) and were subsequently redeemed in their entirety by the Company at par value ($0.001 per share). Notwithstanding the fact that no value was received by any of the founders (including any executive officer or director of the Company) for the Class B common stock, the Company, in accordance with U.S. generally accepted accounting principles ("GAAP"), was required to record the unamortized value of the Class B common stock as a non-cash Class B stock forfeiture expense in the fourth quarter 2016.
For the fourth quarter 2016, funds from operations ("FFO") and FFO per basic and diluted share were ($4.2) million and ($2.78) per basic and diluted share, respectively, and were ($658,000) and ($0.44) per share, respectively, excluding the one-time, non-cash Class B stock forfeiture expense. For the period from June 15, 2016 (date of incorporation) through December 31, 2016, FFO and FFO per share were ($4.4) million and ($4.53) per share, respectively, and were ($658,000) and ($0.68) per share excluding the one-time, non-cash Class B stock forfeiture expense.
For the fourth quarter 2016, adjusted funds from operations ("AFFO") and AFFO per share were ($600,000) and $(0.40) per basic and diluted share, respectively. For the period from June 15, 2016 (date of incorporation) through December 31, 2016, AFFO and AFFO per share were ($600,000) and $(0.62) per basic and diluted share, respectively.
FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net loss available to common stockholders to FFO and AFFO and definitions of terms are included at the end of this release.
Teleconference and Webcast
Innovative Industrial Properties, Inc. will conduct a conference call and webcast at 10:00 a.m. Pacific Time (1:00 p.m. Eastern Time) on Thursday, March 23, 2017 to discuss the company's financial results and operations for the quarter ended December 31, 2016 and for the period from June 15, 2016 (date of incorporation) through December 31, 2016. The call will be open to all interested investors through a live audio webcast at the Investor Relations section of the company's website at www.innovativeindustrialproperties.com, or live by calling 1-866-807-9684 (domestic) or 1-412-317-5415 (international) and asking to be joined to the Innovative Industrial Properties, Inc. conference call. The complete webcast will be archived for 90 days on the company's website. A telephone playback of the conference call will also be available from 12:00 p.m. Pacific Time on Thursday, March 23, 2017 until 12:00 p.m. Pacific Time on Thursday, March 30, 2017, by calling 1-877-344-7529 (domestic), 1-855-669-9658 (Canada) or 1-412-317-0088 (international) and using access code 10103239.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. intends to elect to be taxed as a real estate investment trust. Additional information is available at www.innovativeindustrialproperties.com.
This press release contains statements that the Company believes to be “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than historical facts are forward-looking statements. When used in this press release, words such as the Company “expects,” “intends,” “plans,” “estimates,” “anticipates,” “believes” or “should” or the negative thereof or similar terminology are generally intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. Investors should not place undue reliance upon forward-looking statements. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.