Innovative Industrial Properties Hikes Quarterly Dividend By 24%; Shares Up 122% YTD

Innovative Industrial Properties on Dec. 14 ramped up its fourth-quarter dividend to $1.24 per share from the $1 per share paid to shareholders for the same period a year ago. It is the real estate company’s ninth dividend increase since its Dec. 2016 IPO.

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The quarterly dividend represents a 6% increase from the dividend paid in the third quarter. Shares of the company, which is focused on the regulated US cannabis industry rose 2% in Tuesday’s pre-market trading after closing 4.7% higher on Monday.

Innovative Industrial’s (IIPR) annual dividend of $4.96 per share now reflects a dividend yield of 2.94%. The company also declared a regular quarterly dividend of $0.5625 per share of its 9.00% Series A Cumulative Redeemable Preferred Stock.

The dividends are payable on Jan. 15 to stockholders of record at the close of business on Dec. 31.

IIPR forges partnerships with medical-use cannabis operators and assists in sourcing capital by acquiring and leasing back their real estate assets, in addition to the provision of other real estate-based capital solutions.

According to a separate press release dated Dec. 14, Innovative Industrial invested $31 million to extend its lease term with PharmaCann through 2040. The investment is expected to boost the company’s production capacity and advancements at PharmaCann’s 127,000 square foot facility. PharmaCann is a multi-state cannabis operator with licenses in Illinois, Maryland, Massachusetts, New York, Pennsylvania and Ohio.

“Since 2016, we have progressively supported PharmaCann as its go-to long-term real estate partner, and we are excited to take this next step with the PharmaCann team to significantly upgrade and enhance production capability at their New York facility, in a market experiencing tremendous and growing patient demand for high quality products.” said IIPR’s CEO Paul Smithers.

IIPR shares have gained 122.3% YTD and are trading at a premium of 2.2% to their 52-week high. (See IIPR stock analysis on TipRanks)

Last month, the company reported that its Q3 revenue jumped 197% to $34.3 million year-on-year, beating analysts’ estimates by $4.62 million. Growth was driven by the acquisition and leasing of new properties, contractual rental escalations, partial repayment of rent deferrals, and tenant reimbursements for property insurance premiums and property tax. Fund from operations (FFO) per share grew 61% to $1.22, exceeding the Street’s estimates by $0.05.

Craig-Hallum analyst Eric Des Lauriers raised the stock’s price target from $125 to $170, but reiterated a Hold rating on Nov. 9. According to Des Lauriers ”improving cannabis fundamentals drove the company’s Q3 beat, but shares remain at a premium valuation.”

From the rest of the Street, the stock scores a Strong Buy analyst consensus based on 5 Buys and Craig-Hullum’s Hold. Meanwhile, the average price target of $172 implies upside potential of 2% to current levels.