Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: How are you thinking about tenant risks given the upcoming 2026 debt maturities across the cannabis industry? A: Alan Gold, Executive Chairman, noted that while 2026 presents challenges, the industry is showing signs of maturity and improvement. The company is closely monitoring tenant risks, especially those with earlier debt maturities, and believes the broader market will be better positioned to handle these challenges by 2026.
Q: Could Innovative Industrial Properties (NYSE:IIPR) play a role in helping tenants with debt issues through sale-leasebacks or other means? A: Alan Gold stated that IIPR is open to opportunities that align with their strong balance sheet and liquidity. They are willing to work with tenants on interesting opportunities but emphasize that the broader industry needs to perform better and that broader debt markets should support the industry.
Q: What are the next steps for cannabis rescheduling efforts, and how might the DEA approach this? A: Paul Smithers, CEO, explained that the timeline for rescheduling is uncertain and depends on court rulings and potential guidance from the White House. The industry is awaiting direction from President Trump, which could influence the DEA and HHS to proceed with rescheduling efforts.
Q: Can you provide an update on the tenant portfolio and security deposits applied for rent? A: Alan Gold mentioned that each tenant situation is unique, and IIPR is working closely with tenants to resolve issues. They are cautious about discussing specifics due to confidentiality agreements but are actively managing tenant relationships.
Q: How is IIPR viewing the investment pipeline for 2025, and what impact could state legalization or federal reform have? A: Ben Regin, Chief Investment Officer, stated that IIPR remains opportunistic and disciplined in evaluating investment opportunities. They have a strong liquidity position to capitalize on opportunities and are monitoring potential changes in state legalization and federal reform.
Q: Are there any strategic investments outside of typical acquisitions that IIPR is considering? A: Alan Gold indicated that while IIPR is primarily focused on the cannabis industry, they are exploring various ways to enhance revenue through real estate-related income, leveraging their strong balance sheet and liquidity.
Q: What are some of the "green shoots" in the cannabis industry that IIPR is observing? A: Paul Smithers highlighted several positive trends, including projected 10% growth for 2025, state-specific developments like Tennessee's introduction of cannabis bills, and significant sales milestones in states like Illinois and New York. These trends suggest a robust industry despite challenges.
Q: How is IIPR handling potential requests for rent reductions from tenants following the PharmaCann resolution? A: Alan Gold emphasized that IIPR expects tenants to adhere to their lease agreements. While they are open to discussions, any rent reductions would require compensatory measures, as seen in the PharmaCann resolution.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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