Last month Innovative Industrial Properties (IIPR stock report) dropped about 16%, according to S&P Global Market Intelligence data. This marijuana stock had a return that was negative 15.6% for the month considering no dividends were paid. Innovative Industrial Properties is not a traditional marijuana stock. IIPR is known as a real estate investment trust focused on cannabis growing and processing properties in states permitting medical marijuana use.
In the company’s recent press release they announced that they have entered into an amendment of the lease with a subsidiary of Ascend Wellness Holdings, LLC (AWH) at the property located in Barry, Illinois, making available an additional $8 million in funding for expansion of AWH’s regulated cannabis cultivation and processing facilities at the property. The lease amendment also adjusted the base rent under the lease to take into account the additional available funding and extended the term of the lease agreement. Assuming full payment of the additional funding, IIP’s total investment in the property will be $33 million.
Why This Marijuana Stock Fell Despite Impressive Q2 Results
The result of Innovative Industrial poor performance back in August is due to a lack of momentum within the cannabis stock market. There were no companies-that had specific news that led to the decline. Even major marijuana stocks dropped due to market circumstances. For instance, Aurora Cannabis (ACB stock report), Cronos Group (CRON Stock Report) and Canopy Growth Corp (CGC Stock Report) dropped 12%, 20.2%, and 27.8% respectively. Things weren’t particularly good for Canopy after disappointing Q1 2020 results in which the company reported a 4% decline in revenue.
This past month, Innovative Industrial Properties released its Q2 results, but this news didn’t help move this marijuana stock. IIPR dropped 2% on August 8th following the Q2 release the previous day. Innovative Properties continues to perform well financially after reporting year over year revenue growth of 155%.
Impressive Q2 Results Driven By Acquisitions
The impressive revenue growth is primarily from the acquisition of new properties and contractual rent hikes at various properties. The company’s Q2 results exceeded Wall Street estimates of $8.34 million in revenue and EPS of $0.29.
In the second quarter, the company acquired nine properties in Ohio, Michigan, Pennsylvania, and Southern California. After the end of the quarter, IIPR acquired additional properties, in Nevada, California, Massachusetts, and Michigan. The Massachusetts property covers 150,000 Sq. Ft. which was leased to a Trulieve Cannabis subsidiary.
Despite a pullback in the last two months, this marijuana stock has had an impressive 2019. Through September 5, this pot stock returned 96.4% exceeding the broader market return of 20.4% and performance of major cannabis growers in Canada. Wall Street analysts expect Innovative Industrial Properties to maintain its growth momentum going forward. Analysts are projecting year over year revenue growth in 2019 and 2020 of 162% and 83%.