Avoiding Innovative Industrial Properties’ 10% Yield in Light of Cannabis Market Decline?

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With the cannabis industry suffering from a downturn in the past year, investors have been forced to reassess their strategies and investments. Should you steer clear of Innovative Industrial Properties ($NYSE:IIPR)’ 10% yield given the struggling cannabis industry? Innovative Industrial Properties (IIP) is a real estate investment trust focused on the medical-use and scientific cannabis industry. IIP acquires, owns, and manages specialized properties leased to experienced, state-licensed operators for their medical-use cannabis facilities. Investors enjoy a safe and predictable income stream through IIP’s industrial properties.

In addition, IIP’s model of unlocking value through investing in the real estate side of the cannabis industry has enabled it to become one of the most attractive stocks in the sector. On the one hand, IIP has demonstrated that its strategy of focusing on real estate investments rather than the production side of the business is well-suited for a period of decline in the industry. On the other hand, investors may be wary to invest in a 10% yield with the cannabis market struggling. While there have been some signs of improvement in the cannabis market recently, it is still too early to tell if this trend will continue and whether it will be enough to offset IIP’s 10% yield. Ultimately, investors must weigh the risks and rewards of investing in IIP’s 10% yield given the current state of the cannabis market. There is no doubt that IIP has been a great performer over the past few years, but there is also no guarantee that this success will continue in light of a declining industry. Ultimately, investors must make their own decision as to whether IIP’s 10% yield is worth the risk given their individual investment strategies and goals.

Analysis

At GoodWhale, we take a closer look at INNOVATIVE INDUSTRIAL PROPERTIES’s financials. Our analysis gives them a Risk Rating of “medium”, meaning that they are exposed to average levels of risk and potential for returns when it comes to both financial performance and business operations. It is important to note that GoodWhale has detected two risk warnings in their balance sheet and cashflow statement, and these should be taken into account before investing in this stock. To get an even better understanding of INNOVATIVE INDUSTRIAL PROPERTIES and check out these warnings, become a registered user with GoodWhale and get access to our comprehensive analysis. More…

About the Company

Income Snapshot

Below shows the total revenue, net income and net margin for IIPR. More…

Cash Flow Snapshot

Below shows the cash from operations, investing and financing for IIPR. More…

Balance Sheet Snapshot

Below shows the total assets, liabilities and book value per share for IIPR. More…

Key Ratios Snapshot

Some of the financial key ratios for IIPR are shown below. More…

Peers

The company’s competitors include Realty Income Corp, Prologis Inc, and Crown Castle International Corp.

– Realty Income Corp ($NYSE:O)

Realty Income Corporation is a real estate investment trust that focuses on the ownership of net-leased commercial properties in the United States. As of December 31, 2020, the Company owned 6,573 properties across 49 states and Puerto Rico. The Company’s leased properties are primarily leased to retail (70.3%), industrial (12.8%), healthcare (9.4%), and other commercial tenants (7.5%).

– Prologis Inc ($NYSE:PLD)

Prologis Inc is a leading global provider of logistics real estate with a focus on the industrial sector. As of 2022, the company has a market cap of 100.2 billion. Prologis owns and operates approximately 585 million square feet of industrial space in 19 countries. The company’s properties are located in key markets around the world, including North America, Europe, Asia and Latin America. Prologis’ focus on the industrial sector provides its customers with access to a wide range of logistics solutions, including warehouses, distribution centers, last-mile facilities and transshipment hubs.

– Crown Castle International Corp ($NYSE:CCI)

Crown Castle International Corp is a holding company that provides wireless infrastructure services in the United States. Its primary business is owning, operating, and leasing wireless communications towers and small cell nodes. As of 2021, the company had approximately 40,000 wireless communications towers and approximately 60,000 small cell nodes across the United States. The company was founded in 1994 and is headquartered in Canonsburg, Pennsylvania.

Summary

Innovative Industrial Properties (IIP) is an attractive real estate investment trust (REIT) that specializes in the acquisition, ownership and management of industrial and medical-use cannabis facilities. As a result of recent economic turbulence in the cannabis industry, IIP has seen a decrease in share price, resulting in an attractive 10% dividend yield. Despite the recent market volatility, analysts suggest that IIP is still a suitable investment for those that understand the potential risks associated with investing in the marijuana sector. Ultimately, investors should analyze the company’s financials to make an informed decision on whether to invest in IIP or not.