Is Innovative Industrial Properties Still a Buy?
Innovative Industrial Properties (NYSE: IIPR) is the first publicly traded company on the New York Stock Exchange to provide capital to cannabis companies through leasebacks. Operating as a real estate investment trust (REIT), it provides capital to companies that usually can't get traditional financing because of federal laws regarding cannabis. It does so by buying marijuana companies' facilities, then leasing them back with triple-net leases that put nearly all upkeep expenses on the tenant.
IIPR's shares are down more than 66% this year. There's a good reason for that, as the company's fifth-largest tenant, Kings Garden, defaulted on its rent of its six properties. With cannabis stocks reeling this year, investors were already jittery and the result was a plunging share price for IIPR.
However, I see this as a market overreaction that provides a great opportunity for investors to get in on a first-to-market company with big advantages and a high-yielding dividend. Growth for the overall cannabis market is seen as inevitable. With a current value of $27.7 billion, it's expected to become a $82.3 billion market over the next five years, with a compound annual growth rate of 24.3%, according to a report by MarketsandMarkets.
Source Fool.com
