Why Innovative Industrial Properties' Bad News Doesn't Matter
Sometimes, the market goes a little bit overboard when a piece of bad news breaks, creating an opportunity to profit for investors who see past the noise. On that note, shares of the cannabis cultivation real estate investment trust (REIT) Innovative Industrial Properties (NYSE: IIPR) collapsed by more than 14.1% on Friday as of 2:24 p.m. ET after it filed a document with the Securities and Exchange Commission (SEC) late on July 13 describing the default of one of its tenants, Kings Garden.
The company probably won't get much in the way of compensation for its delinquent tenant, but the news is hardly a death knell for IIP. Let's look a bit more closely at what happened and put it into context so that you can decide whether to take advantage of the freshly discounted stock price.
Kings Garden leases cultivation space from IIP across six different locations, and per the SEC filing, for the month of July it defaulted on $2.2 million in rent and property management fees. If we assume that the tenant is on the hook for that $2.2 million every month, it works out to be an annual sum of $26.4 million.
Source Fool.com
