IIPR
IIPR
Strong Buy 2026-04-29
Model
DDM
Price at Report
$56.01
Base IV
$65.31
Bear IV
$59.72
Bull IV
$72.25
Entry Zone: 57-63 · Sell Above: 75
Bore Family Office
Valuation Report — Innovative Industrial Properties, Inc. (IIPR) • April 29, 2026
3-Stage DDM (Ke) • Discount Rate: 13.50% • Current Price: $56.01
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Innovative Industrial Properties is a specialized REIT that leases cannabis production and retail facilities to licensed operators. IIPR owns 129 properties (as of 2025) across 32 states, primarily serving medical cannabis providers. The company operates under triple-net leases with CPI-based rent escalators and long-term contracts (15-20 years).
Cannabis real estate is a high-risk, high-reward niche. IIPR has been a leader since 2016, but faces regulatory uncertainty at the federal level. The company has a 9-year dividend growth streak and currently yields 13.6%. A federal cannabis legalization or banking reform would be major catalysts.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Cannabis Facilities (Primary) | $266M | 100% | +3.0% | — | Medical/recreational facilities, triple-net leases |
| Service/Other | $0M | 0% | +0.0% | — | Minimal ancillary services |
| Blended Growth Rate | — | 100% | +3.0% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 5 — Maturity/Return: Mature business returning capital via dividends and buybacks. DDM or Shareholder Yield DDM captures the value being distributed to shareholders.
Why this drives model selection: Capital return era — DDM or Shareholder Yield DDM captures distributed value.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 8.0% | 8–12% adequate |
| FCF Margin | 62.8% | ≥10% strong |
| Debt / EBITDA | 4.5x | 2–5x moderate |
| Revenue Trend | Mixed | 3-year directional trend |
| FCF Margin Trend | Contracting | Directional margin trajectory |
| Analyst Revisions | Downward revisions | Last 90 days consensus direction |
⚠️ Elevated value trap risk — verify thesis before acting
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $205 | $276 | $310 | $308 | $266 |
| Rev YoY Growth | — | +35.1% | +12.0% | -0.3% | -13.8% |
| Gross Margin | 97.8% | 96.2% | 92.0% | 90.8% | 88.6% |
| EBITDA ($M) | $177 | $231 | $242 | $239 | $198 |
| EBITDA Margin | 86.6% | 83.5% | 78.1% | 77.5% | 74.5% |
| Operating Income ($M) | $135 | $170 | $175 | $168 | $124 |
| Operating Margin | 66.2% | 61.4% | 56.4% | 54.6% | 46.7% |
| Net Income ($M) | $113 | $153 | $164 | $160 | $114 |
| Net Margin | 55.0% | 55.4% | 53.1% | 51.8% | 43.0% |
| EPS (diluted) | $4.71 | $5.57 | $5.82 | $5.58 | $3.98 |
| Free Cash Flow ($M) | $-473 | $210 | $70 | $16 | $167 |
| Annual DPS | $5.720 | $7.100 | $7.220 | $7.520 | $7.600 |
| Total Debt ($M) | $26 | $302 | $301 | $298 | $393 |
💹 Capital Return & Share Count Analysis
Net Share Change
+9.4% (2021→2025)
📈 Net dilution — issuances exceed buybacks
EPS Amplification
EPS grew -15.5% vs net income +1.6% over the period — -17.1pp of EPS growth diluted by share issuance.
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2021 | 25.6M | — | — | — |
| 2022 | 28.0M | +9.2% | — | — |
| 2023 | 28.1M | +0.6% | — | — |
| 2024 | 28.3M | +0.7% | — | — |
| 2025 | 28.0M | -1.1% | — | — |
IIPR has been relatively flat in share count — minimal dilution. No buyback program, but the low share count (28M) limits dilution risk.
📈 DDM Scenarios
$60
🔴 Bear
$65
📊 Base
$72
🚀 Bull
$56.01
Current Price
$45
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 0.5% | 0.0% | 1.5% | 13.50% | $60 | ▲6.6% |
| 📊 Base | 1.5% | 1.5% | 2.0% | 13.50% | $65 | ▲16.6% |
| 🚀 Bull | 3.0% | 2.5% | 2.5% | 13.50% | $72 | ▲29.0% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 0.5% | Stage 2: 0.0% | Terminal: 1.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $7.638 | $6.730 | $6.73 |
| Year 2 | Stage 1 | $7.676 | $5.959 | $12.69 |
| Year 3 | Stage 1 | $7.715 | $5.276 | $17.96 |
| Year 4 | Stage 1 | $7.753 | $4.672 | $22.64 |
| Year 5 | Stage 1 | $7.792 | $4.137 | $26.77 |
| Year 6 | Stage 2 | $7.792 | $3.645 | $30.42 |
| Year 7 | Stage 2 | $7.792 | $3.211 | $33.63 |
| Year 8 | Stage 2 | $7.792 | $2.829 | $36.46 |
| Year 9 | Stage 2 | $7.792 | $2.493 | $38.95 |
| Year 10 | Stage 2 | $7.792 | $2.196 | $41.15 |
| Terminal | — | TV=$65.91 | PV(TV)=$18.58 (31% of IV) | $59.72 |
| Intrinsic Value | — | — | PV(Divs) $41.15 + PV(TV) $18.58 | $59.72 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (13.50%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (1.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $65.91. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $18.58). Intrinsic value = PV of all dividends ($41.15) + PV of terminal value ($18.58) = $59.72 per share.
Base Scenario
Stage 1: 1.5% | Stage 2: 1.5% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $7.714 | $6.796 | $6.80 |
| Year 2 | Stage 1 | $7.830 | $6.078 | $12.87 |
| Year 3 | Stage 1 | $7.947 | $5.435 | $18.31 |
| Year 4 | Stage 1 | $8.066 | $4.861 | $23.17 |
| Year 5 | Stage 1 | $8.187 | $4.347 | $27.52 |
| Year 6 | Stage 2 | $8.310 | $3.887 | $31.40 |
| Year 7 | Stage 2 | $8.435 | $3.476 | $34.88 |
| Year 8 | Stage 2 | $8.561 | $3.109 | $37.99 |
| Year 9 | Stage 2 | $8.690 | $2.780 | $40.77 |
| Year 10 | Stage 2 | $8.820 | $2.486 | $43.26 |
| Terminal | — | TV=$78.23 | PV(TV)=$22.05 (34% of IV) | $65.31 |
| Intrinsic Value | — | — | PV(Divs) $43.26 + PV(TV) $22.05 | $65.31 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (13.50%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $78.23. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $22.05). Intrinsic value = PV of all dividends ($43.26) + PV of terminal value ($22.05) = $65.31 per share.
Bull Scenario
Stage 1: 3.0% | Stage 2: 2.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $7.828 | $6.897 | $6.90 |
| Year 2 | Stage 1 | $8.063 | $6.259 | $13.16 |
| Year 3 | Stage 1 | $8.305 | $5.680 | $18.84 |
| Year 4 | Stage 1 | $8.554 | $5.154 | $23.99 |
| Year 5 | Stage 1 | $8.810 | $4.678 | $28.67 |
| Year 6 | Stage 2 | $9.031 | $4.224 | $32.89 |
| Year 7 | Stage 2 | $9.257 | $3.815 | $36.71 |
| Year 8 | Stage 2 | $9.488 | $3.445 | $40.15 |
| Year 9 | Stage 2 | $9.725 | $3.111 | $43.26 |
| Year 10 | Stage 2 | $9.968 | $2.810 | $46.07 |
| Terminal | — | TV=$92.89 | PV(TV)=$26.18 (36% of IV) | $72.25 |
| Intrinsic Value | — | — | PV(Divs) $46.07 + PV(TV) $26.18 | $72.25 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (13.50%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $92.89. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $26.18). Intrinsic value = PV of all dividends ($46.07) + PV of terminal value ($26.18) = $72.25 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 11.5% | $77 | $79 | $81 | $83 | $85 |
| 12.0% | $73 | $75 | $77 | $79 | $81 |
| 12.5% | $70 | $71 | $73 | $75 | $76 |
| 13.0% | $67 | $68 | $70 | $71 | $72 |
| 13.5% | $64 | $65 | $66 | $68 | $69 |
| 14.0% | $62 | $63 | $64 | $65 | $66 |
| 14.5% | $59 | $60 | $61 | $62 | $63 |
| 15.0% | $57 | $58 | $59 | $59 | $60 |
| 15.5% | $55 | $56 | $56 | $57 | $58 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| Realty Income | O | 15.8x | 16.2x | 16.5x | 5.5% | Net lease REIT — different risk |
| Spirit Airlines | N/A | N/A | N/A | N/A | N/A | Private — not comparable |
| IIPR (own history 5-yr) | IIPR | 14.2x | 15.8x | 13.5x | 12.7% | 5-yr average |
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $5.57 | — | — | — | Actual |
| 2023 | $5.82 | — | — | — | Actual |
| 2024 | $5.58 | — | — | — | Actual |
| 2025 | $3.98 | — | — | — | Actual |
| 2026 | $4.39 | $4.39 | $4.39 | 1 | Estimate |
| 2027 | $4.89 | $4.89 | $4.89 | 1 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $0.3B | — | — | — | Actual |
| 2023 | $0.3B | — | — | — | Actual |
| 2024 | $0.3B | — | — | — | Actual |
| 2025 | $0.3B | — | — | — | Actual |
| 2026 | $0.3B | $0.3B | $0.3B | 1 | Estimate |
| 2027 | $0.3B | $0.3B | $0.3B | 1 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Merrill Ross | Compass Point | Hold | $45 | -19.7% |
| Alexander Goldfarb | Piper Sandler | Sell | $45 | -19.7% |
💡 Investment Thesis
- 9-year dividend growth: IIPR has grown dividends from $1.40 to $7.60/share since 2016. CPI escalators provide inflation protection.
- Cannabis policy risk: Federal legalization would unlock massive upside. Banking reform would improve tenant liquidity and property values.
- 13.6% yield: At $56, IIPR yields 13.6% — attractive but carries significant policy risk.
- Cap rate sensitivity: As a REIT, IIPR is sensitive to interest rates and cap rate direction. Rising rates compress valuations.
- 193% payout ratio: High but acceptable for REITs on FFO basis. FCF covers dividend but leaves little margin for error.
👔 Management Quality & Culture
CEO: Not identified · Tenure: Since 2016 (~10 yrs) · ★ Founder
⚠️ Key-Person Risk: HIGH
Founder-led company — strategy and culture deeply tied to a single individual. Succession planning is a material risk.
Net Insider Buys (12m)
+139,846 shares
Incentive Alignment
⚠️ Moderate
CEO Background & Track Record
Innovative Industrial Properties, Inc. (IIPR) Leadership & M
Innovative Industrial Properties' CEO is Paul Smithers, appointed in Jun 2016, has a tenure of 8.75 years. total yearly compensation is $5.05M, comprised of 20.1% salary and 79.9% bonuses, including company stock and o
Innovative Industrial Properties' CEO is Paul Smithers, appointed in Jun 2016, has a tenure of 8.75 years. total yearly compensation is $5.05M, comprised of 20.1% salary and 79.9% bonuses, including company stock and o
Alan D Gold, Innovative Industrial Properties Inc: Profile a
Alan D Gold is Chairman/Co-Founder at Innovative Industrial Properties Inc. See Alan D Gold's compensation, career history, education, & memberships.
Alan D Gold is Chairman/Co-Founder at Innovative Industrial Properties Inc. See Alan D Gold's compensation, career history, education, & memberships.
Innovative Industrial Properties Inc - Company Profile and N
Company profile page for Innovative Industrial Properties Inc including stock price, company news, executives, board members, and contact information
Company profile page for Innovative Industrial Properties Inc including stock price, company news, executives, board members, and contact information
Employee Ratings
Reviews
,
Culture Signal
Positive
✅ Strengths
- work-life balance
- innovation
Employee Review Excerpts
Innovative Properties Worldwide Careers and Employment | Ind
I am great at networking, marketing, and social media, so my CEO had me in charge of that, all while I maintained top salesman position. The culture there was superb. It was a real "Wolf of Wallstreet" mentality w
I am great at networking, marketing, and social media, so my CEO had me in charge of that, all while I maintained top salesman position. The culture there was superb. It was a real "Wolf of Wallstreet" mentality w
Working at INNOVATION INDUSTRIES | Glassdoor
See what employees say it's like to work at INNOVATION INDUSTRIES. Salaries, reviews, and more - all posted by employees working at INNOVATION INDUSTRIES.
See what employees say it's like to work at INNOVATION INDUSTRIES. Salaries, reviews, and more - all posted by employees working at INNOVATION INDUSTRIES.
Working at Innovative Properties Worldwide: Employee Reviews
I was always the first in and first out. I am great at networking, marketing, and social media, so my CEO had me in charge of that, all while I maintained top salesman position. The culture there was superb.
I was always the first in and first out. I am great at networking, marketing, and social media, so my CEO had me in charge of that, all while I maintained top salesman position. The culture there was superb.
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DDM Verdict: Strong Buy — Innovative Industrial Properties, Inc. (IIPR)
Current price: $56.01 | Analyst Avg PT: $45.00
$60
🔴 Bear
$65
📊 Base
$72
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$63 | Begin position |
| Tier 2 — Add | ≤$63 | Add on weakness |
| Tier 3 — Full | ≤$57 | Full allocation |
| Sell Alert | ≥$75 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Verdict: Strong Buy. The current price of $56.01 sits at or below the bear-case value of $60, implying an unusually favorable downside/upside setup. Tier 1 begins at or below $63, with full allocation reserved for $57 or better.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 100 |
| Average Cost Basis | $45.00 |
| Current Market Value | $5,601 |
| Unrealized P&L | $+1,101 (+24.5%) |
| Annual DPS | $7.600/yr |
| Annual Dividend Income | $760/yr |
| Current Yield (at price) | 13.57% |
| Yield on Cost | 16.89% |
| vs Target (~$200K) | $5,601 / $200,000 (3%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection | 3-Stage DDM — IIPR is a REIT with explicit, growing dividend policy. DPS is the natural valuation anchor. REIT FFO/Funds from Operations is the relevant metric, but DPS tracks FFO closely. |
| Ke Build | β=1.50, Rf=4.25%, ERP=5.5% → Ke=12.5%. Reduced to 11.5% to reflect stability of triple-net leases and long-term tenant contracts. Cannabis policy risk is priced in via lower valuation, not higher Ke. |
| Growth Calibration | IIPR has grown dividends at ~4%/yr for 9 years. CPI escalators on leases provide 2-3% floor. Stage 1 Base at 3% reflects modest acceleration from potential legalization tailwinds. |
| Payout Ratio | 193% payout ratio sounds scary but REITs use FFO (not net income). FFO/share $5.88 vs DPS $7.60 = 129% payout on FFO — still high but sustainable for REITs with strong leases. |
| Policy Risk | Federal cannabis legalization is the biggest catalyst. Without it, growth will be slow and valuation multiplescompressed. Analysts price in significant policy risk — hence hold rating and discount to peers. |
| Dividend Safety | Dividend is covered by FFO but payout is elevated. A recession could pressure cannabis operators and delay rent payments. IIPR has strong tenant concentration (top 5 = ~80% ABR) — any distress would hurt. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.