July Standout: Innovative Industrial Properties (IIPR)

Updated: Dec 3, 2021

July was a lackluster month for us overall despite the market moving slightly higher. We did have a few positions that performed well and one of those was Innovative Industrial Properties (IIPR). IIPR is a real estate investment trust (REIT) that specializes in properties that are leased to operators for cannabis use. Since the regulation around cannabis is quite strict there aren't a lot of traditional lenders or operators in the segment which really gives IIPR a leg up since there isn't much competition in the space.

The marijuana landlord returned over 13% for us for the month of July and just reported earnings August 4th. They continue to do well and recently had their credit rating raised to "investment-grade" which allowed them to buy another $227 million worth of properties in the second quarter. They charge substantial rents for those properties which helps them continue to grow and fuels their dividend growth.

We initially entered the position in the $70's and it is now trading above $215 but we don't have any intention on selling. It remains difficult to buy for new investors because it continues to trade at what many would consider a premium for a REIT. At this point, under $200 would be a more reasonable buy and would be a much better entry point for this name.