Compass Point Downgrades Innovative Industrial Properties (IIPR) to Sell

Compass Point analyst Merrill Ross downgraded Innovative Industrial Properties (NYSE: IIPR) from Neutral to Sell with a price target of $50.00 (from $60.00).

The analyst comments: "On Friday, March 31st, IIPR filed an 8k that reported that it declared certain tenants in default and declared a default on a mortgage loan to Medical Investor Holdings LLC (private company). Unless the four tenants cure the defaults, 2Q25 earnings will be impacted, but not by more than ~2%, because IIPR reports cash rents received and most of these tenants had not been paying full rent or interest. We think that these tenants are not likely to cure their default, and that IIPR will resort to taking control of the properties with the intent of re-leasing them. We have no doubt that the process will be protracted and that regaining possession of the properties will be expensive, and we think that the new tenant will be paying a fraction of the prior contractual rent and might not even be in the cannabis industry. This will put pressure on the dividend and on NAV, both of which provide support for the stock price. The company declared a dividend of $1.90 for 1Q25, and we estimate the dividend will be reduced to the $1.45 to $1.55 range in coming quarters."

For an analyst ratings summary and ratings history on Innovative Industrial Properties click here. For more ratings news on Innovative Industrial Properties click here.

Shares of Innovative Industrial Properties closed at $63.75 yesterday.

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