BTIG: Innovative Industrial Properties 'Uniquely Positioned' For Cannabis Growth

Innovative Industrial Properties Inc IIPR, the only NYSE-listed real estate company that focuses on the regulated U.S. cannabis industry, is "uniquely positioned" for future growth in the sector, according to BTIG.

The Analyst

Thomas Catherwood maintained a Buy rating on Innovative Industrial Properties with a price target lifted from $101 to $148.

The Thesis

Innovative Industrial signed a new lease agreement with cannabis company Green Peak that included $18 million of growth capital, Catherwood said in a Thursday note. (See his track record here.) 

The REIT invested $13 million in an initial 56,000-square-foot facility in 2018, and that agreement included a provision for Innovative Industrial to fund additional facilities if certain EBITDA milestones are reached, the analyst said.

This implies the outlook for Green Peak is better than when the initial deal was inked, he said. 

In essence, Innovative Industrial's agreement with Green Peak boils down to the following, Catherwood said. 

"When you expand over the next seven years, we have the right to be your landlord, if we so choose."

If a similar arrangement was made in another sector, such as high-growth life sciences, investors would view the deal as "incredibly lucrative," the analyst said. 

Price Action

Shares of Innovative Industrial Properties hit a new 52-week high of $137.78 Thursday morning and were up 7.62% at $134.71 at the close Thursday. 

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