Second-quarter 2022 results from Innovative Industrial Properties, Inc. IIPR are set to be released on August 3. The company’s revenues and FFO per share are expected to improve year-over-year in the upcoming quarter. This cannabis-focused real estate investment trust (“REIT”) surprised investors with an adjusted FFO per share surprise of 2.51 percent in the most recent reported quarter.
During the previous four quarters, IIPR’s adjusted FFO per share topped the consensus by an average of 0.85%. The following graph shows the company’s surprising trajectory:
Considerations to Ponder
Things to Watch Innovative Industrial Properties is well-positioned to benefit from its ongoing acquisition of industrial properties leased to state-licensed operators for use as cannabis dispensaries under state regulation. Marijuana’s legalization for medicinal use in many U.S. states and recreational use in several other states has created new business prospects for the marijuana sector.
If you are an experienced medical-use cannabis operator, Innovative Industrial Properties will help you acquire and lease back your real estate assets. The company’s objective is to acquire existing, refurbished, and under-construction industrial buildings, including greenhouses. By June 30th of 2022, this REIT owned 111 properties, up from 108 at the end of the first quarter.
An estimated 8.6 million rentable square feet of space is now under construction or refurbishment across all buildings. The company’s revenue is anticipated to have increased in the quarter ending in June as a result of these expansion activities. IIP reported in the second quarter that it had entered into a lease amendment agreement with Green Thumb Industries Inc. for a Danville, PA site.
A New 152,000-square-foot industrial facility was recently built, and Green Thumb received an additional $55 million in funding. A Texas property was purchased for $12.0 million and leased to a Texas Original Holdings, LLC subsidiary, IIPR reported in a press release today.
As a result of acquisitions and leasing of new properties, additional tenant improvement allowances, and construction funding at existing facilities resulting in adjustments to the base rent and contractual rental escalations for some of its properties, Innovative Industrial Properties is expected to have gained during the quarter under review.
A year-over-year increase of 40.2 percent is predicted by the Zacks Consensus Estimate for quarterly revenues, which is now pegged at $68.5 million. Analysts were unimpressed with Innovative Industrial Properties’ performance in the quarter in question.
According to the Zacks Consensus Estimate, the second-quarter FFO per share has remained unchanged at $2.02 in a month. On the other hand, the projected annual growth rate is about 23.2% higher.
Assumptions on the basis of the Quantitative Model
This season, Innovative Industrial Properties’ FFO per share is expected to align with our model’s predictions. In order to boost the likelihood of an FFO beat, an Earnings ESP of plus one, two, or three (Buy, Buy, or Hold) is needed. This, on the other hand, is not the case.
Zacks Rank 4 (Sell) and Earnings ESP of 0.00 percent indicate that Innovative Industrial Properties is currently a “sell” stock. Before earnings are released, our Earnings ESP Filter can reveal the best stocks to buy or sell.
Stocks to Keep an Eye On
You might want to look at Public Storage PSA and Host Hotels & Resorts, Inc. HST, two REIT stocks, because our model predicts a positive surprise from these companies this quarter. It has an Earnings ESP of +0.31 percent and a current Zacks Rank of 3 for Public Storage, which is scheduled to disclose its quarterly results on August 4.
As of the most recent earnings report due on August 3, Host Hotels & Resorts has an Earnings ESP of +9.18% and a Zacks Rank of 2.
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