Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 61

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 61
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 of the other asset and income tests, our proportionate share is based on our
proportionate interest in the capital of the entity.

In the event that a disregarded subsidiary of
ours ceases to be wholly-owned — for example, if any equity interest in the subsidiary is acquired by a person other than us or
another disregarded subsidiary of ours — the subsidiary’s separate existence would no longer be disregarded for U.S. federal
income tax purposes. Instead, the subsidiary would have multiple owners and would be treated as either a partnership or a taxable corporation.
Such an event could, depending on the circumstances, adversely affect our ability to satisfy the various asset and gross income requirements
applicable to REITs, including the requirement that REITs generally may not own, directly or indirectly, more than 10% of the total value
or total voting power of the outstanding securities of another corporation. See “— Asset Tests” and “—
Gross Income Tests.”

We may from time to time be a limited partner
or non-managing member in a partnership or limited liability company. If a partnership or limited liability company in which we own an
interest takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose
of our interest in such entity. In addition, it is possible that a partnership or limited liability company could take an action which
could cause us to fail a gross income or asset test, and that we would not become aware of such action in time to dispose of our interest
in the partnership or limited liability company or take other corrective action on a timely basis. In that case, we could fail to qualify
as a REIT unless we were entitled to relief, as described below.

Taxable REIT Subsidiaries (“TRSs”). A REIT is permitted to own, directly or indirectly, up to 100%
of the stock of one or more TRSs. The subsidiary and the REIT generally must jointly elect to treat the subsidiary as a TRS. However,
a corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the securities is automatically
treated as a TRS without an election. We generally may not own more than 10%, as measured by voting power or value, of the securities
of a corporation that is not a qualified REIT subsidiary or a REIT unless we and such corporation elect to treat such corporation as