Company: IIPR
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001677576-25-000005
Chunk: 51

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-11-04
Form: 10-Q
Item: Part I, Item 1
Chunk 51
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 included in rental revenues in the period when such costs are reimbursed by the tenants. Contractually obligated real estate taxes that are paid directly by the tenant to the tax authorities are not reflected in our consolidated financial statements.For the three and nine months ended September 30, 2025, rental revenue recognized included the application of $0.8 million and $6.6 million of security deposits for rent, respectively. For the three and nine months ended September 30, 

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2024, rental revenue recognized included the application of $1.4 million and $2.0 million of security deposits for rent, respectively.Life Science Investments. Life science investments consist of an investment in the IQHQ Preferred Stock (as defined in Note 7 "Life Science Investments"), which also includes the IQHQ Warrant (as defined in Note 7). The Company does not have significant influence over IQHQ (as defined in Note 7), and the investments in the equity securities of IQHQ do not have a readily determinable fair value. As such, the investments in the equity securities of IQHQ are carried under the measurement alternative of ASC 321, Investments - Equity Securities, which is cost less impairment and adjusted for observable price changes in orderly transactions for identical or similar investment of the same issuer. As of September 30, 2025, there were no impairments or adjustments to the carrying value of the investments in the equity securities of IQHQ as a result of observable price changes.Life science investments also consist of an investment in the IQHQ Credit Facility (as defined in Note 7). The investment is recorded at the amount funded, including transaction costs and is evaluated for current expected credit loss using relevant information from internal and external sources, current conditions and reasonable and supportable forecasts in accordance with ASC 326, Financial Instruments - Credit Loses ("CECL Standard"). No allowance for credit losses has been recorded as of September 30, 2025. Interest income on the investment is recognized using the effective interest method over the estimated life of the note. Construction Loan. In June 2021, we executed a construction loan agreement with a developer, pursuant to which (as amended in February 2023), we agreed to lend up to $23.0 million for the development of a regulated cannabis cultivation and processing facility in California (the “Construction Loan”). We have an option to purchase the property, and may execute a negotiated lease with an affiliate of the developer or with another third party, if we determine to exercise our purchase option.