Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 122

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 122
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 contracts. Income and gain from “hedging transactions” will be excluded from gross income
for purposes of both the 75% and 95% gross income tests. A “hedging transaction” means (1) any transaction entered into
in the normal course of our trade or business primarily to manage the risk of interest rate or price changes or currency fluctuations
with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets,
(2) any transaction entered into primarily to manage the risk of currency fluctuations with respect to any item of income or gain
that would be qualifying income under the 75% or 95% gross income test (or any property which generates such income or gain) or (3) any
new transaction entered into to hedge the income or loss from a prior hedging transaction, where the property or indebtedness which was
the subject of the prior hedging transaction was extinguished or disposed of. We are required to clearly identify any such hedging transaction
before the close of the day on which it was acquired, originated, or entered into and to satisfy other identification requirements. To
the extent that we hedge for other purposes, or to the extent that we do not properly identify a hedging transaction, the income from
those transactions will likely be treated as non-qualifying income for purposes of both gross income tests. We intend to structure any
hedging transactions in a manner that does not jeopardize our qualification as a REIT; however, no assurance can be given that our hedging
activities will give rise to income that is excluded from gross income or qualifies for purposes of either or both of the gross income
tests. We may conduct some or all of our hedging activities through a TRS or other corporate entity, the income from which may be subject
to U.S. federal income tax, rather than by participating in the arrangements directly or through pass-through subsidiaries.

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Rents from Real Property. To the extent that we acquire real property or an interest therein, rents we receive
will qualify as “rents from real property” in satisfying the gross income requirements for a REIT described above only if
the following conditions are met:

| · | First, the amount of rent                                                                                                                     
 must not be based in whole or in part on the income or profits of any person. An amount received or accrued generally will not be             
 excluded, however, from rents from real property