Company: IIPR
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001677576-25-000005
Chunk: 139

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-11-04
Form: 10-Q
Item: Part I, Item 8
Chunk 139
---
30, 2025, all modifications to our leases with PharmaCann described above will immediately be null and void and the leases will revert to the terms in effect as of January 1, 2025.In March 2025, PharmaCann defaulted on its obligations to pay rent for the month of March under nine of its eleven leases for properties located in New York, Illinois, Pennsylvania, Ohio, and Colorado and therefore, all modifications to our leases with PharmaCann described above became null and void and the leases reverted to the terms in effect as of January 1, 2025. In April 2025, the lease for the cultivation property in Michigan was terminated concurrently with the 

16

execution of a new lease with a new tenant. In August 2025, the lease for the cultivation property in Massachusetts was terminated and we took back possession of the property.In March 2025, we amended our lease with a subsidiary of AYR Wellness, Inc. at one of our Florida properties to  reduce the improvement allowance by $2.5 million to $27.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.Capitalized CostsDuring the nine months ended September 30, 2025, we capitalized costs of $14.8 million relating to improvements and construction activities at our properties.Property DispositionsIn March 2023, we sold a portfolio of four properties in California for $16.2 million (excluding transaction costs) and provided a secured loan for $16.1 million to the buyer of the properties. The loan was set to mature on February 29, 2028 with two options to extend the maturity for twelve months, conditional in each instance on the payment of an extension fee and at least $0.5 million of the principal balance. The loan was interest only and payments were payable monthly in advance. The transaction did not qualify for recognition as a completed sale under GAAP since not all of the criteria were met. Accordingly, we did not derecognize the assets transferred on our consolidated balance sheets and all considerations received to date from the buyer have been recognized as a deposit liability and included in other liabilities on our consolidated balance sheet until such time the criteria for recognition as a sale have been met or the agreement is terminated. We declared this loan in default in March 2025 due to borrower's failure to pay interest and reimbursement for taxes. In September 2025, due to borrower's continued default and voluntary surrender, we