Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 125

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 125
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 or other disposition of such
property may not fall within the safe-harbor provisions. The 100% prohibited transactions tax will not apply to gains from the sale of
property that is held through a taxable REIT subsidiary although such income will be taxed to the taxable REIT subsidiary at U.S. federal
corporate income tax rates.

Foreclosure Property. We will be subject to tax at the maximum corporate rate on any income from foreclosure property,
other than income that otherwise would be qualifying income for purposes of the 75% gross income test, less expenses directly connected
with the production of that income. Gross income from foreclosure property will qualify, however, under the 75% and 95% gross income
tests. Foreclosure property is any real property, including interests in real property, and any personal property incident to such real
property:

| · | that is acquired by a REIT as the result of the REIT                                                                                
 having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or    
 process of law, after there was a default or default was imminent on a lease of such property or on indebtedness that such property 
 secured;                                                                                                                            |
| · | for which the related loan or lease was acquired by                                                                                 
 the REIT at a time when the default was not imminent or anticipated; and                                                            |
| · | for which the REIT makes a proper election to treat                                                                                 
 the property as foreclosure property.                                                                                               |

A REIT will not be considered, however, to have
foreclosed on a property where the REIT takes control of the property as a mortgagee-in-possession and cannot receive any profit or sustain
any loss except as a creditor of the mortgagor. Property generally ceases to be foreclosure property at the end of the third taxable
year following the taxable year in which the REIT acquired the property, or longer if an extension is granted by the Secretary of the
U.S. Treasury Department. This grace period terminates and foreclosure property ceases to be foreclosure property on the first day:

| · | on which a lease is entered into for the property that, by its                                                                              
 terms, will give rise to income that does not qualify for purposes of the 75% gross income test (disregarding income from foreclosure       
 property), or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after such day that         
 will give rise to income that does not qualify for purposes of