Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 151

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 151
---
 the stockholder’s adjusted basis for tax purposes in the preferred stock for
which cash was received. Furthermore, under certain circumstances, a stockholder of shares of preferred stock may recognize gain or dividend
income to the extent that there are accumulated and unpaid dividends on the shares at the time of conversion into common stock.

Adjustments to Conversion Price. Adjustments in the conversion price, or the failure to make such adjustments,
pursuant to the anti-dilution provisions of the preferred stock or otherwise, may result in constructive distributions to the stockholders
of preferred stock that could, under certain circumstances, be taxable to them as dividends pursuant to Section 305 of the Code.
If such a constructive distribution were to occur, a stockholder of preferred stock could be required to recognize ordinary income for
tax purposes without receiving a corresponding distribution of cash. Under proposed regulations, such constructive distributions, if
any, would generally be deemed to occur on the date adjustments to the conversion price are made in accordance with the terms of the
relevant series of preferred stock.

<div align='center'>50</div>

Warrants

Upon the exercise of a warrant for common stock,
a holder will not recognize gain or loss and will have a tax basis in the common stock received equal to the tax basis in such stockholder’s
warrant plus the exercise price of the warrant. The holding period for the common stock purchased pursuant to the exercise of a warrant
will begin on the day following the date of exercise and will not include the period that the stockholder held the warrant.

Upon a sale or other disposition of a warrant,
a holder will recognize capital gain or loss in an amount equal to the difference between the amount realized and the holder’s
tax basis in the warrant. Such a gain or loss will be long term if the holding period is more than one year. In the event that a warrant
lapses unexercised, a holder will recognize a capital loss in an amount equal to his tax basis in the warrant. Such loss will be long
term if the warrant has been held for more than one year.

State, Local and Foreign Taxes

We and/or our subsidiaries and holders of securities
may be subject to taxation by various states, localities or foreign jurisdictions, including those in which we, our subsidiaries, or
holders of our securities transact business, own property or reside. We or our subsidiaries may own properties located in numerous jurisdictions
and may be required to file tax returns in some or all of those jurisdictions. The state,