Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 74

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 74
---
 75% gross income test described above 
 in “— Gross Income Tests.”                                                                                                            |

For purposes of the 10% value test, our proportionate
share of the assets of a partnership is our proportionate interest in any securities issued by the partnership, without regard to the
securities described in the last two bullet points above.

We intend that the assets that we will hold will
satisfy the foregoing asset test requirements. We will not obtain, however, nor are we required to obtain under the U.S. federal
income tax laws, independent appraisals to support our conclusions as to the value of our assets and securities or the real estate collateral
for any mortgage loans that we may originate or acquire. Therefore, we cannot assure you that we will be able to satisfy the asset tests
described above. We will monitor the status of our assets for purposes of the various asset tests and seek to manage our portfolio to
comply at all times with such tests. No assurance, however, can be given that we will continue to be successful in this effort. In this
regard, to determine our compliance with these requirements, we will have to value our investment in our assets to ensure compliance
with the asset tests. Although we seek to be prudent in making these estimates, no assurances can be given that the Service might not
disagree with these determinations and assert that a different value is applicable, in which case we might not satisfy the 75% asset
test and the other asset tests and, thus, would fail to qualify as a REIT.

If we fail to satisfy the asset tests at the
end of a calendar quarter, we will not lose our REIT qualification so long as:

| · | we satisfied the asset tests at                                                                                                          
 the end of the preceding calendar quarter; and                                                                                           |
| · | the discrepancy between the value of our assets and                                                                                      
 the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition 
 of one or more non-qualifying assets.                                                                                                    |

If we did not satisfy the condition described
in the second item, above, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the
calendar quarter in which it arose.

If we violate the 5% asset test, the 10% vote
test or the 10% value test described above at the end of any calendar quarter, we will not lose our REIT qualification if