Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 68

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 68
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 personal property, leased                                                                                      
 in connection with a lease of real property, is greater than 15% of the total rent received under the lease, then the portion of              
 rent attributable to the personal property will not qualify as rents from real property.                                                      |
| · | Fourth, we generally must not operate or manage our                                                                                           
 real property or furnish or render services to our tenants, other than through an “independent contractor” who is adequately                  
 compensated and from whom we do not derive revenue. We may, however, provide services directly to tenants if the services are “usually        
 or customarily rendered” in connection with the rental of space for occupancy only and are not considered to be provided for                  
 the tenants’ convenience. In addition, we may provide a minimal amount of  “non-customary” services to the                                    
 tenants of a property, other than through an independent contractor, as long as our income from the services does not exceed 1% of            
 our income from the related property. Furthermore, we may own up to 100% of the stock of a TRS, which may provide customary and non-customary 
 services to tenants without tainting our rental income from the related properties.                                                           |

If a portion of the rent that we receive from
a property does not qualify as “rents from real property” because the rent attributable to personal property exceeds 15%
of the total rent for a taxable year, the portion of the rent that is attributable to personal property will not be qualifying income
for purposes of either the 75% or 95% gross income test. Thus, if such rent attributable to personal property, plus any other income
that is non-qualifying income for purposes of the 95% gross income test, during a taxable year exceeds 5% of our gross income during
the year, we would lose our REIT qualification. Further, the rent from a particular property does not qualify as “rents from real
property” if (i) the rent is considered based on the income or profits of the tenant, (ii) the tenant either
is a related party tenant or fails to qualify for the exceptions to the related party tenant rule for qualifying taxable REIT subsidiaries
or (iii) we furnish non-customary services to the tenants of the property, or manage or operate the property, other than through
a qualifying independent contractor or a taxable REIT subsidiary.

In addition to the rent, the tenants may be required
to pay certain additional charges. To the extent that