Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 133

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 133
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correct a failure to meet the distribution requirement for a year by paying “deficiency dividends” to our stockholders in
a later year. We may include such deficiency dividends in our deduction for dividends paid for the earlier year. Although we may be able
to avoid income tax on amounts distributed as deficiency dividends, we will be required to pay interest and may be required to pay a
penalty to the Service based upon the amount of any deduction we take for deficiency dividends.

Sale-Leaseback Transactions

Some of our investments have been, and may in
the future be, in the form of sale-leaseback transactions whereby we purchase real estate properties and lease them back to the seller.
We normally intend to treat these transactions as real estate purchases and true leases for federal income tax purposes. However, depending
on the terms of any specific transaction, the Service might take the position that the transaction is not a sale-leaseback but is more
properly treated in some other manner. In the event of a successful recharacterization, we would not be entitled to claim the depreciation
deductions available to an owner of the property. In addition, the recharacterization of one or more of these transactions might cause
us to fail to satisfy the asset tests or the gross income tests described above based upon the asset we would be treated as holding or
the income we would be treated as having earned, and such failure could result in our failing to qualify as a REIT. Alternatively, the
amount or timing of income inclusion or the loss of depreciation deductions resulting from the recharacterization might cause us to fail
to meet the distribution requirement described above for one or more taxable years absent the availability of the deficiency distribution
procedure or might result in a larger portion of our distributions being treated as ordinary distribution income to our stockholders.

Recordkeeping Requirements

We must maintain certain records in order to
qualify as a REIT. In addition, to avoid a monetary penalty, we must request, on an annual basis, information from our stockholders designed
to disclose the actual ownership of our outstanding shares, and we must maintain a list of those persons failing or refusing to comply
with such request as part of our records. A stockholder that fails or refuses to comply with such request is required by the Treasury
Regulations to submit a statement with its tax return disclosing the actual ownership of our stock and other information. We intend to
comply with these requirements.

Failure to Qualify as a REIT

If we fail to satisfy