Company: IIPR
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001677576-25-000005
Chunk: 27

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-11-04
Form: 10-Q
Item: Part II, Item 1A
Chunk 27
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 interest rate environment, our cost of capital may increase, which could reduce the spread between our investment income and financing costs, negatively impacting our net returns and cash flows.

Although certain of our investments bear fixed rates of return and are not directly tied to market interest rates, their relative attractiveness may decline in a higher interest rate environment, and we could experience a negative interest rate spread if our cost of capital rises. This may reduce the profitability of such investments and limit our ability to deploy capital on favorable terms.

Additionally, higher interest rates would increase interest expense on any variable-rate debt we may incur, reducing cash available for distributions to our shareholders. If we are required to refinance existing debt during periods of elevated interest rates, we may face increased borrowing costs or be forced to dispose of assets at times or prices that are not optimal. These conditions could materially and adversely affect our business, results of operations, financial condition, and our ability to make distributions to our shareholders.

Increased debt service obligations under our Credit Facilities or otherwise reduce the amount of cash available for distribution to our shareholders.

The interest and principal payments we are required to make on any outstanding debt under our Credit Facilities or otherwise directly decrease the cash flow available for distributions to our shareholders. A significant portion of our operating cash flows may be allocated to meeting these debt obligations, which may limit our ability to make distributions. In addition, if we are required to repay or refinance debt, we may need to liquidate one or more of our investments. Such sales may occur under market conditions that do not permit us to realize the full value of those assets, further reducing the cash available for distribution to shareholders.

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Investments in Life Science Properties.

The life science industry is highly competitive and subject to rapid technological changes. As a result, we may be unable to compete successfully, which would harm our business.

The life science industry is highly competitive and characterized by rapid technological change. In making investments in the life sciences industry, we expect to face intense competition from other companies, including other companies with significant resources. This competitive challenge may make it difficult for us to acquire commercially viable life science assets.

Any investments in life sciences properties subjects us to industry-specific risks.

As part of our broader growth strategy, we have made and may continue to make investments in properties used by tenants in the life science sector, either through direct property acquisitions or through other investment structures such as joint ventures, debt or mezzanine financing, preferred or joint venture equity interests, and interests in other real estate funds or REITs. These investments