Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 67

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 67
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 to clearly identify any such hedging transaction
before the close of the day on which it was acquired, originated, or entered into and to satisfy other identification requirements. To
the extent that we hedge for other purposes, or to the extent that we do not properly identify a hedging transaction, the income from
those transactions will likely be treated as non-qualifying income for purposes of both gross income tests. We intend to structure any
hedging transactions in a manner that does not jeopardize our qualification as a REIT; however, no assurance can be given that our hedging
activities will give rise to income that is excluded from gross income or qualifies for purposes of either or both of the gross income
tests. We may conduct some or all of our hedging activities through a TRS or other corporate entity, the income from which may be subject
to U.S. federal income tax, rather than by participating in the arrangements directly or through pass-through subsidiaries.

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Rents from Real Property. To the extent that we acquire real property or an interest therein, rents we receive
will qualify as “rents from real property” in satisfying the gross income requirements for a REIT described above only if
the following conditions are met:

| · | First, the amount of rent                                                                                                                     
 must not be based in whole or in part on the income or profits of any person. An amount received or accrued generally will not be             
 excluded, however, from rents from real property solely by reason of being based on fixed percentages of receipts or sales.                   |
| · | Second, rents we receive from a “related party                                                                                                
 tenant” will not qualify as rents from real property in satisfying the gross income tests unless the tenant is a TRS, at least                
 90% of the property is leased to unrelated tenants, the rent paid by the TRS is substantially comparable to the rent paid by the              
 unrelated tenants for comparable space and the rent is not attributable to an increase in rent due to a modification of a lease with          
 a “controlled TRS” (i.e., a TRS in which we own directly or indirectly more than 50% of the voting power or value of                          
 the stock). A tenant is a related party tenant if the REIT, or an actual or constructive owner of 10% or more of the REIT, actually           
 or constructively owns 10% or more of the tenant.                                                                                             |
| · | Third, if rent attributable to