Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 75

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 75
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 (i) the
failure is de minimis (up to the lesser of 1% of the total value of our assets or $10 million) and (ii) we dispose of assets or
otherwise comply with the asset tests within six months after the last day of the quarter in which we identified such failure. In the
event of a more than de minimis failure of any of the asset tests, as long as the failure was due to reasonable cause and not to willful
neglect, we will not lose our REIT qualification if we (i) dispose of assets or otherwise comply with the asset tests within six
months after the last day of the quarter in which we identified such failure, (ii) file a schedule with the Service describing the
assets that caused such failure in accordance with regulations promulgated by the Secretary of the U.S. Treasury Department and (iii) pay
a tax equal to the greater of $50,000 or the product of the highest U.S. federal corporate tax rate (currently, 21%) and the
net income from the non-qualifying assets during the period in which we failed to satisfy the asset tests. If these relief provisions
are inapplicable to a particular set of circumstances involving us, we will fail to qualify as a REIT.

<div align='center'>42</div>

We intend that the assets that we may hold will
satisfy the foregoing asset test requirements. We will monitor the status of our assets and our future acquisition of assets to ensure
that we comply with those requirements, but we cannot assure you that we will be successful in this effort. No independent appraisals
will be obtained to support our estimates of and conclusions as to the value of our assets and securities, or in many cases, the real
estate collateral for the mortgage loans that support our assets. Moreover, the values of some assets may not be susceptible to a precise
determination. As a result, no assurance can be given that the Service will not contend that our ownership of securities and other assets
violates one or more of the asset tests applicable to REITs.

Distribution Requirements

Each taxable year, we must distribute dividends,
other than capital gain dividends and deemed distributions of retained capital gain, to our stockholders in an aggregate amount at least
equal to:

| · | the sum of: |

| · | 90% of our REIT taxable income computed without regard        
 to the dividends paid deduction and our net capital gain, and |
|