Company: IIPR
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001677576-25-000005
Chunk: 71

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-11-04
Form: 10-Q
Item: Part I, Item 1
Chunk 71
---
2.87 $4.16 

10. Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Accounting guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

22

Level 2—Includes other inputs that are directly or indirectly observable in the marketplace.Level 3—Unobservable inputs that are supported by little or no market activities, therefore requiring an entity to develop its own assumptions.The following table presents the carrying value and approximate fair value of financial instruments at September 30, 2025 and December 31, 2024 (in thousands):At September 30, 2025At December 31, 2024Carrying ValueFair ValueCarrying ValueFair ValueLife science investments(1)$100,240 $100,240 $— $— Construction loan(2)$22,800 $29,555 $22,800 $28,245 Investments as cash equivalents(3)$— $— $45,714 $45,714 Notes receivable(4)$16,786 $16,786 $16,786 $16,786 Investments(5)$5,258 $5,258 $5,000 $5,000 Notes due 2026(6)$290,229 $288,507 $297,865 $289,077 Revolving credit facility(7)$50,000 $50,000 $— $— (1)Excludes $5.0 million of investments in the IQHQ Preferred Stock and IQHQ Warrant which are carried at cost under the measurement alternative of ASC 321, Investments - Equity Securities. The investment in the IQHQ Credit Facility is categorized as Level 3 and was valued using a yield analysis, which is typically performed for non-credit impaired loans. To determine fair value using a yield analysis, a current price is imputed for the loan based upon an assessment of the expected market yield for a similarly structured loan with a similar level of risk. In the yield analysis, the Company considers