Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 118

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 118
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 to any of our tenants by a TRS of ours, redetermined deductions and excess interest
represent any amounts that are deducted by a TRS of ours for amounts paid to us that are in excess of the amounts that would have been
deducted based on arm’s length negotiations, and redetermined TRS service income is income of a TRS that is understated as a result
of services provided to us or on our behalf. Rents we receive will not constitute redetermined rents if they qualify for certain safe
harbor provisions contained in the Code. Dividends paid to us from a TRS, if any, will be treated as dividend income received from a
corporation. The foregoing treatment of TRSs may reduce the cash flow generated by us and our subsidiaries in the aggregate and our ability
to make distributions to our stockholders and may affect our compliance with the gross income tests and asset tests.

A TRS generally may be used by a REIT to undertake
indirectly activities that the REIT requirements might otherwise preclude the REIT from doing directly, such as the provision of noncustomary
tenant services or other services that would give rise to income that would not qualify under the REIT rules, or the ownership of property
held for sale to customers. See “— Gross Income Tests — Rents from Real Property” and “— Gross Income
Tests — Prohibited Transactions.”

Gross Income Tests

We must satisfy two gross income tests annually
to qualify and maintain our qualification as a REIT. First, at least 75% of our gross income for each taxable year must consist of defined
types of income that we derive, directly or indirectly, from investments relating to real property or mortgage loans on real property
or qualified temporary investment income. Qualifying income for purposes of the 75% gross income test generally includes:

| · | rents from real property; |

| · | interest on debt secured by mortgages on real property                                                                            
 or on interests in real property, and interest on debt secured by mortgages on both real and personal property if the fair market 
 value of such personal property does not exceed 15% of the total fair market value of all such property;                          |

| · | dividends or other distributions on, and gain from 
 the sale of, shares in other REITs;                |

| · | gain from the sale of real estate assets, other than                                                                                  
 gain from the sale of a debt instrument issued by a “publicly offered REIT”