Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 116

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 116
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.S. federal income tax laws, generally is taxed as a partnership for U.S. federal income tax purposes.
In the case of a REIT that is an owner in an entity that is taxed as a partnership for U.S. federal income tax purposes, the REIT is
treated as owning its proportionate share of the assets of the entity and as earning its allocable share of the gross income of the entity
for purposes of the applicable REIT qualification tests. Thus, our proportionate share of the assets and items of gross income of any
partnership, joint venture, or limited liability company that is taxed as a partnership for U.S. federal income tax purposes is treated
as our assets and items of gross income for purposes of applying the various REIT qualification tests. For purposes of the 10% value
test (described in “— Asset Tests”), our proportionate share is based on our proportionate interest in the equity interests
and certain debt securities issued by the entity. For all of the other asset and income tests, our proportionate share is based on our
proportionate interest in the capital of the entity.

In the event that a disregarded subsidiary of
ours ceases to be wholly-owned — for example, if any equity interest in the subsidiary is acquired by a person other than us or
another disregarded subsidiary of ours — the subsidiary’s separate existence would no longer be disregarded for U.S. federal
income tax purposes. Instead, the subsidiary would have multiple owners and would be treated as either a partnership or a taxable corporation.
Such an event could, depending on the circumstances, adversely affect our ability to satisfy the various asset and gross income requirements
applicable to REITs, including the requirement that REITs generally may not own, directly or indirectly, more than 10% of the total value
or total voting power of the outstanding securities of another corporation. See “— Asset Tests” and “—
Gross Income Tests.”

We may from time to time be a limited partner
or non-managing member in a partnership or limited liability company. If a partnership or limited liability company in which we own an
interest takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose
of our interest in such entity. In addition, it is possible that a partnership or limited liability company could take an action which
could cause us to fail a gross income or asset test, and that we