Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 16

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 16
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| S-12 |

Our Series A Preferred Stock could be treated as “fast-pay stock” for U.S. federal income tax purposes.

If shares of the Series A
Preferred Stock are currently or in the future issued by us at a price that exceeds their redemption price by more than a de minimis amount,
such shares could be characterized as “fast-pay stock” for U.S. federal income tax purposes. We have not structured our Series A
Preferred Stock to be the type of stock addressed by the fast-pay stock rules and it is not contemplated that any shares of the Series A
Preferred Stock will be issued by us at a price that exceeds their redemption price, and accordingly we do not believe the fast-pay stock
rules should apply to our Series A Preferred Stock. However, the matter is not free from doubt, and if circumstances change
or if the IRS were to successfully challenge our position adverse tax consequences may result to the holders of Series A Preferred
Stock.

Transactions involving
fast-pay stock arrangements are treated as “listed transactions” for U.S. federal income tax purposes. If any Series A
Preferred Stock is treated as fast-pay stock, we and all holders of such Series A Preferred Stock would be required to report our
and their participation in the transaction on Internal Revenue Service Form 8886 on an annual basis with our and their U.S. federal
income tax returns and would also be required to mail a copy of that form to the Internal Revenue Service Office of Tax Shelter Analysis.
Failure to comply with those disclosure requirements could result in the assessment by the Internal Revenue Service of interest, additions
to tax and onerous penalties. In addition, an accuracy-related penalty applies under the Internal Revenue Code to any reportable transaction
understatement attributable to a listed transaction if a significant purpose of the transaction is the avoidance or evasion of U.S. federal
income tax. Additionally, certain of our material advisors would also be required to file a disclosure statement with the Internal Revenue
Service.

Therefore, if we issue
shares of Series A Preferred Stock for an amount that exceeds the redemption price plus accrued and unpaid dividends (by more than
a de minimis amount, as determined under the Treasury regulations described above), we may file a “protective” Form 8886,
and certain of our material advisors may file a protective disclosure statement, to avoid the risk of penalties in the event that the
Series A Preferred Stock is treated as fast-pay stock. Holders of shares of the Series A Preferred Stock issued pursuant to