Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 155

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 155
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” then our management could be characterized as fiduciaries under ERISA which could create the potential for
non-exempt prohibited transactions under regulations promulgated by the Department of Labor (the “Plan Assets
Regulation”), when a Plan makes an equity investment in an entity, the assets of such Plan include not only the equity
interest, but also include an undivided interest in the underlying assets of the entity, unless one of the exceptions to this
general rule applies.

In the event that our underlying assets were treated
as the assets of investing Plans, our management would be treated as fiduciaries with respect to each Plan that invests in our securities
and an investment in our securities might constitute an ineffective delegation by such Plans of fiduciary responsibility to our advisors,
and expose the fiduciary of the Plan to co-fiduciary liability under ERISA for any breach by our advisor of the fiduciary duties mandated
under ERISA. Further, if our assets are deemed to be “plan assets,” an investment by an IRA in our securities might be deemed
to result in an impermissible commingling of IRA assets with other property.

If our advisor or its affiliates were treated
as fiduciaries with respect to Plan holders of our securities, the prohibited transaction restrictions of ERISA and the Code would apply
to any transaction involving our assets. These restrictions could, for example, require that we avoid transactions with persons that
are affiliated with or related to us or our affiliates or require that we restructure our activities in order to obtain an administrative
exemption from the prohibited transaction restrictions. Alternatively, we might have to provide Plan holders of our securities with the
opportunity to sell their securities to us or we might dissolve.

However, as mentioned above, the Plan Assets Regulation
provides exeptions to the general rule that the underlying assets of an entity, such as a REIT, will be treated as assets of a Plan investing
therein. Two such exceptions are the “publicly-offered securities” exception and the “insignificant participation”
exception, each as described below.

Exception for “Publicly-Offered Securities.” If a Plan acquires “publicly-offered securities,”
the assets of the issuer of the securities will not be deemed to be “plan assets” under the Plan Assets Regulation. A publicly-offered
security must be:

| · | (i) sold as part of a public                                                                                                           
 offering registered under the Securities Act and be part of a class