Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 72

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 72
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 if we are entitled to qualify
for relief under certain provisions of the U.S. federal income tax laws. Those relief provisions generally will be available if:

| · | our failure to meet those tests is due to reasonable 
 cause and not to willful neglect; and                |

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| · | following such failure for any taxable year, a schedule                                                                                
 of the sources of our income is filed with the Service in accordance with regulations prescribed by the Secretary of the U.S. Treasury 
 Department.                                                                                                                            |

We cannot predict, however, whether any failure
to meet these tests will qualify for the relief provisions. If these relief provisions are inapplicable to a particular set of circumstances
involving us, we will not qualify as a REIT. As discussed above in the section entitled “— Taxation of Our Company,”
even if the relief provisions apply, we would incur a 100% tax on the gross income attributable to the greater of the amount by which
we fail the 75% gross income test or the 95% gross income test, multiplied, in either case, by a fraction intended to reflect our profitability.

Asset Tests

To qualify as a REIT, we also must satisfy the
following asset tests at the end of each quarter of each taxable year.

First, at least 75% of the value of our total
assets must consist of:

| · | cash or cash items, including certain receivables and                                                                                 
 investments in money market funds;                                                                                                    |
| · | government securities;                                                                                                                |
| · | interests in real property, including leaseholds and                                                                                  
 options to acquire real property and leaseholds;                                                                                      |
| · | interests in mortgage loans secured by real property;                                                                                 |
| · | interests in mortgage loans secured by both real property                                                                             
 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;                                                                                                                        |
| · | stock or shares of beneficial interest in other REITs;                                                                                |
| · | investments in stock or debt instruments during the                                                                                   
 one-year period following our receipt of new capital that we raise through equity offerings or public offerings of debt with at least 
 a five-year term;                                                                                                                     |
| · | personal property leased in connection with real property                                                                             
 if the rent attributable to such personal property is not greater than 15% of the total rent received under the lease;                |
| ·