Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 126

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 126
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 the 75% gross income test (disregarding income from foreclosure property);   |
| · | on which any construction takes place on the property, other than                                                                           
 completion of a building or any other improvement, where more than 10% of the construction was completed before default became imminent;    
 or                                                                                                                                          |
| · | which is more than 90 days after the day on which the                                                                                       
 REIT acquired the property and the property is used in a trade or business that is conducted by the REIT, other than through an independent 
 contractor from whom the REIT itself does not derive or receive any income.                                                                 |

Failure to Satisfy Gross Income Tests. We intend to monitor our sources of income, including any nonqualifying
income received by us, and manage our assets so as to ensure our compliance with the gross income tests. If we fail to satisfy one or
both of the gross income tests for any taxable year, we nevertheless may qualify as a REIT for that year 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