Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 130

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 130
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 and, thus, would fail to qualify as a REIT.

If we fail to satisfy the asset tests at the
end of a calendar quarter, we will not lose our REIT qualification so long as:

| · | we satisfied the asset tests at                                                                                                          
 the end of the preceding calendar quarter; and                                                                                           |
| · | the discrepancy between the value of our assets and                                                                                      
 the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition 
 of one or more non-qualifying assets.                                                                                                    |

If we did not satisfy the condition described
in the second item, above, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the
calendar quarter in which it arose.

If we violate the 5% asset test, the 10% vote
test or the 10% value test described above at the end of any calendar quarter, we will not lose our REIT qualification if (i) the
failure is de minimis (up to the lesser of 1% of the total value of our assets or $10 million) and (ii) we dispose of assets or
otherwise comply with the asset tests within six months after the last day of the quarter in which we identified such failure. In the
event of a more than de minimis failure of any of the asset tests, as long as the failure was due to reasonable cause and not to willful
neglect, we will not lose our REIT qualification if we (i) dispose of assets or otherwise comply with the asset tests within six
months after the last day of the quarter in which we identified such failure, (ii) file a schedule with the Service describing the
assets that caused such failure in accordance with regulations promulgated by the Secretary of the U.S. Treasury Department and (iii) pay
a tax equal to the greater of $50,000 or the product of the highest U.S. federal corporate tax rate (currently, 21%) and the
net income from the non-qualifying assets during the period in which we failed to satisfy the asset tests. If these relief provisions
are inapplicable to a particular set of circumstances involving us, we will fail to qualify as a REIT.

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We intend that the assets that we may hold will
satisfy the foregoing asset test requirements. We will monitor the status of our assets and our future acquisition of