Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 132

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 132
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 in accordance with the preferences
among different classes of shares as set forth in the REIT’s organizational documents. Such preferential dividend rules will
not apply to our distributions if we qualify as a “publicly offered” REIT. We believe that we will be a “publicly offered”
REIT.

We will pay U.S. federal income tax on taxable
income, including net capital gain, that we do not distribute to stockholders. Furthermore, if we fail to distribute during a calendar
year, or by the end of January following the calendar year in the case of distributions with declaration and record dates falling
in the last three months of the calendar year, at least the sum of:

| · | 85% of our REIT ordinary income                                                                                                  
 for such year,                                                                                                                   |
| · | 95% of our REIT capital gain income for such year,                                                                               
 and                                                                                                                              |
| · | any undistributed taxable income from prior periods,                                                                             
 we will incur a 4% nondeductible excise tax on the excess of such required distribution over the amounts we actually distribute. |

We may elect to retain and pay income tax on
the net long term capital gain we recognize in a taxable year. See the section above entitled “— Taxation of U.S. Holders.”
If we so elect, we will be treated as having distributed any such retained amount for purposes of the REIT distribution requirements
and the 4% nondeductible excise tax described above.

We intend to make timely distributions in the
future sufficient to satisfy the annual distribution requirements and to avoid corporate income tax and the 4% nondeductible excise tax.
It is possible that, from time to time, we may experience timing differences between the actual receipt of cash, including distributions
from our subsidiaries, and actual payment of deductible expenses and the inclusion of that income and deduction of such expenses in arriving
at our REIT taxable income. As a result of the foregoing, we may have less cash than is necessary to make distributions to our stockholders
that are sufficient to avoid corporate income tax and the 4% nondeductible excise tax imposed on certain undistributed income or even
to meet the annual distribution requirements. In such a situation, we may need to borrow funds or issue additional stock, or, if possible,
pay dividends consisting, in whole or in part, of our stock or debt securities.

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Under certain circumstances, we may be able to