Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 120

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 120
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 any REIT) in which
we own an equity interest will qualify for purposes of the 95% gross income test but not for purposes of the 75% gross income test. Our
share of any dividends received from any other REIT in which we own an equity interest, if any, will be qualifying income for purposes
of both gross income tests.

Interest. The
term “interest,” as defined for purposes of both gross income tests, generally excludes any amount that is based in whole
or in part on the income or profits of any person. However, interest generally includes the following:

| · | an amount that is based on a fixed percentage or percentages                                                                                
 of receipts or sales; and                                                                                                                   |
| · | an amount that is based on the income or profits of                                                                                         
 a debtor, as long as the debtor derives substantially all of its income from the real property securing the debt from leasing substantially 
 all of its interest in the property, and only to the extent that the amounts received by the debtor would be qualifying “rents              
 from real property” if received directly by a REIT.                                                                                         |

If a loan contains a provision that entitles
a REIT to a percentage of the borrower’s gain upon the sale of the real property securing the loan or a percentage of the appreciation
in the property’s value as of a specific date, income attributable to that loan provision will be treated as gain from the sale
of the property securing the loan, which generally is qualifying income for purposes of both gross income tests, provided that the property
is not inventory or dealer property in the hands of the borrower or the REIT.

Interest on debt secured by a mortgage on real
property or on interests in real property, including, for this purpose, market discount, original issue discount, discount points, prepayment
penalties, loan assumption fees, and late payment charges that are not compensation for services, generally is qualifying income for
purposes of the 75% gross income test. However, if the loan is secured by real property and other property and the highest principal
amount of the loan outstanding during a taxable year exceeds the fair market value of the real property securing the loan as of
(i) the date the REIT agreed to originate or acquire the loan or (ii) as discussed below, in the event of a “significant
modification,” the date we modified the loan, a portion of the interest income from such loan will not be qualifying income for
purposes of the 75% gross