Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 149

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 149
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CA. If we determine withholding
is appropriate in respect of our capital stock, we may withhold tax at the applicable statutory rate, and we will not pay any additional
amounts in respect of such withholding. Under recently released proposed Treasury Regulations, gross proceeds from a sale or other disposition
of our capital stock are not subject to FATCA withholding. In the preamble to these proposed Treasury Regulations, the Internal
Revenue Service has stated that taxpayers may generally rely on the proposed Treasury Regulations until final Treasury Regulations are
issued.

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If withholding is required under FATCA on a payment,
holders of our capital stock that otherwise would not be subject to withholding (or that otherwise would be entitled to a reduced rate
of withholding) generally will be required to seek a refund or credit from the Service to obtain the benefit of such exemption or reduction
(provided that such benefit is available). Stockholders should consult their own tax advisors regarding the effect of FATCA on an investment
in our capital stock.

Redemption and Conversion of Preferred Stock

Cash Redemption of Preferred Stock. A redemption of preferred stock will be treated for federal income
tax purposes as a distribution taxable as a dividend (to the extent of our current and accumulated earnings and profits), unless the
redemption satisfies one of the tests set forth in Section 302(b) of the Code and is therefore treated as a sale or exchange
of the redeemed shares. Such a redemption will be treated as a sale or exchange if it (i) is “substantially disproportionate”
with respect to the holder (which will not be the case if only non-voting preferred stock is redeemed), (ii) results in a “complete
termination” of the holder’s equity interest in us, or (iii) is “not essentially equivalent to a dividend”
with respect to the holder, all within the meaning of Section 302(b) of the Code.

In determining whether any of these tests has
been met, shares of our common stock and preferred stock considered to be owned by the holder by reason of certain constructive ownership
rules set forth in the Code, as well as shares of our common stock and preferred stock actually owned by the holder, must generally
be taken into account. If a holder of preferred stock owns (actually and constructively) no shares of our outstanding common stock or
an insubstantial percentage thereof, a redemption of shares of preferred stock of that holder is likely to qualify for sale or exchange
treatment because the redemption would be “not essentially