Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 71

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 71
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 property to ownership or possession by agreement or    
 process of law, after there was a default or default was imminent on a lease of such property or on indebtedness that such property 
 secured;                                                                                                                            |
| · | for which the related loan or lease was acquired by                                                                                 
 the REIT at a time when the default was not imminent or anticipated; and                                                            |
| · | for which the REIT makes a proper election to treat                                                                                 
 the property as foreclosure property.                                                                                               |

A REIT will not be considered, however, to have
foreclosed on a property where the REIT takes control of the property as a mortgagee-in-possession and cannot receive any profit or sustain
any loss except as a creditor of the mortgagor. Property generally ceases to be foreclosure property at the end of the third taxable
year following the taxable year in which the REIT acquired the property, or longer if an extension is granted by the Secretary of the
U.S. Treasury Department. This grace period terminates and foreclosure property ceases to be foreclosure property on the first day:

| · | on which a lease is entered into for the property that, by its                                                                              
 terms, will give rise to income that does not qualify for purposes of the 75% gross income test (disregarding income from foreclosure       
 property), or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after such day that         
 will give rise to income that does not qualify for purposes of 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