Innovative Industrial Properties, Inc. IIPR
IIPR is a cannabis REIT propped up by overpriced sale-leasebacks to insolvent tenants and sham markups; fair value is $22.29 versus a $69 share price.
Thesis
Grizzly Research argues that Innovative Industrial Properties (NYSE:IIPR), a cannabis-focused REIT, has accumulated a toxic portfolio of low-quality assets through sale-leasebacks at outrageous yields with cash-strapped tenants like PharmaCann, Vireo, DionyMed and MJardin who are already insolvent or near-insolvent. On-the-ground due diligence at properties in Pennsylvania, Illinois, Michigan and Arizona reveals empty land, unbuilt construction, and deed records showing 5x to 14x markups within days of IIPR's purchases — patterns Grizzly says border on fraud and resemble sham transactions to keep tenants like PharmaCann afloat. The firm estimates 38-49% of 2020 rental income is in jeopardy and that the rising dividend has the hallmarks of a pyramid scheme, financed by capital raises rather than sustainable yields. Independent valuation, marking down rent and re-rating cost of equity, points to no more than $22.29 per share, roughly 68% below the current $69.05 price.
SCQA
IIPR is a publicly traded REIT that buys industrial properties from cannabis operators and leases them back at advertised yields above 13%, funded by repeated equity raises totaling $832M since its 2016 IPO.
Field visits and deed records show empty lots, unbuilt facilities, and 5-14x markups in days; tenants like PharmaCann are insolvent, suggesting sham overpayments inflating book value and a dividend financed by capital raises.
Investors should treat IIPR as a short: discount 38-49% of 2020 rental income for tenant defaults and overpayments, re-rate cost of equity to reflect the true risk, and expect a substantial dividend cut.
Independent sum-of-the-parts and yield-adjusted valuation supports a price target of $22.29 per share, implying roughly 68% downside from the $69.05 share price at the time of publication.
The three reasons
- 1
38-49% of 2020 rental income at risk from insolvent or near-insolvent cannabis tenants
- 2
Pattern of massive overpayments (5x-14x in days) suggests sham deals bordering on fraud
- 3
Pyramid-scheme dynamics: rising dividend financed by capital raises, not sustainable cash flow
Primary demands
- Investors should sell IIPR shares; valuation is unsupported by underlying asset quality
- Recognize that the dividend is unsustainable and will be cut or financed by further capital raises
- Scrutinize sham-like transactions and overpayments used to inflate book value of the property portfolio
KPIs cited
Pattern membership
Precedents cited
- WeWork failed IPO and Adam Neumann departure
Composition what's on the 36 slides
Slide gallery ·
Notes
Grizzly Research short report on IIPR (cannabis REIT). Distinctive features: (1) opens with a 'WeWork of Cannabis' analogy and bear-themed branding; (2) heavy use of on-the-ground field photos of empty lots and unbuilt facilities as evidence; (3) deed-record screenshots of warranty deeds with same-day flips between related LLCs to argue sham markups; (4) full property-by-property rent discount table that quantifies the 38%/49% downside scenarios; (5) closing waterfall chart bridges $69 share price down to $22.29 target via rent and yield adjustments. Document is a written research report with embedded images and charts rather than a slide deck — Word/Google-Doc visual style, not editorial design. No named human author; signed only by 'Grizzly Research'. Page-5 'Five IIPR Deals You Should Know About' (page 4 in PDF page numbering — body page 4) is the closest thing to a hero infographic.