Innovative industrial properties (NYSE: IIPR) posted its latest set of quarterly earnings results after market hours on Wednesday, and investors reacted accordingly on Thursday. Unfortunately, that reaction was negative, with the market pushing the share value down by almost 11%. The whistleblower S&P500 The index, on the other hand, ended up in positive territory with a gain of 0.7% on Thursday.
Innovative, a highly specialized real estate investment trust (REIT) focused on properties used by the cannabis industry, has reported its third quarter results. It showed that the company earned $76.5 million in revenue for the period, which was almost 2% lower than the $77.8 million in the same quarter of 2023. The company also missed the consensus forecast of $77.4 million.
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Net income also fell, falling to $39.7 million ($1.37 per share) compared to profit of $41.3 million a year ago. The forecasters following innovative stocks expected $1.45 per share. Meanwhile, adjusted funds from operations (AFFO), the most critical profitability measure for REITs, also headed south. It was $64.3 million, compared to $64.8 million in Q3 2023.
In its earnings release, Innovative attributed the revenue decline primarily to a $3 million decrease in rental and property management expenses.
Another factor in Innovative’s sell-off was timing. The results were published very shortly after Election Day, when several marijuana legalization initiatives were rejected by voters – especially in the very populous state of Florida.
To many, cannabis doesn’t seem like a good investment right now, but I think this presents a good buying opportunity in innovative stocks. The company is one of the few marijuana REITs available anywhere, and despite the electoral setbacks, this country will have to effectively legalize the drug at some point. I would seriously consider buying some Innovative on the price drop.
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