Price | 95.74 | EPS | 1 | |
Shares | 11 | P/E | 80 | |
MCap | 1,088 | P/FCF | 43 | |
Net Debt | 25 | EBIT | 18 | |
TEV | 1,113 | TEV/EBIT | 62 | TTM 2019-09-30, in MM, except price, ratios |
10-Q | 2020-09-30 | Filed 2020-11-05 |
10-Q | 2020-06-30 | Filed 2020-08-06 |
10-Q | 2020-03-31 | Filed 2020-05-07 |
10-K | 2019-12-31 | Filed 2020-03-02 |
10-Q | 2019-09-30 | Filed 2019-11-07 |
10-Q | 2019-06-30 | Filed 2019-08-08 |
10-Q | 2019-03-31 | Filed 2019-05-09 |
10-K | 2018-12-31 | Filed 2019-03-14 |
10-Q | 2018-09-30 | Filed 2018-11-08 |
10-Q | 2018-06-30 | Filed 2018-08-13 |
10-Q | 2018-03-31 | Filed 2018-05-10 |
10-K | 2017-12-31 | Filed 2018-03-29 |
10-Q | 2017-09-30 | Filed 2017-11-09 |
10-Q | 2017-06-30 | Filed 2017-08-10 |
10-Q | 2017-03-31 | Filed 2017-05-11 |
10-K | 2016-12-31 | Filed 2017-03-23 |
8-K | 2020-11-09 | |
8-K | 2020-11-04 | |
8-K | 2020-11-03 | |
8-K | 2020-08-26 | |
8-K | 2020-08-12 | |
8-K | 2020-08-05 | |
8-K | 2020-06-29 | |
8-K | 2020-06-09 | |
8-K | 2020-06-02 | |
8-K | 2020-05-26 | |
8-K | 2020-05-06 | |
8-K | 2020-03-09 | |
8-K | 2020-03-03 | |
8-K | 2020-02-26 | |
8-K | 2020-02-24 | |
8-K | 2020-01-24 | |
8-K | 2020-01-16 | |
8-K | 2020-01-14 | |
8-K | 2020-01-03 | |
8-K | 2020-01-01 | |
8-K | 2019-12-31 | |
8-K | 2019-12-16 | |
8-K | 2019-11-18 | |
8-K | 2019-11-06 | |
8-K | 2019-10-30 | |
8-K | 2019-09-24 | |
8-K | 2019-09-20 | |
8-K | 2019-08-09 | |
8-K | 2019-08-07 | |
8-K | 2019-07-11 | |
8-K | 2019-07-02 | |
8-K | 2019-06-26 | |
8-K | 2019-06-13 | |
8-K | 2019-05-21 | |
8-K | 2019-05-09 | |
8-K | 2019-03-13 | |
8-K | 2019-03-13 | |
8-K | 2019-02-15 | |
8-K | 2019-01-22 | |
8-K | 2019-01-16 | |
8-K | 2018-11-07 | |
8-K | 2018-10-03 | |
8-K | 2018-09-04 | |
8-K | 2018-08-10 | |
8-K | 2018-08-02 | |
8-K | 2018-05-31 | |
8-K | 2018-05-23 | |
8-K | 2018-05-09 | |
8-K | 2018-03-28 | |
8-K | 2018-01-18 | |
8-K | 2018-01-08 |
Part I |
Item 1. Financial Statements |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
Item 4. Controls and Procedures |
Part II |
Item 1. Legal Proceedings |
Item 1A. Risk Factors |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. Defaults Upon Senior Securities |
Item 4. Mine Safety Disclosures |
Item 5. Other Information |
Item 6. Exhibits |
EX-10.1 | iipr-20200930xex10d1.htm |
EX-10.2 | iipr-20200930xex10d2.htm |
EX-31.1 | iipr-20200930xex31d1.htm |
EX-31.2 | iipr-20200930xex31d2.htm |
EX-32.1 | iipr-20200930xex32d1.htm |
Balance Sheet | Income Statement | Cash Flow |
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Assets, Equity
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Rev, G Profit, Net Income
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Ops, Inv, Fin
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One) |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED | |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________ |
Commission file number:
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(Exact Name of Registrant as Specified in Its Charter)
(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.) |
organization) | |
( | |
(Address of principal executive offices) | (Registrant’s telephone number) |
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbols (s) |
| Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company |
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| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 5, 2020 there were
INNOVATIVE INDUSTRIAL PROPERTIES, INC.
FORM 10-Q – QUARTERLY REPORT
SEPTEMBER 30, 2020
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | |
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33 |
2
PART I
ITEM 1. FINANCIAL STATEMENTS
Innovative Industrial Properties, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share amounts)
| September 30, |
| December 31, | |||
2020 | 2019 | |||||
Assets | ||||||
Real estate, at cost: | ||||||
Land | $ | | $ | | ||
Buildings and improvements |
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Tenant improvements |
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Total real estate, at cost |
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Less accumulated depreciation |
| ( |
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Net real estate held for investment |
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Cash and cash equivalents |
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Restricted cash | — | | ||||
Short-term investments, net |
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Right of use office lease asset | | | ||||
Other assets, net |
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Total assets | $ | | $ | | ||
Liabilities and stockholders’ equity | ||||||
Exchangeable senior notes, net | $ | | $ | |||
Tenant improvements and construction funding payable | | | ||||
Accounts payable and accrued expenses |
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Dividends payable |
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Office lease liability |
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Rent received in advance and tenant security deposits |
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Total liabilities |
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Commitments and contingencies (Notes 6 and 11) |
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Stockholders’ equity: |
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Preferred stock, par value $ |
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Common stock, par value $ |
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Additional paid-in capital |
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Dividends in excess of earnings |
| ( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity | $ | | $ | |
See the accompanying notes to the condensed consolidated financial statements.
3
Innovative Industrial Properties, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except share and per share amounts)
| For the Three Months Ended |
| For the Nine Months Ended | |||||||||
September 30, | September 30, | |||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||
Revenues: |
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Rental (including tenant reimbursements) | $ | | $ | | $ | | $ | | ||||
Total revenues |
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Expenses: | ||||||||||||
Property expenses |
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General and administrative expense |
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Depreciation expense |
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Total expenses |
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Income from operations |
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Interest and other income |
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Interest expense |
| ( |
| ( |
| ( |
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Net income |
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Preferred stock dividend |
| ( |
| ( |
| ( |
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Net income attributable to common stockholders | $ | | $ | | $ | | $ | | ||||
Net income attributable to common stockholders per share (Note 8): |
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Basic | $ | | $ | | $ | | $ | | ||||
Diluted | $ | | $ | | $ | | $ | | ||||
Weighted average shares outstanding: |
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Basic |
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Diluted |
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See accompanying notes to the condensed consolidated financial statements.
4
Innovative Industrial Properties, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share amounts)
Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||||
Series A | Shares of | Additional | Dividends in | Total | Series A | Shares of | Additional | Dividends in | Total | |||||||||||||||||||||||||
Preferred | Common | Common | Paid-In- | Excess of | Stockholders’ | Preferred | Common | Common | Paid-In | Excess of | Stockholders’ | |||||||||||||||||||||||
| Stock |
| Stock |
| Stock |
| Capital |
| Earnings |
| Equity |
| Stock |
| Stock |
| Stock |
| Capital |
| Earnings |
| Equity | |||||||||||
Balances at beginning of period | $ | | | $ | | $ | | $ | ( | $ | | $ | | | $ | | $ | | $ | ( | $ | | ||||||||||||
Net income | — |
| — |
| — |
| — |
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| | — | — | — | — | | | |||||||||||||||||
Net proceeds from sale of common stock | — |
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| — |
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Net issuance of unvested restricted stock | — |
| — |
| — |
| — |
| — |
| — | — | | — | — | — | — | |||||||||||||||||
Preferred stock dividend | — |
| — |
| — |
| — |
| ( |
| ( | — | — | — | — | ( | ( | |||||||||||||||||
Common stock dividend | — |
| — |
| — |
| — |
| ( |
| ( | — | — | — | — | ( | ( | |||||||||||||||||
Stock-based compensation | — |
| — |
| — |
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| — |
| | — | — | — | | — | | |||||||||||||||||
Balances at end of period | $ | |
| | $ | | $ | | $ | ( | $ | | $ | | | $ | | $ | | $ | ( | $ | |
Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||||
Series A | Shares of | Additional | Dividends in | Total | Series A | Shares of | Additional | Dividends in | Total | |||||||||||||||||||||||||
Preferred | Common | Common | Paid-In | Excess of | Stockholders’ | Preferred | Common | Common | Paid-In | Excess of | Stockholders’ | |||||||||||||||||||||||
| Stock |
| Stock |
| Stock |
| Capital |
| Earnings |
| Equity |
| Stock |
| Stock |
| Stock |
| Capital |
| Earnings |
| Equity | |||||||||||
Balances at beginning of period | $ | | | $ | | $ | | $ | ( | $ | | $ | | | $ | | $ | | $ | ( | $ | | ||||||||||||
Net income | — |
| — | — |
| — |
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| | — | — | — | — | | | ||||||||||||||||||
Equity component of exchangeable senior notes | — | — | — | — | — | — | — | — | — | | — | | ||||||||||||||||||||||
Issuance of exchangeable senior notes | — | | — | | — | | — | — | — | — | — | — | ||||||||||||||||||||||
Net proceeds from sale of common stock | — | | | | — | | — | | | | — | | ||||||||||||||||||||||
Net issuance of unvested restricted stock | — |
| ( | — |
| ( |
| — |
| ( | — | | — | ( | — | ( | ||||||||||||||||||
Preferred stock dividend | — |
| — | — |
| — |
| ( |
| ( | — | — | — | — | ( | ( | ||||||||||||||||||
Common stock dividend | — |
| — | — |
| — |
| ( |
| ( | — | — | — | — | ( | ( | ||||||||||||||||||
Stock-based compensation | — |
| — | — |
| |
| — |
| | — | — | — | | — | | ||||||||||||||||||
Balances at end of period | $ | |
| | $ | | $ | | $ | ( | $ | | $ | | | $ | | $ | | $ | ( | $ | |
See accompanying notes to the condensed consolidated financial statements.
5
Innovative Industrial Properties, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
For the Nine Months Ended | ||||||
September 30, | ||||||
| 2020 |
| 2019 | |||
Cash flows from operating activities | ||||||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||
Depreciation |
| |
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Other non-cash adjustments | | — | ||||
Stock-based compensation |
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Amortization of discounts on short-term investments |
| ( |
| ( | ||
Amortization of debt discounts and issuance costs |
| |
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Changes in assets and liabilities | ||||||
Other assets, net |
| ( |
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Accounts payable and accrued expenses |
| ( |
| ( | ||
Rent received in advance and tenant security deposits |
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Net cash provided by operating activities |
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Cash flows from investing activities | ||||||
Purchases of investments in real estate |
| ( |
| ( | ||
Reimbursements of tenant improvements and construction funding |
| ( |
| ( | ||
Deposits in escrow for acquisitions |
| — |
| ( | ||
Purchases of short-term investments |
| ( |
| ( | ||
Maturities of short-term investments |
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Net cash used in investing activities |
| ( |
| ( | ||
Cash flows from financing activities | ||||||
Issuance of common stock, net of offering costs |
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Net proceeds from issuance of exchangeable senior notes |
| |
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Dividends paid to common stockholders |
| ( |
| ( | ||
Dividends paid to preferred stockholders |
| ( |
| ( | ||
Taxes paid related to net share settlement of equity awards |
| ( |
| ( | ||
Net cash provided by financing activities |
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Net increase in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period | $ | |
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Supplemental disclosure of cash flow information: | ||||||
Cash paid during the period for interest | $ | | $ | | ||
Supplemental disclosure of non-cash investing and financing activities: | ||||||
Accrual for reimbursements of tenant improvements and construction funding | $ | | $ | | ||
Deposits applied for acquisitions | | — | ||||
Accrual for common and preferred stock dividends declared |
| |
| | ||
Accrual for stock issuance costs | | | ||||
Exchange of exchangeable senior notes | | — |
See accompanying notes to the condensed consolidated financial statements.
6
Innovative Industrial Properties, Inc.
Notes to the Condensed Consolidated Financial Statements
September 30, 2020
(Unaudited)
1. Organization
As used herein, the terms “we”, “us”, “our” or the “Company” refer to Innovative Industrial Properties, Inc., a Maryland corporation, and any of our subsidiaries, including IIP Operating Partnership, LP, a Delaware limited partnership (our “Operating Partnership”).
We are an internally-managed real estate investment trust (“REIT”) focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated state-licensed cannabis facilities. We have acquired and intend to continue to acquire our properties through sale-leaseback transactions and third-party purchases. We have leased and expect to continue to lease our properties on a triple-net lease basis, where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, taxes and insurance.
We were incorporated in Maryland on June 15, 2016. We conduct our business through a traditional umbrella partnership real estate investment trust, or UPREIT structure, in which our properties are owned by our Operating Partnership, directly or through subsidiaries. We are the sole general partner of our Operating Partnership and own, directly or through subsidiaries,
2. Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements
Basis of Presentation. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements.
This interim financial information should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Any references to square footage or occupancy percentage, and any amounts derived from these values in these notes to the condensed consolidated financial statements, are outside the scope of our independent registered public accounting firm’s review.
The Company considered the impact of COVID-19 on its assumptions and estimates used and determined that there were no material adverse impacts on the Company's results of operations and financial position at September 30, 2020. A prolonged outbreak could have a material adverse impact on the financial results and business operations of the Company. See Note 6 for further discussion.
Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2020.
Federal Income Taxes. We believe that we have operated our business so as to qualify to be taxed as a REIT for U.S. federal income tax purposes. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income, we generally will not be required to pay federal corporate income taxes on such income. The income taxes recorded on our condensed consolidated statements of income represent amounts paid for city and state income and franchise taxes and are included in general and administrative expenses in the accompanying condensed consolidated statements of income.
Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from these estimates and assumptions.
7
Reportable Segment. We are engaged in the business of providing real estate for the regulated cannabis industry. Our properties are similar in that they are leased to the state-licensed operators on a long-term triple-net basis, consist of improvements that are reusable and have similar economic characteristics. Our chief operating decision maker reviews financial information for our entire consolidated operations when making decisions related to assessing our operating performance. We have aggregated the properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities, including the fact that they are operated using consistent business strategies. The financial information disclosed herein represents all of the financial information related to our
Acquisition of Real Estate Properties. Our investment in real estate is recorded at historical cost, less accumulated depreciation. Upon acquisition of a property, the tangible and intangible assets acquired and liabilities assumed are initially measured based upon their relative fair values. We estimate the fair value of land by reviewing comparable sales within the same submarket and/or region, the fair value of buildings on an as-if vacant basis and may engage third-party valuation specialists. Acquisition costs are capitalized as incurred. All of our acquisitions to date were recorded as asset acquisitions.
Depreciation. We are required to make subjective assessments as to the estimated useful lives of our depreciable assets. We consider the period of future benefit of the assets to determine the appropriate estimated useful lives. Depreciation of our assets is charged to expense on a straight-line basis over the estimated useful lives. We depreciate each of our buildings and improvements over its estimated remaining useful life, generally not to exceed
We depreciate office equipment and furniture and fixtures over estimated useful lives ranging from
Provision for Impairment. On a quarterly basis, we review current activities and changes in the business conditions of all of our properties prior to and subsequent to the end of each quarter to determine the existence of any triggering events or impairment indicators requiring an impairment analysis. If triggering events or impairment indicators are identified, we review an estimate of the future undiscounted cash flows for the properties, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration.
Long-lived assets are individually evaluated for impairment when conditions exist that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Impairment indicators or triggering events for long-lived assets to be held and used are assessed by project and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations, current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, construction costs, available market information, current and historical operating results, known trends, current market/economic conditions that may affect the property, and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount to its estimated fair value. We may adjust depreciation of properties that are expected to be disposed of or redeveloped prior to the end of their useful lives.
Revenue Recognition. Our leases are triple-net leases, an arrangement under which the tenant maintains the property while paying us rent. We account for our current leases as operating leases and record revenue for each of our properties on a cash basis due to the uncertain regulatory environment in the United States relating to the regulated cannabis industry and the uncertainty of collectability of lease payments from each tenant due to its limited operating history. Contractually obligated reimbursements from tenants for recoverable real estate taxes and operating expenses are included in rental revenue in the period when such costs are reimbursed by the tenants. Contractually obligated real estate taxes that are paid directly by the tenant to the tax authorities are not reflected in our condensed consolidated financial statements.
Cash and Cash Equivalents and Restricted Cash. We consider all highly-liquid investments with original maturities of three months or less to be cash equivalents. As of September 30, 2020 and December 31, 2019, $
Restricted cash relates to cash held in escrow for the reimbursement of tenant improvements in accordance with various lease agreements. As of September 30, 2020, all of the cash held was released from restriction.
8
Investments. Investments consist of obligations of the U.S. government and certificates of deposit with an original maturity at the time of purchase of greater than three months. Investments are classified as held-to-maturity and stated at amortized cost.
Exchangeable Notes. The “Debt with Conversion and Other Options” Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification requires the liability and equity components of exchangeable debt instruments that may be settled in cash upon exchange, including partial cash settlement, to be separately accounted for in a manner that reflects the issuer’s nonexchangeable debt borrowing rate. The initial proceeds from the sale of our Exchangeable Senior Notes (as defined below) were allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonexchangeable debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the Exchangeable Senior Notes as of the date of issuance. We measured the estimated fair value of the debt component of our Exchangeable Senior Notes as of the date of issuance based on our estimated nonexchangeable debt borrowing rate with the assistance of a third-party valuation specialist as we do not have a history of borrowing arrangements and there is limited empirical data available related to the Company’s industry due to the regulatory uncertainty of the cannabis market in which the Company’s tenants operate. The equity component of our Exchangeable Senior Notes is reflected within additional paid-in capital on our condensed consolidated balance sheets, and the resulting debt discount is amortized over the period during which the Exchangeable Senior Notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense. The additional non-cash interest expense attributable to our Exchangeable Senior Notes will increase in subsequent periods through the maturity date as the Exchangeable Senior Notes accrete to the par value over the same period.
Deferred Financing Costs. The deferred financing costs that are included as a reduction in the net book value of the related liability on our condensed consolidated balance sheets reflect issuance and other costs related to our Exchangeable Senior Notes. These costs are amortized as non-cash interest expense using the effective interest method over the life of the Exchangeable Senior Notes.
Stock-Based Compensation. Stock-based compensation for equity awards is based on the grant date fair value of the equity awards and is recognized over the requisite service period. If awards are forfeited prior to vesting, we reverse any previously recognized expense related to such awards in the period during which the forfeiture occurs and reclassify any non-forfeitable dividends and dividend equivalents previously paid on these awards from retained earnings to compensation expense. Forfeitures are recognized as incurred.
Lease Accounting. As lessor for each of our real estate transactions involving the leaseback of the related property to the seller or affiliates of the seller, we determine whether these transactions qualify as sale and leaseback transactions under the accounting guidance. For these transactions, we consider various inputs and assumptions including, but not necessarily limited to, lease terms, renewal options, discount rates, and other rights and provisions in the purchase and sale agreement, lease and other documentation to determine whether control has been transferred to the Company or remains with the lessee. A transaction involving a sale leaseback will be treated as a purchase of a real estate property if it is considered to transfer control of the underlying asset from the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control. Otherwise, the lease is treated as an operating lease. These criteria also include estimates and assumptions regarding the fair value of the leased facilities, minimum lease payments, the economic useful life of the facilities, the existence of a purchase option, and certain other terms in the lease agreements. The lease accounting guidance requires accounting for a transaction as a financing in a sale leaseback when the seller-lessee is provided an option to purchase the property from the landlord at the tenant’s option. All of our leases are classified as operating leases. Our tenant reimbursable revenue and property expenses are presented on a gross basis as rental revenue and as property expenses, respectively, on our condensed consolidated statements of income.
In April 2020, in response to the coronavirus pandemic and associated severe economic disruption, we amended leases at certain of our properties to provide for temporary base rent and property management fee deferrals through June 30, 2020. The FASB has issued additional guidance for companies to account for any coronavirus related rent concessions in the form of FASB staff and board members' remarks at the April 8, 2020 public meeting and the FASB staff question-and-answer document issued on April 10, 2020. We have elected the practical expedient which allows us to not have to evaluate whether concessions provided in response to coronavirus pandemic are lease modifications. This relief is subject to certain conditions being met, including ensuring the total remaining lease payments are substantially the same or less as compared to the original lease payments prior to the concession being granted.
Lease amendments that are not associated with the coronavirus pandemic are evaluated to determine if the modification grants the lessee an additional right-of-use not included in the original lease and if the lease payments increase commensurate with the standalone price of the additional right-of-use, adjusted for the circumstances of the particular contract. If both conditions are present, the lease amendment is accounted for as a new lease that is separate from the original lease.
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One of our leases that was entered into prior to 2019 provides the lessee with a purchase option to purchase the leased property at the end of the initial lease term in September 2034, subject to the satisfaction of certain conditions. The purchase option provision allows the lessee to purchase the leased property at the greatest of (a) the fair value; (b) the value determined by dividing the then-current base rent by
Our leases generally contain options to extend the lease terms at the prevailing market rate or at the expiring rental rate at the time of expiration. Certain of our leases provide the lessee with a right of first refusal or right of first offer in the event we market the leased property for sale.
Recent Accounting Pronouncements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses, which changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, companies will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, which among other updates, clarifies that receivables arising from operating leases are not within the scope of this guidance and should be evaluated in accordance with Topic 842, Leases. For available-for-sale debt securities with unrealized losses, companies will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. These standards were effective for the Company on January 1, 2020 and did not have a material impact on our condensed consolidated financial statements.
Concentration of Credit Risk. As of September 30, 2020, we owned 63 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania and Virginia. The ability of any of our tenants to honor the terms of their leases is dependent upon the economic, regulatory, competition, natural and social factors affecting the community in which that tenant operates.
The following table sets forth the tenants in our portfolio that represented the largest percentage of our total rental revenue for each period presented, including tenant reimbursements:
For the Three Months Ended | For the Nine Months Ended |
| |||||||
September 30, 2020 | September 30, 2020 | ||||||||
Percentage of | Percentage of | ||||||||
| Number of |
| Rental |
| Number of |
| Rental |
| |
| Leases |
| Revenue |
| Leases |
| Revenue | ||
PharmaCann Inc.(1) |
| |
| | % | |
| | % |
Cresco Labs Inc.(1) | | | % | | | % | |||
Ascend Wellness Holdings, LLC(1) |
| |
| | % | |
| | % |
Holistic Industries Inc.(1) | | | % | | | % | |||
Curaleaf Holdings, Inc.(1)(2) |
| |
| | % | |
| | % |
Green Thumb Industries Inc.(1) |
| |
| | % | |
| | % |
SH Parent, Inc. (Parallel) (1) |
| |
| | % | |
| | % |
For the Three Months Ended | For the Nine Months Ended |
| |||||||
September 30, 2019 | September 30, 2019 |
| |||||||
|
| Percentage of |
|
| Percentage of |
| |||
| Number of |
| Rental |
| Number of |
| Rental | ||
| Leases |
| Revenue |
| Leases |
| Revenue | ||
PharmaCann Inc.(1) |
| |
| | % | |
| | % |
Ascend Wellness Holdings, LLC(1) | | | % | | | % | |||
Vireo Health, Inc.(1) | | | % | | | % | |||
Kings Garden Inc.(1) |
| |
| | % | |
| | % |
Holistic Industries Inc. | | | % | | | % | |||
Green Peak Industries, LLC |
| |
| | % | |
| | % |
The Pharm, LLC(1) |
| |
| | % | |
| | % |
(1) | Includes leases with affiliates of the entity, for which the entity has provided a corporate guaranty. |
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(2) | Curaleaf Holdings, Inc. acquired GR Companies, Inc. (“Grassroots”) and executed corporate guaranties for our leases with Grassroots in August 2020. |
At September 30, 2020, one of our properties in Michigan accounted for approximately
We have deposited cash with a financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $
3. Common Stock
As of September 30, 2020, the Company was authorized to issue up to
In January 2020, we issued
In May 2020, we issued
In July 2020, we issued
In September 2019, we entered into equity distribution agreements with three sales agents, pursuant to which we may offer and sell from time to time through an “at-the-market” offering program, or ATM Program, up to $
4. Preferred Stock
As of September 30, 2020, the Company was authorized to issue up to
5. Dividends
The following table describes the dividends declared by the Company during the nine months ended September 30, 2020:
|
| Amount |
|
| Dividend |
| Dividend | |||||
Declaration Date | Security Class | Per Share | Period Covered | Paid Date | Amount | |||||||
| (In thousands) | |||||||||||
$ | | January 1, 2020 to March 31, 2020 | $ | | ||||||||
$ | | January 15, 2020 to April 14, 2020 | $ | | ||||||||
$ | | April 1, 2020 to June 30, 2020 | $ | | ||||||||
$ | | April 15, 2020 to July 14, 2020 | $ | | ||||||||
$ | | July 1, 2020 to September 30, 2020 | $ | | ||||||||
$ | | July 15, 2020 to October 14, 2020 | $ | |
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6. Investments in Real Estate
Acquisitions
The Company acquired the following properties during the nine months ended September 30, 2020 (dollars in thousands):
Rentable | ||||||||||||||||||
Square | Purchase | Transaction | ||||||||||||||||
Property |
| Market |
| Closing Date |
| Feet(1) |
| Price |
| Costs |
| Total | ||||||
Green Leaf VA | Virginia | January 15, 2020 | | $ | | $ | | $ | | (2) | ||||||||
Cresco OH | Ohio | January 24, 2020 | | | | | (3) | |||||||||||
GTI OH | Ohio | January 31, 2020 |