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Factors to Impact Innovative Industrial's (IIPR) Q3 Earnings

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Innovative Industrial Properties, Inc. (IIPR - Free Report) , a leading real estate investment trust (REIT) specializing in the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated cannabis facilities, is set to announce its third-quarter 2023 earnings on Nov 1 after market close.

In the last reported quarter, Innovative Industrial delivered a surprise of 7.11% in terms of adjusted FFO per share. Results reflected better-than-expected revenues.

Over the last four quarters, IIPR’s adjusted FFO per share surpassed the consensus mark on all occasions, with the average beat being 7.26%. The graph below depicts the surprise history of the company:

Innovative Industrial has grabbed much attention in the past as it combines the high growth potential of the cannabis industry with the stability of the real estate market. In this article, we'll delve into IIPR's performance in recent quarters and analyze the factors that may have contributed to its third-quarter 2023 results.

Factors at Play

Regulatory shifts in the cannabis sector and the growing acceptance of cannabis for medical and recreational purposes are anticipated to have a positive impact on IIPR's performance in the third quarter of 2023.

The acquisition and leasing of new properties and additional building infrastructure allowances provided to tenants at certain properties that resulted in increases in the base rent, tenant reimbursements and contractual rental escalations at certain properties are likely to have benefited Innovative Industrial.

However, continued inflation in input and labor costs is likely to have affected expenses in the quarter under consideration. This, along with pressure on pricing, is likely to have hampered profitability to some extent.

Projections for Q3 2023

The Zacks Consensus Estimate for quarterly revenues is currently pegged at $75.6 million. The figure suggests a rise of 6.7% year over year.

Innovative Industrial Properties’ activities during the quarter in discussion were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for the third-quarter FFO per share has remained unrevised at $2.19 in the past month. It suggests a 2.8% increase year over year.

Here Is What Our Quantitative Model Predicts:

Our proven model does not conclusively predict a surprise in terms of FFO per share for Innovative Industrial Properties this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an FFO beat. However, that’s not the case here.

Innovative Industrial Properties currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Our model shows that Ventas Inc. (VTR - Free Report) and Easterly Government Properties, Inc. (DEA - Free Report) have the right combination of elements to report a surprise this quarter.

Ventas is scheduled to report quarterly numbers on Nov 2. VTR has an Earnings ESP of +0.08% and a Zacks Rank of 3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Easterly Government Properties is slated to report quarterly numbers on Oct 31. DEA has an Earnings ESP of +1.16% and carries a Zacks Rank of 3 presently.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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