Innovative Industrial Properties to offer exchangeable senior notes
On February 15, 2019, Innovative Industrial Properties (IIPR) made an announcement that through its operating partnership subsidiary, IIP Operating Partnership, it is offering $125 million of exchangeable senior notes. The notes will carry a coupon rate of 3.75% and are due in 2024. It has also offered initial purchasers to purchase an additional $18.75 million aggregate principal amount of the notes.
The exchange rate for these notes will be 14.37 shares of the company’s common stock per $1,000 in principal in the notes, reflecting an exchange price of approximately $69.57 per share. The net proceeds from this offer will be used to invest in specialized industrial real estate assets, which will support the cultivation and processing of regulated cannabis. Further, the proceeds will be used for other general corporate purposes.
Innovative Industrial Properties rose ~1.1% and closed at $64.99 for the week ending February 15. As a result of these gains, the stock traded 30.8% above its 100-day moving average price of $49.68, which indicates bullishness in the stock. On a year-to-date basis, the stock has risen 41.6%. The company’s 14-day relative strength index is at 61, which suggests that the stock is neither overbought nor oversold.
Innovative Industrial Properties underperformed the ETFMG Alternative Harvest ETF (MJ), which gained ~4.0% during the same period. The fund also provides exposure to Cronos Group (CRON), Canopy Growth (CGC), and Aurora Cannabis (ACB) with weights of 8.0%, 7.8%, and 7.2%, respectively, as of February 15.