PCLOF - Innovative Industrial Properties Is Facing A Negative Catalyst If Democrats Win The January 5 Georgia Senate Race
- A Democratic win in the January 5 Georgia U.S. Senate race would be a negative catalyst for IIPR as Democratic control of Senate would accelerate relaxation of Federal cannabis prohibition.
- IIPR 3% dividend yield doesn’t price in the risk changes in Federal cannabis laws would allow commercial banks to provide lending services to cannabis operators, squeezing IIPR’s fat underwriting margins.
- IIPR’s double-digit lending rates with annual 3% to 4.5% rent escalators over the life of the lease are driving tenants to seek cheaper sources of financing.
- IIPR’s real estate is primarily indoor grow facilities that are at risk of obsolescence if cannabis can be imported from Mexico and Latin America where cultivation cost is 90% lower.
- Recommended trade going into January 5 Georgia U.S. Senate race: long IIPR puts, long bear call spread or pair trade a long in Green Thumb Industries (GTBIF) with IIPR short.
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Innovative Industrial Properties Is Facing A Negative Catalyst If Democrats Win The January 5 Georgia Senate Race