VFF - Many Of Innovative Industrial Properties' Tenants Are Unlikely To Survive Paying An Interest Expense Rate Over 20% In A Post-Prohibition World

• If Federal prohibition remains through December 2030, I believe that IIPR's current $1.06 billion portfolio alone, excluding new investment, could support a dividend from $7 to $8 by December 2030.
• However, by 2030, IIPR's tenants' interest rate burden will exceed 20%. How will these tenants compete in a post-prohibition world where competitors can access commercial banks offering single digit rates?
• Were a current IIPR lease to default in a post-prohibition world, IIPR's economics on the new lease would be at least 60% lower.
• IIPR's current dividend of $5.28 will be at risk if leases generating more than 30% of 2020 rental revenues were to default and be renewed at commercial banking rates.
• An additional $500 million invested before legalization would ameliorate the risk, but in a post-prohibition world, IIPR's $1.5 billion portfolio will likely struggle to support a dividend above $6.

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