Innovative Industrial Properties (IIPR) is currently undervalued, trading at 8 times its 2026 annualized first-quarter net funds from operations (NFFO), compared to peers at 14.37 times. The company offers a high dividend yield of 13.32%, though this is not fully covered at present. However, ongoing resolutions of tenant defaults and new lease agreements are expected to improve NFFO coverage and support dividend payments. Recent leasing momentum and increased payments from previously defaulted tenants have driven sequential revenue growth, with second-quarter revenue likely to exceed $70 million. IIPR is rated Buy due to anticipated NFFO growth and favorable regulatory changes in the cannabis sector, despite some risk of a dividend cut.
