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Smoke em If You Got Them

Tex the 2nd mentioned a yield to call for the 9.00% Innovative Industrial Properties perpetual preferred (IIPR-A) which I just had to check out. IIPR is a REIT devoted to owning primarily building used for the cannibis business.

The issue is a cumulative perpetual with a 9% coupon–with a optional redemption date starting 10/19/2022—geez just 14 months from now.

Shares are trading at $36.50 now. This is insanity–a yield to worst of over 30%. Yikes!!!

All I can say is that it is certain that buyers of this preferred stock must be smoking some of the product grown in these buildings

5 thoughts on “Smoke em If You Got Them”

  1. I always thought there was something missing that owners knew that I didnt.
    But I finally checked SEC annual filings and no there is nothing missing. This is from there annual filing this year…

    As of December 31, 2020, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $0.001 per share, and there were issued and outstanding 600,000 shares of 9.00% Series A Cumulative Redeemable Preferred Stock, $0.001 par value per share (the “Series A Preferred Stock”). Generally, the Company is not permitted to redeem the Series A Preferred Stock prior to October 19, 2022, except in limited circumstances relating to the Company’s ability to qualify as a REIT and in certain other circumstances related to a change of control/delisting (as defined in the articles supplementary for the Series A Preferred Stock). On or after October 19, 2022, the Company may, at its option, redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends on such Series A Preferred Stock up to, but excluding the redemption date. Holders of the Series A Preferred Stock generally have no voting rights except for limited voting rights if the Company fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances.

  2. I bought the IPO several years ago and flipped it for a small gain. Nobody told me I was supposed to hold it.

  3. Tim,
    I think you might have meant a YTW of negative 30%.
    IIPR sounds like a competitor (much bigger) to PW.
    PW-A is currently callable, but the current yield on PW-A is actually higher than the current yield on IIPR-A, even though the PW-A dividend is lower.

    Back in early February, PW had a rights offering, which caused some speculation that the proceeds might be used to call the PW-A. I lightened my PW-A at the time. But now I see that at around the same time as the rights offering, PW issued additional PW-A shares (more than doubling the outstanding balance) in conjunction with a property acquisition.

    I would take the fact that PW issued additional PW-A in February as an indication that they do not intend to call PW-A any time soon. Given that the current yield on PW-A is now north of 7%, I think there is adequate compensation for what now appears to be a less likely risk of call.

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