INNOVATIVE INDUSTRIAL PROPERTIES INCIIPR

INNOVATIVE INDUSTRIAL PROPERTIES INC Segments Disclosure

10-KFiled Feb 24, 20262 min read
Segment Information
During the fourth quarter of 2025, in connection with our significant financial investments in the life science industry, we began managing the business through two reportable segments based on portfolio type. This change reflects how our CODM evaluates performance and allocates resources. The CODM is our President and Chief Executive Officer.

Our reportable segments consist of the following as of December 31, 2025:
•Cannabis Portfolio Segment, which primarily includes the acquisition, development and redevelopment, and leasing of real estate properties to regulated cannabis operators on a long-term triple-net basis.
•Life Science Portfolio Segment, which includes the investments in the IQHQ Credit Facility, IQHQ Preferred Stock and IQHQ Warrant.
The CODM evaluates the performance of each reportable segment and allocates resources based on the net income of each segment. Items that are not directly assignable to a reportable segment are reflected as Unallocated due to how our CODM utilizes segment information for planning and execution of our business strategy. Total capital expenditures are reviewed by the CODM on a consolidated basis as presented in the accompanying consolidated statements of cash flows. All of our operations are conducted within the United States.
The segment net income, including significant segment expenses that are regularly reviewed by the CODM, for the years ended December 31, 2025, 2024 and 2023, and the total segment assets as of December 31, 2025 and 2024, are presented in the tables below (in thousands):
Years ended December 31,
202520242023
Cannabis Portfolio Segment:
Rental revenues (including tenant reimbursements)$265,486 $306,936 $307,349 
Other revenues469 1,581 2,157 
  Total reportable segment revenue265,955 308,517 309,506 
Property expenses(30,177)(28,472)(24,893)
Depreciation and amortization expense(74,068)(70,807)(67,194)
Impairment loss on real estate(3,527)— — 
Gain (loss) on sale of real estate(326)(3,449)— 
Interest and other income6,413 4,388 1,060 
Cannabis Portfolio Segment net income164,270 210,177 218,479 
Life Science Portfolio Segment:
Interest and other income5,047 — — 
Life Science Portfolio Segment net income5,047 — — 
Total reportable segment net income169,317210,177218,479
Unallocated:
General and administrative expense(33,735)(37,444)(42,832)
Interest and other income2,860 6,600 7,386 
Interest expense(20,195)(17,672)(17,467)
Gain (loss) on exchange of Exchangeable Senior Notes— — 22 
Net income118,247 161,661 165,588 
Preferred stock dividends(3,812)(1,804)(1,352)
Net income attributable to common stockholders$114,435 $159,857 $164,236 
Segment Total Assets:December 31, 2025December 31, 2024
Cannabis Portfolio Segment$2,165,359 $2,222,360 
Life Science Portfolio Segment152,665 — 
Unallocated52,834 155,687 
Total$2,370,858 $2,378,047 
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About Segments Disclosures

Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.

Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.

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