Stocks of REIT Innovative Industrial Properties (NYSE:IIPR), the first and only cannabis-focused real estate company on the NY Stock Exchange, fell 7% on Thursday and closed at $169.68 near its 52-week lows after Blue Orca Capital issued a short-seller report on the fund, reported Deborah Borchardt for Green Market Report. Blue Orca has been called an “activist investment firm.”
“In the last 18 months, we think IIPR’s loan book appears to have degraded significantly as the sector has become more competitive and IIPR stretched for lower quality tenants in search of continuing growth. IIPR’s largest tenant is a failed SPAC that appears in severe financial distress and was recently sued by investors accusing it of securities fraud and being in effect a Ponzi scheme,” noted the report, adding that “unlike other REITs, IIPR cannot expect to recover the lost income from defaulting tenants because it appears that the actual values of its properties are substantially below their carrying value on IIPR’s balance sheet. IIPR’s stock has already priced in robust net income growth in FY 2022, meaning a repricing is likely given the risk of default at its primary tenant and the deteriorating fundamentals of other IIPR portfolio companies.”
