Innovative Industrial Properties, Inc. (NYSE:IIPR) Q4 2022 Earnings Call Transcript

Eric Des Lauriers : Appreciate that color. And then last one, for me is kind of a follow-up here. When you look at both cap rates, and the sort of annual step up, obviously, we do have pricing down in some markets like 50% year-over-year, I’m just wondering how you look at both of those, if you see any likelihood of those kinds of softening and perhaps the quarters ahead. If we don’t get any material rebound in prices, I’m just wondering, sort of how you are kind of weighing the sort of pros and cons of more attractive rates for you, but putting more pressure on the tenants in a kind of challenging environment here. Just wondering sort of how you feel about the cap rates and annual step up, specifically? And, yes, any comments, that would be great.

Thanks. A – Alan Gold So just to remind everybody that we are — we enter into sale leaseback transactions. So we’re more focused on our yields, and our yields continued to be very, I think, accretive to our current cost of capital, which is still very high. And as long as we continue to have the ability to do accretive transactions, I think we are still looking at potentially deploying capital in the future, if we can raise capital effectively and cost effectively. That’s how we’re looking at it. We don’t have the business of buying from existing investors at whatever cap rate that they want. That’s not our business. We believe that cap rates for all real estate asset classes have increased with the U.S. economy in general increase in rates and cost of capital.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Alan Gold for any closing remarks.

Alan Gold : Thank you. And first, I want to thank the team for all their hard work. I mean, it’s, they’ve done a phenomenal job to get us to where we are today and they still have tremendous challenges and work as we move forward throughout 2023. I also want to again, thank our stakeholders, our shareholders for their continued support. And with that, like to end the call. Thank you all.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may all now disconnect.