Piper downgrades Innovative Industrial to Underweight on tenant default

Piper Sandler downgraded Innovative Industrial Properties (IIPR) to Underweight from Neutral with a price target of $70, down from $118, after the company announced PharmaCann defaulted on its obligations to pay December rent under six of its 11 leases. PharmaCann is Innovative’s largest tenant, the analyst tells investors in a research note. The firm says that while Innovative’s Q4 results should not be impacted as security deposits covered December rent, 17% delinquent rents is “concerning for the future.” The default further displays need for consolidation the industry as there is too much capacity, contends Piper. Shares of Innovative Industrial are down 23%, or $21.73, to $73.88 in afternoon trading.