IIPR Puts Play Update (after earnings) with new Positions via /r/wallstreetbets #stocks #wallstreetbets #investing


IIPR Puts Play Update (after earnings) with new Positions

Well ReRards I will keep this simple and update my position. IIPR reported smash earnings… But that's not the end of the story.

Second Quarter 2022 Highlights

Financial Results and Capital Activity

  • Generated total revenues of approximately $70.5 million in the quarter, representing a 44% increase from the prior year’s quarter.
  • Recorded net income attributable to common stockholders of approximately $39.9 million for the quarter, or $1.42 per diluted share, and AFFO of approximately $60.1 million, or $2.14 per diluted share (including the dilutive impact of the assumed full exchange of the 3.75% Exchangeable Senior Notes due 2024 (the Exchangeable Senior Notes)).
  • Paid a quarterly dividend of $1.75 per common share on July 15, 2022 to stockholders of record as of June 30, 2022, representing a 25% increase over the prior year’s second quarter 2021 dividend, equal to an annualized dividend of $7.00 per share.
  • Completed an underwritten public offering of common stock, including the exercise in full of the underwriters’ option to purchase additional shares, resulting in net proceeds of approximately $330.9 million.
  • Exchanged approximately $3.1 million principal amount of the Exchangeable Senior Notes, leaving approximately $6.5 million principal amount of Exchangeable Senior Notes outstanding as of today.

First a Disclaimer:

I personally have no opinion on the validity of the IIPR claims, I have no idea if they are true or false, and I have no knowledge of Kings Garden at all. The earnings call or the documents submitted to the SEC and shareholders do not mention any of these details and IIPR shareholders should understand their investment. I have no sentiment regarding Kings Garden and if these claims are false I hope they are vindicated.

My only position is that I think IIPR is currently overvalued, Management in making terrible investments with shareholder money and is not accurately representing the weakness of its portfolio.

Kings Garden Default

I would encourage anyone to read the amended lawsuit themselves but per IIPR own filing in California Court it certainly appears to be a tad more serious than then a simple Landlord/Tenant rent issue with an easy resolution as the earnings call might have you believe… IIPR has paid millions of dollars to a tenant for construction allowance that apparently according to IIPR "stolen" or "misused"

How does this happen?? Certainly a company this good has procedures for verifying, checking, checking again, confirming, visiting the sites in question, examining documents, etc…. Especially dealing with the public money… So they were completely fooled? Looked away? Didn't want to know? Who knows. I make no inference from this other than to repeat the facts that IIPR is stating themselves… The money is gone, tenant is not paying and is going to dispute the case.

This was the Executive Chairman Alan Gold comment on the matter;

“Thank you, Brian, and welcome, everyone. I know one of the biggest questions for today's calls has to do with Kings Garden and what happened. To recap, Kings Garden leased six properties. The total base rent of which was approximately $5.5 million for the second quarter or approximately 8% of our base rents collected for the quarter.

Of these six properties, four were operational with a ground up expansion project also at one of those properties, which we will call the 19 Street expansion. The other two properties were in development or redevelopment, Bridge Street and Inland Center Dr. On July 13th, Kings Garden defaulted on their lease obligations and on July 14th, we filed an 8-K regarding that default. Later in July, we filed a suit with the state court asking for immediate access to our properties among other demands.

Today, Kings Garden remains in default and on August 2nd, we amended our suit making further claims regarding construction at the properties, among other things. Okay that is what happened. And unfortunately, we will not be able to answer any questions regarding the legal proceedings. I ask for your understanding”.

Well….I think that's just a tad bit of an understatement and clearly nobody went and pulled this document from the County Clerk to ask any questions…. Had they, it would have been a bloodbath.

From IIPR amended Court Filing

SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF RIVERSIDE

PALM SPRINGS COURTHOUSE

IIP-CA 2 LP, A DELAWARE LIMITED PARTNERSHIP,S2202975

PLAINTIFF,

V.

KINGS GARDEN INC., A NEVADA CORPORATION, CK ENDEAVORS, INC., A CALIFORNIA CORPORATION, JM ENDEAVORS, INC., A CALIFORNIA CORPORATION, MICHAEL KING, AN INDIVIDUAL, GARY LASALLE, AN INDIVIDUAL,CHARLES KIELEY, AN INDIVIDUAL, AND LAURI KIBBY, AN INDIVIDUAL,DEFENDANTS.

CASE NO: CVPS2202975

AMENDED COMPLAINT FOR:

  1. BREACH OF CONTRACT,

  2. DECLARATORY RELIEF,

  3. INJUNCTIVE RELIEF,

  4. BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING,

  5. FRAUD,

  6. NEGLIGENT MISREPRESENTATION,

  7. CONVERSION,

8. THEFT BY FALSE PRETENSES,

  1. MONEY HAD AND RECEIVED, AND

10. VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUP O ZATIONS

ACT (18 U.S.C. § 1962(C))

https://preview.redd.it/lk6nh08u92g91.png?width=975&format=png&auto=webp&s=c31d99e988cc05e8010ebecfa000efbff83af290

I don't know if its true or not, does not really matter to my thesis that IIPR is currently overvalued. Given that case management does not occur until Jan 2023, its unlikely a quick resolution will come.

IIPR certainly played it cool reporting "99%" rent collection… Which technically is true since the Q ended June 30th.

When did IIPR become aware of the problems with its 2nd largest tenant? By their own admission early June?

https://preview.redd.it/zznsa4y6b2g91.png?width=975&format=png&auto=webp&s=1788dc61a78e89c60b199d2a7529c39558f54fcf

https://preview.redd.it/6vjn6ju8b2g91.png?width=975&format=png&auto=webp&s=5858b4cc1e70b37a4b5a0ce2d4062c057889e85d

And it goes on and it gets way worse…IIPR decision making with shareholders money….. Not good. And I would only look to Parallel/SA Parent for the next domino to potentially fall.

Anyone can get the documents from the Court and I encourage that.

And a small sell off has commenced after being up on the earnings call.. A lot of questions need to be answered here. This is just a part of why I think IIPR is overvalued.

https://preview.redd.it/5roe6m0oc2g91.png?width=678&format=png&auto=webp&s=25e42893bf03697be0223bbbcf080f1a85293fad

My Position and I will keep adding.

https://preview.redd.it/7pz2793qc2g91.png?width=975&format=png&auto=webp&s=87b7d20c010a5df55003b16db1d88b36ca35a580

it appears some are catching on from the sing in options sentiment. But this is a REIT paying a 7.3% dividend and generally doesn't see much of this kind of volatile activity.

https://preview.redd.it/stiy5l57d2g91.png?width=975&format=png&auto=webp&s=e89a58e8c94f1fcb2373a69ed3ee4c06cc80ce8e

Submitted August 06, 2022 at 11:46AM by DA2710
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