An already beaten-up dividend stock took another hit last week. Innovative Industrial Properties
(NYSE:IIPR) fell by 14% on Friday, hitting a new 52-week low of $94.55 on the day. The selloff took place
as investors learned that one of the real estate investment trust's larger tenants, Kings Garden,
defaulted on its payments for July. Innovative Industrial Properties notes that the monetary value of the
default was $2.2 million, with the bulk of that being base rent and property management fees.
The company's filing was brief but it was enough to send the stock into yet another tailspin. Already
falling hard year to date, losing more than half of its value since the start of 2022, Innovative Industrial's
stock is now down more than 63% after this latest setback.
This news comes after months earlier, a short-seller report said Innovative Industrial's tenants were high
risk, specifically Kings Garden. With the drop in price, Innovative Industrial's yield is now at 7.3%.
Although that is high, it may not be of much comfort to investors if there are concerns about the REIT's
tenants and their relative stability. Although the company was dismissive of the short-seller report, it's
hard for investors not to turn a blind eye to these recent developments.
Although the yield looks appealing, the safer option for investors right now is to hang tight and see how
this plays out. A hit to the company's profitability could impact the dividend. At the very least, investors
should consider waiting until the company's next earnings report, which is likely to come out next
month, for an update on the business and the current situation.
