Recent progress on leasing activity, a firmer tenant base and approaching fourth quarter earnings has put Innovative Industrial Properties (IIPR) back in focus as investors weigh possible US cannabis policy changes and industry sentiment.

Despite the recent leasing progress and speculation around cannabis rescheduling, the share price at US$48.25 reflects a softer tone, with a 30 day share price return decline of 2.47% and a 1 year total shareholder return decline of 23.12%, suggesting momentum has faded over time even as policy hopes support sentiment.

If you are looking beyond cannabis focused real estate, this could be a useful moment to see how other property and related income ideas compare to fast growing stocks with high insider ownership.

With IIPR trading at US$48.25, carrying an intrinsic value estimate gap and a history of weaker recent returns, is the market overlooking potential cannabis policy benefits here or already pricing in any future growth?

Most Popular Narrative: 15.4% Undervalued

With Innovative Industrial Properties last closing at $48.25 against a widely followed fair value view of $57, the current price sits well below that narrative anchor and puts the focus squarely on how sustainable future cash flows might be.

The company's investments are structured for high risk adjusted returns (the IQHQ investment is expected to yield over 14% and sits in a senior position in the capital stack, ahead of $4 billion in equity), which management states will be highly accretive to AFFO directly supporting earnings, dividend sustainability, and share value.

Curious how a shrinking revenue line, slimmer margins and a higher future earnings multiple can still point to upside? The most followed narrative joins those pieces together into a single cash flow path, then discounts it at just under 8% to land on that fair value. If you want to see exactly which assumptions need to hold for that gap to close, the full narrative lays it all out.

Result: Fair Value of $57 (UNDERVALUED)

However, there is still a case that stronger life science exposure through IQHQ and a conservative balance sheet could soften the cannabis specific headwinds embedded in that story.

Build Your Own Innovative Industrial Properties Narrative

If you see the numbers differently or simply want to test your own assumptions, you can build a custom view in just a few minutes, starting with Do it your way.

A great starting point for your Innovative Industrial Properties research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.