The question of whether the proportion of Innovative industrial properties (NASDAQ: GOLF) may double in value, fat sounds right now. At present, it is more relevant that the share certificates are more than halved in value. While this may mean some upside, it does not necessarily mean that the stock has risen 100% now.
Still, I would be negatively surprised if Innovative Industrial Properties did not double in value in five years. The valuation is cheap, the growth is intact, and the real estate investment fund is relatively small. For me, an ideal composition is to achieve this goal.
Innovative industrial properties: Doubled in 5 years?
In any case, the shares in Innovative Industrial Properties are relatively cheap. Based on the current share price of approx. $ 136, the price-to-FFO ratio is 16.7 on an adjusted basis. It is relatively inexpensive and is rounded off with a yield of over 5%.
For a normal REIT, this would be a normal assessment. But not for innovative industrial properties. The real estate investment fund has had a growth of 38% year-on-year in funds from operations. Dividend per share rose 16.7% quarter-on-quarter. Of course you can object: You can not buy much from the past. Nevertheless, the signs point to further growth.
Finally, cannabis REIT consistently buys more real estate. Based on current valuations, even a growth of 8% per year over the next five years will result in a price-to-FFO ratio of only 11. It would be a really cheap valuation measurement, and a growth of only 8% pa is historic very, very low.
Just looking at the valuation, growth and a property portfolio of well over 100 properties, I am convinced that there is a chance that the price can double. Innovative Industrial Properties is a hot bet if you want solid returns in the long run.
Every opportunity has its price: and it, along with valuation, is a risk. It is no different at Innovative Industrial Properties, although on the risk side, alongside a slowdown in growth, there are critics who have attacked the business model, claiming it is illegitimate financing of the cannabis industry. Where we can counter that is that every regulator sees what the management of cannabis REIT does.
Nevertheless, regulation would be an obstacle and could slow growth. But when I now look at the valuation and the further growth potential and at the same time look at the high-growth dividend, I think that the risk / reward ratio is uniquely favorable.
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Vincent owns shares in Innovative Industrial Properties. The Motley Fool owns shares in and recommends Innovative Industrial Properties.