IIPR Innovative Industrial Properties Inc - 8-K

Item 1.01 Entry into a Material Definitive Agreement.

The disclosure under Item 2.03 regarding the Loan
Agreement (as defined below) is incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation
or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On May 22, 2026, Innovative Industrial Properties,
Inc. (the “Company”) entered into an ATM Advance Agreement (the “Loan Agreement”) with A.G.P./Alliance Global
Partners (“Lender”). The proceeds of the Loan Agreement are expected to be used for general corporate purposes, including
the repayment of the Company’s 5.50% Senior Notes due May 2026.

The Loan Agreement provides for a term loan in
the aggregate principal amount of $20 million to the Company (the “Loan”). The Loan bears interest at a rate of 10.0% per
annum, compounding monthly on the last business day of each calendar month; provided that, at any time that an event of default under
the Loan Agreement has occurred and is continuing, the Loan will bear interest at a rate of 18.0% per annum. The Loan matures on October
9, 2026, and pursuant to the terms of the Agreement, we are required to make weekly interest and principal payments beginning on May 29,
2026. In connection with the Loan Agreement and the Loan, the Company granted Lender a security interest in and a lien upon the gross
proceeds the Company receives from the sale of securities pursuant to the equity distribution agreement, dated May 13, 2025, between the
Company and Lender (the “Sales Agreement”), net of any sales agent commissions, but before deduction of any other expenses
or costs (“Sales Proceeds”), and all the Company’s rights under the Sales Agreement, all of the Company’s right,
title and interest in and to the Company’s at-the-market equity offering program and the securities offered thereunder, and the
Sales Proceeds thereof; provided, that no security interest was granted in any rights under the equity distribution agreement or similar
arrangement other than the Sales Agreement. The Company agreed to pay an advance setup fee of 1% of the amount of the Loan.

The Loan Agreement provides for voluntary prepayment
in whole or in part at any time without premium or penalty, upon notice to Lender. The Loan Agreement requires mandatory prepayment upon
the occurrence of specified events, including (i) the receipt of proceeds from certain significant asset dispositions and (ii) the occurrence
of certain events that may adversely affect the Company’s financial position, capital markets access, ownership structure or the
value of material collateral securing the loan, including termination of the Company’s at-the-market equity offering program, a
sustained suspension in trading of the Company’s equity securities, or a change of control.

Additionally, during the term of the Loan Agreement,
the Company is required to deposit into a segregated deposit account (the “Segregated Account”) all Sales Proceeds. Prior
to the occurrence of an event of default under the Loan Agreement, the Company may withdraw funds from the Segregated Account for any
general corporate purpose. During the continuance of an event of default, unless the Company obtains Lender’s prior written consent,
amounts on deposit in the Segregated Account may be withdrawn by the Company only to make scheduled weekly payments or mandatory prepayments
under the Loan Agreement. The Segregated Account will be subject to a deposit account control arrangement in favor of the Lender, pursuant
to which, during the continuance of an event of default under the Loan Agreement, the Lender may exercise control over funds in the account,
including directing the withdrawal of funds to satisfy the Company’s outstanding obligations under the Loan Agreement.

The Company has also appointed Lender as its attorney-in-fact
and delivered to Lender an escrowed placement notice (the “Escrowed Placement Notice”), which Lender may execute upon the
occurrence and during the continuance of an event of default to effect sales under the Sales Agreement, subject to the pricing parameters
set forth in the Escrowed Placement Notice and the other terms and conditions of the Sales Agreement. The Escrowed Placement Notice may
not be used to effect any forward sale. Any Sales Proceeds from such sales will be deposited into the Segregated Account and may be applied
by Lender to satisfy the Company’s outstanding obligations under the Loan. The Escrowed Placement Notice and the related power of
attorney will terminate upon payment in full of all obligations under the Loan Agreement.

The Loan Agreement contains customary representations
and warranties, covenants and events of default. The covenants set forth in the Loan Agreement include certain affirmative and negative
operational and financial covenants, including, among other things, restrictions on the Company’s ability to incur certain liens
or indebtedness, make fundamental changes to its business, modify or terminate its at-the-market equity offering program with Lender,
permit the aggregate remaining capacity under the at-the-market equity offering program with Lender to be less than a specified amount,
sell any securities through an at-the-market equity offering program other than pursuant to the program with Lender as the exclusive sales
agent while the Company’s obligations under the Loan Agreement remain outstanding.

In addition, the Loan Agreement contains customary
events of default, including, among others, the failure to pay principal, interest or other amounts when due, breaches of representations,
warranties or covenants, defaults under certain other indebtedness, certain bankruptcy or insolvency events, certain judgment events and
other customary events of default for financings of this type. Certain events of default may also arise from the Company’s failure
to comply with specified operating, financing and capital markets-related covenants set forth in the Loan Agreement.

The foregoing description is a summary of certain
terms of the Loan Agreement and is qualified in its entirety by reference to the full text of the Loan Agreement, which is filed as Exhibit
10.1 hereto and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit

Description of Exhibit

10.1

ATM Advance Agreement, dated as of May 22, 2026, by and between Innovative Industrial Properties,
Inc. and A.G.P./Alliance Global Partners.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).