High-Flying Cannabis REIT Resides In This ETF | ETF Trends

Shares of Innovative Industrial Properties Inc. (NYSE: IIPR) rallied Wednesday after reporting better-than-expected fourth-quarter earnings. The stock is following through on those gains Thursday, extending its gain to more than 9% over the past week.

Investors looking to access Innovative Industrial Properties via exchange traded funds may be surprised to learn the stock currently does not reside in cannabis-related ETFs, but one unique real estate investment trust (REIT) fund features solid exposure to the stock. As of Wednesday, March 13, the Pacer Benchmark Industrial Real Estate SCTR ETF (NYSEArca: INDS) had the largest allocation to Innovative Industrial Properties among all ETFs at 5.76%.

“The company reported fourth-quarter net income of $2.3 million, or 23 cents a share, compared with $284,000, or 7 cents a share, in the year-ago period,” reports MarketWatch. “Revenue rose to $4.8 million from $2.3 million in the year-ago period.”

INDS offers investors exposure to US companies that generate the majority of their revenue from industrial REITs that are part of the e-commerce distribution and logistics network. INDS provides exposure to the growing e-commerce space by investing in data center and distribution center REITs, along with higher quality retail real estate.

“As of March 13, 2019, IIP owned 13 properties that were 100% leased to state-licensed medical-use cannabis operators and comprising an aggregate of approximately 1,128,000 rentable square feet (including approximately 159,000 rentable square feet under development/redevelopment) in Arizona, California, Colorado, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Ohio and Pennsylvania, with a weighted-average remaining lease term of approximately 14.3 years,” according to the company.


As the e-commerce industry continues to expand in the digital age, industrial and warehouse space in the real estate industry have enjoyed strong support. Investors can also target this potential growth opportunity in the REITs sector linked to online retailers through a targeted exchange traded fund strategy.

INDS is a play on e-commerce and the related real estate demands. Currently, e-commerce and online shopping represent about 10% of overall U.S. retail sales, a number that is expected to continue growing in the years ahead. The sudden rise of online giant retailers like Amazon has increased demand for warehouses to store inventory. Around 25% to 30% of warehouse space is currently dedicated to e-commerce.

INDS is up 19.53% this year and is beating the largest traditional REIT ETF by more than 400 basis points.

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