JMP analyst Aaron Hecht on Friday downgraded Innovative Industrial Properties (NYSE:IIPR) inventory to Market Perform from Market Outperform after the corporate launched a enterprise replace that mirrored “operator issues that seem like intensifying.”

Investors had been dissatisfied with the replace — that confirmed decrease lease collections and tenant issues — as the inventory dropped virtually 20% on the information. IIPR slipped 0.4% in premarket buying and selling.

Hecht was primarily involved that the corporate “seems to be battling two of its bigger tenants in Parallel and Green Peak Industries (12.6% of the corporate’s invested capital) over lease construction,” he wrote in a notice.

In addition, the discharge highlighted 5 operators who’re “both in default, receiving deferrals, or trying to restructure.” On a troubling notice, 25% of IIPR’s invested capital was comprised of the operators highlighted within the launch.

That mentioned, Hecht contended that it’s going to take time to completely resolve the operator issues, probably leaving the corporate’s inventory rangebound. IIPR is down 6.3% year-to-date and off practically 54% Y/Y.

The analyst additionally lowered his 2022 FFO estimate for $7.62 from $7.76, in contrast with the $7.73 consensus. For 2023, he sees FFO of $7.68 vs. $8.14 consensus and $8.36 within the prior estimate.

Earlier, Seeking Alpha contributor Dane Bowler flagged IIPR as a Strong Sell as he expects additional lease troubles for the corporate down the highway.