For most of its history, the company at the center of this Cambridge lab loan has been known for something quite different: owning the cultivation and processing facilities that state-licensed cannabis growers depend on. Innovative Industrial Properties, Inc. (NYSE: IIPR) is an internally managed real estate investment trust, or REIT, that buys these specialized buildings and leases them to operators. As of the end of the second quarter, it owned 108 properties with about 8.4 million rentable square feet across 19 states.
That focus came with challenges. The company has spent recent years resolving problems with some tenants, including PharmaCann, and has looked for income beyond cannabis. In 2025, it made what management called its first investment outside the industry: a $270 million commitment to IQHQ, a private developer of life science campuses, split between a credit facility and preferred stock. By the second quarter of 2026, that commitment was fully funded.
The latest step goes further. The company has announced a $245 million mezzanine loan commitment to affiliates of IQHQ for Phase I of Alewife Park, a 27-acre life science campus in Cambridge, Massachusetts. Phase I covers three existing buildings totaling 392,000 square feet, and a later phase could add up to 364,000 square feet. IQHQ says about $800 million had been invested in the campus before this loan.
A mezzanine loan sits in the middle of a property’s financing. It gets repaid after the senior lender but ahead of the owners. In this case, the loan is secured by pledges of the ownership interests in the entities that hold the campus, not by a direct mortgage on the buildings. That added risk is reflected in the price. The loan is expected to yield about 15.8% over its term, with a 14% floor, and it matures in February 2028 with a one-year extension option.
About $111 million was funded at closing, and part of it paid off the borrower’s existing $85 million bridge loan. The remaining $134 million is expected to go out through the fourth quarter of 2027 as funding conditions are met. The company also has the option to buy up to $155 million of notes held by the other mezzanine lender on the same terms. It plans to pay for the investment with cash and its revolving credit facilities.
The campus’s anchor tenant is Lila Sciences, a private company backed by Flagship Pioneering that is developing AI systems and automated laboratories for life and materials science research. Lila signed a 244,000 square foot lease at Alewife Park in October 2025, and according to IQHQ, Phase I is now 78% leased to the company.
That lease stands out because the surrounding market is still soft. CBRE reported Greater Boston lab vacancy of 28.7% in the second quarter of 2026, with rents declining for a fourth straight quarter, although Cambridge posted nearly 194,000 square feet of positive absorption (more space filled than vacated). Conditions vary sharply within the city. Lincoln Property Company put vacancy in West Cambridge, where Alewife Park sits, at 39.5%, compared with 13.4% in East Cambridge.
Executive Chairman Alan Gold said the company expects the deal to add meaningfully to earnings, although the announcement did not include a specific figure. The tradeoff is concentration. Together with the earlier commitment, the company has now committed $515 million to IQHQ, or $670 million if it buys the additional notes. Measured against a market value of roughly $1.45 billion, that is a large bet on one borrower and, at Alewife, largely one tenant.
The deal shows how far the company has traveled from its original business. Cannabis rent still makes up its core, but more of its future income now rests on a recovery in Boston lab space and on a young AI science company growing into its new home. The pace of the coming loan draws, and IQHQ’s progress leasing the rest of Phase I, will offer the clearest signals of how that bet is playing out.
