PW Power REIT

Power REIT (NYSE American: PW) today reported its results for the quarter ended September 30, 2019.

Financial Highlights

		Three Months Ended September 30,								Nine Months Ended September 30,
		2019				2018				2019				2018
Net Income Attributable to Common Shares		$	203,635			$	132,801			$	474,222			$	414,824
Net Income per Common Share		$	0.11			$	0.07			$	0.25			$	0.23
Core FFO Available to Common Shares		$	334,055			$	266,561			$	846,888			$	770,341
Core FFO per Common Share			0.18				0.15				0.45				0.42

Power REIT’s portfolio of primarily “triple net leased” real estate provides stable operating income. In July of 2019, Power REIT announced an updated business plan with a new focus for acquisitions on Controlled Environment Agriculture. As part of this announcement, Power REIT announced the acquisition of two Controlled Environment Agriculture properties for the cultivation of medical cannabis. The acquisitions primarily account for the 25% growth in Core FFO for Q3 2019 over Q3 2018. This dynamic growth is a function of the high yield for the recent acquisitions as well as Power REIT’s relatively small market capitalization. Power REIT is currently working on a debt financing to fund additional acquisitions and believes it can continue to grow its Core FFO per Common Share as it embarks on its new growth plan.

Recent Development – New Focus for Acquisitions

Power REIT believes agricultural production is ripe for technological transformation and that we are at the early stages of a boom in agricultural venture capital that, among other things, will shift food production for certain crops from traditional outdoor farms to Controlled Environment Agriculture “plant factories.” Since a significant portion of any given CEA enterprise is real estate, Power REIT sees an opportunity to participate in the trend towards indoor agriculture.

CEA for Food

CEA for food production is widely adopted in parts of Europe and is becoming an increasingly competitive alternative to traditional farming for a variety of reasons. CEA caters to consumer desires for sustainable and locally grown products. Locally grown indoor produce will have a longer shelf life as the plants are healthier and also travel shorter distances thereby reducing food waste. In addition, a controlled environment produces high-quality pesticide free products that eliminates seasonality and provides highly predictable output that can be used to simplify the supply chain to the grocer’s shelf.

CEA for Cannabis

Power REIT is focused on investing in the cultivation and production side of the cannabis industry through the ownership of real estate. As such it is not directly in the cannabis business and also not even indirectly involved with facilities that sell cannabis directly to consumers. By serving as a landlord, Power REIT believes it can generate attractive risk adjusted returns related to the fast growing cannabis industry and that this offers a safer approach than investing directly in cannabis operating businesses.

Recent Acquisitions

On July 15, 2019, Power REIT announced that it had acquired two greenhouse properties located in southern Colorado. The two properties are leased to an operator that is licensed for the cultivation and processing of medical cannabis. The total combined purchase price was $1,770,000. The annual straight-line triple net-rent is approximately $331,000 which translates to a yield of approximately 19%. During Q3 2019, Power REIT recorded approximately $72,000 of income related to these acquisitions compared to approximately $83,000 that would be recorded for a full quarter. The acquisition of the greenhouses was closed on an all-cash basis with existing working capital. As such, they are accretive to Core Funds from Operation by approximately $331,000 per annum which is more than a 30% increase from historical levels. Power REIT is currently in discussions regarding the expansion of one of the two greenhouse properties.

Dividend Declaration

Preferred Stock: For the Company’s 7.75% Series A Cumulative Redeemable Perpetual Preferred Stock, a cash dividend of $0.484375 per depositary share was declared. The preferred stock dividend, which equates to an annual dividend payment of $1.9375 per depositary share, is payable on December 15, 2019, to stockholders of record on November 15, 2019.

About Power REIT

Power REIT is a real estate investment trust that owns real estate related to infrastructure assets including properties for Controlled Environment Agriculture, Renewable Energy and Transportation. Power REIT is actively seeking to expand its real estate portfolio related to Controlled Environment Agriculture and Renewable Energy.

Additional Information

Further details regarding Power REIT’s consolidated results of operations and financial condition as of and for the year ended December 31, 2018 are contained in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission, which can be viewed at the Company’s website at www.pwreit.com under the Investor Relations section, and in EDGAR on the SEC’s website, www.sec.gov.

Forward-Looking Statements

This document may contain forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can usually identify forward-looking statements as containing the words “believe,” “expect,” “will,” “anticipate,” “intend,” “estimate,” “would,” “should,” “project,” “plan,” “assume” or other similar expressions, or negatives of those expressions, although not all forward-looking statements contain these identifying words. All statements contained in this document regarding Power REIT’s future strategy, future operations, projected financial position, estimated future revenues, projected costs, future prospects, the future of Power REIT’s industries and results that might be obtained by pursuing management’s current or future objectives are forward-looking statements. Over time, Power REIT’s actual results, performance, financial condition or achievements may differ from the anticipated results, performance, financial condition or achievements that are expressed or implied in Power REIT’s forward-looking statements, and such differences may be significant and materially adverse to Power REIT and its security holders.

All forward-looking statements reflect Power REIT’s good-faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Power REIT disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except to the extent required by law. For a further discussion of factors that could cause Power REIT’s future results or financial condition to differ materially from anything expressed or implied in its forward-looking statements, see the sections entitled “Risk Factors” in Power REIT’s registration statements and quarterly and annual reports as filed by Power REIT from time to time with the Securities and Exchange Commission.

Non-GAAP Financial Measures

This document contains supplemental financial measures that are not calculated pursuant to U.S. generally accepted accounting principles (“GAAP”), including the measure identified by us as Core Funds From Operations Available to Common Shares (“Core FFO”). Management believes that Core FFO is a useful supplemental measure of the Company’s operating performance. Management believes that alternative measures of performance, such as net income computed under GAAP, or Funds From Operations computed in accordance with the definition used by the National Association of Real Estate Investment Trusts (“NAREIT”), include certain financial items that are not indicative of the results provided by the Company’s asset portfolio and inappropriately affect the comparability of the Company’s period-over-period performance. These items include non-recurring expenses, such as those incurred in connection with litigation, one-time upfront acquisition expenses that are not capitalized under ASC-805 and certain non-cash expenses, including non-cash, stock-based compensation expense. Therefore, management uses Core FFO and defines it as net income excluding such items. Management believes that, for the foregoing reasons, these adjustments to net income are appropriate. The Company believes that Core FFO is a useful supplemental measure for the investing community to employ, including when comparing the Company to other REITs that disclose similarly adjusted FFO figures, and when analyzing changes in the Company’s performance over time. Readers are cautioned that other REITs may use different adjustments to their GAAP financial measures than we do, and that as a result the Company’s Core FFO may not be comparable to the FFO measures used by other REITs or to other non-GAAP or GAAP financial measures used by REITs or other companies.

POWER REIT AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

		(Unaudited)
		September 30, 2019				December 31, 2018
ASSETS
Land		$	6,928,644			$	6,788,067
Land Improvements, net of accumulated depreciation			1,633,277				-
Net investment in capital lease - railroad			9,150,000				9,150,000
Total real estate assets			17,711,921				15,938,067
Cash and cash equivalents			573,141				1,771,011
Prepaid expenses			53,799				16,795
Intangible assets, net of accumulated amortization			3,648,740				3,826,595
Other assets			342,044				342,668
TOTAL ASSETS		$	22,329,645			$	21,895,136
LIABILITIES AND EQUITY
Deferred revenue		$	69,434			$	32,851
Security deposit			114,378				-
Accounts payable			44,511				24,828
Accounts payable - Related party			-				1,374
Accrued interest			83,635				87,846
Current portion of long-term debt, net of unamortized discount			413,830				389,996
Long-term debt, net of unamortized discount			8,780,522				9,167,336
TOTAL LIABILITIES			9,506,310				9,704,231
Series A 7.75% Cumulative Redeemable Perpetual Preferred Stock Par Value $25.00 (175,000 shares authorized; 144,636 issued and outstanding as of September 30, 2019 and December 31, 2018)			3,492,149				3,492,149
Commitments and Contingencies			-				-
Equity:
Common Shares, $0.001 par value (100,000,000 shares authorized; 1,872,939 shares issued and outstanding at September 30, 2019 and 1,870,139 at December 31, 2018)			1,873				1,870
Additional paid-in capital			11,774,359				11,616,154
Accumulated deficit			(2,445,046	)			(2,919,268	)
Total Equity			9,331,186				8,698,756
TOTAL LIABILITIES AND EQUITY		$	22,329,645			$	21,895,136

POWER REIT AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2019				2018				2019				2018
REVENUE
Lease income from capital lease – railroad, net		$	228,750			$	228,750			$	686,250			$	686,250
Rental income			334,532				262,527				859,587				787,582
Misc. income			589				2,803				8,238				6,493
TOTAL REVENUE			563,871				494,080				1,554,075				1,480,325
EXPENSES
Amortization of intangible assets			59,285				59,286				177,855				177,856
General and administrative			94,144				104,043				312,192				301,871
Property tax			5,537				5,521				16,650				13,790
Interest expense			113,501				122,371				345,271				361,810
TOTAL EXPENSES			290,178				291,221				869,679				855,327
NET INCOME			273,693				202,859				684,396				624,998
Preferred Stock Dividends			(70,058	)			(70,058	)			(210,174	)			(210,174	)
NET INCOME ATTRIBUTABLE TO COMMON SHARES		$	203,635			$	132,801			$	474,222			$	414,824
Income Per Common Share:
Basic and diluted		$	0.11			$	0.07			$	0.25			$	0.23
Weighted Average Number of Shares Outstanding:
Basic			1,872,939				1,827,804				1,871,093				1,827,494
Diluted			1,885,488				1,827,804				1,871,093				1,827,494
Cash dividend per Series A Preferred Share		$	0.48			$	0.48			$	1.45			$	1.45

POWER REIT AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

		Nine Months Ended September 30,
		2019				2018
Operating activities
Net Income		$	684,396			$	624,998
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets			177,855				177,856
Amortization of debt costs			18,892				18,894
Stock-based compensation			158,208				158,767
Depreciation			17,711
Changes in operating assets and liabilities
(Decrease)/Increase in accounts payable related party			(1,374	)			198
Decrease in other assets			624				45,028
(Increase) in prepaid expenses			(37,004	)			(7,147	)
(Decrease)/Increase in accounts payable			19,683				(19,314	)
Increase in securtiy deposit			114,378				-
(Decrease) in accrued interest			(4,211	)			(4,430	)
Increase in deferred revenue			36,583				30,382
Net cash provided by operating activities			1,185,741				1,025,232
Investing activities
Cash paid for land and land improvements			(1,791,565	)			-
Net cash used in investing activities		$	(1,791,565	)			-
Financing Activities
Principal payment on long-term debt			(381,872	)			(354,370	)
Cash dividends paid on preferred stock			(210,174	)			(210,174	)
Net cash used in financing activities			(592,046	)			(564,544	)
Net (decrease)/increase in cash and cash equivalents			(1,197,870	)			460,688
Cash and cash equivalents, beginning of period			1,771,011				1,146,730
Cash and cash equivalents, end of period		$	573,141			$	1,607,418
Supplemental disclosure of cash flow information:
Interest paid		$	330,590			$	357,311

CORE FUNDS FROM OPERATIONS (FFO)(Unaudited)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2019				2018				2019				2018
Core FFO Available to Common Shares		$	334,055			$	266,561			$	846,888			$	770,341
Core FFO per common share			0.18				0.15				0.45				0.42
Weighted Average shares outstanding (basic)			1,885,488				1,827,804				1,871,093				1,827,494

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Unaudited)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2019				2018				2019				2018
Net income Attributable to Common Shares		$	203,635			$	132,801			$	474,222			$	414,824
Stock-based compensation			47,127				68,175				158,208				158,767
Interest Expense - Amortization of Debt Costs			6,297				6,299				18,892				18,894
Amortization of Intangible Asset			59,285				59,286				177,855				177,856
Depreciation on Land Improvements			17,711				-				17,711				-
Core FFO Available to Common Shares		$	334,055			$	266,561			$	846,888			$	770,341

Contact Information

Telephone | 212.750.0371Email | ir@pwreit.comWebsite | www.pwreit.com