UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): February 6, 2020

 

POWER REIT

(Exact name of registrant as specified in its charter)

 

Maryland

(State or other jurisdiction of incorporation)

 

001-36312

(Commission File Number)

 

45-3116572

(IRS Employer Identification No.)

 

301 Winding Road

Old Bethpage, NY 11804

(Address of principal executive offices and Zip Code)

 

Registrant’s telephone number, including area code: (212) 750-0371

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Trading Symbol   Name of Each Exchange on Which Registered
Common Shares   PW   NYSE (American)
         

7.75% Series A Cumulative Redeemable

Perpetual Preferred Stock, Liquidation

Preference $25 per Share

 

PW.A

 

 

NYSE (American)

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

 

 

     

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

Power REIT (“Power REIT” or the “Trust”) announces the acquisition of two properties located in southern Colorado (the “Properties”) through two newly formed wholly owned subsidiaries of a wholly owned subsidiary of the Trust (each a “PropCo”). Each Propco has entered into a triple-net lease with an operator such that the tenant is responsible for paying all expenses related to the Properties, including maintenance expenses, insurance and taxes. The term of each lease is 20 years and provides two options to extend for additional five-year periods. The Leases also have financial guarantees from affiliates of the tenants. Each tenant intends to operate the Properties as licensed cannabis cultivation and processing facilities.

 

The rent for each of the Leases is structured whereby after a deferred-rent period, the rental payments provide Power REIT a full return of invested capital over the next three years in equal monthly payments. The deferred-rent period for one of the leases is six months and for the other lease is nine months. After the deferred-rent period, rent is structured to provide a 12.5% return for one of the leases and a 12.9% return for the other lease based on the original invested capital amount with annual rent increases of 3% rate per annum. At any time after year six, if cannabis is legalized at the federal level, the rent will be readjusted down to an amount equal to a 9% return on the original invested capital amount and will increase at a 3% rate per annum based on a starting date of the start of year seven.

 

The Leases require each tenant to maintain a medical cannabis license and operate in accordance with all Colorado and state and local regulations with respect to its operations. The Leases prohibit the retail sale of the Tenant’s cannabis and cannabis-infused products from the Properties.

 

The foregoing descriptions of the Leases does not purport to be complete and are qualified in their entirety by reference to the complete text of the Leases, copies of which are attached hereto as Exhibits 10.1 and 10.2 and is incorporated into this Current Report on Form 8-K by reference.

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

On February 2, 2020, the Trust, through each PropCo, completed the acquisition of two Properties.

 

Power REIT acquired “Maverick 14” for $850,000 which is 5.54 acres with an existing greenhouse and processing facility totaling 8,300 square feet. As part of the transaction, the Trust has agreed to fund the immediate expansion of 15,120 square feet of greenhouse space for $1,058,400 and the tenant has agreed to fund the construction of an additional 2,520 square feet of head-house/processing space on the property. Accordingly, Power REIT’s total capital commitment totals $1,908,400.

 

Power REIT acquired “Sherman 6” for $150,000 which is 5.0 acres of vacant land approved for cannabis cultivation. As part of the transaction, the Trust has agreed to fund the immediate construction of 15,120 square feet of greenhouse space and 7,520 square feet of head-house/processing space on the property for $1,693,800. Accordingly, Power REIT’s total capital commitment totals $1,843,800.

 

The total combined investment across all three properties will be approximately $3,752,200 plus acquisition expenses. The acquisitions and commitments to fund construction are being funded from existing working capital.

 

Item 7.01 Regulation FD Disclosure.

 

On February 6, 2020, the Trust issued a press release regarding the acquisition of the Properties. A copy of the press release is attached hereto as Exhibit 99.1. The information contained in Item 7.01 of this report, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Such information shall not be incorporated by reference into any filing of the Trust, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

Item 8.01 Other Events.

 

     

 

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit   Description of Exhibit
     
10.1   Lease Agreement related to Maverick Lot 14
     
10.2   Lease Agreement related to Sherman Lot 6
     
99.1   Power REIT Press Release issued on February 6, 2020.

 

Forward-Looking Statements

 

Some of the information in this press release contains forward-looking statements and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this press release, words such as “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may,” “target,” or similar expressions, are intended to identify such forward-looking statements. Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements include those discussed under the caption “Risk Factors” included in our Annual Report on Form 10-K for our fiscal year ended December 31, 2018, which was filed with the U.S. Securities and Exchange Commission (“SEC”), as well as in other reports that we file with the SEC.

 

Forward-looking statements are based on beliefs, assumptions and expectations as of the date of this press release. We disclaim any obligation to publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after the date of this press release.

 

     

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

POWER REIT

     
Date: February 6, 2020 By /s/ David H. Lesser
   

David H. Lesser

Chairman of the Board and Chief Executive Officer

 

     

 

 

Exhibit   Description of Exhibit
     
10.1   Lease Agreement related to Maverick Lot 14
     
10.2   Lease Agreement related to Sherman Lot 6
     
99.1   Power REIT Press Release issued on February 6, 2020.

 

     

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