Power REIT (NYSE-AMEX: PW) (“Power REIT” or the “Trust”) today
announced that it has entered into an agreement for a 5,040
square-foot greenhouse expansion for the cultivation of cannabis at
its southern Colorado property (“Maverick 5”), which is owned by a
wholly owned subsidiary of the Trust. Power REIT’s investment in
the expansion is $340,000 and the lease amendment is structured to
provide additional straight-line annual rent of approximately
$63,000, representing an estimated yield of over 18%.
Power REIT acquired Maverick 5 on March 19, 2020
for $150,000. As part of the acquisition, the Trust agreed to fund
the immediate construction of 5,040 square feet of greenhouse space
and 4,920 square feet of head-house/processing space. This project
is currently under construction and anticipated to be completed by
mid-July 2020.
David Lesser, Power REIT’s Chairman and
CEO, commented, “We are pleased that the initial Maverick
5 expansion is proceeding ahead of schedule and we are able to
quickly add an expansion to meet our tenant’s evolving business
needs with additional greenhouse cultivation space. Since closing
on this acquisition and commencing construction, our tenant has
accelerated plans to populate the facility with cannabis plants,
which has led to the expedient need to expand the scope of the
current construction project to add an additional greenhouse bay.
The modularity of greenhouses has allowed us to meet our tenant’s
needs and move forward with the additional space. This is the
second time, we have efficiently moved forward with an expansion of
a greenhouse property in our portfolio, which demonstrates the
economic resiliency of our greenhouse focused business plan.”
FFO ASSUMPTIONS
The Maverick 5 expansion is immediately
accretive to FFO by adding $63,000 of straight-line rent which
translates to incremental FFO of approximately $0.033 per share per
annum on a run rate basis. Omitting future available capital
deployments, this transaction along with the other recently
announced greenhouse related transactions should increase FFO by
over 65% on a run rate basis relative to Power REIT’s stabilized
FFO prior to embarking on our updated business plan in July 2019.
Assuming Power REIT deploys its remaining capital equally over the
next two quarters, the year-end “run-rate” for FFO per share should
exceed $1.60 per share, which assumes that the capital is deployed
at a 12.5% yield. Similarly, if Power REIT deploys its capital at a
rate in-line with recent acquisitions, the year end FFO “run-rate”
could exceed $1.90 per share, which more than triples the previous
performance prior to the implementation of Power REIT’s new
business plan in the middle of last year.
Mr. Lesser continued, “When we
acquired Maverick 5, we indicated that our tenant was well
positioned for near-term expansion. This transaction demonstrates
the demand for an essential business and where the tenant is likely
to have additional expansion needs. This supply and demand dynamic
will likely allow us to deploy additional capital on an attractive
risk adjusted basis.” Mr. Lesser concluded, “With
an extensive acquisition pipeline, we feel cautiously optimistic
that we will be able to deploy the remainder of the capital
currently available for investment in the near term. Cannabis
operators currently have limited access to capital sources which
means that Power REIT should be able to deploy much needed capital
at attractive risk adjusted returns.”
As previously disclosed, Power REIT recently
completed a $15.5 million debt financing at a rate of 4.62% which
fully amortizes over a 35-year term. Approximately $4.7 million of
the funds have been earmarked to acquire assets and expand
greenhouse cultivation assets we have acquired. In addition to this
expansion transaction, Power REIT has an extensive pipeline of CEA
acquisition targets and is actively working to deploy the remainder
of the capital available for investment.
UPDATE ON CONSTRUCTION
ACTIVITY
Power REIT is currently has four greenhouse
projects in southern Colorado in various stages of construction.
The state of Colorado has deemed cannabis an essential service
including the construction of cultivation facilities. Power REIT’s
construction activities remain on or ahead of schedule. Below is a
summary of the status of the construction projects currently
underway:
Maverick 1
On December 31, 2019, Power REIT announced that
it had entered into an agreement to expand its property referred to
as Maverick 1 by adding an additional 10,800 sf of greenhouse
space. The property is now fully enclosed and working towards
finalizing the interior construction including mechanical, electric
and light depravation shades. Our tenant has indicated that the
expansion should be ready for occupancy by June 1, 2020.
Maverick 14
On February 6, 2020, Power REIT announced the
acquisition of an existing greenhouse and support buildings and an
agreement to construct 15,120 square feet of greenhouse space and
2,520 square feet of head-house/processing space. This construction
is proceeding ahead of schedule with all of the poles and trusses
for the greenhouse in place and the greenhouse is already fully
enclosed and working towards finalizing the interior construction
including mechanical, electric and light depravation shades. It is
anticipated that the entire property will be ready for occupancy by
mid-July 2020.
Sherman 6
On February 6, 2020, Power REIT announced the
acquisition of vacant land and an agreement to construct 15,120
square feet of greenhouse space and 7,520 square feet of
head-house/processing space. This construction is proceeding ahead
of schedule with the processing space anticipated for occupancy by
mid-May 2020. In addition, all of the poles and trusses for the
greenhouse have been set and the greenhouse is almost fully
enclosed. It is anticipated that the entire property will be ready
for occupancy by the mid-July 2020.
Maverick 5
On March 20, 2020, Power REIT announced the
acquisition of vacant land and an agreement to construct 5,040
square feet of greenhouse space and 4,920 square feet of
head-house/processing space. This construction is proceeding ahead
of schedule with the processing space anticipated to be ready for
occupancy by mid-May, 2020. In addition, all of the columns for the
greenhouse have been installed and it is anticipated to be ready
for occupancy by the end of June. As described above, Power REIT
has now agreed to fund the immediate expansion of greenhouse space
by 5,040 square feet which we currently anticipate will be ready
for occupancy by mid-July, 2020
STATEMENT ON SUSTAINABILITY
Power REIT owns real estate related to
infrastructure assets including properties for Controlled
Environment Agriculture (CEA Facilities), Renewable Energy and
Transportation.
CEA Facilities, such as
greenhouses, provide an extremely environmentally friendly
solution, which consume approximately 70% less energy than indoor
growing operations that do not benefit from “free” sunlight. CEA
facilities use 90% less water than field grown plants, and all of
Power REIT’s greenhouse properties operate without the use of
pesticides and avoid agricultural runoff of fertilizers and
pesticides. These facilities cultivate medical Cannabis, which has
been recommended to help manage a myriad of medical symptoms,
including seizures and spasms, multiple sclerosis, post-traumatic
stress disorder, migraines, arthritis, Parkinson's disease, and
Alzheimer’s.
Renewable Energy assets are
comprised of land and infrastructure associated with utility scale
solar farms. These projects produce power without the use of fossil
fuels thereby lowering carbon emissions. The solar farms produce
approximately 50,000,000 kWh of electricity annually which is
enough to power approximately 4,600 home on a carbon free
basis.
Transportation assets are
comprised of land associated with a railroad, an environmentally
friendly mode of bulk transportation.
ABOUT POWER REIT
Power REIT is a real estate investment trust
(REIT) 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 on Power REIT can be found on its website at
www.pwreit.com
CAUTIONARY STATEMENT ABOUT
FORWARD-LOOKING STATEMENTS
This document includes forward-looking
statements within the meaning of the U.S. securities laws.
Forward-looking statements are those that predict or describe
future events or trends and that do not relate solely to historical
matters. You can generally identify forward-looking statements as
statements containing the words "believe," "expect," "will,"
"anticipate," "intend," "estimate," "project," "plan," "assume",
"seek" 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 our future strategy, future operations, future prospects,
the future of our industries and results that might be obtained by
pursuing management's current or future plans and objectives are
forward-looking statements. You should not place undue reliance on
any forward-looking statements because the matters they describe
are subject to known and unknown risks, uncertainties and other
unpredictable factors, many of which are beyond our control. Our
forward-looking statements are based on the information currently
available to us and speak only as of the date of the filing of this
document. Over time, our actual results, performance, financial
condition or achievements may differ from the anticipated results,
performance, financial condition or achievements that are expressed
or implied by our forward-looking statements, and such differences
may be significant and materially adverse to our security
holders.
CONACT:
David H. Lesser, Chairman &
CEOdlesser@pwreit.com301 Winding RoadOld Bethpage, NY
11804212-750-0371www.pwreit.com
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