Power REIT (NYSE AMEX: PW) (“Power REIT or the “Company”) today
provided a company update on its financial results for the period
ended, June 30, 2020 and acquisition and capital raising activities
as well as its organizational structure.
HIGHLIGHTS
● |
Significantly grew net income and Core FFO in the second quarter
driven by increases in rental income from newly acquired
properties. |
● |
Further progress on future acquisition transactions and sourcing
non-dilutive capital sources. |
● |
Further diversified its Board and Management team by adding Paula
Poskon and Susan Hollander. |
FINANCIAL RESULTS AND FINANCING
ACTIVITIES
Net income available to common stockholders
totaled approximately $410,000, for the three months ended June 30,
2020, or $0.21 per share compared with approximately $143,000, or
$0.08 for the same period in 2019.
Core Funds From Operations (“Core FFO”) totaled
approximately $555,000 for the three months ended June 30, 2020, or
$0.29 per diluted share, compared with approximately $256,000, or
$0.14 per share for the same period in 2019.
The Company is currently in various stages of
negotiations on an active pipeline of acquisition opportunities
that management believes could be highly accretive to Core FFO. In
addition to its capital on hand, Power REIT is pursuing a variety
of non-dilutive capital sources. More details regarding these
transactions will be announced in due process.
Commenting on the results and current
initiatives, David Lesser, Chief Executive Officer stated,
“We are pleased to welcome Ms. Poskon to our Board and formalize
the role of Ms. Hollander as Chief Accounting Officer. We continue
to execute on the strategic business plan we put into place in the
middle of 2019 – focusing on Controlled Environment Agriculture
(CEA) real estate investments in the form of greenhouses. Since
implementing this strategy, we have acquired 6 CEA properties for
the cultivation of medical cannabis as well as the announcement of
two expansion projects related to these assets. This activity has
favorably impacted Core FFO which has grown from $0.14 in the
second quarter of 2019 to $0.29 in the second quarter of 2020 which
represents growth of approximately 107%.”
Mr. Lesser concluded, “Second quarter 2020 FFO
was in line with the guidance provided in our investor
presentation. We are optimistic that we can outperform the guidance
for our run-rate FFO guidance going forward. We have a significant
acquisition pipeline that is in various stages of negotiations and
are working on a capital plan that is intended to create
significant shareholder value. This dynamic growth to our Core FFO
is a function of the attractive yields we can achieve investing in
CEA properties and Power REIT’s relatively small size. We hope to
continue this dramatic growth and believe our shares represent a
compelling investment opportunity based on the current multiple we
trade at combined with the potential for outsized growth.”
INVESTMENT ACTIVITIES
During the first half of 2020, the Company
acquired four CEA real estate properties, aggregating approximately
101,000 square feet of green house and support space for the
cultivation of medical cannabis. The total capital commitment
related to these assets is $10 million. The assets have been
acquired with attractive yields whereby Power REIT receives a full
return of its investment over the first three years after an
initial deferred rent period followed by an ongoing rental stream.
The average yield based on straight-line rent for these
acquisitions is in excess of 18%.
Concurrent with these acquisitions, Power REIT
has entered into “triple-net” leases that require each tenant to
pay all property related expenses including maintenance, insurance
and taxes. Each lease has a term of 20 years and provides two
5-year renewal options for the tenant with financial guarantees
from affiliates of the tenant. The leases require each tenant to
maintain a valid medical marijuana license and to operate in
accordance with all municipal regulations in the state where they
are located.
PORTFOLIO
The current portfolio is comprised of:
|
● |
6 Controlled Environment Agriculture greenhouse facilities
aggregating over 131,00 square feet; |
|
● |
7 solar farm ground leases totaling 601 acres; and |
|
● |
112 miles of railroad property |
POWER REIT’S INVESTMENT
THESIS
Power REIT believes agricultural production is
ripe for technological transformation and the industry is in the
early stages of an agricultural venture capital boom 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, the Company has identified a unique
opportunity to participate in the upward trend of 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,
which is anticipated to offer a safer approach than investing
directly in cannabis operating businesses.
POWER REIT’S 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
BOARD AND MANAGEMENT
ANNOUNCEMENTS
During the first half of 2020, Power REIT
enhanced and further diversified its Board and Management team.
On July 28, 2020, the Board approved the
appointment of Paula Poskon as a new independent Trustee. Ms.
Poskon will serve as a financial expert and provide her 20+ years
of real estate and capital markets expertise with a particular
focus on real estate investment trusts. Ms. Poskon is the founder
of STOV Advisory Services LLC (“STOV”) which offers consulting and
advisory services to company executives and investors in the areas
of real estate, capital markets, investor relations, and diversity
and inclusion. Prior to forming STOV, Ms. Poskon was a Senior Vice
President/Senior Real Estate Research Analyst at D.A. Davidson
& Co., a full-service investment firm, having been hired to
co-lead the launch of its real estate capital markets platform.
Prior to that, Ms. Poskon was a Director and Senior Equity Research
Analyst in Real Estate at Robert W. Baird & Co., Inc., a wealth
management, capital markets, asset management and private equity
firm. Prior to that, Ms. Poskon held several positions at Lehman
Brothers, a global financial services firm. Ms. Poskon was named
No. 3 on The Wall Street Journal’s “Best on the Street” among real
estate analysts for 2009 and No. 2 among real estate analysts for
stock picking in 2011 by StarMine. She graduated from the Wharton
School at the University of Pennsylvania with a Bachelor of Science
in Economics with a concentration in Accounting and a Master of
Business Administration in Finance with a concentration in
Strategic Management. Ms. Poskon is a frequent speaker at real
estate industry conferences. Ms. Poskon currently serves as a
Trustee of Wheeler Real Estate Investment Trust, Inc., having been
elected by shareholders in 2019.
On July 28, 2020, Susan Hollander was appointed
to serve as Chief Accounting Officer of Power REIT. Ms. Hollander
is responsible for strategic accounting, compliance and financial
reporting functions including SEC and statutory filings. Ms.
Hollander has been working with our CEO, David Lesser, since 2017
in various capacities across several entities and is increasingly
focusing her efforts on Power REIT. Prior to that, Ms. Hollander
was Controller at Boston Provident, LP, a long-short, multi asset
hedge fund specializing in the financial services industry for over
22 years where she focused primarily on financial reporting,
trading operations, fund accounting and performance reporting. Ms.
Hollander has more than 30 years of accounting, finance and tax
experience, primarily within the financial services/real estate
industry. In addition, Ms. Hollander has public company reporting
expertise. Ms. Hollander graduated from Binghamton University,
State University of New York with a Bachelor of Science in
Economics.
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
for the cultivation of food and cannabis.
ADDITIONAL INFORMATION
Further details regarding Power REIT’s
consolidated results of operations and financial condition for all
current and previous reporting periods are contained in the
Company’s filings 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.
Investor
Contacts:212.750.0371ir@pwreit.comWebsite |
www.pwreit.com
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