Power REIT (NYSE-AMEX: PW) (“Power REIT” or the “Trust”) today
announced that it has acquired a 3.0 acre property in York County,
Maine (the “505 Property”) for $400,000 through a wholly owned
subsidiary (“PropCo”).
The Property is adjacent to a property (the “495
Property”) that was acquired by PropCo on May 15, 2020 that is
leased to “Sweet Dirt” as the operator. The 495 Property has a
32,800 square-foot greenhouse that is under active construction and
is on track for completion by the end of 2020. It also has a 2,800
square foot processing/distribution building with construction
recently completed. A virtual tour of the recent status of the
greenhouse construction can be accessed here: Sweet Dirt Virtual
Tour
In acquiring the 505 Property, PropCo exercised
an option it received at the time of the acquisition of the 495
Property. Concurrent with the acquisition, PropCo amended the lease
with Sweet Dirt whereby the lease will cover both properties and
PropCo will fund the construction of an additional approximately
9,900 square feet of processing space and the renovation of an
existing approximately 2,738 square foot building on the 505
Property. The completion of construction on the 505 Property is
targeted for the Summer of 2021.
Sweet Dirt’s owners are authorized by the state
of Maine for medical cannabis cultivation, processing and
distribution at the 495 Property and will secure an additional
cannabis processing license for the 495 Property before
construction is completed. As part of the acquisition, the existing
triple net lease is being amended whereby PropCo will fund
approximately $1.56 million of costs to complete the construction.
Accordingly, Power REIT’s total investment in the 505 Property is
approximately $1.96 million. The lease amendment is structured to
provide straight-line annual rent of approximately $373,000 which
is an FFO yield of approximately 19% on the incremental invested
capital.
The combined properties are expected to be one
of the largest cannabis greenhouse cultivation and
processing/distribution properties in the state of Maine upon
completion of construction at both parcels. In addition, PropCo has
the option to finance the construction of additional greenhouse
cultivation space on the 505 Property for Sweet Dirt which is
targeted for 2021.
David Lesser, Power REIT’s Chairman and
CEO, commented, “This transaction further strengthens our
relationship with Sweet Dirt as we build out a multifaceted
cannabis campus for them. Sweet Dirt has demonstrated that they can
become a strong leader in the Maine regulated cannabis market. We
are excited to support their tremendous growth efforts in the
highly fragmented Maine market which is projected for tremendous
growth.”
Hughes Pope, Co-Founder of Sweet Dirt
commented, “We are thrilled to have the continued
confidence and support of Power REIT as we ramp up production to
meet the growing demand from existing and future cannabis patients
and consumers. The expansion of our cannabis campus in Eliot, Maine
will allow us to deliver year-round, organically grown artisanal
cannabis and a wide variety of premium cannabis derived products to
the Maine market.”
Jim Henry, CEO of Sweet Dirt,
commented, “Power REIT is providing a real estate solution
that enables us to move towards our vision of becoming a
large-scale producer of the highest quality cannabis and cannabis
related products in Maine. The addition of this state-of-the-art
processing facility will allow us to capture significant market
share for our products. This transaction with Power REIT allows us
to accelerate our vertically integrated platform within Maine’s
cannabis market which is poised for rapid growth. We are currently
experiencing product shortages in Maine and Sweet Dirt looks
forward to fulfilling a sizable portion of this demand. Upon
completion later this year, we will have a state-of-the-art
greenhouse that will feature exceptional performance to grow
high-quality cannabis at a competitive cost.”
Mr. Lesser commented, “We are
pleased to be part of these and future Sweet Dirt transactions,
that should position them as a dominant player in the Maine
cannabis market. Upon completion of both parcels, Sweet Dirt will
have the largest cannabis greenhouse cultivation facility in Maine
and will also one of the few fully vertically integrated cannabis
companies with greenhouse cultivation, processing, and retail
sales. We also anticipate funding the expansion of Sweet Dirt’s
greenhouse cultivation capacity on this newly acquired parcel of
land in 2021 on similar economic terms.”
Mr. Lesser continued, “Our
existing portfolio of cannabis greenhouse properties are on track
with respect to construction and rent payments. With an extensive
acquisition pipeline, we feel 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.”
Expansion of Sherman Lot 6, Ordway
Colorado
In addition to the Sweet Dirt transaction
described above, Power REIT has agreed to fund the expansion of its
property located in Ordway, Colorado (“Sherman 6”), a five-acre
property owned by a subsidiary of Power REIT. Construction is
largely complete on the 23,896 square foot greenhouse/processing
facility that is currently operational and currently has
approximately 1,800 cannabis plants growing onsite. Power REIT has
agreed to fund the expansion of the greenhouse head-house by 2,520
square feet to accommodate additional processing space, for
$151,301. In conjunction with this transaction, the original
20-year lease has been amended to provide additional straight-line
rent of approximately $29,000 per year which translates to an
approximately 19% yield.
CORE FFO ASSUMPTIONS
The acquisition and expansion transactions are
immediately accretive to CORE FFO by adding approximately $402,000
of straight-line rent that translates to incremental CORE FFO of
approximately $0.21 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 CORE FFO per share to approximately
$1.76 per year on a run rate basis which compares to $0.56 prior to
embarking on our updated business plan in July 2019. Assuming Power
REIT deploys its existing available capital prior to the end of the
year, the year-end “run-rate” for FFO per share should be in excess
of $2.00 per share.
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 $12.1 million
have now been earmarked to acquire assets and expand existing
greenhouse cultivation properties. In addition to the transactions
announced today, the remainder of the capital available for
investment is anticipated to be deployed by Power REIT through an
extensive acquisition pipeline of targeted CEA facilities in the
form of greenhouses.
Mr. Lesser,
concluded “Since embarking on our new business
plan in July 2019, which pivoted our focus specifically to
Controlled Environment Agriculture (“CEA”) properties, Power REIT
continues to prove out the benefits of this strategy through
dramatic growth in CORE FFO. The combination of our relatively
small size and the attractive rates of return that Power REIT is
investing in greenhouse properties, translates to the potential for
significant additional growth. At this point, Power REIT trades at
a lower multiple than typical REITs while having a clear path to
growth that far exceed the REIT market in general. We believe this
represents a compelling investment opportunity with the potential
for attractive risk adjusted returns.”
STATEMENT ON SUSTAINABILITY
Power REIT owns real estate related Controlled
Environment Agriculture, Renewable Energy and Transportation.
CEA Properties, 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 SWEET DIRT
Sweet Dirt is a Maine cannabis company and
producer of organically grown cannabis and cannabis-infused
products. The owners of Sweet Dirt produce organically grown
medical cannabis and cannabis-infused products. The company’s focus
on the creation of its proprietary soils and organic growing
practices have earned it the MOGFA-certified clean cannabis
designation achieved by fewer than 1% of all licensed cannabis
growers in Maine. Additional information about Sweet Dirt can be
found on its website: www.sweetdirt.com
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 about Power REIT can be found on its website:
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 & CEO |
Mary Jensen, Investor Relations |
dlesser@pwreit.com |
mary@irrealized.com |
212-750-0371 |
310-526-1707 |
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301 Winding RoadOld Bethpage, NY
11804 |
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www.pwreit.com |
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