Power REIT (NYSE-AMEX: PW and PW.PRA) (“Power REIT” or the “Trust”)
today announced that it has completed the acquisition of a 4.32
acre land parcel (“Tamarack 7”) for $150,000 located in southern
Colorado through a wholly owned subsidiary (“PropCo”) which plans
to construct a greenhouse for the cultivation of medical cannabis.
Tamarack 7 is adjacent to several other properties that Power REIT
currently owns in a Crowley County, Colorado and is approved for
cannabis cultivation.
Concurrent with the closing on this acquisition,
PropCo entered into a “triple-net” lease that requires its tenant
(“Fifth Ace”) to pay all property related expenses including
maintenance, insurance and taxes. The lease has a term of 20 years
and provides two 5-year renewal options for the tenant and has
financial guarantees from affiliates of the tenant. The lease
requires Fifth Ace to maintain a medical marijuana license and to
operate in accordance with all Colorado and municipal regulations
while prohibiting retail sales of its products from the
property.
As part of this transaction, Power REIT has
agreed to fund the immediate construction of an 18,000 square foot
greenhouse and processing facility for approximately $1.22 million.
Accordingly, Power REIT’s total capital commitment is approximately
$1.37 million. The lease is structured to provide straight-line
annual rent of approximately $262,000 which represents an
unleveraged FFO yield of approximately 19% on the invested
capital.
David Lesser, Power REIT’s Chairman and
CEO, commented, “This transaction is the latest example of
our growth model to create a portfolio of Controlled Environment
Agriculture (“CEA”) properties. Southern Colorado is an ideal
greenhouse cultivation environment. We believe we are providing a
compelling real estate solution that enables our tenant to move
forward with their vision of growing high-quality cannabis in a
greenhouse using an innovative aeroponics growing system. This
growing method is intended to produce higher yields at lower costs
than traditional growing methods.”
CORE FFO ASSUMPTIONS
The acquisition described above is immediately
accretive to CORE FFO by adding approximately $262,000 of
straight-line rent that translates to incremental CORE FFO of
approximately $0.14 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
$1.75 per year on an annualized run rate basis which compares to
$0.56 per share prior to embarking on our updated business plan in
July 2019. Assuming Power REIT deploys its existing available
capital December 31, 2020 on terms similar to recent transactions,
the year-end annual “run-rate” FFO per share would be approximately
$2.00 per share.
As previously disclosed, Power REIT recently
completed a $15.5 million debt financing at a rate of 4.62% that
fully amortizes over a 35-year term. As of this announcement,
approximately $13.5 million has been committed to transactions
since completing the debt financing. Including the transaction
announced today, the remaining capital available for investment is
anticipated to be deployed by Power REIT in the near future based
on an extensive acquisition pipeline of greenhouse cultivation
facilities.
NON-DILUTIVE CAPITAL PLAN
Power REIT currently has a Series A Preferred
Stock with a $25.00 par value and a 7.75% cumulative yield
(NYSE-AMEX: PW.PRA). As previously disclosed, 100% of the dividends
paid by Power REIT are treated as a return of capital and as such
are not taxed on a current basis. Power REIT believes that it can
create significant shareholder value by issuing additional
preferred stock based on the acquisition yields that Power REIT is
investing at which should create a significant spread relative to
the cost of capital.
Power REIT has provided guidance for its
annualized CORE FFO of approximately $2.00 per share upon
deployment of remaining capital available for investment. By way of
example, if Power REIT can raise $20 million from an offering of
preferred stock on terms similar to its existing preferred stock,
this would add approximately $2 million of annual Core FFO which
translates to approximately $1.00 per share. Power REIT believes
that this kind of dramatic growth should establish a potential for
outsized investor returns on a risk adjusted basis.
Power REIT is also exploring debt alternatives
which may also provide a significant positive spread between cost
of capital and the yield that Power REIT is investing at.
COMPELLING INVESTMENT
OPPORTUNITY
Power REIT’s common stock currently trades at an
FFO Forward Multiple of approximately 10X based on projected 2021
Core FFO. This is relatively low for a real estate investment trust
(REIT) with primarily triple-net-leased assets. This multiple and
estimated Core FFO does not take into account potential growth
associated with additional capital deployment beyond its existing
available capital for deployment which should prove conservative as
Power REIT pursues its non-dilutive capital plan to finance further
acquisitions. As such, Power REIT believes an investment in its
commons stock should offer the potential for attractive risk
adjusted investment returns.
Power REIT’s preferred stock (NYSE-AMEX: PW.PRA)
currently offers greater than a 7.0% yield that is paid quarterly
and is entirely treated as a return of capital for tax purposes. As
such, the dividends are not taxed on a current basis but could be
treated as a capital gain at the time of sale of the security. In
addition, Power REIT’s preferred stock dividend is well covered,
based on current and proforma CORE FFO expectations. Power REIT
believes this provides a level of confidence in the safety of its
dividend on its Preferred Stock and believes an investment in its
Preferred Stock can provide an attractive tax-adjusted and risk
adjusted rate of return given the current interest rate
environment.
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. With an attractive
forward multiple compared to other REITs and our anticipated growth
prospects, we believe that Power REIT offers a compelling
investment opportunity with attractive risk adjusted returns.”
UPDATED INVESTOR
PRESENTATION
Power REIT has posted an updated investor
presentation to its website: www.pwreit.com
STATEMENT ON SUSTAINABILITY
Power REIT owns real estate related Controlled
Environment Agriculture in the form of greenhouses, 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 POWER REIT
Power REIT is a real estate investment trust
(REIT) that owns real estate related Controlled Environment
Agriculture in the form of greenhouses, Renewable Energy and
Transportation. Power REIT is actively seeking to expand its real
estate portfolio related to Controlled Environment Agriculture.
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.com212-750-0371 |
mary@irrealized.com310-526-1707 |
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301 Winding RoadOld Bethpage, NY 11804 |
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www.pwreit.com |
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