Power REIT (NYSE-AMEX: PW and PW.PRA) (“Power REIT” or the “Trust”)
today announced that it acquired two parcels in Crowley County,
Colorado (the “Properties”) for $150,000 through a wholly owned
subsidiary (“PropCo”). The Properties are strategically located in
a part of southern Colorado that offers a very favorable business
setting and climate for greenhouse cultivation. The parcels are
comprised of 2.37 acres and 2.09 acres respectively.
Concurrent with the acquisition of the
Properties, PropCo entered into a lease with a seasoned operator of
cannabis cultivation facilities (“Monte Fiore”). The lease is
structured as a “triple-net” lease that requires Monte Fiore 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 Monte Fiore 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. The lease is
structured to provide straight-line annual rent of approximately
$579,000 which represents an unleveraged FFO yield of approximately
18.9% on the invested capital. The transaction, increases Power
REIT’S FFO on a run rate basis by approximately $0.30 per
share.
As part of the transaction, Power REIT has
agreed to fund the immediate construction of a 33,744 square foot
greenhouse and processing facility for approximately $2.9 million.
Accordingly, Power REIT’s total capital commitment is approximately
$3.1 million. In addition, Power REIT has secured options to
acquire two additional adjacent parcels with approximately 2 acres
each and has the option to acquire such parcels and fund the
construction of additional greenhouse and processing space for
Monte Fiore. The parcels are intended to be acquired in phases over
the next several years. In the event the options are not exercised
per the schedule and options expire, Power REIT has a Right of
First Refusal over the parcels.
David Lesser, Power REIT’s Chairman and
CEO, commented, “We have worked hard to create a plan for
a truly state of the art greenhouse cultivation complex with a
highly sophisticated cannabis operator. Monte Fiore, and its
affiliates have developed and currently operate a 36,000 square
foot greenhouse cultivation facility in southern Colorado and
operate a 60,000 square foot hemp greenhouse and 400 acre outdoor
farm. We believe this transaction positions them to become a strong
leader in the Colorado regulated cannabis market and we are excited
to support their efforts.”
Jared Schrader, Chief Executive Officer
of Monte Fiore, commented, “Monte Fiore is a company
focused on greenhouse cultivation and processing. We are currently
in the enviable position such that the demand for our products far
exceeds our capacity. After investigating alternatives, we have
concluded to pursue growth plans in Crowley County based on the
favorable environment and infrastructure. In addition, the support
of Power REIT allows us to accelerate our growth and work toward
our objective of becoming a large-scale low-cost producer of the
highest quality cannabis and cannabis related products.
Monte Fiore is dedicated to producing
consistent, top quality cannabis in a sustainable manner. We are
craft-driven creators, meaning we prioritize producing the best
product over generating the most hype. And by using industry
leading genetics and practicing completely pesticide free hydronic
cultivation, we can serve our customers better and foster a blazing
passion for our product. We are excited to have the support of
Power REIT and look forward to expanding this relationship over
time at this location as well as other potential
opportunities.”
Nick Perrino, President of Monte Fiore,
commented, “Upon completion of construction, the
greenhouse campus will have exceptional performance to grow high
quality cannabis at a competitive cost. We will also have a
state-of-the-art processing facility that will allow us to capture
significant market share for our cannabis derived products. We
pride ourselves on the ability to perpetually harvest approximately
1,000 plants per week. Upon completion of this cultivation
facility, we expect this number to grow to approximately 2,000
plants per week. Power REIT moves us towards our vision of becoming
a large-scale producer of the highest quality cannabis and cannabis
products in Colorado.”
FFO ASSUMPTIONS
The acquisition described above is immediately
accretive to CORE FFO by adding approximately $579,000 of
straight-line rent that translates to incremental CORE FFO of
approximately $0.30 per share per annum on a run rate basis.
Omitting any future acquisition or financing activity, this
transaction along with the other recently announced greenhouse
related transactions should increase CORE FFO per share to
approximately $2.04 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.
Power REIT is currently focusing on additional
accretive acquisition opportunities within its targeted markets
while simultaneously seeking non-diluticve capital sources to fund
this pipeline. As of this announcement, approximately $16.6 million
has been committed to transactions since completing the previously
disclosed debt financing.
Mr. Lesser,
concluded Since embarking on our new business plan
focused on Controlled Environment Agriculture properties in July
2019, Power REIT has now demonstrated dramatic growth in FFO. Our
FFO per share for the second quarter of 2019 was $0.14 and we are
now offering guidance that our run rate FFO based is $0.51 per
share per quarter assuming no additional transactions beyond what
has now been announced. This represents 264% growth in a little
over a year. Given our relatively small size coupled with the
attractive rates of return that Power REIT is investing in
greenhouse properties, translates to the potential for significant
additional growth. Power REIT is actively working on a capital plan
to continue its dramatic growth. Power REIT currently trades at
less than a 10x multiple of its forward FFO guidance. As such,
Power REIT trades at a lower multiple than typical REITs and yet
has a clear path to growth that far exceed the REIT market in
general. I believe this represents a compelling opportunity for
investment that should generate 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 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 MONTE FIORE
Monte Fiore, and its affiliates, is a Colorado
state-licensed producer of premium cannabis and manufacturer of
cannabis derived products. Monte Fiore operates a 36,000 square
foot cannabis cultivation and processing facility in southern
Colorado. In addition, Monte Fiore operates a 60,000 square foot
hemp culrivation greenhouse and 400 acre farm in southern Colorado.
Monte Fiore is currently proceeding with the construction of a
33,744 square foot greenhouse and processing facility to meet the
demand for its cannabis and cannabis derived products. Additional
information about Monte Fiore can be found on its website:
https://www.montefiorefarms.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. 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 Road |
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Old Bethpage, NY 11804 |
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www.pwreit.com |
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