Current Report Filing (8-k)
February 06 2020 - 7:54AM
Edgar (US Regulatory)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of report (Date of earliest event reported): February 6, 2020
POWER
REIT
(Exact
name of registrant as specified in its charter)
Maryland
(State
or other jurisdiction of incorporation)
001-36312
(Commission
File Number)
45-3116572
(IRS
Employer Identification No.)
301
Winding Road
Old
Bethpage, NY 11804
(Address
of principal executive offices and Zip Code)
Registrant’s
telephone number, including area code: (212) 750-0371
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of Each Class
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Trading
Symbol
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Name
of Each Exchange on Which Registered
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Common
Shares
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PW
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NYSE
(American)
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7.75%
Series A Cumulative Redeemable
Perpetual
Preferred Stock, Liquidation
Preference
$25 per Share
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PW.A
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NYSE
(American)
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company [ ]
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item
1.01. Entry into a Material Definitive Agreement.
Power
REIT (“Power REIT” or the “Trust”) announces the acquisition of two properties located in southern Colorado
(the “Properties”) through two newly formed wholly owned subsidiaries of a wholly owned subsidiary of the Trust (each
a “PropCo”). Each Propco has entered into a triple-net lease with an operator such that the tenant is
responsible for paying all expenses related to the Properties, including maintenance expenses, insurance and taxes. The term of
each lease is 20 years and provides two options to extend for additional five-year periods. The
Leases also have financial guarantees from affiliates of the tenants. Each tenant intends to operate the Properties as
licensed cannabis cultivation and processing facilities.
The
rent for each of the Leases is structured whereby after a deferred-rent period, the rental payments provide Power REIT a full
return of invested capital over the next three years in equal monthly payments. The deferred-rent period for one of the leases
is six months and for the other lease is nine months. After the deferred-rent period, rent is structured to provide a 12.5% return
for one of the leases and a 12.9% return for the other lease based on the original invested capital amount with annual rent
increases of 3% rate per annum. At any time after year six, if cannabis is legalized at the federal level, the rent will be readjusted
down to an amount equal to a 9% return on the original invested capital amount and will increase at a 3% rate per annum based
on a starting date of the start of year seven.
The
Leases require each tenant to maintain a medical cannabis license and operate in accordance with all Colorado and
state and local regulations with respect to its operations. The Leases prohibit the retail sale of the Tenant’s cannabis
and cannabis-infused products from the Properties.
The
foregoing descriptions of the Leases does not purport to be complete and are qualified in their entirety by reference to the complete
text of the Leases, copies of which are attached hereto as Exhibits 10.1 and 10.2 and is incorporated into this Current Report
on Form 8-K by reference.
Item
2.01 Completion of Acquisition or Disposition of Assets.
On
February 2, 2020, the Trust, through each PropCo, completed the acquisition of two Properties.
Power
REIT acquired “Maverick 14” for $850,000 which is 5.54 acres with an existing greenhouse and processing facility totaling
8,300 square feet. As part of the transaction, the Trust has agreed to fund the immediate expansion of 15,120 square feet of greenhouse
space for $1,058,400 and the tenant has agreed to fund the construction of an additional 2,520 square feet of head-house/processing
space on the property. Accordingly, Power REIT’s total capital commitment totals $1,908,400.
Power
REIT acquired “Sherman 6” for $150,000 which is 5.0 acres of vacant land approved for cannabis cultivation. As part
of the transaction, the Trust has agreed to fund the immediate construction of 15,120 square feet of greenhouse space and 7,520
square feet of head-house/processing space on the property for $1,693,800. Accordingly, Power REIT’s total capital commitment
totals $1,843,800.
The
total combined investment across all three properties will be approximately $3,752,200 plus acquisition expenses. The acquisitions
and commitments to fund construction are being funded from existing working capital.
Item
7.01 Regulation FD Disclosure.
On
February 6, 2020, the Trust issued a press release regarding the acquisition of the Properties.
A copy of the press release is attached hereto as Exhibit 99.1. The information contained in Item 7.01 of this report, including
Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, or otherwise subject to the liabilities of that section. Such information shall not be incorporated by
reference into any filing of the Trust, whether made before or after the date hereof, regardless of any general incorporation
language in such filing.
Item
8.01 Other Events.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
Forward-Looking
Statements
Some
of the information in this press release contains forward-looking statements and within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this press release,
words such as “believe,” “expect,” “anticipate,” “estimate,” “plan,”
“continue,” “intend,” “should,” “may,” “target,” or similar expressions,
are intended to identify such forward-looking statements. Forward-looking statements are subject to significant risks and uncertainties.
Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set
forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in
the forward-looking statements include those discussed under the caption “Risk Factors” included in our Annual Report
on Form 10-K for our fiscal year ended December 31, 2018, which was filed with the U.S. Securities and Exchange Commission (“SEC”),
as well as in other reports that we file with the SEC.
Forward-looking
statements are based on beliefs, assumptions and expectations as of the date of this press release. We disclaim any obligation
to publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances
after the date of this press release.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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POWER REIT
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Date:
February 6, 2020
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By
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/s/
David H. Lesser
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David
H. Lesser
Chairman
of the Board and Chief Executive Officer
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