Power REIT (NYSE - AMEX: PW and PW.PRA) (“Power REIT or the
“Company”) today reported its financial and operating results for
the three and nine months ended September 30, 2020.
FINANCIAL HIGHLIGHTS
● |
Acquisitions Drove a 148% Growth Rate in Q3 Net Income and
99% Core FFO Per Share Growth Rate as Compared to Q3
2019 |
|
|
● |
Continues to Deploy Capital at Greater than 18% Unleveraged
Yields |
|
|
● |
On Track For $2.04 Run Rate Core FFO Per
Share |
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net Income
Attributable to Common Shareholders |
|
$ |
506,006 |
|
|
$ |
203,635 |
|
|
$ |
1,097,730 |
|
|
$ |
474,222 |
|
Net Income per Common Share
(diluted) |
|
$ |
0.25 |
|
|
$ |
0.11 |
|
|
$ |
0.56 |
|
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core FFO Available to
Common Shareholders* |
|
$ |
679,746 |
|
|
$ |
334,055 |
|
|
$ |
1,586,647 |
|
|
$ |
846,888 |
|
Core FFO per Common Share |
|
$ |
0.35 |
|
|
$ |
0.18 |
|
|
$ |
0.83 |
|
|
$ |
0.45 |
|
*see Net Income to Core FFO reconciliation at the end of
the press release.
Commenting on the
results and current initiatives, David Lesser, Chief Executive
Officer stated, “We are pleased with our greenhouse
property acquisition activity since the second half of 2019, when
we announced an updated business plan with a new focus on
Controlled Environment Agriculture (CEA) greenhouses. Since that
time, we have acquired ten CEA greenhouse properties for the
cultivation of medical cannabis. These acquisitions have driven
dramatic growth in Net Income and Core FFO. The acquisitions
completed during the third quarter combined with acquisitions
completed after the end of the quarter now puts us at an annual run
rate of Core FFO per share of approximately $2.04 assuming no
additional acquisition or financing activity. This represents
additional growth of approximately 46% above our most recent
quarter. In addition, we have a significant acquisition pipeline
and anticipate further growth from these potential investments as
we deploy the additional capital in the near future.”
Mr. Lesser concluded, “We continue to deliver
value through accretive acquisitions. This dynamic growth is a
function of the attractive yields Power REIT can achieve by
deploying capital on CEA properties and Power REIT’s relatively
small size. In addition, we currently trade at a relatively low
multiple of Core FFO which we believe provides a compelling
investment opportunity.”
FINANCIAL RESULTS AND FINANCING ACTIVITIES
For the three months ended September 30,
2020
Net income available to common stockholders
increased to $506,006 for the three months ended September 30,
2020, representing an approximately 148% increase from the prior
year’s third quarter.
Net income per fully diluted share increased to
$0.25 for the three months ended September 30, 2020, representing
an approximately 136% increase from the prior year’s third
quarter.
Core FFO per common share increased to $0.35 for
the three months ended September 30, 2020, representing an
approximately 99% increase from the prior year’s third quarter.
Total revenue increased to $1,115,586 for the
three months ended September 30, 2020, representing an
approximately 98% increase from the prior year’s third quarter.
FINANCIAL RESULTS AND FINANCING ACTIVITIES
For the nine months ended September 30, 2020
Net income available to common stockholders
increased to $1,097,730 for the nine months ended September 30,
2020, representing an approximately 91% increase from the same
period in the prior year.
Net income per fully diluted common share
increased to $0.56 for the nine months ended September 30, 2020,
representing an approximately 120% increase from the same period in
the prior year.
Core FFO per common share increased to $0.83 for
the nine months ended September 30, 2020, representing an
approximately 84% increase from the same period in the prior
year.
Total revenues increased to $2,878,096 for the
nine months ended September 30, 2020, representing an approximately
85% increase from the same period in the prior year.
INVESTMENT ACTIVITY
From July 1, 2020 through today, Power REIT
acquired four properties totaling approximately 64,000 square feet
of greenhouse cultivation and processing properties (including
expected rentable square feet upon completion of properties under
development).
These four properties represent a total capital
commitment of approximately $6.4 million (consisting of purchase
price and development costs and excluding transaction costs) and
generate straight-line annualized rent of approximately $1.2
million, representing a yield of approximately 19%.
CAPITAL SOURCES AND
DEPLOYMENT
Cash and Cash Equivalents totaled approximately
$7.6 million as of September 30, 2020, compared to approximately
$15.8 million as of December 31, 2019, with the reduction a result
of working capital requirements, investment and finance
activities.
The Company is exploring non-dilutive capital
sources to fund its significant acquisition pipeline, which is in
various stages of negotiations.
DISTRIBUTIONS
During the quarter, the Company paid a cash
dividend of $0.484375 per share on its 7.75% Series A Cumulative
Redeemable Perpetual Preferred Stock (the “Series A preferred
Shares”), which equates to an annual dividend payment of $1.9375
per Series A Preferred Share.
Subsequent to the end of the third quarter, the
Board of Trustees declared a cash dividend of $0.484375 per Series
A Preferred Share, which equates to an annual dividend rate of
$1.9375 per Series A Preferred Share. The dividend is payable on
December 15, 2020 to stockholders of record as of November 15,
2020.
PORTFOLIO
Power REIT’s portfolio is currently comprised
of:
|
● |
Ten Controlled Environment Agriculture greenhouse facilities
aggregating over 197,000 square feet; |
|
● |
Seven 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
(CEA) “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 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.
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.
STATEMENT ON SUSTAINABILITY
Power REIT owns real estate related to
infrastructure assets including properties for CEA Facilities,
Renewable Energy and Transportation.
CEA Facilities, such as
greenhouses, provide an 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 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
ADDITIONAL INFORMATION
Further details regarding Power REIT’s
consolidated results of operations and financial condition as of
and for the year ended December 31, 2019 are contained in the
Company’s annual report on Form 10-K filed 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 and annual
run rate, projected costs, acquisition pipeline, future prospects
and growth from potential investments, 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. While Power REIT believes these forward-looking
statements are reasonable, undue reliance should not be placed on
any such forward-looking statements, which are based on information
available to us on the date of this release. These forward-looking
statements are subject to various risks and uncertainties, many of
which are difficult to predict that could cause actual results to
differ materially from current expectations and assumptions from
those set forth or implied by any forward-looking statements.
Important factors that could cause actual results to differ
materially from current expectations include, among others, Power
REIT’s ability to implement its future strategy and achieve the
estimated future revenues, including an annual run rate of Core FFO
per share of approximately $2.04, as planned, Power REIT’s ability
to complete future acquisitions and generate growth from the
investments, as planned, Power REIT’s ability to maintain
compliance with the NYSE listing requirements, and the other
factors discussed in the Power REIT’s Annual Report on Form 10-K
for the year ended December 31, 2019 and Power REIT’s subsequent
filings with the SEC, including subsequent periodic reports on
Forms 10-Q and 8-K. The information in this release is provided
only as of the date of this release, and Power REIT undertakes no
obligation to update any forward-looking statements contained in
this release on account of new information, future events, or
otherwise, except as required by law.
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.
FFO RECONCILIATION TO NET
INCOME
CORE FUNDS FROM OPERATIONS
(FFO)(Unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net Income |
|
$ |
576,064 |
|
|
$ |
273,693 |
|
|
$ |
1,307,904 |
|
|
$ |
684,396 |
|
Stock-Based Compensation |
|
|
66,161 |
|
|
|
47,127 |
|
|
|
189,452 |
|
|
|
158,208 |
|
Interest Expense -
Amortization of Debt Costs |
|
|
8,527 |
|
|
|
6,297 |
|
|
|
25,582 |
|
|
|
18,892 |
|
Amortization of Intangible
Asset |
|
|
59,285 |
|
|
|
59,285 |
|
|
|
177,854 |
|
|
|
177,855 |
|
Depreciation on Land
Improvements |
|
|
39,767 |
|
|
|
17,711 |
|
|
|
96,029 |
|
|
|
17,711 |
|
Core FFO Available to
Preferred and Common Stock |
|
|
749,804 |
|
|
|
404,113 |
|
|
|
1,796,821 |
|
|
|
1,057,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Dividends |
|
|
(70,058 |
) |
|
|
(70,058 |
) |
|
|
(210,174 |
) |
|
|
(210,174 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core FFO Available to
Common Shares |
|
$ |
679,746 |
|
|
$ |
334,055 |
|
|
$ |
1,586,647 |
|
|
$ |
846,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding (basic) |
|
|
1,915,200 |
|
|
|
1,872,939 |
|
|
|
1,909,151 |
|
|
|
1,871,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core FFO per Common
Share |
|
|
0.35 |
|
|
|
0.18 |
|
|
|
0.83 |
|
|
|
0.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth - Core FFO |
|
|
103 |
% |
|
|
|
|
|
|
87 |
% |
|
|
|
|
Growth Core FFO Per Share |
|
|
99 |
% |
|
|
|
|
|
|
84 |
% |
|
|
|
|
CONTACT:
David H. Lesser, Chairman & CEO |
Mary Jensen, Investor Relations |
dlesser@pwreit.com |
mary@irrealized.com |
212-750-0371 |
310-526-1707 |
|
|
301 Winding RoadOld Bethpage, NY 11804 |
|
www.pwreit.com |
|
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