Power REIT (NYSE-AMEX: PW and PW.PRA) (“Power REIT” or the “Trust”)
today announced that it has acquired two adjacent property parcels
totaling 4.0 acres in Crowley County, Colorado (the “Property”)
through a wholly owned subsidiary (“PropCo”). The Property is
strategically located in a very favorable business setting of
Southern Colorado that offers a growing environment for efficient
and sustainable greenhouse cultivation.
As part of the transaction, Power REIT has
agreed to fund the construction of an approximately 38,440 square
foot greenhouse cultivation facility. Power REIT’s total capital
commitment for the project is approximately $2.95 million including
the land acquisition cost.
LEASE STRUCTURE
Concurrent with the acquisition, PropCo entered
into a 20-year “triple-net” lease (the “Lease”) with Cloud Nine
Farms LLC (“Cloud Nine”), a minority owned business that is owned
by Mr. Joel Perez, a seasoned entrepreneur with extensive
experience in the construction industry. Mr. Perez will operate the
cannabis cultivation facility along with a team of experienced
operators that specializes in the Colorado marketplace for cannabis
cultivation, development, and supply chain logistics.
The lease requires Cloud Nine to pay all
property related expenses including maintenance, insurance and
taxes. After the initial 20-year term, The Lease provides two,
five-year renewal options and has a personal guarantee from the
owner of Cloud Nine. As mandated by the Lease, Cloud Nine will
maintain a medical marijuana license and will operate in accordance
with all Colorado and municipal regulations. The Lease also
prohibits retail sales from the Property.
After an initial deferred rent period to allow
for construction, the rental payments enumerated in the Lease
provide PropCo with a full return of its invested capital over the
next three years after which PropCo receives an approximately 13%
yield increasing thereafter at a rate of 3% per annum.
The Lease, as structured, is immediately
accretive to Core FFO and by adding straight-line annual rent of
approximately $552,870, representing an unleveraged FFO yield of
approximately 18.7% on the invested capital.
David Lesser, Power REIT’s Chairman and
CEO, commented, “We continue to deploy capital on a highly
accretive basis that supports our investment thesis of investing in
sustainable properties. Southern Colorado continues to represent a
compelling opportunity for our investment strategy in cannabis
cultivation facilities. We believe that each additional acquisition
diversifies our tenant concentration and further improves our
focused strategy within this vibrant market, which we believe has
significant runway for growth.”
Joel Perez, Cloud Nine’s President,
commented, “Power REIT is providing Cloud Nine with a
unique opportunity to dramatically scale our business through a
prudent, accelerated growth plan. We are very excited about our
future prospects and are looking forward to getting this property
operational as quickly as possible and moving onto additional
phases of expanding the cultivation area with Power REIT’s
support.”
FORWARD CORE FFO PER SHARE
Power REIT has now deployed approximately $10
million of capital from its recently closed Rights Offering across
several transactions. This leaves approximately $26.5 million to
deploy. Power REIT’s current run-rate of FFO based solely on
transactions closed and not taking into account deployment of
additional capital is approximately $6.6 million as described in
our most recently published Investor Presentation which is
available at: www.pwreit.com/investors
Reflecting the impact of Power REIT’s recent
Rights Offering and assuming the full deployment of its remaining
proceeds into additional acquisitions at an average 16% yield to
common equity, we foresee a forward Core FFO per share run rate of
$3.18. However, it is important to understand that near-term
quarterly results could be below this run-rate due to uncertainty
of transaction timing and dilution from the additional shares
issued pursuant to the Rights Offering that generated the available
cash on Power REIT’s balance sheet for investment.
The following table provides a roadmap and sensitivity analysis
for forward Core FFO per share:
Common Shares Outstanding (Pre
Rights Offering) |
|
|
|
|
|
|
1,916,139 |
|
|
|
|
|
Shares Sold in Rights
Offering |
|
|
|
|
|
|
1,383,394 |
|
|
|
|
|
Total Shares Outstanding (Post
Rights Offering) |
|
|
|
|
|
|
3,299,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rights Offering Price |
|
|
|
|
|
$ |
26.50 |
|
|
|
|
|
Rights Offering Capital Raise
- Gross |
|
|
|
|
|
$ |
36,659,941 |
|
|
|
|
|
Proceeds Net of Costs
(est.) |
|
|
0.25 |
% |
|
$ |
36,568,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Announced Transactions Using
Proceeds from Rights Offering: |
|
|
|
|
|
|
|
|
|
|
|
|
Apotheke |
|
|
|
|
|
|
1,813,398 |
|
|
|
|
|
Canndescent |
|
|
|
|
|
|
2,685,000 |
|
|
|
|
|
Grail Project Expansion |
|
|
|
|
|
|
517,663 |
|
|
|
|
|
Gas Station |
|
|
|
|
|
|
2,118,717 |
|
|
|
|
|
Cloud Nine |
|
|
|
|
|
|
2,947,905 |
|
|
|
|
|
Total |
|
|
|
|
|
|
10,082,683 |
|
|
|
|
|
Remaining Rights Offering Proceeds for Investment |
|
|
|
|
|
$ |
26,485,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unleveraged FFO Yield on
Investments (Net) |
|
|
14.0 |
% |
|
|
16.0 |
% |
|
|
18.0 |
% |
Annualized Run Rate Core FFO
Guidance (existing portfolio) |
|
$ |
6,558,874 |
|
|
$ |
6,558,874 |
|
|
$ |
6,558,874 |
|
Incremental FFO from
Acquisitions with remaining RO Proceeds |
|
|
3,707,985 |
|
|
|
4,237,697 |
|
|
|
4,767,409 |
|
Incremental G&A to expand
Power REIT team |
|
|
(300,000 |
) |
|
|
(300,000 |
) |
|
|
(300,000 |
) |
Annualized Run Rate Pro Forma
Core FFO |
|
|
9,966,859 |
|
|
|
10,496,571 |
|
|
|
11,026,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Run Rate Pro Forma
Core FFO Per Share |
|
$ |
3.02 |
|
|
$ |
3.18 |
|
|
$ |
3.34 |
|
Increase from Q4 2020 |
|
|
48 |
% |
|
|
56 |
% |
|
|
64 |
% |
Mr. Lesser,
concluded “We have generated dramatic growth since
July 2019 when we embarked on our new business plan focused on
Controlled Environment Agriculture properties. Power REIT’s
relatively small size combined with the attractive investment
yields that we are generating through CEA property acquisitions,
positions us for continued outpaced growth. We believe Power REIT
represents an attractive investment proposition based on our
relatively low trading multiple than REIT peers with a clear growth
trajectory.
UPDATED INVESTOR
PRESENTATION
Power REIT has posted an updated investor
presentation which is available using the following link:
https://www.pwreit.com/investors
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 POWER REIT
Power REIT is a specialized real estate
investment trust (REIT) that owns sustainable 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 for the cultivation
of food and cannabis.
Power REIT is focuses on the “Triple Bottom
Line” with a commitment to Profit, Planet and People…
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 |
|
|
301 Winding RoadOld Bethpage, NY
11804 |
|
www.pwreit.com |
|
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