Power REIT (NYSE-AMEX: PW and PW.PRA) (“Power REIT” or the “Trust”)
today announced that it has acquired a 35-acre property located in
Huerfano County, Colorado (the “Property”) through a wholly owned
subsidiary (“PropCo”). The Property is strategically located in a
part of southern Colorado that offers a very favorable business
setting and growing environment for efficient and sustainable
greenhouse cultivation.
The property currently has multiple greenhouses
and support buildings which will be upgraded through a
redevelopment plan that Power REIT will fund along with the new
construction of additional greenhouse space. Upon completion, the
Property will comprise approximately 102,800 square feet of
greenhouse and related space. Power REIT’s total capital commitment
for the project is approximately $3.9 million including the
property acquisition cost. The Property also has ample acreage for
future expansion which Power REIT intends to finance.
LEASE STRUCTURE
Concurrent with the acquisition, PropCo entered
into a 20-year “triple-net” lease (the “Lease”) with Walsenburg
Cannabis LLC (“WC”) which will operate the cannabis cultivation
facility. The Lease covers approximately 22.2 acres of the 35 acre
Property. The remaining and undeveloped 12.8 acres is available for
future expansions.
The Lease requires WC 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 WC’s President. Pursuant
to the Lease, WC 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.
The Lease, as structured, is immediately
accretive to Core FFO by adding straight-line annual rent of
approximately $729,000. This represents an unleveraged Core FFO
yield of approximately 18.8% on Power REIT’s invested capital.
After an initial deferred rent period, 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.
David Lesser, Power REIT’s Chairman and
CEO, commented, “The acquisition is consistent with Power
REIT’s investment strategy of focusing on sustainability including
greenhouse crop cultivation which is less expensive and has a much
lower carbon footprint than growing in an industrial property. This
Property is positioned to allow WC to compete favorably within the
Colorado market by providing both the infrastructure and a
configuration that should allow rapid scale-up in a cost-effective
manner relative to competing facilities. In addition, the Property
has the potential for the significant expansion of the cultivation
canopy, which will be implemented with a focus on becoming a
low-cost producer of high-quality cannabis.”
WC is led by Jared Schrader, an experienced
cannabis cultivation operator with a solid track record. Mr.
Schrader grew revenue at a Colorado cannabis cultivation facility
from annual revenue of $150,000 to weekly revenue of over $150,000
(i.e. > $8 million annually) over the span of two years.
Simultaneous with Power REIT’s acquisition of the Property,
Millennium Investment and Acquisition Company Inc. (“MILC”)
provided a loan to WC and is seeking approval from the Colorado
regulators to take an ownership stake in WC after which MILC would
become a majority owner of WC in the form of a preferred equity
ownership stake in a joint venture with the management team of WC.
David H Lesser, Power REIT’s Chairman and CEO is also Chairman and
CEO of MILC (ticker: MILC).
“We are excited to have the support of Power
REIT to get this project growing, stated Jared
Schrader, Walsenburg Cannabis’
President. We believe this
property can quickly become a large-scale producer of cannabis and
cannabis related products to serve the Colorado market. The
Property is subdivided into five parcels that each have local
approval for the cultivation of cannabis. This allows the Property
to pursue a rapid growth plan given the nature of Colorado cannabis
licensing which is based on a limited plant count initially per
property. Once performance is demonstrated to the regulators, each
property will have the potential to “tier-up” and add more plants.
In addition, WC is focused on a “speed to revenue” approach given
the start of operations in the spring growing season."
FORWARD CORE FFO PER SHARE
Power REIT has now announced transactions that
deploy approximately $14 million of capital from its recently
closed Rights Offering across several transactions. This leaves
approximately $22.6 million to deploy. Power REIT’s current Core
FFO run rate is approximately $7.2 million based solely on
transactions closed and not taking into account deployment of
additional capital as described in our most recently published
Investor Presentation which is available at:
www.pwreit.com/investors
Based on the impact from 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, Power REIT estimates a forward Core FFO per share
run rate of $3.22. However, it is important to understand that
near-term quarterly results will likely be below this run-rate due
to the timing of acquisitions 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 |
|
|
|
|
|
Walsenburg |
|
|
|
|
|
|
3,876,600 |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
Total |
|
|
|
|
|
|
13,959,283 |
|
|
|
|
|
Remaining Rights Offering Proceeds for Investment |
|
|
|
|
|
$ |
22,609,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unleveraged FFO Yield on
Investments (Net) |
|
|
14.0 |
% |
|
|
16.0 |
% |
|
|
18.0 |
% |
Annualized Run Rate Core FFO
Guidance (existing portfolio) |
|
$ |
7,197,881 |
|
|
$ |
7,197,881 |
|
|
$ |
7,197,881 |
|
Incremental FFO from
Acquisitions with remaining RO Proceeds |
|
|
3,165,261 |
|
|
|
3,617,441 |
|
|
|
4,069,621 |
|
Incremental G&A to expand
Power REIT team |
|
|
(200,000 |
) |
|
|
(200,000 |
) |
|
|
(200,000 |
) |
Annualized Run Rate Pro Forma
Core FFO |
|
|
10,163,142 |
|
|
|
10,615,322 |
|
|
|
11,067,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Run Rate Pro Forma
Core FFO Per Share |
|
$ |
3.08 |
|
|
$ |
3.22 |
|
|
$ |
3.35 |
|
Increase from Q4 2020 |
|
|
51 |
% |
|
|
58 |
% |
|
|
64 |
% |
Mr. Lesser
concluded “We continue to generate 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, with a focus on the “Triple Bottom
Line” and a commitment to Profit, Planet and People 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.
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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