Power REIT (NYSE-AMEX: PW and PW.PRA) (“Power REIT” or the “Trust”)
today announced that it has acquired a 10-acre property in Crowley
County, Colorado (the “Property”) through a wholly owned subsidiary
(“PropCo”). The Property will include the construction of a 12,000
square foot greenhouse space and 12,880 square feet of support
buildings and infrastructure that will be funded by Power REIT for
a total capital commitment of approximately $2.9 million.
Power REIT has strategically located greenhouse
investments across Southern Colorado with over 83 acres comprised
of 383,328 square feet of Controlled Environmental Agricultural
(CEA) facilities in the form of greenhouses. This entire portfolio
is currently leased to operators who are licensed for the
cultivation of regulated cannabis at the properties.
LEASE STRUCTURE
Concurrent with the acquisition, PropCo entered
into a 20-year “triple-net” lease (the “Lease”) with JKL2 Inc.
(“JKL2”), which will operate the Property as a cannabis cultivation
facility. The Lease requires JKL2 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 personal guarantees from the owners of JKL2. As
mandated by the Lease, JKL2 will maintain a medical marijuana
license and will operate in accordance with all Colorado and
municipal regulations. The Lease also prohibits the retail sale of
cannabis at the Property.
After an initial deferred rent period to allow
for construction, the Lease stipulates rental payments that provide
PropCo with a full return of its invested capital over the next 36
months, and thereafter, provides an approximately 13% yield
increasing thereafter at a rate of 3% per annum. The Lease, as
structured, provides straight-line annual rent of approximately
$546,000, representing an unleveraged Core FFO yield of
approximately 18.8% on the invested capital.
David Lesser, Power REIT’s Chairman and
CEO, commented, “This transaction is with an
established operator and provides additional diversification of
portfolio risk. We continue to deploy capital at what we believe
are attractive risk adjusted returns that benefit from the
favorable economic and regulatory environments for cannabis
cultivation in Crowley County Colorado.”
JKL2 Inc. is a strategic cultivation partner of
WHT LBL LLC, a multi-state operator (MSO) based in Boulder,
Colorado. WHT LBL produces products for Colorado’s market-leading
edible brands and distributes these products throughout the state.
WHT LBL’s products are currently sold throughout Colorado and
carried by the largest, best in class dispensaries in the state.
JKL2’s cannabis cultivation facility will immediately add capacity
and further secure WHT LBL’s flower and trim supply chain and
provide for future growth. JKL2 Inc. is led by long-time cannabis
veterans with over a decade of cultivation expertise and successes
throughout the United States.
“We are extremely excited to have the backing of
Power REIT to get this project off the ground. stated Jill
Lamoureux, Co-Founder and Chief Compliance Officer of WHT LBL and
partner of JKL2 Inc. We believe this facility can
quickly become a large-scale producer of high-quality cannabis and
compete aggressively in the very active and growing Colorado
market. Having been in the cannabis space for some time, it is no
secret that financing has been one of the most challenging
obstacles for growing cannabis companies. We are very excited to be
working with Power REIT and would not be in the position to launch
JKL2 without their support. They have been responsive to our
needs, understand the industry, easy to work with, and ultimately,
provided fair and equitable deal terms that allow for rapid,
responsible growth."
Commenting further on the transaction,
Chelsey Joseph, Co-Founder and Chief Executive Officer of
WHT LBL and partner of JKL2 Inc. stated, “Power REIT’s
dedication to sustainability and responsible cultivation practices
in the cannabis market, makes working with them an easy decision
and a much-needed resource to propel JKL2 to the next level. As a
cannabis MSO focused on working with the fastest growing and most
respected brands in the cannabis market, we are approached
regularly by brands looking to enter the growing Colorado market.
JKL2 strengthens our value proposition and allows us to confidently
bring these beloved brands and products to the people of
Colorado.”
FORWARD CORE FFO PER SHARE
Power REIT has now announced transactions that
deploy approximately $19.5 million of capital from its recently
closed Rights Offering across several transactions. This leaves
approximately $17 million to deploy. Power REIT’s current annual
Core FFO run rate is approximately $8.25 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 (i.e. lower than recent investment yields), Power
REIT estimates a forward annualized Core FFO per share run rate of
$3.26. 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 |
|
|
|
|
|
Vinita |
|
|
|
|
|
|
2,650,000 |
|
|
|
|
|
JKL |
|
|
|
|
|
|
2,928,293 |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
Total |
|
|
|
|
|
|
19,537,576 |
|
|
|
|
|
Remaining Rights Offering Proceeds for Investment |
|
|
|
|
|
$ |
17,030,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unleveraged FFO Yield on
Investments (Net) |
|
|
14.0 |
% |
|
|
16.0 |
% |
|
|
18.0 |
% |
Annualized Run Rate Core FFO
Guidance (existing portfolio) |
|
$ |
8,246,846 |
|
|
$ |
8,246,846 |
|
|
$ |
8,246,846 |
|
Incremental FFO from
Acquisitions with remaining RO Proceeds |
|
|
2,384,300 |
|
|
|
2,724,914 |
|
|
|
3,065,529 |
|
Incremental G&A to expand
Power REIT team |
|
|
(200,000 |
) |
|
|
(200,000 |
) |
|
|
(200,000 |
) |
Annualized Run Rate Pro Forma
Core FFO |
|
|
10,431,146 |
|
|
|
10,771,760 |
|
|
|
11,112,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Run Rate Pro Forma
Core FFO Per Share |
|
$ |
3.16 |
|
|
$ |
3.26 |
|
|
$ |
3.37 |
|
Quarterly Run Rate Pro Forma
Core FFO Per Share |
|
$ |
0.79 |
|
|
$ |
0.82 |
|
|
$ |
0.84 |
|
Increase from Q4 2020 |
|
|
55 |
% |
|
|
60 |
% |
|
|
65 |
% |
Mr. Lesser
concluded “We continue to invest at very
attractive yields relative to traditional commercial real estate
asset classes. We also believe we can continue our growth through
acquisitions using non-dilutive capital. Given our small size,
these transactions generate significant growth in Core FFO per
share. In addition, Power REIT currently trades at a relatively low
multiple and as such, Power REIT represents both a value play and a
growth play which is hard to find in the current investment
climate.”
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 homes 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
ABOUT WHT LBL
WHT LBL is a multi-state, licensed, experienced
cannabis cultivator, processor, and manufacturer bringing the
white-label production model to the cannabis market.
WHT LBL works alongside new and emerging
cannabis brands, proven and expanding cannabis brands, and cannabis
dispensaries looking for high-quality private label products that
will drive consumer loyalty. With extensive cannabis expertise, our
comprehensive platform consists of market-proven best practices and
products that drive growth and eliminates problems for brands and
dispensary buyers.
Additional information about WHT LBL can be found on its
website: www.whtlbl.co
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.
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
11804www.pwreit.com |
|
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