OLD BETHPAGE, N.Y. – Power REIT (NYSE-AMEX: PW and PW.PRA) (“Power REIT” or the “Trust”) today announced that it acquired a 2.11 acre parcel in Crowley 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 climate for greenhouse cultivation.
As part of the transaction, Power REIT has agreed to fund the immediate construction of an 18,528 square foot greenhouse and processing facility for approximately $1.3 million including the land acquisition cost.
Concurrent with the acquisition of the Property, PropCo entered into a 20-year “triple-net” lease with a tenant (“Green Mile”) which will operate a cannabis cultivation facility. The lease requires Green Mile to pay all property related expenses including maintenance, insurance and taxes. After the initial 20-year term, Green Mile’s lease provides two, five-year renewal options. The lease also has personal guarantees from the owners of Green Mile.
The lease requires Green Mile to maintain a medical marijuana license and to operate in accordance with all Colorado and municipal regulations while prohibiting retail sales of its products from the property. The lease is structured to provide straight-line annual rent of approximately $252,000 which represents an unleveraged CORE FFO yield of approximately 19.2% on the invested capital. The transaction increases Power REIT’s CORE FFO on a run rate basis by approximately $0.13 per share.
David Lesser, Power REIT’s Chairman and CEO, commented, “This recent acquisition represents the latest iteration of an upgraded prototype greenhouse cultivation facility in Southern Colorado and supports our investment thesis of investing in sustainable greenhouse properties. We remain enthusiastic about expanding our greenhouse portfolio in Colorado, which should allow our tenant to compete favorably with indoor cultivation facilities by growing high quality cannabis at a competitive cost.”
Mr. Lesser continued, “We are optimistic about our current acquisition pipeline and hope to announce additional activity in the near term in Colorado as well as other states that allow for regulated cannabis growing and sales.”
FFO ASSUMPTIONS
The acquisition described above is immediately accretive to CORE FFO by adding approximately $252,000 of straight-line rent that translates to incremental CORE FFO of approximately $0.13 per share per annum on a run rate basis. Omitting any future acquisition or financing activity, this transaction along with the other recently announced greenhouse related transactions should increase CORE FFO per share to approximately $2.17 per year on an annualized run rate basis which compares to $0.56 per share prior to embarking on our updated business plan in July 2019.
Mr. Lesser, concluded “Since embarking on our new business plan focused on Controlled Environment Agriculture properties in July 2019, Power REIT has now demonstrated dramatic growth in CORE FFO. Our CORE FFO per share for the second quarter of 2019 was $0.13 and we are now offering guidance that our run rate CORE FFO is $0.54 per share per quarter assuming no additional transactions beyond what has now been announced. This represents 315% growth in a little over a year. Given Power REIT’s relatively small size and the attractive investment yields that we are generating through CEA property acquisitions positions us for continued dramatic growth. We are actively working on a capital plan designed to continue this dramatic growth trajectory. We have a unique value proposition, where we currently trade at a lower multiple than typical REITs and with a clear path to growth that far exceeds the REIT market in general. I believe this represents a compelling opportunity for investment that should generate attractive risk adjusted returns.”
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
