Power REIT (NYSE-AMEX: PW) (“Power REIT” or the “Trust”) today
announced that it acquired a 3 acre property in York County, Maine
for $1,000,000 through a newly formed wholly owned subsidiary
(“PropCo”). The property includes a 32,800 square-foot greenhouse
and 2,800 square foot processing/distribution building that are
both under active construction. Simultaneous with the acquisition,
PropCo entered into a lease with an operator (“Sweet Dirt”) that is
licensed for medical cannabis cultivation, processing and
distribution at the property (“Tenant”). As part of the
acquisition, PropCo will reimburse Tenant for $950,000 of the
approximately $1.5 million Sweet Dirt has incurred to date related
to the construction and will fund up to approximately $2.97 million
of costs to complete the construction. Accordingly, Power REIT’s
total investment in the property is approximately $4.92 million
which translates to approximately $138 per square foot for a state
of the art Controlled Environment Agriculture Greenhouse (“CEAG”).
The lease is structured to provide straight-line annual rent of
approximately $920,000, representing an estimated yield of over
18.5% with the tenant responsible for all operating expenses.
Upon completion of the construction, which is
targeted for November 2020, the CEAG is expected to the be largest
cannabis greenhouse cultivation facility in the state of Maine. In
addition, Power REIT received an option to acquire an adjacent 3
vacant parcel that is owned by Tenant for $400,000 which provides
Power REIT the option to finance additional cultivation space for
Sweet Dirt.
David Lesser, Power REIT’s Chairman and
CEO, commented, “We are excited to support the efforts of
Sweet Dirt as we enter a new market. The Maine market is highly
fragmented and is projected for tremendous growth. Power REIT is
focused on supporting Sweet Dirt’s efforts to take a leadership
role in the Maine Cannabis industry.”
Kristin Pope, Co-Founder of Sweet Dirt
commented, “Sweet Dirt is thrilled to have the support of
Power REIT as we ramp up production to meet the demand from
existing medical cannabis patients and future consumers. The
greenhouse will allow us to deliver year-round, organically grown
artisanal cannabis to the Maine market.”
Jim Henry, CEO of Sweet Dirt,
commented, “Sweet Dirt is preparing to expand our
footprint in Maine’s regulated market. This transaction will allow
us to focus on cultivation and invest directly into our growth
initiatives. The state-of-the-art greenhouse will feature
exceptional thermal performance, best- in-class snow and wind load
capacity, automated climate control, supplemental lighting and
light-deprivation (shade) systems. Power REIT moves us towards our
vision of becoming a large-scale producer of the highest quality
cannabis in Maine.”
FFO ASSUMPTIONS
The acquisition is immediately accretive to FFO
by adding approximately $920,000 of straight-line rent which
translates to incremental FFO of approximately $0.48 per share per
annum on a run rate basis. Omitting future available capital
deployments, this transaction along with the other recently
announced greenhouse related transactions should increase FFO per
share to approximately $1.40 per year on a run rate basis which
compares to $0.56 prior to embarking on our updated business plan
in July 2019. Assuming Power REIT deploys its existing remaining
capital equally over the next two quarters, the year-end “run-rate”
for FFO per share should exceed $1.80 per share, which assumes that
the capital is deployed at a 12.5% yield. Similarly, if Power REIT
deploys its capital at a rate in-line with recent acquisitions, the
year end FFO “run-rate” would exceed $1.90 per share.
Mr. Lesser continued, “By this
coming fall upon completion of the CEAG, our tenant will not only
have the largest cannabis greenhouse cultivation facility in Maine
but will also be the first fully vertically integrated cannabis
company with greenhouse cultivation, processing and retail sales.
We also look forward to funding the expansion of Sweet Dirt’s
cultivation capacity in the near term on an adjacent parcel of land
that is owned by Sweet Dirt and for which Power REIT has an option
to acquire and then fund the improvements. This should solidify a
dominant position in the Maine market for Sweet Dirt. Our existing
portfolio of cannabis greenhouse properties are all on track with
respect to construction and rent payments. With an extensive
acquisition pipeline, we feel optimistic that we will be able to
deploy the remainder of the capital currently available for
investment in the near term. Cannabis operators currently have
limited access to capital sources which means that Power REIT
should be able to deploy much needed capital at attractive risk
adjusted returns.”
Mr. Lesser concluded, “Since
embarking on our new business plan focused on CEAG properties in
July 2019, Power REIT has now demonstrated dramatic growth in FFO.
Given our relatively small size coupled with the attractive rates
of return that Power REIT is investing in CEAG properties,
translates to the potential for significant additional growth. At
this point, Power REIT trades at a lower discount than typical
REITs and yet has growth prospects that are much higher than the
REIT market in general. I believe this represents a compelling
opportunity for investment that should generate attractive risk
adjusted returns.”
As previously disclosed, Power REIT recently
completed a $15.5 million debt financing at a rate of 4.62% which
fully amortizes over a 35-year term. Approximately $9.6 million of
the funds has now been earmarked to acquire assets and expand
greenhouse cultivation assets we have acquired. In addition to this
expansion transaction, Power REIT has an extensive pipeline of CEA
acquisition targets and is actively working to deploy the remainder
of the capital available for investment.
UPDATED INVESTOR
PRESENTATION
In conjunction with this acquisition, Power REIT
has updated its investor presentation to communicate the company’s
strategic business plan and recent activities. A copy of the
presentation can be found in the investors section of the Power
REIT website: www.pwreit.com
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 SWEET DIRT
Sweet Dirt and its affiliates is a Maine
state-licensed medical cannabis caregiver and producer of
organically grown cannabis and wholesome CBD/hemp products. Sweet
Dirt provides patients with affordable, effective healing through
clean medical cannabis and has a focus on sustainability including
environmental and social benefits. Additional information about
Sweet Dirt can be found on its website: www.sweetdirt.com
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 and Renewable Energy. 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.
CONTACT:
David H. Lesser, Chairman & CEO dlesser@pwreit.com301
Winding Road Old Bethpage, NY 11804 212-750-0371 www.pwreit.com
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