Power REIT (NYSE - AMEX: PW and PW.PRA) (“Power REIT” or the
“Trust”), Power REIT with a focused “Triple Bottom Line” strategy
and a commitment to profit, planet, and people, today announced
that it is providing an update that includes highlights of the
Trust’s financial and operating results for the three months ended
March 31, 2021.
1Q-2021 HIGHLIGHTS
|
|
Three Months Ended March 31, |
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
Revenue |
|
$ |
1,820,927 |
|
|
$ |
787,388 |
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Common Shareholders |
|
$ |
944,918 |
|
|
$ |
182,029 |
|
Net Income per Common Share
(diluted) |
|
|
0.33 |
|
|
|
0.09 |
|
|
|
|
|
|
|
|
|
|
Core FFO Available to
Common Shareholders |
|
$ |
1,274,939 |
|
|
$ |
351,650 |
|
Core FFO per Common Share |
|
|
0.46 |
|
|
|
0.19 |
|
|
|
|
|
|
|
|
|
|
Growth
Rates: |
|
|
|
|
|
|
|
|
Revenue |
|
|
131 |
% |
|
|
|
|
Net Income Attributable to
Common Shareholders |
|
|
419 |
% |
|
|
|
|
Net Income per Common Share
(diluted) |
|
|
267 |
% |
|
|
|
|
Core FFO Available to Common
Shareholders |
|
|
263 |
% |
|
|
|
|
Core FFO per Common Share |
|
|
142 |
% |
|
|
|
|
*See Net Income to Core FFO Reconciliation at
the end of this release.
● |
|
Raised over $36.6 million in an investor friendly Rights Offering
that was launched at the end of December 2020 and closed in
February 2021. |
● |
|
Acquired 5 CEA facilities in Colorado and California totaling
approximately 110,000 square feet of greenhouse and
cultivation/processing space. |
● |
|
Entered into 3 new triple-net leases, one lease amendment and was
assigned an existing lease with state-licensed cannabis
operator. |
Commenting on the results and Q1-2021
achievements, David Lesser, Chief Executive Officer
stated, “Power REIT made significant progress during the
quarter by completing a Rights Offering that allowed existing
investors to participate at an attractive stage of our growth
trajectory. Existing investors were offered the right to purchase
additional shares at $26.50. With the common stock trading at
$43.98, these investors have generated gains exceeding 66% within a
few months. As we deploy the capital raised in additional accretive
acquisitions, we also continue to explore non-dilutive capital
sources to fund our growth in an effort to create ongoing
shareholder value.”
Mr. Lesser continued, “The
updated business plan that Power REIT put into motion in the second
half of 2019 is driving substantial growth. This is reflected in
our first quarter 2021 Core FFO per common share of $0.46, which
increased 142% year over year. Our dynamic growth is a function of
the attractive yields Power REIT can achieve with its strategic CEA
investments coupled with our relatively small size which amplifies
the impact of these transactions. With the current stock price at
$43.98 and a forward Core FFO run rate of $3.18 per share, Power
REIT trades at a 13.8x multiple. We believe our potential growth
rate driven by acquisitions combined with a relatively low forward
Core FFO multiple provides a compelling value proposition for
investors. We have an active pipeline of acquisitions and hope to
announce additional activity in the near future.”
FORWARD CORE FFO PER SHARE
Power REIT has now deployed approximately $10
million of the capital raised in its recently closed Rights
Offering across several transactions. This leaves approximately
$26.5 million to deploy. Power REIT’s current run-rate of Core 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 on 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, the Trust estimates 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 |
% |
DISTRIBUTIONS
For the quarter ended March 31, 2021, the Trust
paid dividends of approximately $163,000 (or $0.484375 per share
per quarter for a total of $1.9375 per share total) on Power REIT’s
7.75% Series A Cumulative Redeemable Perpetual Preferred
Stock.
Subsequent to the end of the first quarter in
2021, the Board of Trustees declared a cash dividend of $0.484375
per depository share on its 7.75% Series A Cumulative Redeemable
Perpetual Preferred Stock, which equates to an annual dividend rate
of $1.9375 per depository share. The dividend is payable on June
15, 2021 to stockholders of record as of May 15, 2021.
CAPITAL MARKETS ACTIVITY
On February 5, 2021 Power REIT closed on its
Rights offering, generating proceeds of approximately $36.6 million
of proceeds and issued an additional 1,383,394 common shares.
Through this Offering, shareholders of record as of December 28,
2020 were offered the opportunity to purchase additional shares at
$26.50 per share.
As part of the acquisition of the Canndescent
Property (described below), Power REIT issued 192,678 shares of
Power REIT Series A Preferred Stock.
Cash and Cash Equivalents totaled approximately
$37 million as of March 31, 2021 compared to $5.6 million as of
December 31, 2020. The increase is the result of the capital raised
in the Rights Offering offset by investment activity.
ACQUISITION ACTIVITY
During the first quarter, Power REIT acquired
four new properties and signed long-term leases in conjunctions
with these transactions.
● |
On January 4, 2021, acquired two properties located in southern
Colorado through a newly formed wholly owned subsidiary (“PW
Grail”) of the Trust’s wholly owned subsidiary. The properties (the
“Grail Properties”) are comprised of 4.41 acres. As part of the
transaction, Power REIT agreed to fund the immediate construction
of an approximately 21,732 square foot greenhouse and processing
facility for approximately $1.84 million including the land
acquisition cost. Concurrent with the acquisition, PW Grail entered
into a 20-year “triple-net” lease (the “Grail Project Lease”) with
The Grail Project LLC (“Grail Project”) which will operate a
cannabis cultivation facility. The lease requires Grail Project to
pay all property related expenses including maintenance, insurance
and taxes. After the initial 20-year term, the Grail Project Lease
provides four, five-year renewal options. The lease also has a
personal guarantee from the owner of the Grail Project. |
|
|
● |
On January 14, 2021, acquired a property (the “Apotheke Property”)
located in southern Colorado through a newly formed wholly owned
subsidiary (“PW Apotheke”) of the Trust’s wholly owned subsidiary,
which is comprised of 4.31 acres. As part of the transaction, Power
REIT agreed to fund the immediate construction of an approximately
21,548 square foot greenhouse and processing facility for
approximately $1.8 million including the land acquisition cost.
Concurrent with the acquisition, PW Apotheke entered into a 20-year
“triple-net” lease (the “Apotheke Lease”) with DOM F, LLC (“Dom
F”), which will operate a cannabis cultivation facility. The lease
requires Dom F to pay all property related expenses including
maintenance, insurance and taxes. After the initial 20-year term,
Apotheke Lease provides two, five-year renewal options. The lease
also has a personal guarantee from the owner of Dom F. and Dom F
intends to operate the Apotheke Property as a licensed cannabis
cultivation and processing facility. |
|
|
● |
On February 3, 2021, acquired a property located in Riverside
County, CA (the “Canndescent Property”) through a newly formed
wholly owned subsidiary (“PW Canndescent) for $7.685 million. Power
REIT paid for the property with $2.685 million cash on hand and
issued 192,308 shares of Power REIT Series A Preferred Stock to the
seller. PW Canndescent received an assignment of a lease (the
“Canndescent Lease”) to allow the tenant (“Canndescent”) to operate
the 37,000 square foot greenhouse cultivation facility on the
Canndescent Property. |
|
|
● |
On February 23, 2021 PW Grail amended the aforementioned Grail
Project Lease making approximately $518,000 of more funds available
to construct an additional 6,256 square feet to the cannabis
cultivation and processing space. Accordingly, the Trust’s total
capital commitment was approximately $2.4 million. |
|
|
● |
On March 12, 2021, acquired a property (the “Gas Station Property”)
located in southern Colorado through a newly formed wholly owned
subsidiary (“PW Gas Station”) of the Trust’s wholly owned
subsidiary, which is comprised of 2.2 acres. As part of the
transaction, Power REIT agreed to fund the immediate construction
of an approximately 24,512 square foot greenhouse and processing
facility for approximately $2.1 million including the land
acquisition cost. Concurrent with the acquisition, PW Gas Station
entered into a 20-year “triple-net” lease (the “Gas Station Lease”)
with The Gas Station, LLC (“Gas Station”) who will operate a
cannabis cultivation facility. The lease requires Gas Station to
pay all property related expenses including maintenance, insurance
and taxes. After the initial 20-year term, Gas Station Lease
provides two, five-year renewal options. The lease also has a
personal guarantee from the owners of Gas Station and they intend
to operate the Gas Station Property as a licensed cannabis
cultivation and processing facility. |
SUBSEQUENT EVENTS
As of May 7 2021, the Trust engaged in the
following business activities after the period ended, March 31,
2021:
● |
On April 20, 2021, Power REIT acquired two properties (the “Cloud
Nine Properties”) located in southern Colorado through a newly
formed wholly owned subsidiary (“PW Cloud Nine”) of the Trust’s
wholly owned subsidiary, which is comprised of approximately 4.0
acres. As part of the transaction, Power REIT agreed to fund the
immediate construction of an approximately 38,440 square foot
greenhouse and processing facility for approximately $2.95 million
including the land acquisition cost. Concurrent with the
acquisition, PW Cloud Nine entered into a 20-year “triple-net”
lease (the “Cloud Nine Lease”) with Cloud Nine Farms LLC (“Cloud
Nine”), which will operate a cannabis cultivation facility. The
lease requires Cloud Nine to pay all property related expenses
including maintenance, insurance and taxes. After the initial
20-year term, the Cloud Nine Lease provides two, five-year renewal
options. The lease also has a personal guarantee from the owner of
Cloud Nine who will operate the Cloud Nine Property as a licensed
cannabis cultivation and processing facility. |
PORTFOLIO
Power REIT’s portfolio currently comprises:
|
● |
18 Controlled Environment Agriculture (CEA) properties with
totaling almost 365,000 square feet; |
|
● |
7 solar farm ground leases totaling 601 acres; and |
|
● |
112 miles of railroad property. |
POWER REIT’S INVESTMENT
THESIS
Power REIT believes agricultural production is
ripe for technological transformation and the industry is in the
early stages of an agricultural venture capital boom that, among
other things, will shift food production for certain crops from
traditional outdoor farms to Controlled Environment Agriculture
“plant factories.” Since a significant portion of any given CEA
enterprise is real estate, the Trust has identified a unique
opportunity to participate in the upward trend of indoor
agriculture.
CEA FOR CANNABIS
Power REIT is focused on investing in the
cultivation and production side of the cannabis industry through
the ownership of real estate. As such it is not directly in the
cannabis business and also not even indirectly involved with
facilities that sell cannabis directly to consumers. By serving as
a landlord, Power REIT believes it can generate attractive risk
adjusted returns related to the fast-growing cannabis industry,
which is anticipated to offer a safer approach than investing
directly in cannabis operating businesses.
CEA FOR FOOD
CEA for food production is widely adopted in
parts of Europe and is becoming an increasingly competitive
alternative to traditional farming for a variety of reasons. CEA
caters to consumer desires for sustainable and locally grown
products. Locally grown indoor produce will have a longer shelf
life as the plants are healthier and also travel shorter distances
thereby reducing food waste. In addition, a controlled environment
produces high-quality pesticide free products that eliminates
seasonality and provides highly predictable output that can be used
to simplify the supply chain to the grocer’s shelf.
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 with 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 focused 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
ADDITIONAL INFORMATION
Further details regarding Power REIT’s
consolidated results of operations and financial condition as of
and for the year ended December 31, 2020 are contained in the
Trust’s annual report on Form 10-K filed with the Securities and
Exchange Commission, which can be viewed at the Trust’s website at
www.pwreit.com under the Investor Relations section, and in EDGAR
on the SEC’s website, www.sec.gov.
FORWARD-LOOKING STATEMENTS
This document may contain forward-looking
statements within the meaning of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended.
Forward-looking statements are those that predict or describe
future events or trends and that do not relate solely to historical
matters. You can usually identify forward-looking statements as
containing the words “believe,” “expect,” “will,” “anticipate,”
“intend,” “estimate,” “would,” “should,” “project,” “plan,”
“assume” 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 Power REIT’s future strategy, future operations,
projected financial position, estimated future revenues and annual
run rate, projected costs, acquisition pipeline, future prospects
and growth from potential investments, the future of Power REIT’s
industries and results that might be obtained by pursuing
management’s current or future objectives are forward-looking
statements. While Power REIT believes these forward-looking
statements are reasonable, undue reliance should not be placed on
any such forward-looking statements, which are based on information
available to us on the date of this release. These forward-looking
statements are subject to various risks and uncertainties, many of
which are difficult to predict that could cause actual results to
differ materially from current expectations and assumptions from
those set forth or implied by any forward-looking statements.
Important factors that could cause actual results to differ
materially from current expectations include, among others, Power
REIT’s ability to implement its future strategy and achieve the
estimated future revenues, including an annual run rate of Core FFO
per share of approximately $2.04, as planned, Power REIT’s ability
to complete future acquisitions and generate growth from the
investments, as planned, Power REIT’s ability to maintain
compliance with the NYSE listing requirements, and the other
factors discussed in the Power REIT’s Annual Report on Form 10-K
for the year ended December 31, 2019 and Power REIT’s subsequent
filings with the SEC, including subsequent periodic reports on
Forms 10-Q and 8-K. The information in this release is provided
only as of the date of this release, and Power REIT undertakes no
obligation to update any forward-looking statements contained in
this release on account of new information, future events, or
otherwise, except as required by law.
Non-GAAP Financial Measures
This document contains supplemental financial
measures that are not calculated pursuant to U.S. generally
accepted accounting principles (“GAAP”), including the measure
identified by us as Core Funds From Operations Available to Common
Shares (“Core FFO”). Management believes that Core FFO is a useful
supplemental measure of the Trust’s operating performance.
Management believes that alternative measures of performance, such
as net income computed under GAAP, or Funds From Operations
computed in accordance with the definition used by the National
Association of Real Estate Investment Trusts (“NAREIT”), include
certain financial items that are not indicative of the results
provided by the Trust’s asset portfolio and inappropriately affect
the comparability of the Trust’s period-over-period performance.
These items include non-recurring expenses, such as those incurred
in connection with litigation, one-time upfront acquisition
expenses that are not capitalized under ASC-805 and certain
non-cash expenses, including non-cash, stock-based compensation
expense. Therefore, management uses Core FFO and defines it as net
income excluding such items. Management believes that, for the
foregoing reasons, these adjustments to net income are appropriate.
The Trust believes that Core FFO is a useful supplemental measure
for the investing community to employ, including when comparing the
Trust to other REITs that disclose similarly adjusted FFO figures,
and when analyzing changes in the Trust’s performance over time.
Readers are cautioned that other REITs may use different
adjustments to their GAAP financial measures than we do, and that
as a result the Trust’s Core FFO may not be comparable to the FFO
measures used by other REITs or to other non-GAAP or GAAP financial
measures used by REITs or other companies.
RECONCILIATION NET INCOME TO CORE
FFO
Management believes that Core FFO is a useful
supplemental measure of the Trust’s operating performance.
Management believes that alternative measures of performance, such
as net income computed 56 under GAAP, or Funds From Operations
computed in accordance with the definition used by the National
Association of Real Estate Investment Trusts (“NAREIT”), include
certain financial items that are not indicative of the results
provided by the Trust’s asset portfolio and inappropriately affect
the comparability of the Trust’s period-over-period performance.
These items include non-recurring expenses, such as those incurred
in connection with litigation, one-time upfront acquisition
expenses that are not capitalized under ASC-805 and certain
non-cash expenses, including stock-based compensation expense
amortization and certain up front financing costs. Therefore,
management uses Core FFO and defines it as net income excluding
such items. Management believes that, for the foregoing reasons,
these adjustments to net income are appropriate. The Trust believes
that Core FFO is a useful supplemental measure for the investing
community to employ, including when comparing the Trust to other
REITs that disclose similarly adjusted FFO figures, and when
analyzing changes in the Trust’s performance over time. Readers are
cautioned that other REITs may use different adjustments to their
GAAP financial measures than Power REIT do, and that as a result,
the Trust’s Core FFO may not be comparable to the FFO measures used
by other REITs or to other non-GAAP or GAAP financial measures used
by REITs or other companies.
CORE FUNDS FROM OPERATIONS
(FFO)(Unaudited)
|
|
Three Months Ended March 31, |
|
|
|
2021 |
|
|
2020 |
|
Revenue |
|
$ |
1,820,927 |
|
|
$ |
787,388 |
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
1,108,128 |
|
|
$ |
252,087 |
|
Stock-Based Compensation |
|
|
66,158 |
|
|
|
75,159 |
|
Interest Expense -
Amortization of Debt Costs |
|
|
8,527 |
|
|
|
8,527 |
|
Amortization of Intangible
Asset |
|
|
59,285 |
|
|
|
59,285 |
|
Depreciation on Land
Improvements |
|
|
196,051 |
|
|
|
26,650 |
|
Core FFO Available to
Preferred and Common Stock |
|
|
1,438,149 |
|
|
|
421,708 |
|
|
|
|
|
|
|
|
|
|
Preferred Stock Dividends |
|
|
(163,210 |
) |
|
|
(70,058 |
) |
|
|
|
|
|
|
|
|
|
Core FFO Available to
Common Shares |
|
$ |
1,274,939 |
|
|
$ |
351,650 |
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding (basic) |
|
|
2,755,502 |
|
|
|
1,899,313 |
|
|
|
|
|
|
|
|
|
|
Core FFO per Common
Share |
|
|
0.46 |
|
|
|
0.19 |
|
|
|
|
|
|
|
|
|
|
Growth
Rates: |
|
|
|
|
|
|
|
|
Revenue |
|
|
131 |
% |
|
|
|
|
Net Income |
|
|
340 |
% |
|
|
|
|
Core FFO Available to Common
Shareholders |
|
|
263 |
% |
|
|
|
|
Core FFO per Common Share |
|
|
142 |
% |
|
|
|
|
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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