Power REIT (NYSE American: PW) announced that it closed on a
$15,500,000 financing to fund acquisitions.
Closing on Financing
Power REIT, through a newly formed subsidiary,
completed a financing that is intended to provide capital for
acquisition of additional properties on an accretive basis. The
financing is in the form of long-term fixed rate bonds with gross
proceeds of $15,500,000. The bonds carry a fixed interest rate of
4.62% and fully amortize over the life of the financing which
matures in 2054 (35 years). Power REIT intends to use the proceeds
to expand its portfolio of income producing properties.
Power REIT’s portfolio of primarily “triple net
leased” real estate provides stable operating income. In July of
2019, Power REIT announced an updated business plan with a new
focus for acquisitions on Controlled Environment Agriculture real
estate. As part of that announcement, Power REIT announced the
acquisition of two Controlled Environment Agriculture properties
for the cultivation of medical cannabis. These acquisitions created
significant growth in our Core Funds from Operations for the
quarter ended September 30, 2019 relative to historical levels.
Power REIT believes that it can create significant earnings growth
by acquiring additional Controlled Environment Agriculture assets
and has an active pipeline of potential acquisitions. The potential
for significant growth is a result of the relatively high yield
relative to other traditional real estate asset classes combined
with Power REIT’s relatively small market capitalization. In
addition, Power REIT currently trades at a discount to its estimate
of Net Asset Value which may help enhance returns to investors as
Power REIT continues to execute on its growth plans.
David Lesser, Power REIT’s CEO commented: “this
financing is an important next step in the execution of our
recently announced business plan. We are pursuing an active
pipeline of acquisition opportunities and also are engaged in
active discussions related to the expansion of our existing
Controlled Environment Agriculture properties.”
Recent Development – New Focus for
Acquisitions
Power REIT believes agricultural production is
ripe for technological transformation and that we are at the early
stages of a boom in agricultural venture capital 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, Power REIT sees an opportunity to
participate in the trend towards indoor agriculture.
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.
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 and
that this offers a safer approach than investing directly in
cannabis operating businesses.
Recent Acquisitions
On July 15, 2019, Power REIT announced that it
had acquired two greenhouse properties located in southern
Colorado. The two properties are leased to an operator that is
licensed for the cultivation and processing of medical cannabis.
The total combined purchase price was $1,770,000. The annual
straight-line triple net-rent is approximately $331,000 which
translates to a yield of approximately 19%. During Q3 2019, Power
REIT recorded approximately $72,000 of income related to these
acquisitions compared to approximately $83,000 that would be
recorded for a full quarter. The acquisition of the greenhouses was
closed on an all-cash basis with existing working capital. As such,
they are accretive to Core Funds from Operations by approximately
$331,000 per annum which is more than a 30% increase from
historical levels. Power REIT is currently in active discussions
regarding the expansion of one of the two greenhouse
properties.
Dividend Declaration
Preferred Stock: For the Company's 7.75%
Series A Cumulative Redeemable Perpetual Preferred Stock, a cash
dividend of $0.484375 per depositary share was declared. The
preferred stock dividend, which equates to an annual dividend
payment of $1.9375 per depositary share, is payable on December 15,
2019, to stockholders of record on November 15, 2019.
About Power REIT
Power REIT is a real estate investment trust
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
Further details regarding Power REIT’s
consolidated results of operations and financial condition as of
and for the year ended December 31, 2018 are contained in the
Company’s annual report on Form 10-K filed with the Securities and
Exchange Commission, which can be viewed at the Company’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, projected
costs, future prospects, 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. Over time, Power
REIT’s actual results, performance, financial condition or
achievements may differ from the anticipated results, performance,
financial condition or achievements that are expressed or implied
in Power REIT’s forward-looking statements, and such differences
may be significant and materially adverse to Power REIT and its
security holders.
All forward-looking statements reflect Power
REIT’s good-faith beliefs, assumptions and expectations, but they
are not guarantees of future performance. Power REIT disclaims any
obligation to publicly update or revise any forward-looking
statements to reflect changes in underlying assumptions or factors,
new information, data or methods, future events or other changes,
except to the extent required by law. For a further discussion
of factors that could cause Power REIT’s future results or
financial condition to differ materially from anything expressed or
implied in its forward-looking statements, see the sections
entitled “Risk Factors” in Power REIT’s registration statements and
quarterly and annual reports as filed by Power REIT from time to
time with the Securities and Exchange Commission.
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 Company’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 Company’s asset portfolio and
inappropriately affect the comparability of the Company’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 Company
believes that Core FFO is a useful supplemental measure for the
investing community to employ, including when comparing the Company
to other REITs that disclose similarly adjusted FFO figures, and
when analyzing changes in the Company’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 Company’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.
Contact InformationTelephone |
212.750.0371Email | ir@pwreit.comWebsite | www.pwreit.com
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