Power REIT (NYSE-AMEX: PW and PW.PRA) (“Power REIT” or the “Trust”) today announced that it has acquired a 37,000 square foot state-of-the art greenhouse cannabis cultivation facility located in Riverside County, California (the “Property”) through a wholly owned subsidiary (“PropCo”) for $7.685 million. Power REIT funded the transaction using $2.685 million of cash on hand and the issuance of 192,308 shares of Power REIT’s Series A Preferred Stock (NYSE American ticker: PW.PRA), which had a closing price of $26.00 per share on February 2, 2021.
The property is leased to Canndescent (“Canndescent”), the #1 selling flower brand for luxury cannabis, with over 50% store penetration in California. Canndescent offers ultra-premium products grown through a proprietary cultivation process. The lease provides straight-line annual rent of approximately $1,074,000 which represents an unleveraged CORE FFO yield to the Common Shares of Power REIT of greater than 26%. The transaction increases Power REIT’s CORE FFO on a run rate basis by approximately $0.21 per share relative to the prior run rate guidance. This increase in CORE FFO is based on using proceeds from the pending Rights Offering that Power REIT is conducting in order to fund the acquisition. Accordingly, such calculation is based on adding approximately 101,000 common shares in order to provide an indication of the pro-forma impact from the acquisition.
David Lesser, Power REIT’s Chairman and CEO, commented, “This transaction demonstrates Power REIT’s ability to source and close accretive real estate acquisitions that we believe should result in the creation of significant shareholder value. This acquisition expands our national footprint into the California market, which is the largest cannabis market in the United States. The acquisition provides attractive valuation metrics including a discount to replacement cost and a lower price than recent comparable property sales in the market. We are also pleased to establish a relationship with Canndescent which is a sophisticated cannabis operator with premier brands and significant customer loyalty.”
Adrian Sedlin, Founder and CEO of Canndescent, commented, “We are excited to partner with Power REIT and are already exploring additional pipeline and business opportunities that could be mutually beneficial to us and Power REIT as we both continue to expand our respective businesses.”
Mr. Lesser concluded, “In addition, we believe that our previously announced Rights Offering is a very investor friendly component of our capital plan that should allow shareholders the opportunity to participate in our immediate growth plans. As previously announced, we have extended the closing on the Rights Offering to February 5, 2021. This was in response to the significant interest we have received and to allow as many shareholders as possible to participate. We are optimistic about our acquisition pipeline and hope to announce additional acquisitions in the near future.”
UPDATED INVESTOR PRESENTATION
Power REIT has posted an updated investor presentation which is available using the following link: https://www.pwreit.com/investors
