REIT Acquires Property for Cannabis Processing and Expansion of Existing Property in Highly Accretive Transactions
Bethpage, New York, September 18, 2020 (GLOBE NEWSWIRE) Power REIT (NYSE-AMEX: PW) (“Power REIT” or the “Trust”)
today announced that it has acquired a 3.0 acre
property in York County, Maine (the “505 Property”) for $400,000 through a wholly owned subsidiary (“PropCo”).
Property is adjacent to a property (the “495 Property”) that was acquired by PropCo on May 15, 2020 that is leased
to “Sweet Dirt” as the operator. The 495 Property has a 32,800 square-foot greenhouse that is under active construction
and is on track for completion by the end of 2020. It also has a 2,800 square foot processing/distribution building with construction
recently completed. A virtual tour of the recent status of the greenhouse construction can be accessed here: Sweet
Dirt Virtual Tour
acquiring the 505 Property, PropCo exercised an option it received at the time of the acquisition of the 495 Property. Concurrent
with the acquisition, PropCo amended the lease with Sweet Dirt whereby the lease will cover both properties and PropCo will fund
the construction of an additional approximately 9,900 square feet of processing space and the renovation of an existing approximately
2,738 square foot building on the 505 Property. The completion of construction on the 505
Property is targeted for the Summer of 2021.
Dirt’s owners are authorized by the state of Maine for medical cannabis cultivation, processing and distribution at the
495 Property and will secure an additional cannabis processing license for the 495 Property before construction is completed.
As part of the acquisition, the existing triple net lease is being amended whereby PropCo will fund approximately $1.56 million
of costs to complete the construction. Accordingly, Power REIT’s total investment in the 505 Property is approximately $1.96
million. The lease amendment is structured to provide straight-line annual rent of approximately $373,000 which is an FFO yield
of approximately 19% on the incremental invested capital.
combined properties are expected to be one of the largest cannabis greenhouse cultivation and processing/distribution properties
in the state of Maine upon completion of construction at both parcels. In addition, PropCo has the option to finance the construction
of additional greenhouse cultivation space on the 505 Property for Sweet Dirt which is targeted for 2021.
Lesser, Power REIT’s Chairman and CEO, commented, “This transaction further strengthens our relationship with
Sweet Dirt as we build out a multifaceted cannabis campus for them. Sweet Dirt has demonstrated that they can become a strong
leader in the Maine regulated cannabis market. We are excited to support their tremendous growth efforts in the highly fragmented
Maine market which is projected for tremendous growth.”
Pope, Co-Founder of Sweet Dirt commented, “We are thrilled to have the continued confidence and support of Power REIT
as we ramp up production to meet the growing demand from existing and future cannabis patients and consumers. The expansion of
our cannabis campus in Eliot, Maine will allow us to deliver year-round, organically grown artisanal cannabis and a wide variety
of premium cannabis derived products to the Maine market.”
Henry, CEO of Sweet Dirt, commented, “Power REIT is providing a real estate solution that enables us to move towards
our vision of becoming a large-scale producer of the highest quality cannabis and cannabis related products in Maine. The addition
of this state-of-the-art processing facility will allow us to capture significant market share for our products. This transaction
with Power REIT allows us to accelerate our vertically integrated platform within Maine’s cannabis market which is poised
for rapid growth. We are currently experiencing product shortages in Maine and Sweet Dirt looks forward to fulfilling a sizable
portion of this demand. Upon completion later this year, we will have a state-of-the-art greenhouse that will feature exceptional
performance to grow high-quality cannabis at a competitive cost.”
Lesser commented, “We are pleased to be part of these and future Sweet Dirt transactions, that should position them
as a dominant player in the Maine cannabis market. Upon completion of both parcels, Sweet Dirt will have the largest cannabis
greenhouse cultivation facility in Maine and will also one of the few fully vertically integrated cannabis companies with greenhouse
cultivation, processing, and retail sales. We also anticipate funding the expansion of Sweet Dirt’s greenhouse cultivation
capacity on this newly acquired parcel of land in 2021 on similar economic terms.”
Lesser continued, “Our existing portfolio of cannabis greenhouse properties are 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.”
of Sherman Lot 6, Ordway Colorado
addition to the Sweet Dirt transaction described above, Power REIT has agreed to fund the expansion of its property located in
Ordway, Colorado (“Sherman 6”), a five-acre property owned by a subsidiary of Power REIT. Construction is largely
complete on the 23,896 square foot greenhouse/processing facility that is currently operational and currently has approximately
1,800 cannabis plants growing onsite. Power REIT has agreed to fund the expansion of the greenhouse head-house by 2,520 square
feet to accommodate additional processing space, for $151,301. In conjunction with this transaction, the original 20-year lease
has been amended to provide additional straight-line rent of approximately $29,000 per year which translates to an approximately
acquisition and expansion transactions are immediately accretive to CORE FFO by adding approximately $402,000 of straight-line
rent that translates to incremental CORE FFO of approximately $0.21 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
CORE FFO per share to approximately $1.76 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 available capital prior to the end of the year, the year-end
“run-rate” for FFO per share should be in excess of $2.00 per share.
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 $12.1 million have now been earmarked to acquire assets and expand existing greenhouse
cultivation properties. In addition to the transactions announced today, the remainder of the capital available for
investment is anticipated to be deployed by Power REIT through an extensive acquisition pipeline of targeted CEA facilities
in the form of greenhouses.
Lesser, concluded “Since embarking on our new business plan in July 2019, which pivoted our focus
specifically to Controlled Environment Agriculture (“CEA”) properties, Power REIT continues to prove out the benefits
of this strategy through dramatic growth in CORE FFO. The combination of our relatively small size and the attractive rates of
return that Power REIT is investing in greenhouse properties, translates to the potential for significant additional growth. At
this point, Power REIT trades at a lower multiple than typical REITs while having a clear path to growth that far exceed the REIT
market in general. We believe this represents a compelling investment opportunity with the potential for attractive risk adjusted
REIT owns real estate related Controlled Environment Agriculture, Renewable Energy and Transportation.
Properties, 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.
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.
assets are comprised of land associated with a railroad, an environmentally friendly mode of bulk transportation.
Dirt is a Maine cannabis company and producer of organically grown cannabis and cannabis-infused products. The owners of Sweet
Dirt produce organically grown medical cannabis and cannabis-infused products. The company’s focus on the creation of its
proprietary soils and organic growing practices have earned it the MOGFA-certified clean cannabis designation achieved by fewer
than 1% of all licensed cannabis growers in Maine. Additional information about Sweet Dirt can be found on its website: www.sweetdirt.com
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
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H. Lesser, Chairman & CEO
Jensen, Investor Relations|
Bethpage, NY 11804