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Power REIT Acquires Properties in Colorado for Greenhouse Cannabis Cultivation in Highly Accretive Transaction

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Enters into Long-Term Lease with Cloud Nine Farms – a Minority Owned Business

Old Bethpage, New York, April 20, 2021 (GLOBE NEWSWIRE) -- Power REIT (NYSE-AMEX: PW and PW.PRA) (“Power REIT” or the “Trust”) today announced that it has acquired two adjacent property parcels totaling 4.0 acres in Crowley County, Colorado (the “Property”) through a wholly owned subsidiary (“PropCo”). The Property is strategically located in a very favorable business setting of Southern Colorado that offers a growing environment for efficient and sustainable greenhouse cultivation.

As part of the transaction, Power REIT has agreed to fund the construction of an approximately 38,440 square foot greenhouse cultivation facility. Power REIT’s total capital commitment for the project is approximately $2.95 million including the land acquisition cost.

LEASE STRUCTURE

Concurrent with the acquisition, PropCo entered into a 20-year “triple-net” lease (the “Lease”) with Cloud Nine Farms LLC (“Cloud Nine”), a minority owned business that is owned by Mr. Joel Perez, a seasoned entrepreneur with extensive experience in the construction industry. Mr. Perez will operate the cannabis cultivation facility along with a team of experienced operators that specializes in the Colorado marketplace for cannabis cultivation, development, and supply chain logistics.

The lease requires Cloud Nine to pay all property related expenses including maintenance, insurance and taxes. After the initial 20-year term, The Lease provides two, five-year renewal options and has a personal guarantee from the owner of Cloud Nine. As mandated by the Lease, Cloud Nine will maintain a medical marijuana license and will operate in accordance with all Colorado and municipal regulations. The Lease also prohibits retail sales from the Property.

After an initial deferred rent period to allow for construction, the rental payments enumerated in the Lease provide PropCo with a full return of its invested capital over the next three years after which PropCo receives an approximately 13% yield increasing thereafter at a rate of 3% per annum.

The Lease, as structured, is immediately accretive to Core FFO and by adding straight-line annual rent of approximately $552,870, representing an unleveraged FFO yield of approximately 18.7% on the invested capital.

David Lesser, Power REIT’s Chairman and CEO, commented, “We continue to deploy capital on a highly accretive basis that supports our investment thesis of investing in sustainable properties. Southern Colorado continues to represent a compelling opportunity for our investment strategy in cannabis cultivation facilities. We believe that each additional acquisition diversifies our tenant concentration and further improves our focused strategy within this vibrant market, which we believe has significant runway for growth.”

Joel Perez, Cloud Nine’s President, commented, “Power REIT is providing Cloud Nine with a unique opportunity to dramatically scale our business through a prudent, accelerated growth plan. We are very excited about our future prospects and are looking forward to getting this property operational as quickly as possible and moving onto additional phases of expanding the cultivation area with Power REIT’s support.”

FORWARD CORE FFO PER SHARE

Power REIT has now deployed approximately $10 million of capital from its recently closed Rights Offering across several transactions. This leaves approximately $26.5 million to deploy. Power REIT’s current run-rate of 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 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, we foresee 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 
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power reit (ticker: pw) is a listed real estate investment trust (reit) that acquires, owns and manages real-estate related to energy and transportation infrastructure in the u.s. infrastructure assets often have significant embedded real-estate value due to their proximity to supporting infrastructure, favorable geographic or other locational advantages and ownership of hard to acquire operating permits and/or rights of way. within the energy sector, power reit is focused on acquiring land and other real estate interests related to renewable energy based generating facilities, including real estate related to solar, wind, hydropower and geothermal generating facilities. since december 2012, power reit has announced over 25mw of land investments in utility scale solar projects.