UC Asset Acquired $3M Cannabis Property via Non-Cash Deal

Rhea-AI Summary

UC Asset (OTCQB: UCASU) has completed the acquisition of a $3.0 million cannabis property, securing the remaining 50% ownership for $1.5 million through a non-cash transaction. The property includes 1,550 square feet of office space and 16,500 square feet of cannabis cultivation space, recently appraised at $3.4 million replacement cost.

The acquisition was structured through preferred shares ($1.0M), equity trade ($250K), and third-party financing ($250K). The current tenant, who is also the seller, has entered a five-year double-net lease with monthly rent increasing from $12,000 to $13,000 immediately and to $16,000 next year.

This acquisition brings UC Asset's total real estate portfolio to approximately $7 million, with $3 million in cannabis properties. The company plans to launch a Reg A+ secondary public offering (SPO) to raise up to $10 million, primarily for cannabis property investments.

Positive

• Non-cash acquisition preserves company's cash reserves
• Tenant becomes strategic investor, reducing default risk
• 33% increase in rental income by next year (from $12K to $16K monthly)
• Property appraised at $3.4M, above acquisition cost of $3M
• Doubles cannabis property portfolio to $3M

Negative

• Potential share dilution from issuing $1M in preferred shares
• Additional $250K debt from third-party financing
• High-risk tenant industry (cannabis) with elevated default rates
• Dependency on federal regulation changes for mortgage financing

ATLANTA, March 11, 2025 /PRNewswire/ -- UC Asset LP (OTCQB: UCASU) announces today the acquisition of a $3.0 million cannabis property, which includes 1,550 square feet of office space and 16,500 square feet of cannabis cultivation space. UC Asset previously owned 50% of the property and has just acquired the other 50% for $1.5 million. An independent licensed appraiser recently valued the property at a replacement cost of $3.4 million, which excluds all the equipment for cannabis cultivation.

None of the $1.5 million consideration for this deal was paid in cash at closing. Instead, UC Asset issued preferred shares with a face value of $1.0 million to the seller, traded $250,000 in equity, and secured $250,000 in financing with assistance from a third party. 

"With the exception of $250,000 in financing, the remaing $1.25 million is de facto an investment by the seller in our company," says Larry Wu, founder of UC Asset. "Since the seller is also a major owner of the current tenant, this can be interpreted as that our tenant has become a strategic investor in UC Asset."

A prevalent challenged in cannabis property investment, Wu highlights, is the high default rate among cannabis tenants, stemming from the high-risk-high-reward nature of an emerging industry such as cannabis. When growers face difficulties in operation, they may default their lease or even vacate the property, resulting in financial losses for property investors. To mitigate this risk, UC Asset, as a property investor, has adopted a strategy of forming long-term stratetic partnerships with tenants. A key component of this approach is encouraging tenants to become strategic investors in UC Asset. 

As part of the deal, the current tenant entered into a five-year double-net lease with UC Asset, increasing the monthly rent from $12,000 to $13,000 immediately, and further to $16,000 at the beginning of next year.

"This deal is part of our strategic plan to expand our investment in cannabis properties," says Wu, founder of UC Asset. "Among our portfolio properties, cannabis properties currently yield the highest return on equity (ROE) and has most promising potential for appreciation in the coming years, especially if change in federal regulations will allow commercial banks to provide mortgage loans to cannabis property owners."

Last month, UC Asset announced plans to launch a secondary public offering (SPO) via Reg A+, aiming at raising a maximum of $10 million. The majority of fund raised through the planned SPO will be invest in cannabis properties.

Following the acquisition, UC Asset's total real estate portfolio will increase to approximately $7 million, based on historic cost, including $3 million in cannabis properties. This, according to Wu, will strengthen its position for a successful SPO.

Currently, UC Asset is one of the only four US public companies that hold a significant portion of their portfolio in cannabis properties. 

UC Asset acquired 50% of the property back in May 2023, paying $1.0 million cash and issuing $600,000 of preferred shares to the then-owner.

The property is a cannabis growing facility with fully computerized environment control and has the capacity to host full cycle cannabis production, from creating clones/genetics to extracting cannabinoids. 

About UC Asset LP

UC Asset LP is a limited partnership formed for the purpose of investing in real estate with innovative strategies. For more information about UC Asset, please visit: www.ucasset.com

Disclaimer:

This News Release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any these statements. You are cautioned not to place undue reliance on any those forward-looking statements. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this news release. None of such forward-looking statements should be regarded as a representation by us or any other person that the objectives and plans set forth in this News Release will be achieved or be executed.

For More Information Contact: +1 470-475-1035, IR@UCasset.com

View original content:https://www.prnewswire.com/news-releases/uc-asset-acquired-3m-cannabis-property-via-non-cash-deal-302398608.html

SOURCE UC Asset LP

FAQ

What is the value and structure of UC Asset's (UCASU) latest cannabis property acquisition?

UC Asset acquired the remaining 50% of a $3M cannabis property for $1.5M through preferred shares ($1M), equity trade ($250K), and financing ($250K), with no cash at closing.

How much will the rental income increase from UCASU's new cannabis property lease agreement?

The monthly rent will increase from $12,000 to $13,000 immediately, and further to $16,000 at the beginning of next year under a five-year double-net lease.

What is UC Asset's (UCASU) total real estate portfolio value after the cannabis property acquisition?

UC Asset's total real estate portfolio increased to approximately $7 million, including $3 million in cannabis properties.

How much funding does UCASU plan to raise through its upcoming Reg A+ SPO?

UC Asset plans to raise up to $10 million through a Reg A+ secondary public offering, primarily for cannabis property investments.

What is the appraised value of UCASU's newly acquired cannabis property?

An independent licensed appraiser valued the property at a replacement cost of $3.4 million, excluding cannabis cultivation equipment.