UC Asset Filed for Public Offering of 8% Dividend Preferred Units

Rhea-AI Summary

UC Asset LP (OTCQB: UCASU) has filed Form 1A for a secondary public offering through Reg A Tier II registration, aiming to raise up to $10 million through preferred shares with an 8% annual dividend. The majority of funds will be used to expand its cannabis property portfolio. The company believes the legal cannabis industry has hit bottom after four years of consolidation and expects a second growth wave. To hedge risks, UC Asset will only invest in cannabis properties that can be converted into non-cannabis properties. The preferred shares include a hedging strategy: 8% annual dividend if successful, conversion to common shares at book value if cannabis growth exceeds expectations, or redemption at face value if performance disappoints.

Positive

• 8% annual preferred dividend yield, significantly higher than the average REIT return of 4.9% in 2024
• Hedging strategy through convertible properties that can retain value as regular warehouses
• Potential upside through conversion to common shares at net book value if cannabis industry grows
• Capital protection through redemption at face value if portfolio underperforms

Negative

• High-risk investment in cannabis properties, an industry that has seen 95% value loss since 2021
• Success depends on speculative second wave of cannabis industry growth
• Offering will dilute existing shareholders
• Subject to SEC review and qualification before offering can proceed

ATLANTA, May 12, 2025 /PRNewswire/ -- UC Asset LP (OTCQB: UCASU) announced today that the company filed Form 1A last Thursday for a secondary public offering (SPO) through Reg A Tier II registration, with the intention of issuing up to $10 million preferred shares which will carry an 8% per annum preferred dividend. The filing is subject to SEC review, and the company will not offer any securities until the SEC qualifies its filing.

Investing in Cannabis Property

The majority of the capital raised will be used to expand its portfolio of cannabis property.

"We believe the legal cannabis industry has reached its rock bottom after four years of market consolidation, and we may see the second wave of growth for the cannabis industry starting soon," projected Larry Wu, founder of UC Asset.

According to Wu, the first wave of the cannabis industry started in 2012 and peaked in 2021, during which time stock prices of certain cannabis property companies soared 1400% in four years. But some cannabis property stocks have lost over 95% of their value since 2021, leading to huge losses for investors. Since then, many cannabis property owners have attempted to liquidate their portfolios, resulting in a continuous decrease in the value of cannabis properties.

"However, there has never been an industry that reached its maturity after only one wave of growth," claimed Wu. "It is not unusual for certain industries to experience 3 to 5 waves of fast growth before market saturation. The cannabis industry is far from realizing its full potential, in our opinion. As Warren Buffett once said, we ought to be greedy now, when others are fearful."

Hedging Strategy

Despite the company's confidence that a second wave of fast growth is happening soon, based on its analysis of industrial and macro-economic data, as well as policy trends, Wu cautioned that they could be wrong, and their strategy might lead to losses for investors.

"To hedge against potential loss, we will only invest in cannabis properties that can potentially be converted into non-cannabis properties and may still retain their value," said Wu.

For example, recently the company has entered into LOIs to acquire certain cannabis properties, of which the unit price, according to Wu, will be lower than average warehouses in the same area. "If the cannabis industry does not enter into another stage of fast growth, we may convert these properties into warehouses and may still make a profit," asserted Wu.

The preferred shares offered by the company, therefore, will be imbued with a hedging strategy: It will distribute an 8% per annum preferred dividend if the company's cannabis property portfolio does well. At this moment, an 8% dividend will be significantly higher than the average total return of REITs, which is about 4.9% for 2024.

If the cannabis industry experiences faster-than-expected growth, preferred unit shareholders will be able to convert their preferred shares into common shares at net book value, which will potentially give investors a big upside.

On the other hand, if the cannabis industry stumbles, and the company's cannabis property portfolio does not perform, it may trigger a redemption term and allow the preferred unit shareholders to redeem their shares at face value.

For More Information

The full text of the draft of the offering statement, including the full text of the certificate of preferred units to be offered, can be found on the company's EDGAR landing page on the SEC.gov website.

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: IR@UCasset.com; +1 470-475-1035

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SOURCE UC Asset LP

FAQ

What is the size and dividend rate of UC Asset's (UCASU) new preferred share offering?

UC Asset is planning to raise up to $10 million through preferred shares offering an 8% annual dividend rate.

How will UC Asset (UCASU) use the proceeds from its preferred share offering?

The majority of the capital raised will be used to expand UC Asset's portfolio of cannabis properties.

What hedging strategies does UC Asset (UCASU) have for its cannabis property investments?

UC Asset will only invest in cannabis properties that can be converted into non-cannabis properties like warehouses to retain value if the cannabis industry underperforms.

What are the conversion and redemption terms for UC Asset's (UCASU) preferred shares?

Shareholders can convert preferred shares to common shares at net book value if cannabis growth exceeds expectations, or redeem at face value if the portfolio underperforms.

How does UC Asset's (UCASU) 8% preferred dividend compare to industry standards?

The 8% annual preferred dividend is significantly higher than the average REIT total return of 4.9% for 2024.