Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

POWER REIT

(PW)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector news

POWER REIT : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

05/07/2021 | 06:17am EDT

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this "Report") includes forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are those that predict or describe future events or
trends and that do not relate solely to historical matters. You can generally
identify forward-looking statements as statements containing the words
"believe," "expect," "will," "anticipate," "intend," "estimate," "project,"
"plan," "assume" or other similar expressions, or negatives of those
expressions, although not all forward-looking statements contain these
identifying words. All statements contained in this Report regarding our future
strategy, future operations, projected financial position, estimated future
revenues, projected costs, future prospects, the future of our industries and
results that might be obtained by pursuing management's current or future plans
and objectives are forward-looking statements.



You should not place undue reliance on any forward-looking statements because
the matters they describe are subject to known and unknown risks, uncertainties
and other unpredictable factors, many of which are beyond our control, including
those identified below, under Part II, Item 1A. "Risk Factors" and elsewhere in
this Report, and those identified under Part I, Item 1A of the 2020 10-K. Our
forward-looking statements are based on the information currently available to
us and speak only as of the date of the filing of this Report. New risks and
uncertainties arise from time to time, and it is impossible for us to predict
these matters or how they may affect us. Over time, our actual results,
performance, financial condition or achievements may differ from the anticipated
results, performance, financial condition or achievements that are expressed or
implied by our forward-looking statements, and such differences may be
significant and materially adverse to our security holders. Our forward-looking
statements contained herein speak only as of the date hereof, and we make no
commitment to update or publicly release any revisions to forward-looking
statements in order to reflect new information or subsequent events,
circumstances or changes in expectations.



MANAGEMENT'S DISCUSSION AND ANALYSIS

We are a Maryland-domiciled Real Estate Investment Trust (REIT) that owns a
portfolio of real estate assets related to transportation, energy infrastructure
and Controlled Environment Agriculture (CEA) in the United States. We are
focused on making new acquisitions of real estate within the CEA sector related
to food and cannabis production.



We are structured as a holding company and own our assets through twelve
wholly-owned, special purpose subsidiaries that have been formed in order to
hold real estate assets, obtain financing and generate lease revenue. We were
formed as part of a reorganization and reverse triangular merger of Pittsburgh &
West Virginia Railroad ("P&WV") that closed on December 2, 2011. P&WV survived
the reorganization as our wholly-owned subsidiary. Our investment strategy,
which is focused on transportation, CEA and energy infrastructure-related real
estate, builds upon P&WV's historical ownership of railroad real estate assets,
which are currently triple-net leased to Norfolk Southern Railroad ("NSC"). We
typically enter into long-term triple net leases where tenants are responsible
for all ongoing costs related to the property, including insurance, taxes and
maintenance.



Prior to 2019, our focus was on the acquisition of real estate assets related to
transportation and energy infrastructure. In 2019 we expanded the focus of our
real estate acquisitions to include CEA properties in the United States. CEA is
an innovative method of growing plants that involves creating optimized growing
environments for a given crop indoors. We are currently focused on making new
acquisitions of real estate within the CEA sector related to food and cannabis
cultivation.


As of March 31, 2021, our portfolio consisted of approximately 112 miles of
railroad infrastructure and related real estate leased to a railway company
which is owned by our subsidiary, P&WV, approximately 601 acres of fee simple
land leased to a number of solar power generating projects with an aggregate
generating capacity of approximately 108 MW and approximately 52 acres of land
with 327,000 square feet of existing or under construction greenhouses leased to
medical cannabis operators. We are actively seeking to grow our portfolio of CEA
for food and cannabis production.



During the quarter ended March 31, 2021, we raised gross proceeds of
approximately $36.7 million and issued an additional 1,383,394 common shares
through a rights offering that closed on February 5, 2021. The offer commenced
in December, 2020 whereby shareholders of record as of December 28, 2020 could
purchase one additional share at $26.50 per share for every share owned.



Recent Developments


During the first quarter ended March 31, 2021, we added to our portfolio of CEA
properties by acquiring four new properties and expanding one of the leases
on a
newly acquired property.



15







On January 4, 2021, through a newly formed wholly owned subsidiary, PW CO CanRE
Grail, LLC, ("PW Grail"), we completed the acquisition of two properties
totaling 4.41 acres of vacant land ("Grail Properties") approved for medical
cannabis cultivation in southern Colorado for $150,000 plus acquisition costs.
As part of the transaction, we agreed to fund the immediate construction of an
approximately 21,732 square foot greenhouse and processing facility for
approximately $1.69 million. Accordingly, PW Grail's total capital commitment is
approximately $1.84 million. Concurrent with the acquisition, PW Grail entered
into a 20-year "triple-net" lease (the "Grail Project Lease") with The Grail
Project LLC ("Grail Project") which will operate a cannabis cultivation
facility. The lease requires Grail Project to pay all property related expenses
including maintenance, insurance and taxes. After the initial 20-year term, the
Grail Project's Lease provides four, five-year renewal options. The rent for the
Grail Project Lease is structured whereby after a six-month free-rent period,
the rental payments provide Power REIT a full return of invested capital over
the next three years in equal monthly payments. After the 42nd month, rent is
structured to provide a 12.9% return of the original invested capital with
increases of 3% rate per annum. At any time after year six, if cannabis is
legalized at the federal level, the rent will be readjusted down to an amount
equal to a 9% return of the original invested capital and will increase at a 3%
rate per annum on a starting date of the start of year seven. The lease requires
the tenant to maintain a medical cannabis license and operate in accordance with
all Colorado and local regulations with respect to its operations. The lease
prohibits the retail sale of the tenant's cannabis and cannabis-infused products
from the Grail Properties. The lease also has personal guarantees from the
owners of the Grail Project. The Grail Project Lease is structured to provide an
annual straight-line rent of approximately $350,000, representing an estimated
yield on costs of over 18%. The project is currently under construction and
should be completed by July 2021.



On February 23, 2021, we amended the Grail Project Lease making approximately
$518,000 of more funds available to construct an additional 6,256 square feet to
the cannabis cultivation and processing space. Once completed, our total capital
commitment will be approximately $2.4 million. As part of the agreement, PW
Grail and Grail Project have amended the Lease ("Grail Amended Lease") whereby
after an eight-month period, the additional rental payments provide PW Grail
with a full return of its original invested capital over the next three years
and thereafter, provide a 12.9% return increasing 3% per annum. The additional
annual straight-line rent of approximately $105,000 represents an estimated
yield on costs of over 18% over our investment.



On January 14, 2021, through a newly formed wholly owned subsidiary, PW CO CanRE
Apotheke, LLC, ("PW Apotheke"), we completed the acquisition of a property
totaling 4.31 acres of vacant land ("Apotheke Property") approved for medical
cannabis cultivation in southern Colorado for $150,000 plus acquisition costs.
As part of the transaction, we agreed to fund the immediate construction of an
approximately 21,548 square foot greenhouse and processing facility for
approximately $1.66 million. Accordingly, PW Apotheke's total capital commitment
is approximately $1.81 million. Concurrent with the acquisition, PW Apotheke
entered into a 20-year "triple-net" lease (the "Apotheke Lease") with Dom F, LLC
("Dom F") which will operate a cannabis cultivation facility. The lease requires
Dom F to pay all property related expenses including maintenance, insurance and
taxes. After the initial 20-year term, the Apotheke Lease provides two,
five-year renewal options. The rent for the Apotheke Lease is structured whereby
after an eight-month free-rent period, the rental payments provide Power REIT a
full return of invested capital over the next three years in equal monthly
payments. After the 44th month, rent is structured to provide a 12.9% return of
the original invested capital with increases of 3% rate per annum. At any time
after year six, if cannabis is legalized at the federal level, the rent will be
readjusted down to an amount equal to a 9% return of the original invested
capital and will increase at a 3% rate per annum on a starting date of the start
of year seven. The lease requires the tenant to maintain a medical cannabis
license and operate in accordance with all Colorado and local regulations with
respect to its operations. The lease prohibits the retail sale of the tenant's
cannabis and cannabis-infused products from the Apotheke Property. The lease
also has personal guarantees from the owners of Dom F. The Apotheke Lease is
structured to provide an annual straight-line rent of approximately $342,000,
representing an estimated yield on costs of over 18%. The project is currently
under construction and should be completed by September, 2021.



On February 3, 2021, we acquired a property located in Riverside County, CA (the
"Canndescent Property") through a newly formed wholly owned subsidiary ("PW
Canndescent"). The purchase price was $7.685 million and we paid for the .85
acre property with $2.685 million cash on hand and the issuance of 192,308
shares of Power REIT's Series A Preferred Stock. PW Canndescent received an
assignment of a lease (the "Canndescent Lease") to allow the tenant
("Canndescent") to operate the 37,000 square foot greenhouse cultivation
facility on the Canndescent Property. Canndescent is a premium flower brand for
luxury cannabis in California. The Canndescent Lease requires Canndescent to pay
all property related expenses including maintenance, insurance and taxes. The
rent for the Canndescent Lease is structured to provide straight-line annual
rent of approximately $1,074,000.



16






The following table summarized the preliminary allocation of the purchase consideration for the Canndescent Property based on the relative fair values of the assets acquired:




Land                                                 $   258,420
Assets Subject to Depreciation:
Improvements (Greenhouses / Processing Facilities)     7,426,580
Acquisition Costs Capitalized                             92,289
Total Assets Acquired                                $ 7,777,289




On March 12, 2021, through a newly formed wholly owned subsidiary, PW CO CanRE
Gas Station, LLC, ("PW Gas Station"), we purchased a property totaling 2.2 acres
of vacant land ("Gas Station Property") approved for medical cannabis
cultivation in southern Colorado for $85,000 plus acquisition costs. As part of
the transaction, we agreed to fund the immediate construction of an
approximately 24,512 square foot greenhouse and processing facility for
approximately $2.03 million. Accordingly, PW Gas Station's total capital
commitment is approximately $2.1 million. Concurrent with the acquisition, PW
Gas Station entered into a 20-year "triple-net" lease (the "Gas Station Lease")
with The Gas Station, LLC ("Gas Station") which will operate a cannabis
cultivation facility. The lease requires Gas Station to pay all property related
expenses including maintenance, insurance and taxes. After the initial 20-year
term, the Gas Station's Lease provides two, five-year renewal options. The rent
for the Gas Station Lease is structured whereby after a seven-month free-rent
period, the rental payments provide Power REIT a full return of invested capital
over the next three years in equal monthly payments. After the 43rd month, rent
is structured to provide a 12.9% return of the original invested capital with
increases of 3% rate per annum. At any time after year six, if cannabis is
legalized at the federal level, the rent will be readjusted down to an amount
equal to a 9% return of the original invested capital and will increase at a 3%
rate per annum on a starting date of the start of year seven. The lease requires
the tenant to maintain a medical cannabis license and operate in accordance with
all Colorado and local regulations with respect to its operations. The lease
prohibits the retail sale of the tenant's cannabis and cannabis-infused products
from the Gas Station Property. The lease also has personal guarantees from the
owners of the Gas Station. The Gas Station Lease is structured to provide an
annual straight-line rent of approximately $400,000, representing an estimated
yield on costs of over 18%. The project is currently under construction and
should be completed by September, 2021.



The acquisitions described above are accounted for as asset acquisitions under ASC 805-50. Power REIT has established a depreciable life for the property improvements of 20 years for greenhouses and 39 years for buildings.



17







The following table is a summary of the Trust's properties as of March 31, 2021:



Property Type/Name       Location       Acres        Size1        Lease Start    Term (yrs)2        Rent ($)         Gross Book Value
Railroad Property
P&WV (Norfolk
Southern)             PA/WV/OH                      112 miles       Oct-64                 99     $     915,000     $        9,150,000

Solar Farm Land
PWSS                  Salisbury, MA      54               5.7       Dec-11                 22            89,494              1,005,538
                      Tulare County,
PWTS                  CA                 18               4.0       Mar-13                 25            32,500                310,000
                      Tulare County,
PWTS                  CA                 18               4.0       Mar-13                 25            37,500                310,000
                      Tulare County,
PWTS                  CA                 10               4.0       Mar-13                 25            16,800                310,000
                      Tulare County,
PWTS                  CA                 10               4.0       Mar-13                 25            29,900                310,000
                      Tulare County,
PWTS                  CA                 44               4.0       Mar-13                 25            40,800                310,000
PWRS                  Kern County, CA    447             82.0       Apr-14                 20           803,117              9,183,548
                      Solar Farm Land
                      Total              601            107.7                                     $   1,050,111     $       11,739,086

CEA (Cannabis) Property34

                      Crowley County,
JAB - Tam Lot 18      CO                2.11           12,996       Jul-19                 20           201,810              1,075,000
                      Crowley County,
JAB - Mav Lot 1       CO                5.20           16,416       Jul-19                 20           294,046              1,594,582
Grassland - Mav Lot   Crowley County,
14                    CO                5.54           26,940       Feb-20                 20           354,461              1,908,400
Chronic - Sherman     Crowley County,
Lot 6                 CO                5.00           26,416       Feb-20                 20           375,159              1,995,101
Original - Mav Lot    Crowley County,
5                     CO                5.20           15,000       Apr-20                 20           256,743              1,358,664
Sweet Dirt 495        York County, ME   3.06           35,600       May-20                 20           919,849              4,917,134
Sweet Dirt 505        York County, ME   3.58           12,638       Sep-20                 20           373,055              1,964,723
Fifth Ace - Tam Lot   Crowley County,
7                     CO                4.32           18,000       Sep-20                 20           261,963              1,364,585
Monte Fiore - Tam     Crowley County,
Lot 13                CO                2.37            9,384       Oct-20                 20            87,964                425,000
Monte Fiore - Tam     Crowley County,
Lot 14                CO                2.09           24,360       Oct-20                 20           490,700              2,637,300
Green Mile - Tam      Crowley County,
Lot 19                CO                2.11           18,528       Dec-20                 20           252,061              1,311,116
Grail Project - Tam   Crowley County,
Lot 4 & 5             CO                4.41           27,988       Jan-21                 20           454,602              2,360,112
Apotheke - Tam Lot    Crowley County,
8                     CO                4.31           21,548       Jan-21                 20           341,953              1,813,893
                      Riverside
Canndescent           County, CA        0.85           37,000       Feb-21                  5         1,073,318              7,685,000
Gas Station - Tam     Crowley County,
Lot 3                 CO                2.20           24,512       Mar-21                 20           399,748              2,118,717
                      CEA Total         52.35         327,326                                     $   6,137,432     $       34,529,327
Grand Total                                                                                       $   8,102,543     $       55,418,413



1 Solar Farm Land size represents Megawatts and CEA property size represents square feet

2 Not including renewal options

3 Rent represents straight line net rent

4 Gross Book Value represents total commitment

Note: Size, Rent and Gross Book Value assume completion of approved construction





Critical Accounting Policies



The consolidated financial statements are prepared in conformity with U.S. GAAP,
which requires the use of estimates, judgments and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the consolidated financial statements, and the
reported amounts of revenues and expenses in the periods presented. We believe
that the accounting estimates employed are appropriate and resulting balances
are reasonable; however, due to inherent uncertainties in making estimates,
actual results may differ from the original estimates, requiring adjustments to
these balances in future periods. The critical accounting estimates that affect
the condensed consolidated financial statements and the judgments and
assumptions used are consistent with those described under Part II, Item 7
of
the 2020 10-K.



Results of Operations


Three Months Ended March 31, 2021 and 2020




Revenue during the three months ended March 31, 2021 and 2020 was $1,820,927 and
$787,388 respectively. Revenue during the three months ended March 31, 2021
consisted of revenue from lease income from direct financing lease of $228,750,
rental income of $1,591,931 and miscellaneous income of $246. The increase in
total revenue was primarily related to a $1,088,729 increase in rental income
from newly acquired properties netted with a decrease in other income of
$55,190. Expenses for the three months ended March 31, 2021 increased by
$177,498 as compared to total expenses for the three months ended March 31, 2020
primarily due to an increase in general and administrative expenses of $14,194
and an increase in depreciation expense of $169,401. Net income attributable to
common shares during the three months ended March 31, 2021 and 2020 was
approximately $944,918 and $182,029, respectively. Net income attributable to
common shares increased by $762,889 primarily due to the increase in rental
income which was offset by an increase in depreciation expense.



18






For the three months ended March 31, 2021 and 2020, we paid a cash dividend to our holders of Series A Preferred Stock of $163,210 and $70,058, respectively.

Liquidity and Capital Resources

Our cash and cash equivalents totaled approximately $37,071,322 as of March 31,
2021, an increase of $31,469,496 from December 31, 2020. During the three months
ended March 31, 2021, the primary increase of cash was due to financing
activities such as the rights offering that closed on February 5, 2021 through
which, we raised $36,598,055, ($36,659,941 netted with offering expenses of
$61,886), netted with a decrease of cash due to the acquisition of land and
construction in progress payments.



With the cash available as of May, 2021, we believe these resources will be
sufficient to fund our operations and commitments. Our cash outlays, other than
acquisitions, property improvements, dividend payments and interest expense, are
for general and administrative ("G&A") expenses, which consist principally of
legal and other professional fees, consultant fees, NYSE American listing fees,
insurance, shareholder service company fees and auditing costs.



To meet our working capital and longer-term capital needs, we intend to rely on
cash provided by our operating activities, proceeds received from the issuance
of equity securities and proceeds received from borrowings, which are typically
secured by liens on assets. Based on our leases in place and rental income as of
March 31, 2021, we anticipate generating $11,257,063 in cash rent over the next
twelve months. At March 31, 2021, we owed debt in the principal amount of
$24,344,619, of which $644,365 is due in the next twelve months. We anticipate
that our cash from operations will be sufficient to support our operations;
however additional acquisition of real estate may require us to seek to raise
additional financing. There can be no assurance that financing will be available
when needed on favorable terms.



FUNDS FROM OPERATIONS - NON GAAP FINANCIAL MEASURES

We assess and measure our overall operating results based upon an industry
performance measure referred to as Core Funds From Operations ("Core FFO") which
management believes is a useful indicator of our operating performance. Core FFO
is a non-GAAP financial measure. Core FFO should not be construed as a
substitute for net income (loss) (as determined in accordance with GAAP) for the
purpose of analyzing our operating performance or financial position, as Core
FFO is not defined by GAAP. The following is a definition of this measure, an
explanation as to why we present it and, at the end of this section, a
reconciliation of Core FFO to the most directly comparable GAAP financial
measure. Management believes that alternative measures of performance, such as
net income computed under GAAP, or Funds From Operations computed in accordance
with the definition used by the National Association of Real Estate Investment
Trusts ("NAREIT"), include certain financial items that are not indicative of
the results provided by our asset portfolio and inappropriately affect the
comparability of the Trust's period-over-period performance. These items include
non-recurring expenses, such as one-time upfront acquisition expenses that are
not capitalized under ASC-805 and certain non-cash expenses, including
stock-based compensation expense, amortization and certain up front financing
costs. Therefore, management uses Core FFO and defines it as net income
excluding such items. We believe that Core FFO is a useful supplemental measure
for the investing community to employ, including when comparing us to other
REITs that disclose similarly Core FFO figures, and when analyzing changes in
our performance over time. Readers are cautioned that other REITs may use
different adjustments to their GAAP financial measures than we use, and that as
a result, our Core FFO may not be comparable to the FFO measures used by other
REITs or to other non-GAAP or GAAP financial measures used by REITs or other
companies.



19






A reconciliation of our Core FFO to net income for the three months ended March 31, 2021 and 2020 is included in the table below (in thousands):




                        CORE FUNDS FROM OPERATIONS (FFO)

                                  (Unaudited)



                                                     Three Months Ended March 31,
                                                        2021                2020
Revenue                                            $     1,820,927       $   787,388

Net Income                                         $     1,108,128       $   252,087
Stock-Based Compensation                                    66,158            75,159
Interest Expense - Amortization of Debt Costs                8,527         

8,527

Amortization of Intangible Asset                            59,285         

59,285

Depreciation on Land Improvements                          196,051         

26,650

Core FFO Available to Preferred and Common Stock 1,438,149

 421,708

Preferred Stock Dividends                                 (163,210 )         (70,058 )
Core FFO Available to Common Shares                $     1,274,939       $ 

351,650

Weighted Average Shares Outstanding (basic)              2,755,502        
1,899,313

Core FFO per Common Share                                     0.46              0.19

Growth Rates:
Revenue                                                        131 %
Net Income                                                     340 %
Core FFO Available to Common Shareholders                      263 %
Core FFO per Common Share                                      142 %

© Edgar Online, source Glimpses

All news about POWER REIT
09/09POWER REIT : Acquires 556,146 Square Foot Cannabis Greenhouse Cultivation and Processing F..
PU
09/09POWER REIT : Entry into a Material Definitive Agreement, Completion of Acquisition or Disp..
AQ
09/09PropCo Enters 20-Year Triple-Net Lease with Marengo Cannabis LLC
CI
09/09Power REIT Acquires 556,146 Square Foot Cannabis Greenhouse Cultivation and Processing ..
CI
09/09POWER REIT (NYSEAM : PW) completed the acquisition of 556,146 Square Foot Cannabis Greenho..
CI
08/09POWER REIT : Results of Operations and Financial Condition, Financial Statements and Exhib..
AQ
08/09POWER REIT : Earnings Flash (PW) POWER REIT Posts Q2 Revenue $2.3M
MT
08/09POWER REIT : Earnings Flash (PW) POWER REIT Reports Q2 FFO $0.51
MT
08/09POWER REIT (NYSEAM : PW) acquired 4 Controlled Environmental Agriculture Facilities in Col..
CI
08/06POWER REIT : Management's Discussion and Analysis of Financial Condition and Results of Op..
AQ
More news
Analyst Recommendations on POWER REIT
More recommendations
Financials (USD)
Sales 2021 9,71 M - -
Net income 2021 - - -
Net Debt 2021 - - -
P/E ratio 2021 -
Yield 2021 3,75%
Capitalization 172 M 172 M -
Capi. / Sales 2021 17,7x
Capi. / Sales 2022 11,7x
Nbr of Employees 3
Free-Float 68,3%
Chart POWER REIT
Duration : Period :
Power REIT Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends POWER REIT
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 1
Last Close Price 51,69 $
Average target price 63,00 $
Spread / Average Target 21,9%
Managers and Directors
David H. Lesser Chairman-Trustees Board, CEO, CFO & Secretary
Virgil E. Wenger Independent Trustee
Patrick R. Haynes Independent Trustee
William S. Susman Independent Trustee
Paula Jean Poskon Independent Trustee
Sector and Competitors
1st jan.Capi. (M$)
POWER REIT84.95%172
EQUINIX, INC. (REIT)18.74%74 913
DIGITAL REALTY TRUST, INC.9.47%44 285
ALEXANDRIA REAL ESTATE EQUITIES, INC.9.63%29 770
REALTY INCOME CORPORATION6.90%25 879
SEGRO PLC32.76%20 674