Benzinga | Dec 7, 2020 06:59AM EST

Power REIT Acquires Property for Greenhouse Cannabis Cultivation in Highly Accretive Transaction

Power REIT (AMEX:PW) ("Power REIT" or the "Trust") today announced that it acquired a 2.11 acre parcel in Crowley County, Colorado (the "Property") through a wholly owned subsidiary ("PropCo"). The Property is strategically located in a part of southern Colorado that offers a very favorable business setting and climate for greenhouse cultivation.

As part of the transaction, Power REIT has agreed to fund the immediate construction of an 18,528 square foot greenhouse and processing facility for approximately $1.3 million including the land acquisition cost.

Concurrent with the acquisition of the Property, PropCo entered into a 20-year "triple-net" lease with a tenant ("Green Mile") which will operate a cannabis cultivation facility. The lease requires Green Mile to pay all property related expenses including maintenance, insurance and taxes. After the initial 20-year term, Green Mile's lease provides two, five-year renewal options. The lease also has personal guarantees from the owners of Green Mile.

The lease requires Green Mile to maintain a medical marijuana license and to operate in accordance with all Colorado and municipal regulations while prohibiting retail sales of its products from the property. The lease is structured to provide straight-line annual rent of approximately $252,000 which represents an unleveraged CORE FFO yield of approximately 19.2% on the invested capital. The transaction increases Power REIT's CORE FFO on a run rate basis by approximately $0.13 per share.