Benzinga | May 26, 2021 10:46AM EDT

Power REIT To Reach The Booming Michigan Cannabis Market With Pending $18.5M Greenhouse Acquisition

Power REIT (NYSE-AMEX: PW) reported Tuesday it will buy a greenhouse cannabis cultivation and processing facility in Michigan for around $18.5 million.

What happened

The Old Bethpage, a New York-based real estate investment trust, signed an agreement to buy the property with 522,530 sq. feet of greenhouse and processing space. The property is attractively based in the area that provides the "potential for unlimited cannabis cultivation licenses," the company noted.

Spreading across 66 acres, the property can notably expand its cultivation and processing space, already having plans to add 330,236 sq. feet.

The state-of-the-art facility boasts premium greenhouse growing controls and a state-of-the-art irrigation/fertigation system. It is already prepared for immediate cannabis cultivation.

Under the deal, Power REIT agreed to a 75-day due diligence timeline, followed up with a 30-day period to finalize the transaction. The company is working on completing all the necessary requirements though it does not guarantee when or if the transaction will be completed.

Why it matters

According to Power REIT's report, this could be the biggest regulated cannabis cultivation and processing facility and one of the largest in the U.S. as well.

"This acquisition is a great opportunity for Power REIT to gain scale," said David Lesser, Power REIT's chairman and CEO. "Like our other Controlled Environment Agriculture properties, this has significant potential for expansion. Once operational, this will be one of the largest cannabis greenhouse cultivation facilities in the United States even before any expansion."

Lesser added that this potential purchase marks the company's entrance into the booming Michigan cannabis market, which currently has among the highest prices of cannabis in the U.S.

"The acquisition is consistent with Power REIT's investment strategy of focusing on sustainability which is associated with growing in a greenhouse which will be less expensive and have a much lower carbon footprint than growing in an industrial property," Lesser said.

"We were able to seize this opportunity due to our flexible balance sheet, our expansive network and focused investment strategy."

Power REIT focuses on sustainable real estate, such as properties for controlled environment agriculture as well as renewable energy and transportation.

Price Action

Power REIT's shares were trading at $41.41 per share at the time of writing.

Photo by CRYSTALWEED cannabis on Unsplash