Power REIT (NYSE: PW) has acquired a 37,000 square foot state-of-the-art greenhouse cannabis cultivation facility located in Riverside County, California through a wholly-owned subsidiary for $7.685 million. Power REIT funded the transaction using $2.685 million of cash on hand and the issuance of 192,308 shares of Power REIT’s Series A Preferred Stock, which had a closing price of $26.00 per share on February 2, 2021.
The property is leased to luxury cannabis brand Canndescent, which has over 50% store penetration in California. Canndescent offers ultra-premium products grown through a proprietary cultivation process.
Adrian Sedlin, Founder and CEO of Canndescent, commented, “We are excited to partner with Power REIT and are already exploring additional pipeline and business opportunities that could be mutually beneficial to us and Power REIT as we both continue to expand our respective businesses.”
The lease provides straight-line annual rent of approximately $1,074,000 which represents an unleveraged CORE FFO yield to the Common Shares of Power REIT of greater than 26%. The transaction increases Power REIT’s CORE FFO on a run-rate basis by approximately $0.21 per share relative to the prior run rate guidance. This increase in CORE FFO is based on using proceeds from the pending Rights Offering that Power REIT is conducting in order to fund the acquisition. Accordingly, such calculation is based on adding approximately 101,000 common shares in order to provide an indication of the pro-forma impact of the acquisition.
David Lesser, Power REIT’s Chairman, and CEO, commented, “This transaction demonstrates Power REIT’s ability to source and close accretive real estate acquisitions that we believe should result in the creation of significant shareholder value. This acquisition expands our national footprint into the California market, which is the largest cannabis market in the United States. The acquisition provides attractive valuation metrics including a discount to replacement cost and a lower price than recent comparable property sales in the market. We are also pleased to establish a relationship with Canndescent which is a sophisticated cannabis operator with premier brands and significant customer loyalty.”
In October, Canndescent announced the launch of JUSTICE JOINTS, where 100% of profits will be donated to social justice causes. Specifically, JUSTICE JOINTS will donate all profits to fostering the participation and ownership of BIPOC communities within the cannabis industry and to prisoner release, expungement, and reentry programs for those convicted of nonviolent cannabis offenses.
“JUSTICE JOINTS provides an opportunity for the entire cannabis community to rally and to change the world we have into the one we want,” said Sedlin. He continued, “As industry participants, we feel a massive imperative to help the thousands of people still jailed for selling the same plant we do and to increasing participation opportunities for those communities disproportionately impacted by the war on drugs.”
At launch, JUSTICE JOINTS has partnered with the Last Prisoner Project, a 501(c)(3) non-profit coalition of social justice leaders and drug policy reform experts to direct its profits in support of criminal record expungement, release, and reentry programs. Over the coming months, JUSTICE JOINTS will establish a grant program geared toward increasing participation and ownership of BIPOC communities within the cannabis industry.
“Last Prisoner Project is proud to partner with Canndescent at the launch of JUSTICE JOINTS so we can raise awareness around the need for criminal justice reform”, said Erik Murray, Last Prisoner Project Board Member. Last Prisoner Project can’t express enough gratitude to the consumers who purchase this great product and for their contributions to our collective efforts to bring these cannabis prisoners home.”