Connect with us

Hi, what are you looking for?

Saturday, Jul 24, 2021
Mugglehead Magazine
Cannabis & psychedelics industry news based in Vancouver, B.C.
  • Loading stock data...

Investment Ideas

Power REIT closes on financing to expand cannabis portfolio

The company issued $15.5 million in bonds to fund the acquisition of cannabis properties

Power REIT Closes on Financing to Expand Cannabis Portfolio

An American real-estate investment trust is looking to double-down on high-yield properties servicing the cannabis industry.

Power REIT (NYSE American: PW) announced Monday it had closed on a $15.5 million round of financing to acquire more incoming-producing properties.

Through a newly formed subsidiary, the New York-based trust issued long-term fixed rate bonds with an interest rate of 4.62 per cent that will be paid over the financing’s lifetime of 35 years, until 2054.

Other REITs in the cannabis sector have performed well, despite the sagging market, which analysts say is in part due to cash-starved weed companies selling off their properties to generate capital.

In July 2019, Power REIT announced an updated business plan that would focus on acquiring buildings suited for indoor cannabis cultivation — what it calls “controlled environment agriculture.” As part of that release, the company said it was acquiring two facilities in southern Colorado for the cultivation of medical cannabis.

The two properties make up a total of 19,000 square-feet of cultivation and processing space, and are leased to a licensed cannabis producer. These acquisitions created significant growth in its core funds from operations for the last quarter, the company said.

Power REIT said it believes it can create significant earnings growth by acquiring more of this type of property, and has an “active pipeline” of potential acquisitions. The growth potential is a result of the high yield relative to other traditional asset types combined with REITs relatively small market capitalization, the company said.

“This financing is an important next step in the execution of our recently announced business plan,” CEO David Lesser said in the release. “We are pursuing an active pipeline of acquisition opportunities and also are engaged in active discussions related to the expansion of our existing controlled environment agriculture properties.”

The company’s portfolio is divided into three industries: controlled environment agriculture (cannabis), solar farm land and railroads. By rent breakdown, cannabis properties make up 15 per cent, solar farm land 43 per cent and railroad property 42 per cent.

According to the company’s website, cannabis properties generate 15 per cent of the rent with eight per cent of its total gross book value. That figure contrasts with solar farm land generating 43 per cent of total rent from its gross book value of 52 per cent of the company’s portfolio.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Health and Safety

Science doesn't know yet, but one psychedelic researcher is chasing clues to see if it can

Canada

As more medium-to-small producers came into play this year, great weed started hitting legal shelves at fairer prices

Enforcement

The legislation's steep penalties and confusing rules are a step backward to populations that have used cannabis traditionally for centuries

News

Cannabis will be treated like alcohol under the company's policy changes