Power REIT acquired two parcels in Crowley County, Colorado for $150,000 through a wholly-owned subsidiary (“PropCo”). "The Properties are strategically located in a part of southern Colorado that offers a very favorable business setting and climate for greenhouse cultivation," the team with the company explains. "The parcels are comprised of 2.37 acres and 2.09 acres respectively."
Concurrent with the acquisition of the Properties, PropCo entered into a lease with a seasoned operator of cannabis cultivation facilities (“Monte Fiore”). The lease is structured as a “triple-net” lease that requires Monte Fiore to pay all property related expenses including maintenance, insurance and taxes. The lease has a term of 20 years and provides two, 5-year renewal options for the tenant and has financial guarantees from affiliates of the tenant. The lease requires Monte Fiore 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 $579,000 which represents an unleveraged FFO yield of approximately 18.9% on the invested capital. The transaction, increases Power REIT’S FFO on a run rate basis by approximately $0.30 per share.
As part of the transaction, Power REIT has agreed to fund the immediate construction of a 33,744 square foot greenhouse and processing facility for approximately $2.9 million. Accordingly, Power REIT’s total capital commitment is approximately $3.1 million. In addition, Power REIT has secured options to acquire two additional adjacent parcels with approximately 2 acres each and has the option to acquire such parcels and fund the construction of additional greenhouse and processing space for Monte Fiore. The parcels are intended to be acquired in phases over the next several years. In the event the options are not exercised per the schedule and options expire, Power REIT has a Right of First Refusal over the parcels.
David Lesser, Power REIT’s Chairman and CEO, commented, “We have worked hard to create a plan for a truly state-of-the-art greenhouse cultivation complex with a highly sophisticated cannabis operator. Monte Fiore, and its affiliates have developed and currently operate a 36,000 square foot greenhouse cultivation facility in southern Colorado and operate a 60,000 square foot hemp greenhouse and 400 acre outdoor farm. We believe this transaction positions them to become a strong leader in the Colorado regulated cannabis market and we are excited to support their efforts.”
Jared Schrader, Chief Executive Officer of Monte Fiore, commented, “Monte Fiore is a company focused on greenhouse cultivation and processing. We are currently in the enviable position such that the demand for our products far exceeds our capacity. After investigating alternatives, we have concluded to pursue growth plans in Crowley County based on the favorable environment and infrastructure. In addition, the support of Power REIT allows us to accelerate our growth and work toward our objective of becoming a large-scale low-cost producer of the highest quality cannabis and cannabis related products."
"Monte Fiore is dedicated to producing consistent, top quality cannabis in a sustainable manner. We are craft-driven creators, meaning we prioritize producing the best product over generating the most hype. And by using industry leading genetics and practicing completely pesticide free hydronic cultivation, we can serve our customers better and foster a blazing passion for our product. We are excited to have the support of Power REIT and look forward to expanding this relationship over time at this location as well as other potential opportunities.”
Nick Perrino, President of Monte Fiore, commented, “Upon completion of construction, the greenhouse campus will have exceptional performance to grow high quality cannabis at a competitive cost. We will also have a state-of-the-art processing facility that will allow us to capture significant market share for our cannabis derived products. We pride ourselves on the ability to perpetually harvest approximately 1,000 plants per week. Upon completion of this cultivation facility, we expect this number to grow to approximately 2,000 plants per week. Power REIT moves us towards our vision of becoming a large-scale producer of the highest quality cannabis and cannabis products in Colorado.”
For more information:
Power REIT
301 Winding Road
Old Bethpage, NY 11804
212-750-0371
ir@pwreit.com
pwreit.com