Power REIT has finalized a lease amendment to fund additional improvements to its greenhouse cultivation facility in Marengo Township, MI. Power REIT’s capital commitment is approximately $4,100,000 which increases the straight-line annual rent by approximately $830,000.
"Including the additional funding announced today, Power REIT’s total capital commitment is approximately $25,600,000 million for the purchase and improvement of 556,146 square feet of greenhouse and processing space," the Power Reit team explains. "The 20 year “triple-net” lease is structured to provide straight-line annual rent of approximately $5,100,000, which represents an unleveraged core FFO yield of approximately 20% on Power REIT’s invested capital."
The additional items for Phase 2 of facility improvements focus on transitioning the facility from pepper farming to cannabis cultivation. The greenhouse upgrades include air circulation fans, exhaust fans with carbon filters as well as installation of an upgraded greenhouse automation system. The existing energy curtain will be replaced, and a blackout curtain will be added for photoperiod control necessary for optimizing greenhouse cultivation of cannabis. Three quarters of an acre of the greenhouse will be converted into nursery space adjacent to the new state-of-the-art propagation room that is currently under construction. The construction of fourteen dedicated spaces incorporating precision energy-efficient environmental control equipment will ensure optimal conditions for the critical phase of drying and curing the harvested plants. Other general improvements are included in this lease addendum as well as upgrades to the office space, upgrades to the head-house, and installation of video surveillance and other security systems.
Jared Schrader, President of Millennium Cannabis commented, “We are very pleased with the pace of construction at the Marengo, Michigan project. The funding provided by the lease amendment will enable us to continue the construction progress and our pathway to revenue. Approvals at the township level are moving along well and we have received approval from the Planning Committee and are currently working on next steps with the State of Michigan and Marengo township for the final site plan. Licensing is progressing as expected and we hope to commence cultivation of plants in early 2022.”
David Lesser, Chairman and CEO of Power REIT commented, “We are pleased with the progress we have made since acquiring this property which we believe will be the largest cannabis cultivation facility in Michigan. The Michigan market remains very strong, and we are confident that Millennium Cannabis is putting in place a plan to become a low-cost large-scale producer of cannabis related products within the Michigan market. We believe we acquired this property at an attractive basis that, once operational, should provide Millennium Cannabis a competitive advantage. This transaction represents the latest example of Power REIT’s ability to deploy capital on a highly accretive basis.”