Power REIT Buys Another Property In Colorado For Cannabis Operations

Real estate investment trust Power REIT (NYSE-AMEX: PW) has bought a 2.2-acre parcel in Crowley County, Colorado via its subsidiary PropCo.

The property has a favorable geographical position for both greenhouse growing and business operations, being suited in the southern part of the Centennial state.

The Deal Specifics

Under the deal, Power REIT is supposed to back the building of around 24,512 square feet of greenhouse and processing capacity for Gas Station LLC, a new tenant. With this funding, Power REIT’s total investment for the property amounts to $2.1 million.

PropCo signed a 20-year “triple-net” lease with Gas Station, which is supposed to run a cannabis cultivation facility.

Under the lease, Gas Station will finance all standard property-related costs, such as maintenance, taxes, and insurance.

The lease could be renewed two times for five years, and it also requires Gas Station to keep a medical marijuana license and to work following the regional regulations. It is not allowed to retail sale its products directly from the property.

Power REIT noted that the lease was formed to enable PropCo to achieve a full return on its investment in the next three years. It has set a yearly rent of around $301,000 which accounts for unleveraged FFO yield of around 19% on the invested sum.

“We continue to deploy capital on a highly accretive basis that supports our investment thesis of investing in sustainable property investments,” Power REIT Chairman and CEO David Lesser stated. “Southern Colorado continues to represent a compelling opportunity for our investment strategy in cannabis cultivation facilities. We believe that each additional acquisition diversifies our tenant concentration and further improves our focused strategy within this vibrant market that provides significant runway for growth.”

Earlier this year, Power REIT acquired another Colorado greenhouse property in a lease-back deal with The Apotheke, run by dispensary operator Viviana Fernandez.

The company signed a deal to finance the property, which contains a greenhouse and processing facility — with $1.8 million.