Power REIT (NYSE-AMEX: PW) confirmed Friday it has bought a 9.35-acre property in Craig County, Oklahoma via its subsidiary PropCo for a total of $2.65 million.
The property is based in northeast Oklahoma, which is said to provide excellent conditions for greenhouse growth.
The Deal Details
The Old Bethpage, a New York-based real estate investment trust simultaneously signed a 20-year “triple-net” lease with Vinita Cannabis LLC, which will run the property as a cannabis cultivation facility.
Under the lease, VC is required to compensate all property-related costs, counting maintenance, taxes, and insurance and to keep a medical cannabis license. It will run the facility following all state and regional regulations. No sale of cannabis at the property will be permitted.
The lease offers two, five-year renewal options after the initial 20-year term.
After the period set for renovations, the lease requires rental payments that will provide PropCo with a full return of its investment in the following three years, “and thereafter, provides an approximately 13% yield increasing thereafter at a rate of 3% per annum,” according to Power REIT.
Under the deal, Power REIT will support the renovation expenses of around 40,000 sq. feet of greenhouse space, 3,000 sq. feet of office space, and 100,000 sq. feet of fenced outdoor cultivation space with hoop structures.
“We are expanding our nationwide footprint and diversifying portfolio risk with this acquisition in Oklahoma,” Power REIT’s Chairman and CEO David Lesser stated. “Our debut in this state positions us to participate in what has been coined, the 'wild-wild-west' and benefit from the opportunities inherent with the Oklahoma cannabis market rapid expansion. This cultivation facility is already operational and will be upgraded to provide operational improvements. There is also ample expansion opportunity that will allow our tenant to capitalize on the increasing demand for cannabis products in Oklahoma.”
Price Action
Power REIT’s shares were trading 10.11% lower at $38.50 per share at the time of writing.
Photo by Rick Proctor on Unsplash
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