POWER REIT (NYSEMKT:PW) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
On December 31, 2019, Power REIT (the “Trust”) announced it had entered into an agreement with JAB Industries Ltd. (“Tenant”) to expand a property owned through a wholly owned subsidiary of Power REIT (“PropCo”) and leased to Tenant to a lease (the “Lease”). The property being expanded is located in Southern Colorado and is approximately 5.2 acres and currently has approximately 5,616 rentable square feet of greenhouse and other related space that is being used for cultivation and processing of cannabis. The Lease requires the Tenant to maintain a medical cannabis license and operate in accordance with all Colorado and state and local regulations with respect to its operations. The Lease prohibits the retail sale of the Tenant’s cannabis and cannabis-infused products from the Properties.
The expansion consists of approximately 10,800 square feet of additional greenhouse space that will be used for the cultivation of cannabis. The Tenant is responsible for implementing the expansion and PropCo will fund the cost of such expansion up to a total of $899,582 with any additional amounts funded by Tenant.
As part of the agreement, PropCo and Tenant have amended the Lease to increase the rent whereby after a six-month period, the additional rental payments provide PropCo with a full return of its invested capital related to the expansion over the next three years in equal monthly payments. Thereafter, rent is structured to provide a 12.5% return on the original invested capital amount which will increase at a 3% rate per annum. At any time after year six of the Lease, if cannabis is legalized at the federal level, the rent will be readjusted down to an amount equal to a 9% return on the original invested capital amount and will increase at a 3% rate per annum based on a starting date of the start of year seven.
The Lease provides that Tenant is responsible for paying all expenses related to the Properties, including maintenance expenses, insurance and taxes.
About POWER REIT (NYSEMKT:PW)
Power REIT is a real estate investment trust (REIT) that holds, develops, acquires and manages real estate assets related to transportation and energy infrastructure in the United States. The Company, within the transportation and energy infrastructure sectors, is focused on making new acquisitions of real estate that are or will be leased to renewable energy generation projects, such as utility-scale solar farms and wind farms. It is structured as a holding company and owns its assets through its subsidiaries. Its assets include approximately 112 miles of railroad infrastructure and related real estate, which is owned by its subsidiary Pittsburgh & West Virginia Railroad (P&WV) and approximately 601 acres of fee simple land leased to a range of solar power generating projects with an aggregate generating capacity of approximately 108 Megawatts (MW). It is engaged in expanding its portfolio of real estate related to renewable energy generation projects.