Cannabis Cultivation Facility to be Constructed in Southern Colorado
New York-based Power REIT or the “Trust,” a specialized real-estate investment trust (REIT) focused on sustainable real estate, has acquired a 2.11 acre parcel in Crowley County, in southern Colorado, through a wholly owned subsidiary (“PropCo”). Power REIT plans to begin the immediate construction of an 18,528-square-foot greenhouse and processing facility for approximately $1.3 million, including the land acquisition cost.
Concurrent with the acquisition of the Property, PropCo entered into a 20-year “triple-net” lease with a tenant (“Green Mile”) which will operate a cannabis cultivation facility. The lease requires Green Mile to pay all property related expenses including maintenance, insurance and taxes. After the initial 20-year term, Green Mile’s lease provides two, five-year renewal options. The lease also has personal guarantees from the owners of Green Mile.
The lease requires Green Mile 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 $252,000 which represents an unleveraged CORE FFO yield of approximately 19.2% on the invested capital. The transaction increases Power REIT’s CORE FFO on a run rate basis by approximately $0.13 per share.
David Lesser, Power REIT’s Chairman and CEO, commented, “This recent acquisition represents the latest iteration of an upgraded prototype greenhouse cultivation facility in Southern Colorado and supports our investment thesis of investing in sustainable greenhouse properties. We remain enthusiastic about expanding our greenhouse portfolio in Colorado, which should allow our tenant to compete favorably with indoor cultivation facilities by growing high quality cannabis at a competitive cost.” Mr. Lesser continued, “We are optimistic about our current acquisition pipeline and hope to announce additional activity in the near term in Colorado as well as other states that allow for regulated cannabis growing and sales.”
CEA Facilities, such as greenhouses, provide an extremely environmentally friendly solution, which consume approximately 70% less energy than indoor growing operations that do not benefit from “free” sunlight. CEA facilities use 90% less water than field grown plants, and all of Power REIT’s greenhouse properties operate without the use of pesticides and avoid agricultural runoff of fertilizers and pesticides.