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What changed in Power REIT's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Power REIT's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+373 added−498 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-31)

Top changes in Power REIT's 2023 10-K

373 paragraphs added · 498 removed · 219 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

42 edited+40 added−6 removed29 unchanged
Biggest changeThe chart below shows the organizational structure of the Trust as of December 31, 2022. 6 Properties As of December 31, 2022, the Trust’s assets consisted of a total of approximately 112 miles of railroad infrastructure plus branch lines and related real estate, approximately 601 acres of fee simple land leased to seven utility scale solar power generating projects with an aggregate generating capacity of approximately 108 Megawatts (“MW”), and approximately 263 acres of land with 2,211,000 square feet of existing or under construction greenhouse/processing space. 7 Below is a chart that summarizes our properties as of December 31, 2022: Property Type/Name Acres Size 1 Lease Start Term (yrs) 2 Gross Book Value 3 Gross Book Value Per SF Railroad Property P&WV - Norfolk Southern 112 miles Oct-64 99 $ 9,150,000 $ - Solar Farm Land Massachusetts PWSS 54 5.7 Dec-11 22 1,005,538 - California PWTS 7 18 4.0 Mar-13 25 310,000 - PWTS 7 18 4.0 Mar-13 25 310,000 - PWTS 7 10 4.0 Mar-13 25 310,000 - PWTS 7 10 4.0 Mar-13 25 310,000 - PWTS 7 44 4.0 Mar-13 25 310,000 - PWRS 447 82.0 Apr-14 20 9,183,548 - Solar Total 601 107.7 $ 11,739,086 $ - Greenhouse - Cannabis Colorado JAB - Mav 1 5,6 5.20 16,416 Jul-19 20 1,594,582 97 Jackson Farms - Tam 18 4,5,6 2.11 12,996 Jul-19 20 1,075,000 83 Mav 14 4,5,6 5.54 26,940 Feb-20 20 1,908,400 71 Green Street (Chronic) - Sherman 6 5,6 5.00 26,416 Feb-20 20 1,995,101 76 Fifth Ace - Tam 7 5,6 4.32 18,000 Sep-20 20 1,364,585 76 Tam 19 4,5,6 2.11 18,528 Dec-20 20 1,311,116 71 Apotheke - Tam 8 5,6 4.31 21,548 Jan-21 20 2,061,542 96 Tam 14 4,5,6 2.09 24,360 Oct-20 20 2,252,187 92 Elevate & Bloom - Tam 13 5,6 2.37 9,384 May-22 20 1,031,712 110 Gas Station - Tam 3 5,6 2.20 24,512 Feb-21 20 2,080,414 85 Tam 27 and 28 4,5,6 4.00 38,440 Apr-21 20 1,872,340 49 Walsenburg Cannabis (Greenhouse) 4,5,6,7 35.00 102,800 May-21 20 4,219,170 41 Walsenburg Cannabis (MIP) 5,6 Jan-22 10 636,351 Sherman 21 and 22 4,5,6 10.00 24,880 Jun-21 20 1,782,136 72 Jackson Farms - Mav 5 5,6 5.20 15,000 Nov-21 20 1,358,634 91 Tam 4 and 5 4,5,6 4.41 27,988 Jan-22 20 2,239,870 80 Maine Sweet Dirt 6,7 6.64 48,238 May-20 20 9,082,731 188 California 4,6,7 0.85 37,000 Jan-21 5 7,685,000 208 Oklahoma 4,6 9.35 40,000 Jun-21 20 2,593,313 65 Michigan 4,6 61.14 556,146 Sep-21 20 24,171,151 43 Greenhouse - Produce Nebraska 4 90.88 1,121,153 Apr-22 10 9,350,000 8 Greenhouse Total 262.72 2,210,745 $ 81,665,335 $ 37 Total Portfolio $ 102,554,421 Impairment $ 16,739,040 Gross Book Value Net of Impairment $ 85,815,381 1 Solar Farm Land size represents Megawatts and CEA property size represents greenhouse square feet 2 Not including renewal options 3 Gross Book Value for our Greenhouse Portfolio represents purchase price (excluding capitalized acquisition costs) plus improvements costs - does not include outstanding capital commitments 4 Property is vacant 5 Tenant is not current on rent/in default 6 An impairment has been taken against this asset 7 Asset held for sale 8 Power REIT’s Business We are primarily engaged in the ownership, leasing, acquisition, development, and disposition of special purpose real estate assets.
Biggest changeProperties As of December 31, 2023, the Trust’s assets consisted of a total of approximately 112 miles of railroad infrastructure plus branch lines and related real estate, approximately 501 acres of fee simple land leased to two utility scale solar power generating projects with an aggregate generating capacity of approximately 88 Megawatts (“MW”), and approximately 256 acres of land with approximately 2,163,000 square feet of existing or under construction greenhouse/processing space. 6 Below is a chart that summarizes our properties as of December 31, 2023: Property Type/Name Acres Size 1 Gross Book Value 3 Railroad Property P&WV - Norfolk Southern 112 miles $ 9,150,000 Solar Farm Land Massachusetts PWSS 7,9 54 5.7 1,005,538 California PWRS 447 82.0 9,183,548 Solar Total 501 87.7 $ 10,189,086 Greenhouse - Cannabis Ordway, Colorado Maverick 1 4,6,7 5.20 16,416 1,594,582 Tamarack 18 4,6 2.11 12,996 1,075,000 Maverick 14 4,6,7 5.54 26,940 1,908,400 Sherman 6 - Green Street/Chronic 5,6,7,9 5.00 26,416 1,995,101 Tamarack 7 4,6 4.32 18,000 1,364,585 Tamarack 7 (MIP) 5 636,351 Tamarack 19 4,6 2.11 18,528 1,311,116 Tamarack 8 - Apotheke 5,6 4.31 21,548 2,061,542 Tamarack 14 4,6,7,9 2.09 24,360 2,252,187 Tamarack 13 4,6,7 2.37 9,384 1,031,712 Tamarack 3 4,6 2.20 24,512 2,080,414 Tamarack 27 and 28 4,6 4.00 38,440 1,872,340 Sherman 21 and 22 2,4,6 10.00 24,880 1,782,136 Maverick 5 - Jacksons Farms 5,6 5.20 15,000 1,358,634 Tamarack 4 and 5 4,6,7 4.41 27,988 2,239,870 Walsenburg, Colorado 4,6,7 35.00 102,800 4,219,170 Desert Hot Springs, California 6,7 0.85 37,000 7,685,000 Vinita, Oklahoma 4,6,7 9.35 40,000 2,593,313 Marengo Township, Michigan 4 61.14 556,146 24,171,151 Greenhouse - Food Crop O’Neill, Nebraska 4 90.88 1,121,153 9,350,000 Greenhouse Total 256.08 2,162,507 $ 72,582,605 Total Portfolio (Real Estate Owned) $ 91,921,691 Mortgage Loan 8 $ 850,000 Impairment 20,673,182 Depreciation and Amortization 6,739,995 Net Book Value Net of Impairment, Depreciation and Amortization $ 65,358,514 1 Solar Farm Land size represents Megawatts and CEA property size represents greenhouse square feet 2 Building structure construction incomplete 3 Gross Book Value for our Greenhouse Portfolio represents purchase price (excluding capitalized acquisition costs) plus improvements costs 4 Property is vacant 5 Tenant is not current on rent/in default 6 An impairment has been taken against this asset 7 Asset held for sale 8 Loan secured by a second mortgage related to property in Maine sold on November 1, 2023 9 Property sold after December 31, 2023 - see Note 13 Subsequent Events 7 Power REIT’s Business We are primarily engaged in the ownership, leasing, acquisition, development, and disposition of special purpose real estate assets.
Our typical approach is to lease the properties on a long-term “triple net” basis whereby the tenant pays all property related costs including real estate taxes, insurance, and other operating costs including the maintenance of the property. 2022 and 2023 Acquisitions and Transactions On March 31, 2022, we completed our first acquisition with the focus on the cultivation of food crops, through a newly formed wholly owned subsidiary, PW MillPro NE LLC, (“PW MillPro”), and acquired a 1,121,513 square foot greenhouse cultivation facility (the “MillPro Facility”) on an approximately 86-acre property and a separate approximately 4.88-acre property with a 21-room employee housing building (the “Housing Facility”) for $9,350,000 and closing costs of approximately $91,000 located in O’Neill, Nebraska (collectively the “Property”).
Our typical approach is to lease the properties on a long-term “triple net” basis whereby the tenant pays all property related costs including real estate taxes, insurance, and other operating costs including the maintenance of the property. 2022 and 2023 Acquisitions and Sale Transactions On March 31, 2022, we completed our first acquisition with the focus on the cultivation of food crops, through a newly formed wholly owned subsidiary, PW MillPro NE LLC, (“PW MillPro”), and acquired a 1,121,513 square foot greenhouse cultivation facility (the “MillPro Facility”) on an approximately 86-acre property and a separate approximately 4.88-acre property with a 21-room employee housing building (the “Housing Facility”) for $9,350,000 and closing costs of approximately $91,000 located in O’Neill, Nebraska (collectively the “Property”).
To achieve this primary goal, we have developed a business strategy focused on increasing the values of our properties, and ultimately of the Trust, which includes: ● Raising capital by monetizing the embedded value in our portfolio to enhance our liquidity position and, as appropriate reducing debt levels to strengthen our balance sheet; ● Selling off non-core properties and underperforming assets; ● Seeking to re-lease properties that are vacant or have non-performing tenants ● Raising the overall level of quality of our portfolio and of individual properties in our portfolio; ● Improving the operating results of our properties; and ● Taking steps to position the Company for future growth opportunities. 9 Improving Our Balance Sheet by Reducing Debt and Leverage; Maintaining Liquidity Leverage We continue to seek ways to reduce our leverage by improving our operating performance and through a variety of other means available to us.
To achieve this primary goal, we have developed a business strategy focused on increasing the values of our properties, and ultimately of the Trust, which includes: ● Raising capital by monetizing the embedded value in our portfolio to enhance our liquidity position and, as appropriate reducing debt levels to strengthen our balance sheet; ● Selling off non-core properties and underperforming assets; ● Seeking to re-lease properties that are vacant or have non-performing tenants; ● Raising the overall level of quality of our portfolio and of individual properties in our portfolio; ● Improving the operating results of our properties; and ● Taking steps to position the Company for future growth opportunities. 8 Improving Our Balance Sheet by Reducing Debt and Leverage; Improving Liquidity Leverage We continue to seek ways to reduce our leverage by improving our operating performance and through a variety of other means available to us.
Unfortunately, in many cases this has not been enough to solve the issues and many of the cannabis tenants have shut down or continue to try to operate but have limited ability to pay rent at this time. 12 Food Cultivation Market Opportunity There is a growing trend towards cultivation of certain crops in CEA greenhouse cultivation facilities.
Unfortunately, this has not been enough to solve the issues and many of the cannabis tenants have shut down or continue to try to operate but have limited ability to pay rent at this time. Food Cultivation Market Opportunity There is a growing trend towards cultivation of certain crops in CEA greenhouse cultivation facilities.
On April 1, 2022, we announced that we entered into a 10-year triple-net lease with a wholly owned subsidiary of Millennium Sustainable Ventures Corp. (ticker: MILC) related to the Property. The MillPro property is configured for the cultivation of tomatoes and during 2022 grew a preliminary crop.
On April 1, 2022, we announced that we entered into a 10-year triple-net lease with a wholly owned subsidiary of Millennium Sustainable Ventures Corp. (ticker: MILC) related to the MillPro Facility. The MillPro Facility is configured for the cultivation of tomatoes and during 2022 grew a preliminary crop.
The Trust is structured as a holding company and owns its assets through twenty-five direct and indirect wholly-owned, special purpose subsidiaries that have been formed in order to hold real estate assets, obtain financing and generate lease revenue.
The Trust is structured as a holding company and owns its assets through twenty-four direct and indirect wholly-owned, special purpose subsidiaries that have been formed in order to hold real estate assets, obtain financing and generate lease revenue.
Currently, the Trust is structured as a holding company and owns its assets through twenty-five wholly-owned, special purpose subsidiaries that have been formed in order to hold real estate assets, obtain financing and generate lease revenue.
Currently, the Trust is structured as a holding company and owns its assets through twenty-four wholly-owned, special purpose subsidiaries that have been formed in order to hold real estate assets, obtain financing and generate lease revenue.
To date, the FDA has not approved a marketing application for cannabis for the treatment of any disease or condition. 13 Governance We are an internally managed REIT with a Board comprised of four independent Trustees and one insider Trustee. Each Trustee serves a one-year term and as such, we do not have a staggered board.
To date, the FDA has not approved a marketing application for cannabis for the treatment of any disease or condition. Governance We are an internally managed REIT with a Board comprised of three independent Trustees and one insider Trustee. Each Trustee serves a one-year term and as such, we do not have a staggered board.
The Trust has a Board of Trustees that has four Independent Trustees in addition to Mr. Lesser. Power REIT does not have a staggered board; accordingly, the current policy is that each Trustee serves for one-year terms. Employee health and safety in the workplace is one of our core values.
The Trust currently has a Board of Trustees that has three Independent Trustees in addition to Mr. Lesser. Power REIT does not have a staggered board; accordingly, the current policy is that each Trustee serves for one-year terms. Employee health and safety in the workplace is one of our core values.
In order for us to maintain our REIT qualification, at least 90% of our ordinary taxable annual income must be distributed to shareholders. As of December 31, 2021, our last tax return completed to date, we currently have a net operating loss of $24.8 million, which may reduce or eliminate this requirement.
In order for us to maintain our REIT qualification, at least 90% of our ordinary taxable annual income must be distributed to shareholders. As of December 31, 2022, our last tax return completed to date, we currently have a net operating loss of $24.5 million, which may reduce or eliminate this requirement.
This cultivation method is resource and energy intensive compared to greenhouse cultivation which should use dramatically less energy when compared to industrial facilities. As the cannabis industry continues to expand and prices compress, we believe that industrial, warehouse-style cultivation of cannabis may not be economically competitive.
Currently, most of the cannabis cultivation, nationally, occurs in industrial, warehouse-style facilities. This cultivation method is resource and energy intensive compared to greenhouse cultivation which should use dramatically less energy when compared to industrial facilities. As the cannabis industry continues to expand and prices compress, we believe that industrial, warehouse-style cultivation of cannabis may not be economically competitive.
Regulated Cannabis Industry - Market Opportunity Cannabis Overview We believe that a convergence of changing public attitudes and increased legalization momentum in various states toward regulated cannabis, and medical-use cannabis in particular, is generating interest investment in regulated cannabis related opportunities.
Regulated Cannabis Industry - Market Opportunity Cannabis Overview We believe that a convergence of changing public attitudes and increased legalization momentum in various states toward regulated cannabis, and medical-use cannabis in particular, has generated interest investment in regulated cannabis related opportunities.
Employee levels are managed to align with the pace of business and management believes it has sufficient human capital to operate its business successfully. We believe that our success depends on our ability to retain our key personnel, primarily David Lesser, our Chairman and Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer.
Hollander are full time employees. Employee levels are managed to align with the pace of business and management believes it has sufficient human capital to operate its business. 13 We believe that our success depends on our ability to retain our key personnel, primarily David Lesser, our Chairman and Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer.
As of December 31, 2022, the Trust’s assets consisted of approximately 112 miles of railroad infrastructure and related real estate which is owned by its subsidiary Pittsburgh & West Virginia Railroad (“P&WV”), approximately 601 acres of fee simple land leased to a number of utility scale solar power generating projects with an aggregate generating capacity of approximately 108 Megawatts (“MW”) and approximately 263 acres of land with approximately 2,211,000 square feet of existing or under construction CEA properties in the form of greenhouses.
As of December 31, 2023, the Trust’s assets consisted of approximately 112 miles of railroad infrastructure and related real estate which is owned by its subsidiary Pittsburgh & West Virginia Railroad (“P&WV”), approximately 501 acres of fee simple land leased to a number of utility scale solar power generating projects with an aggregate generating capacity of approximately 88 Megawatts (“MW”) and approximately 256 acres of land with approximately 2,163,000 square feet of existing or under construction CEA properties in the form of greenhouses.
Disposing of these properties can enable us to redeploy or recycle our capital to other uses, such as to repay debt, to reinvest in other real estate assets and development and redevelopment projects, and for other corporate purposes. Along these lines, in early 2023 we completed sales of assets for total gross proceeds of $2.5 million (See Subsequent Events).
Disposing of these properties can enable us to redeploy or recycle our capital to other uses, such as to repay debt, to reinvest in other real estate assets and development and redevelopment projects, and for other corporate purposes. Along these lines, in 2023 we completed sales of assets for total gross proceeds of approximately $7.3 million.
The wholesale prices in most markets compressed dramatically and in many cases were below the cost of cultivation and many cultivation companies have shut down. Due to the significant price compression in the wholesale cannabis market, many of our cannabis related tenants are experiencing significant financial challenges which has impacted their ability to pay rent.
The wholesale prices in most markets compressed dramatically and in many cases were below the cost of cultivation and many cultivation companies have shut down. Due to the significant price compression in the wholesale cannabis market, all of our cannabis related tenants are experiencing significant financial challenges.
In addition, we do not have any other management protection structures such as “poison pills” or “golden parachutes.” Power REIT management has strong alignment with shareholders through significant insider ownership and both the Board and CEO receive compensation entirely in the form of equity. We believe that our corporate governance is a strong component of our ESG profile.
In addition, we do not have any other management protection structures such as “poison pills” or “golden parachutes.” Power REIT management has strong alignment with shareholders through significant insider ownership. We believe that our corporate governance is a strong component of our ESG profile.
We also have several properties that we are marketing for sale and/or lease which have been classified as “Assets Held for Sale.” Improving Our Portfolio We are currently seeking to refine our property holdings by selling properties and/or re-leasing them in an effort to improve the overall performance going forward.
We also have several properties that we are marketing for sale and/or lease which have been classified as “Assets Held for Sale.” Improving Our Portfolio We are currently seeking to refine our property holdings by selling properties and/or re-leasing them in an effort to improve the overall performance going forward. 9 Taking Steps to Position the Company for Future Growth Opportunities We are taking steps designed to position the Trust to create shareholder value.
As the cannabis industry continues to evolve and mature, innovative products are being developed for consumers. In addition to smoking and vaporizing of dried leaves, cannabis can be incorporated into a variety of edibles, vaporizers, spray products, transdermal patches and topicals. These additional form factors are driving a significant portion of the growth.
In addition to smoking and vaporizing of dried leaves, cannabis can be incorporated into a variety of edibles, vaporizers, spray products, transdermal patches and topicals. These additional form factors are driving a significant portion of the growth.
Under our sustainable business model, our tenants should have the potential to become high-quality, low-cost producers of medical cannabis in their respective states. During 2022, the cannabis industry faced significant headwinds that had a dramatic impact on cultivation focused companies such as our tenants.
We believe that ultimately, greenhouse cultivation facilities should have the potential to become high-quality, low-cost producers of cannabis in their respective states. 11 During 2022 and 2023, the cannabis industry faced significant headwinds that had a dramatic impact on cultivation focused companies such as our tenants.
A number of our CEA facilities will produce cannabis which is considered an alternative medical solution for a variety of ailments including, but not limited to, multiple sclerosis, PTSD, arthritis, and seizures.
Social Our CEA tenant/operator roster is engaged with their local communities. Several of our CEA facilities will produce cannabis which is considered an alternative medical solution for a variety of ailments including, but not limited to, multiple sclerosis, PTSD, arthritis, and seizures.
As of December 31, 2022, 37 states, the District of Columbia, and four of five U.S. territories have passed laws allowing their citizens to use medical cannabis. 11 Cannabis Industry Growth and Trends The cannabis industry over the past several years has experienced dramatic growth.
As of December 31, 2023, 40 states, the District of Columbia, and four of five U.S. territories have passed laws allowing their citizens to use medical cannabis. Cannabis Industry Growth and Trends The cannabis industry over the past several years has experienced dramatic growth. As the cannabis industry continues to evolve and mature, innovative products are being developed for consumers.
Taking Steps to Position the Company for Future Growth Opportunities We are taking steps designed to position the Trust to create shareholder value. In connection therewith, we have implemented processes designed to ensure strong internal discipline in the use, harvesting and recycling of our capital, and these processes will be applied in connection with seeking to reposition properties.
In connection therewith, we have implemented processes designed to ensure strong internal discipline in the use, harvesting and recycling of our capital, and these processes will be applied in connection with seeking to reposition properties.
Our charter also prohibits any person from (1) beneficially or constructively owning shares of our capital stock that would result in our being “closely held” under Section 856(h) of the Code at any time during the taxable year, (2) transferring shares of our capital stock if such transfer would result in our stock being beneficially or constructively owned by fewer than 100 persons and (3) beneficially or constructively owning shares of our capital stock if such ownership would cause us otherwise to fail to qualify as a REIT. 14 This provision or other provisions in our governing documents or provisions that we may adopt in the future, may limit the ability of our shareholders to sell their shares at a premium over then-current market prices by discouraging a third party from seeking to obtain control of us.
Our charter also prohibits any person from (1) beneficially or constructively owning shares of our capital stock that would result in our being “closely held” under Section 856(h) of the Code at any time during the taxable year, (2) transferring shares of our capital stock if such transfer would result in our stock being beneficially or constructively owned by fewer than 100 persons and (3) beneficially or constructively owning shares of our capital stock if such ownership would cause us otherwise to fail to qualify as a REIT.
We believe greenhouse cultivation represents a sustainable solution from both a business and environmental perspective. Certain of our greenhouse properties are operated for the cultivation of cannabis by state-licensed operators. During 2022 we acquired a greenhouse focused on the cultivation of tomatoes.
We believe greenhouse cultivation represents a sustainable solution from both a business and environmental perspective. Certain of our greenhouse properties are operated for the cultivation of cannabis by state-licensed operators. Unfortunately, the market for cannabis compressed dramatically during 2022 and 2023 which has had a dramatic negative effect on this portfolio.
Unfortunately, the market for tomatoes compressed and the tenant was unable to meet its financial obligations and has vacated the property. We continue to explore greenhouse transactions for the cultivation of other plants and food crops.
During 2022 we acquired a greenhouse focused on the cultivation of tomatoes. Unfortunately, the market for tomatoes compressed and the tenant was unable to meet its financial obligations and has vacated the property.
We may continue to seek to acquire, in an opportunistic, selective and disciplined manner, properties that have operating metrics that are better than or equal to our existing portfolio averages, and that we believe have strong potential for increased cash flows and appreciation in value.
We may continue to seek to acquire, in an opportunistic, selective and disciplined manner, properties that have operating metrics that are better than or equal to our existing portfolio averages, and that we believe have potential to generate cash flow and/or appreciation in value. Taking advantage of any acquisition opportunities would likely involve some use of debt or equity capital.
On January 6, 2023, one of our wholly owned subsidiaries sold its interest in five ground leases related to utility scale solar farms located in Tulare County, California for gross proceeds of $2.5 million. The properties were acquired by our subsidiary in 2013 for $1,550,000.
There can be no assurance that the tenant will perform on either the Lease or Purchase. On January 6, 2023, one of our wholly owned subsidiaries sold its interest in five ground leases related to utility scale solar farms located in Tulare County, California for gross proceeds of $2.5 million.
We also own a portfolio of ground leases for utility scale solar farms. Our recent focus on CEA greenhouse properties consumes dramatically less energy than indoor growing, 95% less water, and do not generate the agricultural runoff associated with traditional fertilizers or pesticides. Social Our CEA tenant/operator roster is diverse and engaged with their local communities.
We also own ground leases for utility scale solar farms. Our recent focus on CEA greenhouse properties consumes dramatically less energy than indoor growing, 95% less water, and do not generate the agricultural runoff associated with traditional fertilizers or pesticides. Power REIT does not currently anticipate any material costs related to its portfolio for compliance with environmental laws.
In addition, we are exploring the potential to use our existing corporate structure for strategic transactions including potentially merging assets or companies with the Trust. 10 Financial Results for the years ended December 31, 2022 and 2021 Year Ended December 31, 2022 2021 Revenue $ 8,517,720 $ 8,547,914 Net Income Attributable to Common Shareholders (before impairment) $ 1,832,730 $ 4,491,656 Net Income per Common Share (basic) (before impairment) 0.54 1.41 Net Income (Loss) Attributable to Common Shareholders (after impairment) $ (14,906,310 ) $ 4,491,656 Net Income (Loss) per Common Share (basic) (after impairment) (4.41 ) 1.41 Core FFO Available to Common Shareholders $ 4,449,917 $ 6,139,903 Core FFO per Common Share 1.32 1.93 Growth and Investment Strategies - CEA In 2019, we expanded the focus of our real estate acquisitions to include CEA properties in the United States.
Financial Results for the years ended December 31, 2023 and 2022 Year Ended December 31, 2023 2022 Revenue $ 2,357,695 $ 8,517,720 Net Income (Loss) Attributable to Common Shareholders (before impairment) $ (6,783,206 ) $ 1,832,730 Net Income (Loss) per Common Share (basic) (before impairment) (2.00 ) 0.54 Net Loss Attributable to Common Shareholders (after impairment) $ (15,018,342 ) $ (14,906,310 ) Net Loss per Common Share (basic) (after impairment) (4.43 ) (4.41 ) Core FFO Available to Common Shareholders $ (4,173,118 ) $ 4,449,917 Core FFO per Common Share (1.23 ) 1.32 Growth and Investment Strategies – Controlled Environment Agriculture (CEA) In 2019, we expanded the focus of our real estate acquisitions to include CEA properties in the United States.
His expertise informs our process in all aspects of our business including acquisitions, project management, development, and finance. Mr. Lesser’s significant ownership stake in Power REIT provides strong alignment and incentives to focus on creation of shareholder value. Susan Hollander serves our Chief Accounting Officer with responsibility for all strategic accounting, compliance and financial reporting functions.
Lesser’s significant ownership stake in Power REIT provides strong alignment and incentives to focus on creation of shareholder value. Susan Hollander serves our Chief Accounting Officer with responsibility for all strategic accounting, compliance and financial reporting functions. Accordingly, Power REIT currently has two officers who are responsible for overseeing our activities. Neither Mr. Lesser, nor Ms.
Distributions declared by us will be authorized by our Board of Trustees in its sole discretion out of funds legally available therefor and will be dependent upon a number of factors, including the capital requirements for our business plans and meeting the distribution requirements necessary to maintain our qualification as a REIT.
Dividends During the year ended December 31, 2023, the Trust accrued quarterly cash dividends of approximately $653,000 ($0.484375 per share per quarter) to holders of Power REIT’s 7.75% Series A Cumulative Redeemable Perpetual Preferred Stock. 14 Distributions declared by us will be authorized by our Board of Trustees in its sole discretion out of funds legally available therefor and will be dependent upon a number of factors, including the capital requirements for our business plans and meeting the distribution requirements necessary to maintain our qualification as a REIT.
Management and Trustees - Human Capital Mr. David H. Lesser serves as a member and Chairman of our Board of Trustees. He also serves as our Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer. Mr. Lesser has over 35 years of experience in real estate investment and finance.
He also serves as our Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer. Mr. Lesser has over 35 years of experience in real estate investment and finance. His expertise informs our process in all aspects of our business including acquisitions, project management, development, and finance. Mr.
In the United States, the development and growth of the regulated cannabis industry has generally been driven by state law and regulation. Accordingly, market conditions vary on a state-by-state basis. State laws that legalize and regulate medical-use cannabis allow patients to consume cannabis for medicinal reasons with a designated healthcare provider’s recommendation, subject to various requirements and limitations.
State laws that legalize and regulate medical-use cannabis allow patients to consume cannabis for medicinal reasons with a designated healthcare provider’s recommendation, subject to various requirements and limitations.
Investment Opportunity Within the broader cannabis related investment opportunity, we believe the ownership of real estate has the potential to provide an attractive risk adjusted investment area of focus. Given the regulatory hurdles including the impact on access to traditional forms of capital, a potential opportunity exists to generate higher investment yields than traditional real estate asset classes.
Given the regulatory hurdles including the impact on access to traditional forms of capital, a potential opportunity exists to generate higher investment yields than traditional real estate asset classes. Our investment thesis has focused on CEA cultivation assets in the form of greenhouses that should provide a competitive advantage within the industry.
Unfortunately, the market for tomatoes compressed and the tenant was unable to meet its financial obligations and has vacated the property. We remain optimistic that we acquired this property at an attractive basis and that a new tenant can be secured to put the facility back into operation in the future.
Unfortunately, the market for tomatoes compressed and the tenant was unable to meet its financial obligations and vacated the property. We are actively exploring alternatives to secure a new tenant to put the facility back into operation and the potential to sell the MillPro Facility.
During the twelve months ended December 31, 2022, Power REIT collected approximately 57% of its consolidated revenue from four properties. The tenants are NorthEast Kind Assets, LLC (“Sweet Dirt”), Fiore Management LLC (“Canndescent”), Norfolk Southern Railway and JAB Industries, Ltd (“JAB”) which represent 22%, 10%, 11% and 14% of consolidated revenue respectively.
During the twelve months ended December 31, 2023, Power REIT collected approximately 84% of its consolidated revenue from two properties. The tenants are Norfolk Southern Railway and Regulus Solar LLC which represent 45% and 39% of consolidated revenue respectively.
These means might include selling properties, raising capital or through other actions. Liquidity As of December 31, 2022, our consolidated balance sheet reflected $2.85 million in cash and cash equivalents and $1 million restricted cash.
These means might include leasing vacant properties, selling properties, raising capital or through other actions. Liquidity As of December 31, 2023, the Trust had approximately $4.1 million of cash and approximately $15.5 million of current loan liabilities.
The Trust has offered certain of its cannabis tenants’ relief by amending leases to several of its tenants whereby monthly cash payments are restructured over the course of the lease to lower rent payments during 2022 and increase rent payments in the future.
The Trust has attempted to work with cannabis tenants by offering relief in the form of amending leases whereby monthly cash payments are restructured to reduced amounts.
The sale of the Tulare solar ground leases is part of a strategic review as we continue to evaluate alternatives to enhance liquidity and improve our opportunities. We have shifted our focus to Controlled Environment Agriculture in the form of greenhouses as a technology based real estate opportunity.
The note is secured by a second mortgage on the property and certain corporate and personal guarantees. The sale of the Tulare solar ground leases and the PW SD cannabis related greenhouse cultivation facility are part of a strategic review as we continue to evaluate alternatives to enhance liquidity and improve our opportunities.
The banking industry’s reluctance to finance cannabis operations may provide opportunities for us continue to grow our portfolio on attractive risk adjusted terms. Power REIT can deploy a form of non-dilutive capital to companies seeking to finance licensed cannabis cultivation facilities through the ownership of the real estate.
The banking industry’s reluctance to finance cannabis operations may provide opportunities to deploy capital at attractive risk adjusted terms through the ownership of the real estate. Investment Opportunity Within the broader cannabis related investment opportunity, our investment thesis was that the ownership of real estate has the potential to provide an attractive risk adjusted investment area of focus.
Taking advantage of any acquisition opportunities would likely involve some use of debt or equity capital. We will pursue transactions that we expect can meet the financial and strategic criteria we apply, given economic, market and other circumstances.
We will pursue transactions that we expect can meet the financial and strategic criteria we apply, given economic, market and other circumstances. In addition, we are exploring the potential to use our existing corporate structure for strategic transactions including potentially merging assets or companies with the Trust.
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We believe that this amount and future net cash provided by operations, property sales, and other sources of capital, should provide sufficient liquidity to meet our liquidity requirements in the short term, including for one year from the filing of this Annual Report.
Added
In February of 2024, our subsidiary entered into a 20-year triple-net lease with an initial rent of $1 million per year after a 6-month deferred rent period along with a Letter of Intent to purchase the property for $9.2 million with a deadline of December 31, 2024.
Removed
We typically enter into long-term triple net leases where our tenants are responsible for all costs related to the property, including insurance, taxes and maintenance.
Added
The properties were acquired by our subsidiary in 2013 for $1,550,000. On November 1, 2023, a wholly owned subsidiary of Power REIT (“PW SD”) sold its interest in a cannabis related greenhouse cultivation facility located in Maine to an affiliate of its tenant.
Removed
The cannabis industry is still emerging but increasingly, state-licensed cannabis cultivation, processing and dispensing facilities are becoming sophisticated business enterprises that use state-of-the-art technologies, well-honed business, operational processes to produce and dispense at scale high-quality, high-consistency cannabis products that should drive improved financial performance.
Added
PW SD had entered into a Purchase and Sale Agreement related to this property that was renegotiated as part of proceeding toward closing.
Removed
We have focused on CEA cultivation assets in the form of greenhouses. We believe that acquiring CEA greenhouse cultivation properties, where we construct or rehabilitate existing structures, should provide a competitive advantage that will become increasingly apparent as the cannabis industry expands and matures. Currently, most of the cannabis cultivation, nationally, occurs in industrial, warehouse-style facilities.
Added
The total consideration was $4,787,000, of which $3,400,000 was paid in cash, $537,000 was paid in the form of the release of the security deposit held by PW SD and seller financing in the form of an $850,000 note with an 8.5% interest rate that will accrue until maturity on October 30, 2025.
Removed
Accordingly, Power REIT currently has two full-time employees and several consultants but does not have any other employees or officers. As Power REIT’s business grows, we will continue to evaluate our staffing and third-party service needs and adjust as necessary.
Added
The current loan liabilities include approximately $14.4 million of a bank loan secured by the majority of the greenhouse portfolio (the “Greenhouse Loan”) and which is non-recourse to the Trust as well as approximately $456,000 of debt secured by a property (Salisbury, MA) that was sold in early 2024 and the loan was paid off.
Removed
Dividends During the year ended December 31, 2022, the Trust paid quarterly cash dividends during the first three quarters of 2022 of approximately $490,000 ($0.484375 per share per quarter) to holders of Power REIT’s 7.75% Series A Cumulative Redeemable Perpetual Preferred Stock and accrued the fourth quarter dividend amount.
Added
Of the total amount of cash, approximately $2.2 million is non-restricted cash available for general corporate purposes and $1.9 million is restricted cash related to the Greenhouse Loan.
Added
For the year ended December 31, 2023, the Trust determined that there was substantial doubt as to its ability to continue as a going concern as a result of current liabilities that far exceed current assets, net losses incurred, expected reduced revenue and increased property expenses related to the greenhouse portfolio.
Added
In early 2024, the Trust sold three properties which should help with liquidity. The net proceeds from the sale of the Salisbury, MA property was approximately $662,000 of unrestricted cash and the approximately $456,000 loan was retired at closing and is eliminated from current liabilities.
Added
The other sale produced approximately $53,000 of restricted cash and should generate cash flow from the seller financing provided that should help with liquidity to service the Greenhouse Loan. The Greenhouse Loan is in default and we continue to try to work with the lender to establish a path forward.
Added
However, the Greenhouse Loan is non-recourse to Power REIT which means that in the event it cannot resolve issues with the lender and they foreclose on the properties, Power REIT should be able to continue as a going concern albeit with a smaller portfolio of assets.
Added
In March 2024, the lender filed a litigation seeking among other things, foreclosure and appointment of a receiver (See Note 13 Subsequent Events). Unfortunately, this may lead to distressed sales, which would have a negative impact on our prospects. As of the filing date, The Trust’s current liabilities far exceed current assets.
Added
If the Trust’s plan to focus on selling properties, entering into new leases, improving cash collections from existing tenants and raising capital in the form of debt or equity is effectively implemented, the Trust’s plan could potentially provide enough liquidity. However, the Trust cannot predict, with certainty, the outcome of its actions to generate liquidity.
Added
The cannabis industry is still emerging and has suffered significant business fluctuations over the past couple of year. 10 In the United States, the development and growth of the regulated cannabis industry has generally been driven by state law and regulation. Accordingly, market conditions vary on a state-by-state basis.
Added
During 2022, we completed our first acquisition with the focus on the cultivation of food crops which is an approximately 1.1 million square foot greenhouse cultivation facility located in O’Neill, Nebraska. The greenhouse is configured for the cultivation of tomatoes and during 2022 grew a preliminary crop.
Added
Unfortunately, the market for tomatoes compressed and the tenant was unable to meet its financial obligations and has vacated the property. We have been actively exploring alternatives to secure a new tenant to put the facility back into operation and the potential to sell the Mill Pro Facility.
Added
In February of 2024, our subsidiary entered into a 20-year triple-net lease with an initial rent of $1 million per year after a 6-month deferred rent period along with a Letter of Intent to purchase the property for $9.2 million with a deadline of December 31, 2024.
Added
There can be no assurance that the tenant will perform on either the Lease or Purchase. Competition The current market for properties that meet our investment objectives is limited. We are also in a capital constrained position with a high relative cost of capital.
Added
In particular, larger companies may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies.
Added
We face significant competition from a diverse mix of market participants, including but not limited to, other companies with similar business models, independent investors, hedge funds and other real estate investors, hard money lenders, cannabis and greenhouse operators themselves, all of whom may compete with us.
Added
In particular, we face competition from established companies in this industry, as well as local real estate investors, particularly for smaller retail assets. 12 Government Regulation Real Estate Industry Regulation Generally, the ownership and operation of real properties are subject to various laws, ordinances and regulations, including regulations relating to zoning, land use, water rights, wastewater, storm water runoff and lien sale rights and procedures.
Added
These laws, ordinances or regulations, such as the Comprehensive Environmental Response and Compensation Liability Act and its state analogs, or any changes to any such laws, ordinances or regulations, could result in or increase the potential liability for environmental conditions or circumstances existing, or created by tenants or others, on our properties.
Added
Laws related to upkeep, safety and taxation requirements may result in significant unanticipated expenditures, loss of our properties or other impairments to operations, any of which would adversely affect our cash flows from operating activities.
Added
Agricultural Regulation The greenhouse properties that we own are subject to the laws, ordinances and regulations of state, local and federal governments, including laws, ordinances and regulations involving land use and usage, water rights, treatment methods, disturbance, the environment, and eminent domain.
Added
Each governmental jurisdiction has its own distinct laws, ordinances and regulations governing the use of agricultural lands and water. Many such laws, ordinances and regulations seek to regulate water usage and water runoff because water can be in limited supply, as is the case in certain locations where our properties are located.
Added
In addition, runoff from rain or from irrigation is governed by laws, ordinances and regulations from state, local and federal governments.
Added
Additionally, if any of the water used on or running off from our properties flows to any rivers, streams, ponds, the ocean or other waters, there may be specific laws, ordinances and regulations governing the amount of pollutants, including sediments, nutrients and pesticides, that such water may contain.
Added
We believe that our existing properties have, and other properties that we acquire in the future will have, sources of water, including wells and/or surface water that provide sufficient amounts of water necessary for the current operations at each location.
Added
However, should the need arise for additional water from wells and/or surface water sources, we may be required to obtain additional permits or approvals or to make other required notices prior to developing or using such water sources.
Added
Permits for drilling water wells or withdrawing surface water may be required by federal, state and local governmental entities pursuant to laws, ordinances, regulations or other requirements, and such permits may be difficult to obtain due to drought, the limited supply of available water within the districts of the states in which our properties are located or other reasons.
Added
In addition to the regulation of water usage and water runoff, state, local and federal governments also seek to regulate the type, quantity and method of use of chemicals and materials for growing crops, including fertilizers, pesticides and nutrient rich materials.
Added
Such regulations could include restricting or preventing the use of such chemicals and materials near residential housing or near water sources. Further, some regulations have strictly forbidden or significantly limited the use of certain chemicals and materials.
Added
Licenses, permits and approvals must be obtained from governmental authorities requiring such licenses, permits and approvals before chemicals and materials can be used at grow facilities. Reports on the usage of such chemicals and materials must be submitted pursuant to applicable laws, ordinances, and regulations and the terms of the specific licenses, permits and approvals.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf a property owner were to assert such a claim against us, we may be required to devote significant resources and costs to defending ourselves against such a claim, and if a property owner were to be successful on such a claim, our cannabis tenant may be unable to continue to operate its business in its current form at the property, which could materially adversely impact such tenant’s business and the value of our property, our business and, financial condition and results of operations.
Biggest changeIf a property owner were to assert such a claim against us, we may be required to devote significant resources and costs to defending ourselves against such a claim, and if a property owner were to be successful on such a claim, our cannabis tenant may be unable to continue to operate its business in its current form at the property, which could materially adversely impact such tenant’s business and the value of our property, our business and, financial condition and results of operations. 41 Further, although we are not currently subject to any litigation, from time to time in the normal course of our business operations, we, or any of our subsidiaries, may become subject to litigation, complaints, enforcement actions and governmental inquiries that may result in liability material to our financial statements as a whole or may negatively affect our operating results if changes to our business operations are required.
We may significantly increase the amount of leverage we utilize at any time which could materially and adversely affect us, including the risk that: ● our cash flow from operations may be insufficient to make required payments of principal and interest on the debt or we may fail to comply with all of the other covenants contained in the debt, which is likely to result in (i) acceleration of such debt that we may be unable to repay from internal funds or to refinance on favorable terms, or at all, and/or (ii) the loss of some or all of our assets to foreclosure or sale; ● we may be unable to borrow additional funds as needed or on favorable terms, or at all; 22 ● to the extent we borrow debt that bears interest at variable rates, increases in interest rates could materially increase our interest expense; ● our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase with higher financing costs; ● we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, shareholder distributions, including distributions currently contemplated or necessary to satisfy the requirements for REIT qualification or other purposes; and ● we may be unable to refinance debt that matures prior to the investment it was used to finance on favorable terms, or at all.
We may significantly increase the amount of leverage we utilize at any time which could materially and adversely affect us, including the risk that: ● our cash flow from operations may be insufficient to make required payments of principal and interest on the debt or we may fail to comply with all of the other covenants contained in the debt, which is likely to result in (i) acceleration of such debt that we may be unable to repay from internal funds or to refinance on favorable terms, or at all, and/or (ii) the loss of some or all of our assets to foreclosure or sale; ● we may be unable to borrow additional funds as needed or on favorable terms, or at all; ● to the extent we borrow debt that bears interest at variable rates, increases in interest rates could materially increase our interest expense; ● our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase with higher financing costs; ● we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, shareholder distributions, including distributions currently contemplated or necessary to satisfy the requirements for REIT qualification or other purposes; and ● we may be unable to refinance debt that matures prior to the investment it was used to finance on favorable terms, or at all.
Lesser and his affiliates and interests on the other hand, and such conflicts may be unfavorable to us. 24 Our lessees and many future lessees will likely be structured as special purpose vehicles (“SPVs”), and therefore their ability to pay us is expected to be dependent solely on the revenues of a specific project, without additional credit support.
Lesser and his affiliates and interests on the other hand, and such conflicts may be unfavorable to us. Our lessees and many future lessees will likely be structured as special purpose vehicles (“SPVs”), and therefore their ability to pay us is expected to be dependent solely on the revenues of a specific project, without additional credit support.
These and other limitations may affect our ability to sell or re-lease properties, which may materially and adversely affect our business. 31 Our focus on non-traditional real estate asset classes including CEA, alternative energy and transportation infrastructure sectors will subject us to more risks than if we were broadly diversified to include other asset classes.
These and other limitations may affect our ability to sell or re-lease properties, which may materially and adversely affect our business. Our focus on non-traditional real estate asset classes including CEA, alternative energy and transportation infrastructure sectors will subject us to more risks than if we were broadly diversified to include other asset classes.
Although we currently meet the maintenance listing standards of the NYSE American, we cannot assure you that we will continue to meet those standards, or that the NYSE American will not seek to delist our common shares or Series A Preferred shares as a result of our entry into lease agreements with licensed U.S. cannabis cultivators.
Although we currently believe we meet the maintenance listing standards of the NYSE American, we cannot assure you that we will continue to meet those standards, or that the NYSE American will not seek to delist our common shares or Series A Preferred shares as a result of our entry into lease agreements with licensed U.S. cannabis cultivators.
Future reclassifications or issuances by us of preferred stock, whether Series A Preferred Stock or some new series of preferred stock, could effectively diminish our ability to pay dividends or other distributions to existing equity security holders, including distributions upon our liquidation, dissolution or winding up. 34 The issuance of additional equity securities may dilute existing equity holders.
Future reclassifications or issuances by us of preferred stock, whether Series A Preferred Stock or some new series of preferred stock, could effectively diminish our ability to pay dividends or other distributions to existing equity security holders, including distributions upon our liquidation, dissolution or winding up. The issuance of additional equity securities may dilute existing equity holders.
Currency and Foreign Transactions Reporting Act of 1970 (the “Bank Secrecy Act”), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001. 38 The Financial Crimes Enforcement Network (“FinCEN”), a bureau within the U.S.
Currency and Foreign Transactions Reporting Act of 1970 (the “Bank Secrecy Act”), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001. The Financial Crimes Enforcement Network (“FinCEN”), a bureau within the U.S.
To the extent that our Series A Preferred Stock may have call or conversion provisions that are in our favor at a given time, such provisions may be detrimental to the returns experienced by the holders of the securities. Inflation may negatively affect the value of our preferred stock and the dividends we pay.
To the extent that our Series A Preferred Stock may have call or conversion provisions that are in our favor at a given time, such provisions may be detrimental to the returns experienced by the holders of the securities. 36 Inflation may negatively affect the value of our preferred stock and the dividends we pay.
The results of our operations and the execution on our business plan depend on the availability of additional opportunities for investment, the performance of our existing properties and tenants, the evolution of tenant demand for regulated cannabis facilities, competition, the evolution of alternative capital sources for potential tenants, the availability of adequate equity and debt financing, the federal and state regulatory environment relating to the regulated cannabis industry, and conditions in the financial markets and economic conditions. 16 Our tenants have limited operating histories and may be more susceptible to payment and other lease defaults, which could materially and adversely affect our business Single tenants currently occupy our properties, and we expect that our properties will continue to be operated by single tenants.
The results of our operations and the execution on our business plan depend on the availability of additional opportunities for investment, the performance of our existing properties and tenants, the evolution of tenant demand for regulated cannabis facilities, competition, the evolution of alternative capital sources for potential tenants, the availability of adequate equity and debt financing, the federal and state regulatory environment relating to the regulated cannabis industry, and conditions in the financial markets and economic conditions. 19 Our tenants have limited operating histories and may be more susceptible to payment and other lease defaults, which could materially and adversely affect our business Single tenants currently occupy our properties, and we expect that our properties will continue to be operated by single tenants.
The Joyce Amendment must be renewed each federal fiscal year and was subsequently renewed by the U.S. Congress (“Congress”). There can be no assurance that Congress will further renew the Joyce Amendment in the future. 37 The U.S. federal government’s approach towards cannabis and cannabis-related activities remains uncertain.
The Joyce Amendment must be renewed each federal fiscal year and was subsequently renewed by the U.S. Congress (“Congress”). There can be no assurance that Congress will further renew the Joyce Amendment in the future. The U.S. federal government’s approach towards cannabis and cannabis-related activities remains uncertain.
In addition, we would realize an economic loss on any and all improvements made to properties that were to be used in connection with cannabis cultivation and processing. We may be subject to anti-money laundering laws and regulations in the United States.
In addition, we would realize an economic loss on any and all improvements made to properties that were to be used in connection with cannabis cultivation and processing. 40 We may be subject to anti-money laundering laws and regulations in the United States.
Failure to qualify as a REIT could result in additional expenses or additional adverse consequences, which may include the forced liquidation of some or all of our investments. 27 Although we currently intend to operate in a manner designed to allow us to continue to qualify as a REIT, future economic, market, legal, tax or other considerations might cause us to lose our REIT status, which could have a material adverse effect on our business, prospects, financial condition and results of operations, and could adversely affect our ability to successfully implement our business strategy and pay dividends.
Failure to qualify as a REIT could result in additional expenses or additional adverse consequences, which may include the forced liquidation of some or all of our investments. 28 Although we currently intend to operate in a manner designed to allow us to continue to qualify as a REIT, future economic, market, legal, tax or other considerations might cause us to lose our REIT status, which could have a material adverse effect on our business, prospects, financial condition and results of operations, and could adversely affect our ability to successfully implement our business strategy and pay dividends.
Furthermore, if holders receive the greater of the full trading price of the Series A Preferred Stock on the last date prior to the first public announcement of an event described in the preceding sentence, or the $25.00 liquidation preference per share of Series A Preferred Stock plus accrued and unpaid dividends (whether or not declared) to, but not including, the date of such event, pursuant to the occurrence of any of the events described in the preceding sentence, then holders will not have any voting rights with respect to the events described in the preceding sentence. 35 Dividends on our Series A Preferred Stock can be suspended and not paid on a current basis.
Furthermore, if holders receive the greater of the full trading price of the Series A Preferred Stock on the last date prior to the first public announcement of an event described in the preceding sentence, or the $25.00 liquidation preference per share of Series A Preferred Stock plus accrued and unpaid dividends (whether or not declared) to, but not including, the date of such event, pursuant to the occurrence of any of the events described in the preceding sentence, then holders will not have any voting rights with respect to the events described in the preceding sentence. 37 Dividends on our Series A Preferred Stock can be suspended and not paid on a current basis.
Any proceeding that may be brought against us could have a material adverse effect on our business, financial condition and results of operations. 17 Violations of any U.S. federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements, arising from either civil or criminal proceedings brought by either the U.S. federal government or private citizens, including, but not limited to, property seizures, disgorgement of profits, cessation of business activities or divestiture.
Any proceeding that may be brought against us could have a material adverse effect on our business, financial condition and results of operations. 20 Violations of any U.S. federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements, arising from either civil or criminal proceedings brought by either the U.S. federal government or private citizens, including, but not limited to, property seizures, disgorgement of profits, cessation of business activities or divestiture.
The market price for our common shares may be influenced by many factors, including the following: ● sale of our common shares by our stockholders, executives, and directors; ● volatility and limitations in trading volumes of our securities; 33 ● our ability to obtain financings to implement our business plans; ● our ability to attract new customers; ● The impact of COVID-19; ● changes in our capital structure or dividend policy, future issuances of securities and sales of large blocks of securities by our stockholders; ● our cash position; ● announcements and events surrounding financing efforts, including debt and equity securities; ● reputational issues; ● our inability to successfully manage our business or achieve profitability; ● changes in general economic, political and market conditions in any of the regions in which we conduct our business; ● changes in industry conditions or perceptions; ● analyst research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage; ● departures and additions of key personnel; ● disputes and litigation related to intellectual properties, proprietary rights, and contractual obligations; ● changes in applicable laws, rules, regulations, or accounting practices and other dynamics; ● market conditions or trends in our industry; and ● other events or factors, many of which may be out of our control.
The market price for our common shares may be influenced by many factors, including the following: ● sale of our common shares by our stockholders, executives, and directors; ● volatility and limitations in trading volumes of our securities; ● our ability to obtain financings to implement our business plans; ● our ability to attract new customers; ● The impact of pandemics; ● changes in our capital structure or dividend policy, future issuances of securities and sales of large blocks of securities by our stockholders; ● our cash position; ● announcements and events surrounding financing efforts, including debt and equity securities; ● reputational issues; ● our inability to successfully manage our business or achieve profitability; ● changes in general economic, political and market conditions in any of the regions in which we conduct our business; ● changes in industry conditions or perceptions; ● analyst research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage; ● departures and additions of key personnel; ● disputes and litigation related to intellectual properties, proprietary rights, and contractual obligations; ● changes in applicable laws, rules, regulations, or accounting practices and other dynamics; ● market conditions or trends in our industry; and ● other events or factors, many of which may be out of our control.
We cannot predict if or when any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective or whether any such law, regulation or interpretation may take effect retroactively. 29 In addition, several proposals have been made that would make substantial changes to the federal income tax laws generally.
We cannot predict if or when any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective or whether any such law, regulation or interpretation may take effect retroactively. 30 In addition, several proposals have been made that would make substantial changes to the federal income tax laws generally.
We might not be entitled to the statutory relief described in this paragraph in all circumstances. 28 If we are deemed to be subject to Section 280E of the Code because of the business activities of our tenants, the resulting disallowance of tax deductions could cause us to incur U.S. federal income tax and jeopardize our REIT status.
We might not be entitled to the statutory relief described in this paragraph in all circumstances. 29 If we are deemed to be subject to Section 280E of the Code because of the business activities of our tenants, the resulting disallowance of tax deductions could cause us to incur U.S. federal income tax and jeopardize our REIT status.
Such a situation could materially harm our business. 18 Because we may distribute a significant portion of our income to our stockholders or lenders, we will continue to need additional capital to make new investments. If additional funds are unavailable or not available on favorable terms, our ability to make new investments will be impaired.
Such a situation could materially harm our business. 21 Because we may distribute a significant portion of our income to our stockholders or lenders, we will continue to need additional capital to make new investments. If additional funds are unavailable or not available on favorable terms, our ability to make new investments will be impaired.
Our new leases will generally require our lessees to carry insurance on our properties against risks customarily insured against by other companies engaged in similar businesses in the same geographic region, and to indemnify us against certain losses.
Our leases generally require our lessees to carry insurance on our properties against risks customarily insured against by other companies engaged in similar businesses in the same geographic region, and to indemnify us against certain losses.
Our business strategy includes growth plans. Our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth or investments effectively. Power REIT is pursuing a growth strategy focused on non-traditional asset classes that qualify as real estate for REIT purposes.
Our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth or investments effectively. Power REIT is pursuing a growth strategy focused on non-traditional asset classes that qualify as real estate for REIT purposes.
We cannot predict whether we will be able to sell any property for the price or on the terms we set, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. The number of prospective buyers interested in purchasing greenhouse assets is limited.
We cannot predict whether we will be able to sell any property for the price or on the terms we set, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. The number of prospective buyers interested in purchasing CEA properties is limited.
In connection with our development activities, we are subject to uncertainties associated with re-zoning for development, environmental concerns of governmental entities or community groups and our builder or partner’s ability to build in conformity with plans, specifications, budgeted costs, and timetables. Performance also may be affected or delayed by conditions beyond our control.
In connection with our development activities, we are subject to uncertainties associated with zoning and other required approvals, environmental concerns of governmental entities or community groups and our builder or partner’s ability to build in conformity with plans, specifications, budgeted costs, and timetables. Performance also may be affected or delayed by conditions beyond our control.
Hollander were unable to function on behalf of the Trust, the Trust’s business and prospects would be adversely affected. Moreover, Mr. Lesser has other business interests to which he dedicates a portion of his time that are unrelated to Power REIT. Although Mr.
Hollander were unable to function on behalf of the Trust, the Trust’s business and prospects would be adversely affected. Moreover, Mr. Lesser has other business interests to which he dedicates a portion of his time that are unrelated to Power REIT. Ms. Hollander is also a part time employee. Although Mr.
As of December 31, 2022, the balance of the 2015 PWRS Loan was approximately $7,393,000 (net of unamortized debt costs of approximately $258,000). PW Salisbury Solar, LLC (“PWSS”), one of our subsidiaries, borrowed $750,000 from a regional bank which loan is secured by PWSS’ real estate assets and is secured by a parent guarantee from the Trust.
As of December 31, 2023, the balance of the 2015 PWRS Loan was approximately $6,957,000 (net of unamortized debt costs of approximately $235,000). PW Salisbury Solar, LLC (“PWSS”), one of our subsidiaries, borrowed $750,000 from a regional bank which loan is secured by PWSS’ real estate assets and is secured by a parent guarantee from the Trust.
Because we specifically focus on non-traditional real estate assets, investments in our securities may present more risks than if we were broadly diversified over numerous sectors of the economy.
Because we specifically focus on non-traditional real estate assets, investments in our securities may present more risks than if we were broadly diversified over numerous sectors of the economy. For example, a downturn in the U.S.
As of December 31, 2022, we had outstanding debt in the principal amount of $39.1 million and had issued approximately $8.7 million of our Series A Preferred Stock. This debt and these preferred securities rank senior to the Trust’s common shares in our capital structure.
As of December 31, 2023, we had outstanding debt in the principal amount of $36.7 million and had issued approximately $9.3 million of our Series A Preferred Stock. This debt and these preferred securities rank senior to the Trust’s common shares in our capital structure.
The existence of these provisions, among others, may have a negative impact on the price of our common shares and may discourage third party bids for ownership of our Trust. These provisions may prevent any premiums being offered to holders of common shares.
The existence of these provisions, among others, may have a negative impact on the price of our common shares and may discourage third party bids for ownership of our Trust. These provisions may prevent any premiums being offered to holders of common shares. Our business and operations would suffer in the event of system failures.
However, there are some types of losses, including catastrophic acts of nature, acts of war or riots, for which we or our lessees cannot obtain insurance at an acceptable cost.
However, there are some types of losses, including catastrophic acts of nature, acts of war or riots, for which we or our lessees cannot obtain insurance at an acceptable cost. Also, certain of our vacant properties are not covered by insurance.
The future progression of the pandemic and its effects on our business and operations are uncertain. Further increasing inflation has raised operating costs for many businesses and, in the future, could impact demand or pricing manufacturing of our drug candidates or services providers, foreign exchange rates or employee wages.
Further increasing inflation has raised operating costs for many businesses and, in the future, could impact demand or pricing manufacturing of our drug candidates or services providers, foreign exchange rates or employee wages.
For example, a downturn in the U.S. energy or transportation infrastructure sectors would have a larger impact on us than on a trust that does not concentrate in one sector of the economy.
CEA, alternative energy or transportation infrastructure sectors would have a larger impact on us than on a trust that does not concentrate in one sector of the economy.
Should infrastructure companies experience variations in supply and demand, the resulting decline in operating or financial performance could adversely affect the value or quality of our assets. Infrastructure investments are subject to obsolescence risks.
Historically, commodity prices have been cyclical and have exhibited significant volatility. Should infrastructure companies experience variations in supply and demand, the resulting decline in operating or financial performance could adversely affect the value or quality of our assets. Infrastructure investments are subject to obsolescence risks.
The balance of the PWSS term loan as of December 31, 2022 is approximately $490,000 (net of approximately $1,400 of capitalized debt costs which are being amortized over the life of the financing).
The balance of the PWSS term loan as of December 31, 2023 is approximately $456,000 (net of approximately $0 of capitalized debt costs which are being amortized over the life of the financing).
For example, as of December 31, 2021 three of Power REIT’s properties are leased by tenants in which Millennium Sustainable Ventures Corp., formerly Millennium Investment & Acquisition Company (ticker: MILC) has controlling interests. David H Lesser, Power REIT’s Chairman and CEO, is also Chairman and CEO of MILC.
For example, four of Power REIT’s properties were leased by tenants in which Millennium Sustainable Ventures Corp., formerly Millennium Investment & Acquisition Company (ticker: MILC) had controlling interests. David H. Lesser, Power REIT’s Chairman and CEO, is also Chairman and CEO of MILC.
Actual events involving reduced or limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems.
Actual events involving reduced or limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems. 18 We are actively monitoring the effects these disruptions and increasing inflation could have on our operations.
We currently have secured debt against properties in our portfolio, and we may incur additional debt. The percentage of leverage we employ will vary depending on our available capital, our ability to obtain and access financing arrangements with lenders, debt restrictions contained in financing arrangements.
The percentage of leverage we employ will vary depending on our available capital, our ability to obtain and access financing arrangements with lenders, debt restrictions contained in financing arrangements.
In any such case, you could lose all or part of your investment. Risks Related to our Operations Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business and operating results. Our operations and performance depend on global, regional and U.S. economic and geopolitical conditions.
Risks Related to our Operations Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business and operating results. Our operations and performance depend on global, regional and U.S. economic and geopolitical conditions.
As of the fourth quarter of 2002, we did not declare the dividend on our preferred shares in an effort to conserve liquidity and create financial flexibility. As a result, unpaid dividends are accruing and increasing the liquidation preference for our preferred shares.
In an effort to conserve liquidity and create financial flexibility, the Trust has not declared dividends on its preferred shares since the fourth quarter of 2022. As a result, unpaid dividends are accruing and increasing the liquidation preference for our preferred shares.
To the extent that significant changes in the climate occur, we may experience extreme weather and changes in precipitation and temperature and rising sea levels, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions.
Any such loss could materially and adversely affect our business and our financial condition and results of operations. 22 To the extent that significant changes in the climate occur, we may experience extreme weather and changes in precipitation and temperature and rising sea levels, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions.
Higher market interest rates would not, however, result in more funds being available for us to distribute to shareholders and, to the contrary, would likely increase our borrowing costs and potentially decrease funds available for distribution to our shareholders, if any.
These factors include: ● Increases in market interest rates, which could cause certain prospective purchasers to invest elsewhere. Higher market interest rates would not, however, result in more funds being available for us to distribute to shareholders and, to the contrary, would likely increase our borrowing costs and potentially decrease funds available for distribution to our shareholders, if any.
The Trust could lose its common shares listing or its Series A Preferred Stock listing, both on the NYSE American, depending on a number of factors, including a failure by us to continue to qualify as a REIT, a failure to meet the NYSE American ongoing listing requirements, including those relating to the number of shareholders, the price of the Trust’s securities and the amount and composition of the Trust’s assets, changes in NYSE American ongoing listing requirements and other factors.
The Trust could lose its common shares listing or its Series A Preferred Stock listing, both on the NYSE American, depending on a number of factors, including a failure by us to continue to qualify as a REIT, a failure to meet the NYSE American ongoing listing requirements, including those relating to the number of shareholders, the price of the Trust’s securities and the amount and composition of the Trust’s assets, changes in NYSE American ongoing listing requirements and other factors. 34 Low trading volumes in the Trust’s listed securities may adversely affect holders’ ability to resell their securities at prices that are attractive, or at all.
Additionally, recently, securities of certain companies have experienced significant and extreme volatility in stock price due short sellers of common shares, known as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.
There can be no guarantee that our stock price will remain at current prices or that future sales of our common shares will not be at prices lower than those sold to investors. 35 Additionally, recently, securities of certain companies have experienced significant and extreme volatility in stock price due short sellers of common shares, known as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.
Laws, regulations and the policies with respect to the enforcement of such laws and regulations affecting the cannabis industry in the United States are constantly changing, and we cannot predict the impact that future regulations may have on us. Medical and adult-use cannabis laws and regulations in the United States are complex, broad in scope, and subject to evolving interpretations.
Risks Related to Regulation Laws, regulations and the policies with respect to the enforcement of such laws and regulations affecting the cannabis industry in the United States are constantly changing, and we cannot predict the impact that future regulations may have on us.
Provisions of the Maryland General Corporation Law and our Declaration of Trust and Bylaws could deter takeover attempts and have an adverse impact on the price of our common shares.
Either of these outcomes could adversely affect our financial condition and results of operations. 31 Provisions of the Maryland General Corporation Law and our Declaration of Trust and Bylaws could deter takeover attempts and have an adverse impact on the price of our common shares.
Although our Declaration of Trust permits this type of business relationship and a majority of our disinterested trustees must approve, and in those instances did approve, Power REIT’s involvement in such transactions, in any such circumstance, there may be conflicts of interest between Power REIT on one hand, and MILC, Mr.
As of December 31, 2023, $1,102,500 had been paid to IntelliGen for equipment supplied. 25 Although our Declaration of Trust permits this type of business relationship and a majority of our disinterested trustees must approve, and in those instances did approve, Power REIT’s involvement in such transactions, in any such circumstance, there may be conflicts of interest between Power REIT on one hand, and subsidiaries of MILC, IntelliGen, Mr.
In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of our existing properties or to protect them from the consequence of climate change.
In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of our existing properties or to protect them from the consequence of climate change. Our operating results may be negatively affected by potential development and construction delays and cost overruns.
If we find that the carrying value of goodwill or certain intangible assets exceeds estimated fair value, we will reduce the carrying value of the real estate investment or goodwill or intangible asset to the estimated fair value, and we will recognize impairment with respect to such investments or goodwill or intangible assets.
If we find that the carrying value of goodwill or certain intangible assets exceeds estimated fair value, we will reduce the carrying value of the real estate investment or goodwill or intangible asset to the estimated fair value, and we will recognize impairment with respect to such investments or goodwill or intangible assets. 23 Impairment of long-lived assets is required to be recorded as a non-cash operating expense.
On December 28, 2022, the reported low sale price of our common shares was $3.85, while the reported high sales price was $80.05, on January 13, 2022. We may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance or prospects.
On December 11, 2023, the reported low sale price of our common shares was $.50, while the reported high sales price was $5.59, on February 2, 2023. We may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance or prospects.
Due to the illegal status of cannabis at the national level, the power to regulate the market through licensing, taxes, and other instruments lies with state and local governments.
State and local regulation of cannabis may negatively impact our properties and the viability of tenant operations related thereto. Due to the illegal status of cannabis at the national level, the power to regulate the market through licensing, taxes, and other instruments lies with state and local governments.
We also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a price at the time we acquire the property.
We also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a price at the time we acquire the property. If our projections are inaccurate, we may pay too much for a property, and our return on our investment could suffer.
These ownership limits and other restrictions could have the effect of discouraging a takeover or other transaction in which holders of our common stock might receive a premium for their shares over the then prevailing market price or which holders might believe to be otherwise in their best interests. 36 Risks Related to Regulation We cannot assure you that our common shares will remain listed on the NYSE American, or that our Series A Preferred Stock will obtain listing on the NYSE American.
These ownership limits and other restrictions could have the effect of discouraging a takeover or other transaction in which holders of our common stock might receive a premium for their shares over the then prevailing market price or which holders might believe to be otherwise in their best interests.
Any potential delisting of our common shares from the NYSE American could, among other things, depress our share price, substantially limit liquidity of our common shares and materially adversely affect our ability to raise capital on terms acceptable to us, or at all.
Any potential delisting of our common shares from the NYSE American could, among other things, depress our share price, substantially limit liquidity of our common shares and materially adversely affect our ability to raise capital on terms acceptable to us, or at all. 38 The U.S. federal government’s approach towards cannabis laws may be subject to change or may not proceed as previously outlined.
Any decline in the estimated fair values of our assets could result in impairment charges in the future. It is possible that such impairments, if required, could be material.
In 2023, we recorded approximately $8.2 million in non-cash impairment charges. In 2022, we recorded approximately $16.7 million in non-cash impairment charges. Any decline in the estimated fair values of our assets could result in additional impairment charges in the future. It is possible that such impairments, if required, could be material.
Accordingly, the rescission added to the uncertainty of U.S. federal enforcement of the CSA in states where cannabis use is regulated. Pursuant to his rescission of the Cole Memorandum, former Attorney General Jeffrey B.
Attorneys that state-regulated cannabis industries substantively in compliance with the Cole Memorandum’s guidelines should not be a prosecutorial priority. Accordingly, the rescission added to the uncertainty of U.S. federal enforcement of the CSA in states where cannabis use is regulated. Pursuant to his rescission of the Cole Memorandum, former Attorney General Jeffrey B.
In addition, sales of substantial amounts of our common shares, or the perception that such sales might occur, could adversely affect prevailing market prices of our common shares and our stock price may decline substantially in a short period of time. As a result of this volatility, investors may experience losses on their investment in our common shares.
The stock market in general and the market for cannabis focused companies in particular have experienced extreme volatility. In addition, sales of substantial amounts of our common shares, or the perception that such sales might occur, could adversely affect prevailing market prices of our common shares and our stock price may decline substantially in a short period of time.
Pittsburgh & West Virginia Railroad (“PWV”), one of our subsidiaries, entered into a Loan Agreement in the amount of $15,500,000 that is secured by our equity interest in our subsidiary PWV which is pledged as collateral. The balance of the loan as of December 31, 2022 is $14,615,000 (net of approximately $285,000 of capitalized debt costs).
Pittsburgh & West Virginia Railroad (“PWV”), one of our subsidiaries, entered into a Loan Agreement in the amount of $15,500,000 that is non-recourse to Power REIT and secured by our equity interest in our subsidiary PWV which is pledged as collateral.
As a result, we could be held liable, under some circumstances, for debts incurred by the lessee company relating to the property. Either of these outcomes could adversely affect our financial condition and results of operations.
As a result, we could be held liable, under some circumstances, for debts incurred by the lessee company relating to the property.
Our real estate investments are concentrated in greenhouse properties suitable for the cultivation of cannabis, and a decrease in demand for such facilities could materially and adversely affect our business. These properties may be difficult to sell or re-lease upon tenant defaults or lease terminations, either of which could adversely affect our business.
These properties may be difficult to sell or re-lease upon tenant defaults or lease terminations, either of which could adversely affect our business. Our portfolio of properties is concentrated in greenhouse properties suitable for the cultivation of cannabis used therefore, we are subject to risks inherent in investments heavily in a single industry.
Certain of our properties are located in areas that may experience catastrophic weather and other natural events from time to time, including hurricanes or other severe weather, flooding fires, snow or ice storms, windstorms or earthquakes. These adverse weather and natural events could cause substantial damages or losses to our properties which could exceed our insurance coverage.
Our property portfolio has a high concentration of properties located in certain states. Certain of our properties are located in areas that may experience catastrophic weather and other natural events from time to time, including hurricanes or other severe weather, flooding fires, snow or ice storms, windstorms or earthquakes.
Furthermore, to the extent the Trust has borrowed funds, a rise in interest rates may result in re-financing risk when those borrowings become due, and the Trust may be required to pay higher interest rates or issue additional equity to refinance its borrowings, which could adversely affect the Trust’s financial condition and results of operations. Our quarterly results may fluctuate.
Interest rates have risen significantly of late relative to their recent historically low levels which will continue to have a negative impact on the perceived or actual values of our assets and dividends, and consequently the prices of our securities may decline. 27 Furthermore, to the extent the Trust has borrowed funds, a rise in interest rates may result in re-financing risk when those borrowings become due, and the Trust may be required to pay higher interest rates or issue additional equity to refinance its borrowings, which could adversely affect the Trust’s financial condition and results of operations.
We can provide no assurance that the industries utilizing our assets will succeed and if a tenant fails there is no visibility as to when we would find a replacement tenant or if there are any potential solutions in the broader market.
We can provide no assurance that the industries utilizing our assets will succeed and if a tenant fails there is no visibility as to when we would find a replacement tenant or if there are any potential solutions in the broader market. 32 Our real estate investments are concentrated in greenhouse properties suitable for the cultivation of cannabis, and a decrease in demand for such facilities could materially and adversely affect our business.
Historically, the Trust’s revenue has been concentrated to a relatively limited number of investments, industries and lessees. During the twelve months ended December 31, 2022, Power REIT collected approximately 57% of its consolidated revenue from four properties.
Historically, the Trust’s revenue has been concentrated to a relatively limited number of investments, industries and lessees. During the twelve months ended December 31, 2023, Power REIT collected approximately 84% of its consolidated revenue from two properties. The tenants are Norfolk Southern Railway and Regulus Solar LLC which represent 45% and 39% of consolidated revenue respectively.
If our projections are inaccurate, we may pay too much for a property, and our return on our investment could suffer. 20 The valuation and accounting treatment of certain long-lived assets, such as real estate, or of intangible assets, such as goodwill, could result in future asset impairments, which would be recorded as operating losses.
The valuation and accounting treatment of certain long-lived assets, such as real estate, or of intangible assets, such as goodwill, could result in future asset impairments, which would be recorded as operating losses.
Attorneys”) with certain priorities (the “Cole Priorities”) on which to focus their attention in states that have established cannabis programs with regulatory enforcement systems. U.S. Attorneys were required to adhere to the Cole Priorities until the rescission of the Cole Memorandum in January 2018.
The Cole Memorandum sought to limit the use of the U.S. federal government’s prosecutorial resources by providing United States attorneys (“U.S. Attorneys”) with certain priorities (the “Cole Priorities”) on which to focus their attention in states that have established cannabis programs with regulatory enforcement systems. U.S.
Any foreclosure on a mortgaged property or group of properties could have a material adverse effect on the overall value of our portfolio of properties and more generally on our business. Many factors, including changes in interest rates and the negative perceptions of the cannabis sector generally, can have an adverse effect on the market value of our securities.
Any foreclosure on a mortgaged property or group of properties could have a material adverse effect on the overall value of our portfolio of properties and more generally on our business.
As of December 31, 2022, the amount of unpaid dividends on the outstanding preferred shares is approximately $163,000 . 21 Our obligations arising from our indebtedness could have other negative consequences to our shareholders, including the acceleration of debt if we are not in compliance with the terms of such debt.
As of December 31, 2023, the amount of unpaid dividends on the outstanding preferred shares is approximately $816,000 . Our obligations arising from our indebtedness could have other negative consequences to our shareholders, including the acceleration of debt related to the loan secured by the greenhouse portfolio.
Future laws, ordinances or regulations or the discovery of currently unknown conditions or non-compliances may impose material liability under environmental laws. 25 Legislative, regulatory, accounting or tax rules, and any changes to them or actions brought to enforce them, could adversely affect us. We and our lessees are subject to a wide range of legislative, regulatory, accounting and tax rules.
Legislative, regulatory, accounting or tax rules, and any changes to them or actions brought to enforce them, could adversely affect us. We and our lessees are subject to a wide range of legislative, regulatory, accounting and tax rules.
Consequently, our results of operations for any current or historical period should not be relied upon as being indicative of performance in any future period. 26 The assets in our portfolio may be subject to impairment charges. We periodically evaluate the real estate investments and other assets for impairment indicators.
Consequently, our results of operations for any current or historical period should not be relied upon as being indicative of performance in any future period. We may not be able to sell our real property assets when we desire.
To the extent we pay dividends in the future, the differing treatment of dividends received from REITs and other corporations might cause individual investors to view an investment in REITs as less attractive relative to other corporations, which might negatively affect the value of our shares. 23 The issuance of securities with claims that are senior to those of our common shares, including our Series A Preferred Stock, may limit or prevent us from paying dividends on its common shares.
To the extent we pay dividends in the future, the differing treatment of dividends received from REITs and other corporations might cause individual investors to view an investment in REITs as less attractive relative to other corporations, which might negatively affect the value of our shares.
Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require us to incur material expenditures.
Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require us to incur material expenditures. Future laws, ordinances or regulations or the discovery of currently unknown conditions or non-compliances may impose material liability under environmental laws.
Power REIT’s Series A Preferred Stock is traded on the NYSE American under the ticker “PW PRA”. The Series A Preferred Stock has been listed since March 18, 2014. Because the Series A Preferred Stock has no maturity date, investors seeking liquidity may be limited to selling their shares of Series A Preferred Stock in the secondary market.
Because the Series A Preferred Stock has no maturity date, investors seeking liquidity may be limited to selling their shares of Series A Preferred Stock in the secondary market.
As a result, the presence of significant mold at any of our properties could require us to undertake a costly remediation program to contain or remove the mold from the affected property or development project.
As a result, the presence of significant mold at any of our properties could require us to undertake a costly remediation program to contain or remove the mold from the affected property or development project. 26 Accordingly, we may incur significant costs to defend against claims of liability, to comply with environmental regulatory requirements, to remediate any contaminated property, or to pay personal injury claims.
The business combination provisions of Maryland law (if our Board of Trustees decides to make them applicable to us), the control share acquisition provisions of Maryland law (if the applicable provisions in our Bylaws are rescinded), the limitations on removal of Trustees, the restrictions on the acquisition of our common shares, the power to issue additional shares and the advance notice provisions of our Bylaws could have the effect of delaying, deterring or preventing a transaction or a change in control that might involve a premium price for holders of the common shares or might otherwise be in their best interests. 30 In order to assist us in complying with limitations on the concentration of ownership of REIT stock imposed by the Internal Revenue Code, among other purposes, our charter provides that no natural person or entity may, directly or indirectly, beneficially or constructively own more than 9.9% (in value or number of shares, whichever is more restrictive) of the aggregate amount of our outstanding shares of all classes.
The business combination provisions of Maryland law (if our Board of Trustees decides to make them applicable to us), the control share acquisition provisions of Maryland law (if the applicable provisions in our Bylaws are rescinded), the limitations on removal of Trustees, the restrictions on the acquisition of our common shares, the power to issue additional shares and the advance notice provisions of our Bylaws could have the effect of delaying, deterring or preventing a transaction or a change in control that might involve a premium price for holders of the common shares or might otherwise be in their best interests.
Volatility in commodity prices or in the supply of and demand for infrastructure assets may make it more difficult for companies in the infrastructure sector to raise capital to the extent the market perceives that their performance may be tied directly or indirectly to commodity prices. Historically, commodity prices have been cyclical and have exhibited significant volatility.
Further, extreme price fluctuation upwards or downwards could lead to the development of alternatives to existing energy-related infrastructure and could impair the value of our investments. 33 Volatility in commodity prices or in the supply of and demand for infrastructure assets may make it more difficult for companies in the infrastructure sector to raise capital to the extent the market perceives that their performance may be tied directly or indirectly to commodity prices.
Our common shares and our Series A Preferred shares are currently listed on the NYSE. To our knowledge, The NYSE American has not approved for listing any other U.S.-based REITs engaged in the ownership of cannabis-related properties, other than Innovative Industrial Properties, Inc.
To our knowledge, The NYSE American has not approved for listing any U.S.-based REITs engaged in the ownership of cannabis-related properties, other than Innovative Industrial Properties, Inc. (NYSE: IIPR), a cannabis-focused real estate investment trust listed in late 2016 just prior to the nomination of former Attorney General Sessions.
Department of Justice (the “DOJ”), released a memorandum on August 29, 2013 entitled “Guidance Regarding Marijuana Enforcement” from former Deputy Attorney General James Cole (the “Cole Memorandum”). The Cole Memorandum sought to limit the use of the U.S. federal government’s prosecutorial resources by providing United States attorneys (“U.S.
In an effort to provide guidance to U.S. federal law enforcement, under former President Barak Obama, the U.S. Department of Justice (the “DOJ”), released a memorandum on August 29, 2013 entitled “Guidance Regarding Marijuana Enforcement” from former Deputy Attorney General James Cole (the “Cole Memorandum”).
While the rescission of the Cole Memorandum did not create a change in U.S. federal law, as the Cole Memorandum was policy guidance and not law, the revocation removed the DOJ’s guidance to U.S. Attorneys that state-regulated cannabis industries substantively in compliance with the Cole Memorandum’s guidelines should not be a prosecutorial priority.
Attorneys were required to adhere to the Cole Priorities until the rescission of the Cole Memorandum in January 2018. While the rescission of the Cole Memorandum did not create a change in U.S. federal law, as the Cole Memorandum was policy guidance and not law, the revocation removed the DOJ’s guidance to U.S.
Individual taxpayers might perceive REIT securities as less desirable relative to the securities of other corporations because of the lower tax rate on certain dividends from such corporations to the extent we pay dividends in the future, which might have an adverse effect on the market value of our securities.
Our portfolio of properties includes significant exposure to cannabis related properties; ● Perception by market participants of our potential for growth; ● Relatively low trading volumes in our securities; ● Our results of operations and financial condition; and ● Investor confidence in the stock market, the real estate sector generally, and the cannabis sector generally. 24 Individual taxpayers might perceive REIT securities as less desirable relative to the securities of other corporations because of the lower tax rate on certain dividends from such corporations to the extent we pay dividends in the future, which might have an adverse effect on the market value of our securities.
Our lessees could seek the protection of bankruptcy, insolvency or similar laws, which could result in the rejection and termination of our lease agreements and could cause a reduction in our cash flows. Furthermore, we intend to concentrate our investment activities in the CEA sector, which will subject us to more risks than if we were diversified across many sectors.
Our lessees could seek the protection of bankruptcy, insolvency or similar laws, which could result in the rejection and termination of our lease agreements and could cause a reduction in our cash flows.
Although we believe these fluctuations tend to average out over time, to the extent that our projections are incorrect because weather patterns change significantly, our financial condition and results of operations could be adversely affected. 32 Investments in renewable energy may be dependent on equipment or manufacturers that have limited operating histories or financial or other challenges.
Lease payments that are structured as a percentage of gross revenue typically fluctuate from period to period. Although we believe these fluctuations tend to average out over time, to the extent that our projections are incorrect because weather patterns change significantly, our financial condition and results of operations could be adversely affected.
As a result, compliance with such laws and regulations could require us to incur substantial costs or alter certain aspects of our business. Violations of these laws, or allegations of such violations, could disrupt certain aspects of our business plan and may have a material adverse effect on certain aspects of our planned operations.
Violations of these laws, or allegations of such violations, could disrupt certain aspects of our business plan and may have a material adverse effect on certain aspects of our planned operations. Further, regulations may be enacted in the future that will be directly applicable to certain aspects of our cannabis-related activities.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeTulare was sold in January 2023 for gross sales proceeds of $2,500,000. 40 Below is a chart that summarizes our properties owned as of December 31, 2022: Property Type/Name Acres Size 1 Lease Start Term (yrs) 2 Gross Book Value 3 Gross Book Value Per SF Railroad Property P&WV - Norfolk Southern 112 miles Oct-64 99 $ 9,150,000 $ - Solar Farm Land Massachusetts PWSS 54 5.7 Dec-11 22 1,005,538 - California PWTS 7 18 4.0 Mar-13 25 310,000 - PWTS 7 18 4.0 Mar-13 25 310,000 - PWTS 7 10 4.0 Mar-13 25 310,000 - PWTS 7 10 4.0 Mar-13 25 310,000 - PWTS 7 44 4.0 Mar-13 25 310,000 - PWRS 447 82.0 Apr-14 20 9,183,548 - Solar Total 601 107.7 $ 11,739,086 $ - Greenhouse - Cannabis Colorado JAB - Mav 1 5,6 5.20 16,416 Jul-19 20 1,594,582 97 Jackson Farms - Tam 18 4,5,6 2.11 12,996 Jul-19 20 1,075,000 83 Mav 14 4,5,6 5.54 26,940 Feb-20 20 1,908,400 71 Green Street (Chronic) - Sherman 6 5,6 5.00 26,416 Feb-20 20 1,995,101 76 Fifth Ace - Tam 7 5,6 4.32 18,000 Sep-20 20 1,364,585 76 Tam 19 4,5,6 2.11 18,528 Dec-20 20 1,311,116 71 Apotheke - Tam 8 5,6 4.31 21,548 Jan-21 20 2,061,542 96 Tam 14 4,5,6 2.09 24,360 Oct-20 20 2,252,187 92 Elevate & Bloom - Tam 13 5,6 2.37 9,384 May-22 20 1,031,712 110 Gas Station - Tam 3 5,6 2.20 24,512 Feb-21 20 2,080,414 85 Tam 27 and 28 4,5,6 4.00 38,440 Apr-21 20 1,872,340 49 Walsenburg Cannabis (Greenhouse) 4,5,6,7 35.00 102,800 May-21 20 4,219,170 41 Walsenburg Cannabis (MIP) 5,6 Jan-22 10 636,351 Sherman 21 and 22 4,5,6 10.00 24,880 Jun-21 20 1,782,136 72 Jackson Farms - Mav 5 5,6 5.20 15,000 Nov-21 20 1,358,634 91 Tam 4 and 5 4,5,6 4.41 27,988 Jan-22 20 2,239,870 80 Maine Sweet Dirt 6,7 6.64 48,238 May-20 20 9,082,731 188 California 4,6,7 0.85 37,000 Jan-21 5 7,685,000 208 Oklahoma 4,6 9.35 40,000 Jun-21 20 2,593,313 65 Michigan 4,6 61.14 556,146 Sep-21 20 24,171,151 43 Greenhouse - Produce Nebraska 4 90.88 1,121,153 Apr-22 10 9,350,000 8 Greenhouse Total 262.72 # 2,210,745 $ 81,665,335 $ 37 Total Portfolio $ 102,554,421 Impairment $ 16,739,040 Gross Book Value Net of Impairment $ 85,815,381 1 Solar Farm Land size represents Megawatts and CEA property size represents greenhouse square feet 2 Not including renewal options 3 Gross Book Value for our Greenhouse Portfolio represents purchase price (excluding capitalized acquisition costs) plus improvement costs - does not include outstanding capital commitments 4 Property is vacant 5 Tenant is not current on rent/in default 6 An impairment has been taken against this asset 7 Asset held for sale 41 Railway Property Pittsburgh & West Virginia Railroad (“P&WV”) is a business trust organized under the laws of Pennsylvania for the purpose of owning railroad assets that are currently leased to Norfolk Southern Railway (“NSC”) pursuant to a 99-year lease that became effective in 1964 and is subject to an unlimited number of 99-year renewal periods under the same terms and conditions, including annual rent payments, at the option of NSC (the “Railroad Lease”).
Biggest changeSee Note 8 of our Financial Statements for discussion of impairments and of our assets held for sale. 43 Below is a chart that summarizes our properties owned as of December 31, 2023: Property Type/Name Acres Size 1 Gross Book Value 3 Railroad Property P&WV - Norfolk Southern 112 miles $ 9,150,000 Solar Farm Land Massachusetts PWSS 7,9 54 5.7 1,005,538 California PWRS 447 82.0 9,183,548 Solar Total 501 87.7 $ 10,189,086 Greenhouse - Cannabis Ordway, Colorado Maverick 1 4,6,7 5.20 16,416 1,594,582 Tamarack 18 4,6 2.11 12,996 1,075,000 Maverick 14 4,6,7 5.54 26,940 1,908,400 Sherman 6 - Green Street/Chronic 5,6,7,9 5.00 26,416 1,995,101 Tamarack 7 4,6 4.32 18,000 1,364,585 Tamarack 7 (MIP) 5 636,351 Tamarack 19 4,6 2.11 18,528 1,311,116 Tamarack 8 - Apotheke 5,6 4.31 21,548 2,061,542 Tamarack 14 4,6,7,9 2.09 24,360 2,252,187 Tamarack 13 4,6,7 2.37 9,384 1,031,712 Tamarack 3 4,6 2.20 24,512 2,080,414 Tamarack 27 and 28 4,6 4.00 38,440 1,872,340 Sherman 21 and 22 2,4,6 10.00 24,880 1,782,136 Maverick 5 - Jacksons Farms 5,6 5.20 15,000 1,358,634 Tamarack 4 and 5 4,6,7 4.41 27,988 2,239,870 Walsenburg, Colorado 4,6,7 35.00 102,800 4,219,170 Desert Hot Springs, California 6,7 0.85 37,000 7,685,000 Vinita, Oklahoma 4,6,7 9.35 40,000 2,593,313 Marengo Township, Michigan 4 61.14 556,146 24,171,151 Greenhouse - Food Crop O’Neill, Nebraska 4 90.88 1,121,153 9,350,000 Greenhouse Total 256.08 2,162,507 $ 72,582,605 Total Portfolio (Real Estate Owned) $ 91,921,691 Mortgage Loan 8 $ 850,000 Impairment 20,673,182 Depreciation and Amortization 6,739,995 Net Book Value Net of Impairment, Depreciation and Amortization $ 65,358,514 1 Solar Farm Land size represents Megawatts and CEA property size represents greenhouse square feet 2 Building structure construction incomplete 3 Gross Book Value for our Greenhouse Portfolio represents purchase price (excluding capitalized acquisition costs) plus improvements costs 4 Property is vacant 5 Tenant is not current on rent/in default 6 An impairment has been taken against this asset 7 Asset held for sale 8 Loan secured by a second mortgage related to property in Maine sold on November 1, 2023 9 Property sold after December 31, 2023 - see Note 13 Subsequent Events 44 Railway Property Pittsburgh & West Virginia Railroad (“P&WV”), a wholly owned subsidiary, is a business trust organized under the laws of Pennsylvania which owns railroad assets that are currently leased to Norfolk Southern Railway (“NSC”) pursuant to a 99-year lease that became effective in 1964 and is subject to an unlimited number of 99-year renewal periods under the same terms and conditions, including annual rent payments, at the option of NSC (the “Railroad Lease”).
Simultaneous with the acquisition, PW MillPro entered into a 10-year “triple-net” lease (the “MillPro Lease”) with Millennium Produce of Nebraska LLC (“MillPro”), a subsidiary of Millennium Sustainable Ventures Corp., of which David Lesser is CEO and Chairman. During 2022, MillPro operated the Facility for the cultivation of tomatoes.
Simultaneous with the acquisition, the subsidiary entered into a 10-year “triple-net” lease (the “MillPro Lease”) with Millennium Produce of Nebraska LLC (“MillPro”), a subsidiary of Millennium Sustainable Ventures Corp., of which David Lesser is CEO and Chairman. During 2022, MillPro operated the Facility for the cultivation of tomatoes.
Rent during the renewal option periods is to be calculated as the greater of a minimum stated rental amount or a percentage of the total project-level gross revenue. The acquisition price, not including transaction and closing costs, was approximately $9.2 million. For the twelve months ended December 31, 2022, PWRS recorded rental income of $803,117.
Rent during the renewal option periods is to be calculated as the greater of a minimum stated rental amount or a percentage of the total project-level gross revenue. The acquisition price, not including transaction and closing costs, was approximately $9.2 million. For the twelve months ended December 31, 2023, PWRS recorded rental income of $803,117.
The Trust is currently evaluating alternatives for this asset included but not limited to: (i) restructuring the lease with the MarCann Tenant, (ii) finding a replacement tenant interested in the cultivation of cannabis at the property, or (iii) finding a replacement tenant interested in the cultivation of produce at the property.
The Trust is currently evaluating alternatives for this asset included but not limited to: (i) restructuring the lease with the original Tenant, (ii) finding a replacement tenant interested in the cultivation of cannabis at the property, or (iii) finding a replacement tenant interested in the cultivation of produce at the property, or (iv) the sale of the property.
Rent is payable quarterly in advance and is recorded by Power REIT for accounting purposes on a straight-line basis with $89,494 having been recorded during the year ended December 31, 2022.
Rent was payable to Power REIT quarterly in advance and was recorded by Power REIT for accounting purposes on a straight-line basis with $89,494 having been recorded during the year ended December 31, 2023.
Pursuant to the lease agreement, PWSS’ tenant was required to pay PWSS rent of $80,800 cash for the year December 1, 2012 to November 30, 2013, with a 1.0% escalation in each corresponding year thereafter.
Pursuant to the lease agreement, PWSS’ tenant pays rent of $80,800 cash for the year December 1, 2012 to November 30, 2013, with a 1.0% escalation in each corresponding year thereafter.
Michigan On September 3, 2021, Power REIT, through a newly formed wholly owned indirect subsidiary, PW MI CanRE Marengo, LLC, (“PW Marengo”), we completed the acquisition of a 556,146 square foot greenhouse cultivation facility on a 61.14-acre property in Marengo Township, Michigan (“Marengo Property”) for $18.392 million plus acquisition costs.
Michigan On September 3, 2021, Power REIT, through a wholly owned indirect subsidiary, PW MI CanRE Marengo, LLC, (“PW Marengo”), completed the acquisition of a 556,146 square foot greenhouse cultivation facility on a 61.14-acre property in Marengo Township, Michigan (“Marengo Property”).
Solar Properties PW Salisbury Solar, LLC (“PWSS”) is a Massachusetts limited liability company and a wholly owned subsidiary of the Trust, that owns approximately 54 acres of land located in Salisbury, Massachusetts that is leased to a 5.7 Megawatts (MW) utility scale solar farm.
Solar Properties PW Salisbury Solar, LLC (“PWSS”) is a Massachusetts limited liability company and a wholly owned subsidiary of the Trust, that until January 30, 2024 owned approximately 54 acres of land located in Salisbury, Massachusetts that was leased by Power REIT to a 5.7 Megawatts (MW) utility scale solar farm.
As of December 31, 2022, our portfolio consisted of a total of approximately 112 miles of railroad infrastructure plus branch lines and related real estate, approximately 601 acres of fee simple land leased to a number of utility scale solar power generating projects with an aggregate generating capacity of approximately 108 Megawatts (“MW”), and approximately 263 acres of land with 2,211,000 square feet of existing or under construction greenhouse/processing space.
As of December 31, 2023, our portfolio consisted of a total of approximately 112 miles of railroad infrastructure plus branch lines and related real estate, approximately 501 acres of fee simple land leased to a number of utility scale solar power generating projects with an aggregate generating capacity of approximately 88 Megawatts (“MW”), and approximately 256 acres of land with approximately 2,162,000 square feet of existing or partially complete greenhouse/processing space.
As of December 31, 2022 the tenant has defaulted on the lease by not paying rent that was due and revenue recognition is currently being handled on a cash-basis but no rental income is expected as the tenant has ceased operations at the property. During 2022, the Trust recognized revenue of $193,000 related to a security deposit from the tenant.
During the third quarter of 2022, the tenant defaulted on the lease by not paying rent that was due and revenue recognition is currently being handled on a cash-basis but no rental income is expected as the tenant has ceased operations at the property.
Oklahoma On June 11, 2021, through a new formed wholly owned subsidiary, PW CO CanRE Vinita, LLC, (“PW Vinita”), we purchased a 9.35-acre property that includes approximately 40,000 square feet of greenhouse space, 3,000 square feet of office space and 100,000 square feet of fully fenced outdoor growing space including hoop houses (“Vinita Property”) approved for medical cannabis cultivation in Craig County, OK for $2.1 million plus acquisition costs.
Oklahoma On June 11, 2021, through a wholly owned subsidiary, the Trust purchased a 9.35-acre property that includes approximately 40,000 square feet of greenhouse space, 3,000 square feet of office space and 100,000 square feet of fully fenced outdoor growing space including hoop houses (“Vinita Property”) that was approved for medical cannabis cultivation in Craig County, OK.
As of December 31, 2022 the tenant has defaulted on the lease and the property is vacant. Revenue recognition is currently being handled on a cash-basis but no revenue is expected as the tenant has ceased operations and we are evaluating collectability related to the guaranties.
During the second quarter of 2022, the tenant defaulted on the lease and revenue recognition is currently being handled on a cash-basis but no revenue is expected as the tenant has ceased operations and we are evaluating collectability related to the guaranties. The Trust has taken an impairment against this asset.
As previously announced, cannabis licensing at the Marengo Township greenhouse cultivation facility was delayed based on a dispute with Marengo Township Building Official (“BO”). The BO has taken the position that changing the plant grown in the greenhouse to cannabis would require building permits and a Certificate of Occupancy for the existing structure which previously did not require any.
The BO has taken the position that changing the plant grown in the greenhouse to cannabis would require building permits and a Certificate of Occupancy for the existing structure which previously did not require any.
On November 21, 2022, representatives of Power REIT met with the Marengo Township Construction Board of Appeals which has agreed to allow the project to proceed as follows: ● The existing greenhouse portion of the facility was granted the following variances: ◌ A variance from the Energy Code requirements ◌ A variance from fire suppression consistent with the conclusion of the Michigan Bureau of Fire Services ◌ A variance related to egress requirements consistent with the conclusion of the Michigan Bureau of Fire Services ● Building permits may be required for modifications to the structure but not for the pre-existing structure itself Based on the outcome of the CBA hearing, the project is positioned to move forward with securing state and local cannabis licensing.
On November 21, 2022, representatives of Power REIT met with the Marengo Township Construction Board of Appeals which has agreed to allow the project to proceed as follows: ● The existing greenhouse portion of the facility was granted the following variances: ◌ A variance from the Energy Code requirements ◌ A variance from fire suppression consistent with the conclusion of the Michigan Bureau of Fire Services ◌ A variance related to egress requirements consistent with the conclusion of the Michigan Bureau of Fire Services ● Building permits may be required for modifications to the structure but not for the pre-existing structure itself 46 We continue to work on a strategy related to seeking the required permits for some work that has been completed or is in process after which we could receive a Certificate of Occupancy for cannabis cultivation purposes but the process the process with Marengo Township remains quite challenging.
Revenue Concentration The Trust’s revenue is highly concentrated. For the fiscal year ended 2022, Power REIT collected approximately 57% of its consolidated revenue from four properties. The tenants are NorthEast Kind Assets, LLC (“Sweet Dirt”), Fiore Management LLC (“Canndescent”), Norfolk Southern Railway and JAB Industries, Ltd (“JAB”), which represent 22%, 10%, 11% and 14% of consolidated revenue respectively.
The tenants are NorthEast Kind Assets, LLC (“Sweet Dirt”), Fiore Management LLC (“Canndescent”), Norfolk Southern Railway and JAB Industries, Ltd (“JAB”), which represent 22%, 10%, 11% and 14% of consolidated revenue respectively.
As of December 31, 2022, the Canndescent Property is considered held for sale as the Trust initiated an active program to locate a buyer through a third party.
On October 2, 2023 a lease with a replacement tenant was executed and the tenant is gearing up for operations. As of December 31, 2023, the Canndescent Property is considered held for sale as the Trust initiated an active program to locate a buyer through a third party. The Trust has taken an impairment against this asset.
Norfolk Southern Corporation has an investment grade rating of Baa1 by Moody’s Investor Services.
Norfolk Southern Corporation has an investment grade rating of BBB+ by S&P Global Ratings.
California On February 3, 2021, through a newly formed wholly owned indirect subsidiary PW CA CanRE Canndescent, LLC (“PW Canndescent”), we acquired a property located in Riverside County, CA (the “Canndescent Property”) and the Trust assumed an existing lease.
California On February 3, 2021, through a wholly owned indirect subsidiary, the Trust acquired an .85 acre property with a 37,000 square foot greenhouse located in Riverside County, CA (the “Canndescent Property”) and the Trust assumed an existing lease. During the fourth quarter of 2022, the tenant defaulted on the lease and vacated the property.
On May 21, 2021, through a newly formed wholly owned indirect subsidiary, PW CO CanRE Walsenburg, LLC, (“PW Walsenburg”), we purchased a 35-acre property that includes four greenhouses plus processing/auxiliary facilities (“Walsenburg Property”) approved for medical cannabis cultivation in Huerfano County, Colorado for approximately $2.3 million plus acquisition costs.
The Trust has taken an impairment against the Ordway, CO assets. 45 On May 21, 2021, through a wholly owned indirect subsidiary, the Trust purchased a 35-acre property that includes greenhouses plus processing/auxiliary facilities (“Walsenburg Property”) approved for cannabis cultivation in Huerfano County, Colorado. PW Walsenburg’s total capital investment as of December 31, 2023 is approximately $4.2 million.
As part of the transaction, the Trust, agreed to fund $550,000 to upgrade the facilities. PW Vinita’s capital commitment is approximately $2.65 million. Concurrent with the acquisition, PW Vinita entered into a 20-year “triple-net” lease (the “Vinita Lease”) with VinCann LLC (“VC LLC”) which will operate a cannabis cultivation facility.
Concurrent with the acquisition, PW Vinita entered into a 20-year “triple-net” lease with VinCann LLC (“VC LLC”) to operate a cannabis cultivation facility.
During the twelve months ended December 31, 2021, Power REIT collected approximately 48% of its consolidated revenue from four properties. The tenants are NorthEast Kind Assets, LLC (“Sweet Dirt”), Fiore Management LLC (“Canndescent”), Norfolk Southern Railway and Regulus Solar LLC which represented approximately 15%, 12%, 11% and 10% of consolidated revenue respectively.
The tenants are Norfolk Southern Railway and Regulus Solar LLC which represent 45% and 39% of consolidated revenue respectively. For the fiscal year ended 2022, Power REIT collected approximately 57% of its consolidated revenue from four properties.
Concurrent with the acquisition, PW Walsenburg entered into a 20-year “triple-net” lease (the “Walsenburg Lease”) with Walsenburg Cannabis LLC (“WC”). The lease required WC to pay all property related expenses including maintenance, insurance and taxes. After the initial 20-year term, the Walsenburg Lease provided two, five-year renewal options.
Concurrent with the acquisition, PW Walsenburg entered into a 20-year “triple-net” lease (the “Walsenburg Lease”) with Walsenburg Cannabis LLC.
As part of the transaction, the Trust agreed to fund $2.9 million worth of improvements and upgrades for the facility. Accordingly, PW Marengo’s total capital commitment is approximately $21.4 million Concurrent with the acquisition, PW Marengo entered into a 20-year “triple-net” lease (the “Marengo Lease”) with Marengo Cannabis, LLC (“MC”) for the operation of a cannabis cultivation facility.
Concurrent with the acquisition, PW Marengo entered into a 20-year “triple-net” lease (the “Marengo Lease”) with Marengo Cannabis, LLC (“MC”) for the operation of a cannabis cultivation facility. As previously announced, cannabis licensing at the Marengo Township greenhouse cultivation facility was delayed based on a dispute with Marengo Township Building Official (“BO”).
Nebraska On March 31, 2022, Power REIT, completed its first acquisition with the focus on the cultivation of food crops, through a newly formed wholly owned subsidiary, PW MillPro NE LLC, (“PW MillPro”), and acquired a 1,121,513 square foot greenhouse cultivation facility (the “MillPro Facility”) on an approximately 86-acre property and a separate approximately 4.88-acre property with a 21-room employee housing building (the “Housing Facility”) for $9,350,000 and closing costs of approximately $91,000 located in O’Neill, Nebraska.
The property consists of an approximately 1.1 million square foot greenhouse cultivation facility on an approximately 86-acre property and a separate approximately 4.88-acre property with a 21-room employee housing building.
Removed
As of December 31, 2022, the Trust considered Tulare, Sweet Dirt, Canndescent, Walsenburg as Assets Held for Sale. See Note 7 of our Financial Statements for discussion of impairments and of our assets held for sale.
Added
As of December 31, 2023, the Trust considered Desert Hot Spring (CA), Walsenburg (CO) , Vinita (OK), Maverick 14 (Ordway, CO), Tamarack 4 and 5 (Ordway, CO), Sherman 6 (Ordway, CO), Tamarack 14 (Ordway, CO), Tamarack 13 (Ordway, CO), Maverick 1 (Ordway, CO) and Salisbury (MA) as Assets Held for Sale.
Removed
At the end of the 22-year lease period, which commenced on December 1, 2011 (prior to being assumed by PWSS), the tenant has certain renewal options, with terms to be mutually agreed upon.
Added
The PWSS property was sold on January 30, 2024 (see Note 13 Subsequent Events in the notes to the financial statements contained elsewhere in this Annual Report).
Removed
PW Tulare Solar, LLC (“PWTS”) is a California limited liability company and a wholly owned subsidiary of the Trust, that owns approximately 100 acres of land leased to five (5) utility scale solar farms, with an aggregate generating capacity of approximately 20MW, located near Fresno, California.
Added
CEA Greenhouse Properties – Cannabis Related Colorado Portfolio From July 2019 to June 2021, through a series of wholly owned indirect subsidiaries, the Trust acquired a number of properties located in Ordway, Colorado for the development of greenhouse cannabis cultivation facilities.
Removed
The solar farm tenants pay PWTS gross cash rent of $157,500, payable annually in advance, and without escalation during the 25-year term of the leases. The tenants have up to two renewal options, the first of which is for 5 years, and the second of which is for 4 years and 11 months.
Added
The total size of the Ordway, Colorado portfolio is approximately 59 acres and approximately 300,000 square feet of greenhouse and related structures have been constructed for a total investment of approximately $24 million. Each property was acquired based on entering into a triple-net lease with a cultivation operator.
Removed
The PWTS property is considered held for sale as of December 31, 2022.
Added
A significant portion of the Ordway portfolio is vacant and the Trust is seeking to sell or re-tenant these properties.
Removed
As previously disclosed, the PWTS assets were sold on January 6, 2023, for gross sales proceeds of $2.5 million (see Subsequent Events). 42 CEA Greenhouse Properties Colorado In July 2019, through a newly formed wholly owned indirect subsidiary, PW CO CanRE JAB, LLC (“PW JAB”), we acquired two properties (the “JAB Properties”) in southern Colorado that have approximately 7.3 acres with 18,612 square feet of greenhouse cultivation and processing space.
Added
No income was recognized for this property in 2023. The Trust has taken an impairment against the PW Walsenburg assets. Unfortunately, the market for cannabis cultivation in Colorado deteriorated dramatically in 2022 and 2023 and all of the tenants have encountered an inability to pay contracted rent and are either paying a reduced amount or have vacated the premises.
Removed
At the time of the acquisition, PW JAB entered into two cross-collateralized and cross-defaulted triple-net leases with JAB Industries Ltd. (doing business as Wildflower Farms) (the “JAB Tenant”) for the JAB Properties. Power REIT’s total capital as of December 31, 2022 was approximately $1.6 million.
Added
There can be no assurance that Marengo Township will ultimately approve proceeding with cannabis cultivation at this property or do so on terms that are economically feasible given the current state of the market. Unfortunately, the market for cannabis has compressed dramatically in Michigan over the course of 2022 and 2023.
Removed
The leases provide that the JAB Tenant is responsible for paying all expenses related to the JAB Properties, including maintenance expenses, insurance and taxes. The term of each of the leases is 20 years and provides two options to extend for additional five-year periods.
Added
There can be no assurance as to how long this process will take. CEA Greenhouse Properties – Food Related Nebraska On March 31, 2022, Power REIT, through a wholly owned subsidiary, completed its first acquisition with the focus on the cultivation of food crops.
Removed
The leases also have financial guarantees from affiliates of the JAB Tenant and we are evaluating collectability related to the guaranties. The JAB Tenant intends to operate the JAB Properties as licensed medical cannabis cultivation and processing facilities.
Added
Unfortunately, the market for tomatoes compressed and the tenant was unable to meet its financial obligations and has vacated the property. We have been actively exploring alternatives to secure a new tenant to put the facility back into operation and the potential to sell the MillPro Facility.
Removed
The rent for each of the leases was structured whereby after a six-month free-rent period, the rental payments provide PW JAB a full return of invested capital over the next three years in equal monthly payments. Thereafter, rent was structured to provide a 12.5% return on invested capital, which increases at a 3% rate per annum.
Added
In February of 2024, our subsidiary entered into a 20 year triple-net lease with an initial rent of $1 million per year after a 6 month deferred rent period along with a Letter of Intent to purchase the property for $9.2 million with a deadline of December 31, 2024.
Removed
At any time after year six, if cannabis is legalized at the federal level, the rent will be adjusted 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.
Added
There can be no assurance that the tenant will perform on either the Lease or Purchase. Revenue Concentration The Trust’s revenue is highly concentrated. For the fiscal year ended 2023, Power REIT collected approximately 84% of its consolidated revenue from two properties.
Removed
The JAB Tenant is an affiliate of a company that owns and operates two indoor cannabis cultivation facilities and five dispensary locations in the State of Colorado along with several other cannabis related projects under development.
Removed
The leases require the JAB Tenant to maintain a medical cannabis license and operate in accordance with all Colorado and local regulations with respect to its operations. The leases prohibit the retail sale of the JAB Tenant’s cannabis and cannabis-infused products from the JAB Properties.
Removed
The straight-line annual rent of approximately $331,000 represents an estimated yield of over 18% on Power REIT’s invested capital. During the fourth quarter of 2022, a security deposit in the amount of $93,297 was recognized as a rent payment, and rent and revenue recognition is being handled on a cash-basis.
Removed
On November 1, 2019, PW JAB, entered into an agreement with the JAB Tenant to expand the greenhouse at the 5.2-acre property from approximately 5,616 rentable square feet of greenhouse to approximately 16,416 square feet.
Removed
Our investment in the expansion was $900,000 and the lease amendment is structured to provide rent on similar economics to the original leases and provides additional straight-line annual rent of approximately $165,000, representing an estimated yield of over 18%. The completion of this expansion occurred in July 2020.
Removed
In 2022, the JAB Tenant’s lease was amended to restructure the timing of the rent payments but the total straight-line rent over the life of the lease is unchanged. On May 7, 2021, PW JAB assigned its lease for one property with PW CO CanRE JAB LLC (“PW JAB”) to 19977 LLC.
Removed
On September 7, 2022, PW JAB assigned its lease for the property previous leased to 19977 LLC to Jackson Farms, LLC (the “Tam 18 Assignment”).
Removed
Simultaneous with the assignment, the lease was amended to restructure the timing of the rent payments but the total straight-line rent over the life of the lease is unchanged, and an additional guarantor was added to the lease.
Removed
The construction on the project is largely complete but as of December 31, 2022, the property is vacant and the tenant has defaulted on the lease. Revenue recognition is currently being handled on a cash-basis but no rental income is expected as the tenant has ceased operations at the property and we are evaluating collectability related to the guaranties.
Removed
During the fourth quarter of 2022, a security deposit in the amount of $69,690 was recognized as a rent payment. The Trust has established a depreciable life for the JAB Properties greenhouses of 20 years and has recognized depreciation expense of approximately $128,000 and $128,000 for the years ended December 31, 2022 and 2021, respectively.
Removed
On January 31, 2020, through a newly formed wholly owned indirect subsidiary, PW CO CanRe Mav 14, LLC (“PW Mav 14”), we acquired 5.54 acres of land in Colorado (the “Mav 14 Property”) with an existing greenhouse and processing facility totaling 9,300 square-feet for the cultivation of cannabis for $850,000.
Removed
Concurrent with the closing, PW Mav 14 entered into a triple-net lease (the “Mav 14 Lease”) with a tenant (the “Mav 14 Tenant”) who is responsible for paying all expenses related to the Mav 14 Property including maintenance expenses, insurances and taxes.
Removed
As part of the transaction, PW Mav 14 agreed to fund the construction of 15,120 square feet of greenhouse space for $1,058,400 and the Mav 14 Tenant agreed to fund the construction of approximately 2,520 additional square feet of head-house/processing space on the Mav 14 Property. The Trust’s total capital commitment in the Mav 14 Property is approximately $1.9 million.
Removed
The term of the Mav 14 Lease is 20 years and provides two options to extend for additional five-year periods. The Mav 14 Lease also has financial guarantees from affiliates of the Mav 14 Tenant. The Mav 14 Tenant intended to operate as a licensed medical cannabis cultivation and processing facility.
Removed
The rent for the Mav 14 Lease was structured whereby after a six-month deferred-rent period, the rental payments provide PW Mav 14 a full return of invested capital over the next three years in equal monthly payments. Thereafter, rent was structured to provide a 12.5% return based on invested capital with annual rent increases of 3% rate per annum.
Removed
At any time after year six, if cannabis is legalized at the federal level, the rent would be adjusted down to an amount equal to a 9% return on the invested amount and will increase at a 3% rate per annum based on a starting date of the start of year seven.
Removed
The Mav 14 Lease requires the Mav 14 Tenant to maintain a medical cannabis license and operate in accordance with all Colorado and local regulations with respect to its operations. The Mav 14 Lease prohibits the retail sale of cannabis and cannabis-infused products from the Mav 14 Property.
Removed
The straight-line annual rent of approximately $354,000 represents an estimated yield of over 18% on Power REIT’s invested capital. In 2022, the Mav 14 Lease was amended to restructure the timing of the rent payments but the total straight-line rent over the life of the lease is unchanged.
Removed
The construction on the project is complete but as of December 31, 2022 the property is vacant and the tenant has defaulted on the lease and we are evaluating collectability related to the guaranties. During the fourth quarter of 2022, the Trust recognized revenue of $122,000 related to a security deposit from the tenant.
Removed
Revenue recognition is currently being handled on a cash-basis but no rental income is expected as the tenant has ceased operations at the property. 43 The Trust has established a depreciable life for the PW Mav 14 Property greenhouse of 20 years and has recognized depreciation expense of approximately $88,000 and $88,000 for the years ended December 31, 2022 and 2021, respectively.
Removed
On February 20, 2020, through a newly formed wholly owned indirect subsidiary, PW CO CanRe Sherman 6, LLC (“PW Sherm 6”), we acquired 5.0 acres of vacant land in Colorado (the “Sherman 6 Property”) for $150,000.
Removed
As part of the transaction, PW Sherm 6 agreed to fund the construction of 15,120 square feet of greenhouse space and 8,776 square feet of head-house/processing space on the Sherman 6 Property for $1,693,800. Power REIT’s total capital commitment was approximately $2.0 million.
Removed
On February 1, 2020, PW Sherm 6 entered into a triple-net lease (the “Initial Sherman Lease”) with its tenant (the “Sherman 6 Tenant”) such that the Sherman 6 Tenant is responsible for paying all expenses related to the Sherman 6 Property including maintenance expenses, insurances and taxes.
Removed
The term of the Initial Sherman Lease is 20 years and provides two options to extend for additional five-year periods. The Initial Sherman Lease also has personal guarantees from affiliates of the tenants. The tenant intends to operate as a licensed cannabis cultivation and processing facility.
Removed
The rent for the Initial Sherman Lease is structured whereby after a nine-month deferred-rent period, the rental payments provide PW Sherm 6 a full return of invested capital over the next three years in equal monthly payments. Thereafter, rent is structured to provide a 12.9% return based on invested capital with annual rent increases of 3% rate per annum.
Removed
At any time after year six, if cannabis is legalized at the federal level, the rent will be adjusted 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.
Removed
The Initial Sherman Lease requires the tenant to maintain a medical cannabis license and operate in accordance with all Colorado and local regulations with respect to its operations. The Initial Sherman Lease prohibits the retail sale of the tenant’s cannabis and cannabis-infused products from the Sherman 6 Property.
Removed
The straight-line annual rent of approximately $346,000 represents an estimated yield of over 18% on Power REIT’s invested capital On August 25, 2020, PW Sherm 6 entered into an agreement (as amended, the “Sherman Lease”) for the expansion of the Sherman 6 Property with the Sherman 6 Tenant. The expansion consists of approximately 2,520 square feet of additional greenhouse/headhouse space.
Removed
The Sherman 6 Tenant was responsible for implementing the expansion and PW Sherm 6 funded the cost of such expansion of approximately $150,000, with any additional amounts funded by the Sherman 6 Tenant. Power REIT’s total investment in the Sherman 6 Property is approximately $2.0 million.
Removed
As part of the agreement, PW Sherm 6 and the Sherman 6 Tenant have amended the Lease whereby after a nine-month period, the additional rental payments provide PW Sherm 6 with a full return of its additional invested capital over the next three years and thereafter, provide a 12.9% return increasing 3% rate per annum.
Removed
The additional straight-line rent of approximately $29,000 represents an estimated yield of over 18% on Power REIT’s invested capital. The construction for the entire project is complete and the property is operational.
Removed
In 2022, the Sherman Lease was amended to restructure the timing of the rent payments but the total straight-line rent over the life of the lease and amendment was not changed.
Removed
As of December 31, 2022 the tenant is not current on rent and revenue recognition is being handled on a cash-basis and we are evaluating collectability related to the guaranties.
Removed
The Trust has established a depreciable life for the Sherm 6 Property greenhouse of 20 years and has recognized depreciation expense of approximately $92,000 for both the years ended December 31, 2022 and 2021, respectively. 44 On March 19, 2020, through a newly formed wholly owned indirect subsidiary, PW CO CanRe Mav 5, LLC (“PW Mav 5”), we purchased a 5.2 acre of vacant land in Colorado for $150,000 (the “Mav 5 Property”).

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

4 edited+7 added−25 removed5 unchanged
Biggest changeUnfortunately, to date, the guarantor has not performed on his obligations related to the settlement agreement. 53 On January 15, 2022, Power REIT’s subsidiary, PW CanRe Cloud Nine LLC (“PW Cloud Nine”), filed for the eviction of its tenant Cloud Nine for failure to pay rent when due.
Biggest changeRegardless of the outcome, litigation has adversely impacted our business because of defense costs, diversion of management resources and other factors. 47 On January 15, 2022, Power REIT’s subsidiary, PW CanRe Cloud Nine LLC (“PW Cloud Nine”), filed for the eviction of its tenant Cloud Nine for failure to pay rent when due in District Court, Crowly County, Colorado and a judgement against Cloud Nine and the lease guarantor for unpaid rent.
It is not possible to predict the final resolution of the current litigation to which we are party to, and the impact of certain of these matters on our business, results of operations, and financial condition could be material. Regardless of the outcome, litigation has adversely impacted our business because of defense costs, diversion of management resources and other factors.
It is not possible to predict the final resolution of the current litigation to which we are party to, and the impact of certain of these matters on our business, results of operations, and financial condition could be material.
The Trust does not believe it has material exposure to the claims brought by the JKL Parties beyond the costs associated with the litigation. Item 4. Mine Safety Disclosures. Not Applicable. PART II
The Trust does not believe it has material exposure to the claims brought by the JKL Parties beyond the costs associated with the litigation. A trial was held in May of 2023 and we are awaiting a ruling from the court.
On February 11, 2022 the court granted a Writ of Restitution for the eviction of Cloud Nine LLC. Cloud Nine LLC has appealed the eviction ruling. The appeal is still pending as of the date of this filing. The case is pending in Crowley County Colorado District Court (Case Number: 222cv30004).
On February 11, 2022 the court granted a Writ of Restitution for the eviction of Cloud Nine LLC which was appealed but Cloud Nine ultimately agreed to turn over possession of the property.
Removed
On August 11, 2021, our wholly owned subsidiary, PW CO CanRe MF LLC (“CanRe MF”), filed a breach of contract claim against PSP Management LLC (“PSP”) which is our tenant at a property (the “MF Property”) owned by CanRe MF in Ordway, CO pursuant to a lease (the “MF Lease”) in the District Court, Crowley County, Colorado, Case #2021CV30015.
Added
On February 14, 2022, the defendants in the case filed counterclaims against PW Cloud Nine, Power REIT and David Lesser for: (i) fraudulent misrepresentation, (ii) negligent misrepresentation and/or concealment, (iii) breach of contract, (iv) breach of the duty of good faith and fair dealing, (v) alter ego/piercing the corporate veil, and (vi) unjust enrichment.
Removed
CanRe MF also named a principal owner individually as guarantor of the MF Lease in the litigation. PSP did not complete the construction of the MF Property in a timely manner as required by the MF Lease. CanRE MF is seeking damages related to cost over-runs and failure to pay rent as well as costs of collection and interest.
Added
The case was pending in Crowley County Colorado District Court (Case Number: 2022CV8). On February 13, 2024, the court issued a ruling dismissing all of the counterclaims and granting a default judgement against Cloud Nine and the guarantor of the lease.
Removed
PSP has failed to pay rent due in the amount of $87,841 per month since July 2021. On November 1, 2021, PSP agreed to turn over possession of the property to CanRe MF. CanRe MF is seeking to mitigate its damages by completing the construction and finding a replacement tenant for the MF Property.
Added
On November 17, 2023, Anchor Hydro (“Anchor”) initiated a complaint, as amended, in the Michigan Circuit Court for the County of Calhoun (Case No. 2023-3145-CB) against Power REIT, PW MI CanRE Marengo LLC for Breach of Contract, Unjust Enrichment and Account Stated.
Removed
A portion of the property was re-leased during the Second quarter of 2022 to a new tenant – Elevate and Bloom LLC. Also, during the Second quarter 2022, CanRe MF entered into settlement agreements with one guarantor that was a named party in the litigation.
Added
The litigation relates to purported work by Anchor at the property owned by PW MI CanRE Marengo LLC in Michigan.
Removed
Cloud Nine has deposited $25,000 cash bond with the court and on April 29,2022 PW Cloud Nine LLC filed a motion to increase the bond amount to reflect the full amount of unpaid rent and continuing rent obligations of $83,275.15 per month.
Added
On March 13, 2024, East West Bank (“EWB”) initiated a complaint in the Superior Court of California, County of Los Angeles (Case 24STCV06180) against PW CanRE Holdings, LLC, PW CanRE of Colorado Holdings LLC, PW ME CanRE SD LLC, PW CO CanRE Walsenburg LLC, PW Co CanRE JKL LLC, PW CO CanRE JAB LLC, PW CO CanRE Tam 19 LLC, PW CO CanRE Mav 14 LLC, PW CO CanRE Gas Station LLC, PW CO CanRE Grail LLC, PW CO CanRE Tam 7 LLC, PW CO CanRE Cloud Nine LLC, PW CO CanRE Apotheke LLC, PW CO CanRE Mav 5 LLC, PW CO CanRE MF LLC, PW MillPro NE LLC, PW CA CanRE Canndescent LLC and PW MI CanRE Marengo LLC.
Removed
On September 16, 2022, PW Cloud Nine LLC filed an additional motion seeking to increase the bond amount to reflect the full amount of unpaid rent. On April 1, 2022, Power REIT’s wholly owned subsidiary, PW CanRe Marengo LLC (“PW Marengo”), filed a Complaint, Petition for Writ of Mandamus and Jury Demand against the Township of Marengo, Michigan (the “Complaint”).
Added
The litigation relates to a loan secured by various properties held by PW CanRE Holdings, LLC through its ownership of the various subsidiaries that are also named in the complaint.
Removed
The Complaint was filed in the United States District Court – Western District of Michigan – Southern Division and the Case Number is: 1:22-cv-00321.
Added
The complaint is seeking (i) Judicial Foreclosure (ii) Specific Performance (iii) Appointment of Receiver; (iv) Injunctive Relief; (v) Breach of Contract (Security Agreement); (vi) Breach of Contract (Guaranty); (vii) Money Due; and (viii) Account Stated. Item 4. Mine Safety Disclosures. Not Applicable. PART II
Removed
The Complaint is an action for equitable, declaratory and injunctive relief arising out of Township’s false promises, constitutional violations by the Township’s deprivation of Plaintiffs’ civil rights through its refusal and failure to comply with its own ordinances and state law as well as a common dispute resolution mechanism.
Removed
On April 7, 2022, the Trust filed a Motion for expedited trial and on April 21, 2022, the Township of Marengo, Michigan filed a reply brief related thereto. On June 6, 2022, the Township of Marengo, Michigan filed its answer to the Complaint.
Removed
On July 5, 2022 the court held a status conference which required the parties to participate in a mediation to occur within 30 days. On August 1, 2022, PW Marengo filed a Stipulation dismiss the Complaint, but the parties agreed to continue the court ordered mediation and extend the deadline for mediation while working to finalize an agreed upon mediator.
Removed
On June 30, 2022, PW Marengo, filed a Verified Complaint in Calhoun County Michigan, (the “Calhoun Complaint”) and the Case Number is 22-1760-AW. The Complaint was an action to compel the Township to allow PW Marengo to appear before the Marengo Township Zoning Board of Appeals (“ZBA”).
Removed
On June 10, 2022, PW Marengo filed an application to the ZBA to secure an affirmation that, because the greenhouse property is zoned as Agricultural, it is exempt from requirements of seeking building permits and a Certificate of Occupancy.
Removed
On June 24, 2022, two representatives of the Township indicated that they were rejecting the application to the ZBA because the property is zoned agricultural and exempt from requiring a Certificate of Occupancy and therefore there is no reason to hold the meeting.
Removed
Unfortunately, when pressed, the representatives were unwilling to put this in writing which we believe would have been sufficient to resolve the requirements for the State of Michigan cannabis licensing.
Removed
PW Marengo was seeking documentation that is necessary to secure cannabis licenses from the State of Michigan which has agreed to accept in the form of a simple two sentence statement from Marengo Township that because the property is zoned Agricultural it is exempt from requiring a Certificate of Occupancy.
Removed
After commencement of the litigation process, we ultimately secured the CO Letter from the Marengo Township Supervisor confirming that the property does not need a CO. The CO Letter is in the form that the CRA previously agreed to accept.
Removed
Based on the receipt of the CO Letter, the CRA licensing process moved forward and on August 9, 2022, CRA performed a pre-licensure inspection and identified that no deficiencies existed. In addition to the CRA approval we received, we are required to secure the approval of the Michigan Bureau of Fire Services (“BFS”).
Removed
The BFS process is currently underway but there is no certainty as to the timing to complete this process. Unfortunately, after receiving the CRA pre-approval for the property, the attorney for the Township sent an email to the CRA indicating the facility was not in compliance with the Township requirements.
Removed
Based on this, we once again sought to convene the ZBA which occurred on September 7, 2022. Unfortunately, the ZBA did not vote on what was requested in the application but rather “denied a change of zoning” which was not sought.
Removed
Accordingly, on September 27, 2022, PW Marengo filed a Claim of Appeal of the outcome of the ZBA in the Circuit Court for the County of Calhoun in the State of Michigan (Case Number 20222609AA). Despite having to withdraw the application to the CRA, we have been able to continue the process with the BFS.
Removed
The process was fairly involved and required justifying the level of the hazards as reasonable for operation. On November 4, 2022, we received an approval of our plans from BFS which is subject to a final physical inspection which will take place once we are finalizing the license.
Removed
On October 17, 2022, the Calhoun Complaint (Case Number is 22-1760-AW) was amended in its entirety seeking equitable, declaratory and injunctive relief arising out of the Township’s false promises, and constitutional violations arising from the Township’s deprivation of Plaintiff’s civil rights through its refusal and failure to comply with state law and its own ordinances. 54 On October 24, 2022, PW Marengo submitted an application to the Marengo Township Construction Board of Appeals (“CBA”) as another potential path towards the resolution of the dispute.
Removed
On November 21, 2022, representatives of Power REIT met with the Marengo Township Construction Board of Appeals which has agreed to allow the project to proceed as follows: - The existing greenhouse portion of the facility was granted the following variances: ◌ A variance from the Energy Code requirements ◌ A variance from fire suppression consistent with the conclusion of the Michigan Bureau of Fire Services ◌ A variance related to egress requirements consistent with the conclusion of the Michigan Bureau of Fire Services - Building permits may be required for modifications to the structure but not for the pre-existing structure itself Based on the outcome of the CBA hearing, the project is positioned to move forward with securing state and local cannabis licensing.
Removed
We are working on a strategy related to seeking the required permits for some work that has been completed or is in process after which we could receive a Certificate of Occupancy for cannabis cultivation purposes.
Removed
We are also working on a strategy related to the overall path forward related to this project that may or may not include the cultivation of cannabis. We continue to try to work with the Township to establish a path forward but will continue to pursue a parallel track in litigation including the potential for a court ordered mediation process.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+4 added−11 removed6 unchanged
Biggest changeThe following table provides information regarding our equity compensation plans as of December 31, 2022: Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under Plan (excluding securities in first column) Equity compensation plans approved by security holders 205,000 13.44 150,917 Equity compensation plans not approved by security holders n/a n/a n/a Total 205,000 13.44 150,917 Performance Graph We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Biggest changeThe Plan’s purpose is to secure and retain the services of Employees, Directors and Consultants, to provide incentives for such persons to exert maximum efforts for the success of the Trust and to provide a means by which such persons may be given an opportunity to benefit from increases in value of the common shares through the granting of awards. 49 The following table provides information regarding our equity compensation plans as of December 31, 2023: Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under Plan (excluding securities in first column) (1) Equity compensation plans approved by security holders 197,500 13.44 1,501,295 Equity compensation plans not approved by security holders n/a n/a n/a Total 197,500 13.44 1,501,295 (1) The number of shares of our common stock reserved for issuance under the Plan will automatically increase on January 1 of each year, beginning on January 1, 2020 and ending on and including January 1, 2029, by 12.5% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Board of Trustees.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Trading Market and Historical Prices Our common shares of $0.001 par value are listed for trading on the NYSE American under the symbol “PW” and our shares of Series A Preferred Stock are listed for trading on the NYSE American under the symbol “PW.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Trading Market and Historical Prices Our common shares of $0.001 par value are listed for trading on the NYSE American under the symbol “PW” and our shares of Series A Preferred Stock are listed for trading on the NYSE American under the symbol “PW.A”.
Securities Authorized for Issuance Under Equity Compensation Plans Power REIT’s 2020 Equity Incentive Plan, which superseded the 2012 Equity Incentive Plan, was adopted by the Board on May 27, 2020 and approved by shareholders on June 24, 2020.
Securities Authorized for Issuance Under Equity Compensation Plans Power REIT’s 2020 Equity Incentive Plan (the “Plan”), which superseded the 2012 Equity Incentive Plan, was adopted by the Board on May 27, 2020 and approved by shareholders on June 24, 2020.
As of December 31, 2021, our last tax return completed to date, we have a net operating loss of $24.8 million which reduces our taxable net income, thereby reducing the amount we are required to distribute to our shareholders as dividends, until such Net Operating Losses are exhausted.
As of December 31, 2022, our last tax return completed to date, we have a net operating loss of $24.5 million which reduces our taxable net income, thereby reducing the amount we are required to distribute to our shareholders as dividends, until such Net Operating Losses are exhausted.
Dividends on our Series A Preferred Stock are cumulative and must be paid in full and on a current basis in order for the Trust to pay dividends on it common shares. 56 Issuer Purchases of Equity Securities On January 19, 2017, the board of trustees approved a stock repurchase program of up to $750,000 and which is approved for both common shares and preferred shares of the Trust.
Issuer Purchases of Equity Securities On January 19, 2017, the board of trustees approved a stock repurchase program of up to $750,000 and which is approved for both common shares and preferred shares of the Trust.
The registrar, transfer agent and disbursing agent for dividends and other distributions in respect of our Series A Preferred Stock is Broadridge Corporate Issuer Solutions, Inc. Stock Issued for Cash During the twelve months ended December 31, 2022, we did not issue any securities.
Registrar, Transfer Agent and Disbursing Agent The transfer agent and registrar for our common shares is Broadridge Corporate Issuer Solutions, Inc. 48 The registrar, transfer agent and disbursing agent for dividends and other distributions in respect of our Series A Preferred Stock is Broadridge Corporate Issuer Solutions, Inc.
As of December 31, 2022, the Company has not repurchased any shares of stock under the stock repurchase program.
As of December 31, 2023, the Company has not repurchased any shares of stock under the stock repurchase program. Sales of Unregistered Equity Securities There were no unregistered sales of equity securities by us during the year ended December 31, 2023 or 2022.
Removed
A”. As of March 31, 2023, there were approximately 385 registered holders of registrant’s common shares. 55 Registrar, Transfer Agent and Disbursing Agent The transfer agent and registrar for our common shares is Broadridge Corporate Issuer Solutions, Inc.
Added
As of March 27, 2024, there were approximately 375 registered holders of registrant’s common shares.
Removed
In 2021, the Trust raised gross proceeds of approximately $36.7 million and issued an additional 1,383,394 common shares through a rights offering that closed on February 5, 2021. Offering expenses of $165,075 were incurred in connection with the offering and recorded as contra-equity netting against the proceeds of offering.
Added
Stock Issued for Cash During the twelve months ended December 31, 2023 or 2022, we did not issue any securities.
Removed
Hudson Bay Partner, LP (“HBP”) which is 100% owned by David Lesser, is the Managing Member of PW RO Holdings LLC (“ROH”) which participated in the rights offering and acquired 132,074 shares. On December 31, 2021, ROH distributed 116,617 shares to investors in ROH and currently owns 15,458 shares.
Added
Dividends on our Series A Preferred Stock are cumulative and must be paid in full and on a current basis in order for the Trust to pay dividends on its common shares.
Removed
HBP is the Managing Member of PW RO Holdings 2 LLC (“ROH2”) which participated in the rights offering and acquired 155,000 shares. On October 8, 2021, ROH2 distributed 136,344 shares to an investor in ROH2 and currently owns 18,656 shares.
Added
Performance Graph We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. Item 6. [Reserved]
Removed
HBP is the Managing Member of PW RO Holdings 3 LLC (“ROH3”) which participated in the rights offering and acquired 123,020 shares. On December 17, 2021, ROH3 distributed 108,610 shares to investors in ROH3 and currently owns 14,410 shares. HBP became a Co-Managing Member of 13310 LMR2A (“13310”) which participated in the rights offering and acquired 68,679 shares.
Removed
Increase in Authorized Preferred Stock On January 7, 2021, the Trust filed Articles Supplementary with the State of Maryland to classify an additional 1,500,000 unissued shares of beneficial interest, par value $0.001 per share, 7.75% Series A Preferred Stock, such that the Trust shall now have authorized an aggregate of 1,675,000 shares of Series A Preferred Stock, all of which shall constitute a single series of Series A Preferred Stock.
Removed
On February 3, 2021, as part of the closing for the Canndescent acquisition, the Trust issued 192,308 shares of Power REIT’s Series A Preferred Stock with a fair value of $5,000,008 less $2,205 of costs.
Removed
Sales of Unregistered Equity Securities There were no unregistered sales of equity securities by us during the year ended December 31, 2022 or 2021 other than the issuance of 192,308 shares of Power REIT’s Series A Preferred Stock on February 3, 2021, as part of the closing for the Canndescent acquisition that were disclosed in Power REIT’s Current report on Form 8-K filed with the SEC on February 4, 2021.
Removed
The shares were issued in a transaction exempt from registration under the Securities Act in reliance on Section 4(a)(2) thereof.
Removed
The entities receiving the shares represented that they each were an “accredited investor,” as defined in Regulation D, and were acquiring the securities described herein for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.
Removed
The Plan’s purpose is to secure and retain the services of Employees, Directors and Consultants, to provide incentives for such persons to exert maximum efforts for the success of the Trust and to provide a means by which such persons may be given an opportunity to benefit from increases in value of the common shares through the granting of awards.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

43 edited+45 added−20 removed29 unchanged
Biggest changeOn March 13, 2023 the terms of the Debt Facility were amended which is summarized as follows: - The total commitment is reduced from $20 million to $16 million. - The interest rate is changed to the greater of: (i) 1% above the Prime rate and (ii) 8.75%. - Monthly payments on the Debt Facility will be interest only until maturity. - A portion of the proceeds from the sale of assets within the Borrowing Base for the Debt Facility will be required to pay the outstanding loan amount. - The maturity date of the Debt Facility is changed to December 21, 2025. - The Debt Service Coverage ratio will be 1.50 to 1.00 and the test will be performed on an annual basis and is eliminated until the calendar year 2024. - The definition of assets included in the Borrowing Base for the Debt Facility no longer eliminates assets where tenants are in default for failure to make timely rent payments. - An agreed upon minimum liquidity amount shall be maintained. - A $160,000 fee will be charged by the bank for the modification. 62 The amount of principal payments remaining on Power REIT’s long-term debt as of December 31, 2022 is as follows: Total Debt 2023 1,168,819 2024 715,777 2025 16,755,634 2026 797,628 2027 841,452 Thereafter 18,820,794 Long term debt $ 39,100,104 Critical Accounting Estimates Critical accounting policies are those that require the application of management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that might change in subsequent periods.
Biggest changeThe amount of principal payments remaining on Power REIT’s long-term debt as of December 31, 2023 is as follows: Total Debt 2024 15,529,584 2025 755,634 2026 797,628 2027 841,452 2028 887,325 Thereafter 17,933,071 Long term debt $ 36,744,694 Critical Accounting Estimates Critical accounting policies are those that require the application of management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that might change in subsequent periods.
Quantitative and Qualitative Disclosures about Market Risk. Not applicable. Item 8. Financial Statements and Supplementary Data. This information appears following Item 15 of this document and is incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None
Quantitative and Qualitative Disclosures about Market Risk. Not applicable. 58 Item 8. Financial Statements and Supplementary Data. This information appears following Item 15 of this document and is incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None
Core FFO is a non-GAAP financial measure and should not be substituted for net income. Core FFO: Management believes that Core FFO is a useful supplemental measure of the Trust’s operating performance.
Core FFO is a non-GAAP financial measure and should not be substituted for net income. 57 Core FFO: Management believes that Core FFO is a useful supplemental measure of the Trust’s operating performance.
On March 13, 2023 we entered into a modification of the terms of the Debt Facility which is summarized as follows: - The total commitment is reduced from $20 million to $16 million. - The interest rate is changed to the greater of: (i) 1% above the Prime rate and (ii) 8.75%. - Monthly payments on the Debt Facility will be interest only until maturity. - A portion of the proceeds from the sale of assets within the Borrowing Base for the Debt Facility will be required to pay the outstanding loan amount. - The maturity date of the Debt Facility is changed to December 21, 2025. - The Debt Service Coverage ratio will be 1.50 to 1.00 and the test will be performed on an annual basis and is eliminated until the calendar year 2024. - The definition of assets included in the Borrowing Base for the Debt Facility no longer eliminates assets where tenants are in default for failure to make timely rent payments. - An agreed upon minimum liquidity amount shall be maintained. - A $160,000 fee will be charged by the bank for the modification.
On March 13, 2023 the Greenhouse Loan entered into an additional modification of which the terms are summarized as follows: - The total commitment is reduced from $20 million to $16 million. - The interest rate is changed to the greater of: (i) 1% above the Prime rate and (ii) 8.75%. - Monthly payments on the Greenhouse Loan will be interest only until maturity. - A portion of the proceeds from the sale of assets within the Borrowing Base for the Greenhouse Loan will be required to pay the outstanding loan amount. - The maturity date of the Greenhouse Loan is changed to December 21, 2025. - The Debt Service Coverage ratio will be 1.50 to 1.00 and the test will be performed on an annual basis and is eliminated until the calendar year 2024. - The definition of assets included in the Borrowing Base for the Greenhouse Loan no longer eliminates assets where tenants are in default for failure to make timely rent payments. - An agreed upon minimum liquidity amount shall be maintained in the amount of $1 million. - A $160,000 fee will be charged by the bank for the modification.
To achieve this primary goal, we have developed a business strategy focused on increasing the values of our properties, and ultimately of the Trust, which includes: ● Raising capital by monetizing the embedded value in our portfolio to enhance our liquidity position and, as appropriate reducing debt levels to strengthen our balance sheet; ● Selling off non-core properties and underperforming assets; ● Seeking to re-lease properties that are vacant or have non-performing tenants ● Raising the overall level of quality of our portfolio and of individual properties in our portfolio; ● Improving the operating results of our properties; and ●Taking steps to position the Company for future growth opportunities.
To achieve this primary goal, we have developed a business strategy focused on increasing the values of our properties, and ultimately of the Trust, which includes: ● Raising capital by monetizing the embedded value in our portfolio to improve our liquidity position and, as appropriate reducing debt levels to strengthen our balance sheet; ● Selling off non-core properties and underperforming assets; ● Seeking to re-lease properties that are vacant or have non-performing tenants ● Raising the overall level of quality of our portfolio and of individual properties in our portfolio; 50 ● Improving the operating results of our properties; and ●Taking steps to position the Company for future growth opportunities.
On January 7, 2021, the Trust filed Articles Supplementary with the State of Maryland to classify an additional 1,500,000 unissued shares of beneficial interest, par value $0.001 per share, 7.75% Series A Preferred Stock, such that the Trust shall now have authorized an aggregate of 1,675,000 shares of Series A Preferred Stock, all of which shall constitute a single series of Series A Preferred Stock.
On January 7, 2021, the Trust filed Articles Supplementary with the State of Maryland to classify an additional 1,500,000 unissued shares of beneficial interest, par value $0.001 per share, 7.75% Series A Preferred Stock, such that the Trust now has authorized an aggregate of 1,675,000 shares of Series A Preferred Stock, all of which shall constitute a single series of Series A Preferred Stock.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis is based on, and should be read in conjunction with, the Consolidated and Combined Consolidated Financial Statements and the related notes thereto of the Trust as of and for the years ended December 31, 2022 and December 31, 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis is based on, and should be read in conjunction with, the Consolidated and Combined Consolidated Financial Statements and the related notes thereto of the Trust as of and for the years ended December 31, 2023 and December 31, 2022.
Subsequent changes in estimated undiscounted cash flows arising from changes in the anticipated action to be taken with respect to the property could impact the determination of whether an impairment exists and whether the effects could materially affect our net income.
Subsequent changes in estimated undiscounted cash flows arising from changes in the anticipated action to be taken with respect to the property could impact the determination of whether an impairment exists and whether the effects could materially affect the Trust’s net income.
If there is a triggering event in relation to a property to be held and used, we will estimate the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges.
If there is a triggering event in relation to a property to be held and used, the Trust will estimate the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges.
On November 25, 2019, Power REIT, through a newly formed subsidiary, PW PWV Holdings LLC (“PW PWV”), entered into a loan agreement (the “PW PWV Loan Agreement”) with a certain lender for $15,500,000 (the “PW PWV Loan”).
On November 25, 2019, Power REIT, through a subsidiary, PW PWV Holdings LLC (“PW PWV”), entered into a loan agreement (the “PW PWV Loan Agreement”) with a certain lender for $15,500,000 (the “PW PWV Loan”).
Improving Our Balance Sheet by Reducing Debt and Leverage; Maintaining Liquidity 58 Leverage We continue to seek ways to reduce our leverage by improving our operating performance and through a variety of other means available to us. These means might include selling properties, raising capital or through other actions.
Improving Our Balance Sheet by Reducing Debt and Leverage; Maintaining Liquidity Leverage We continue to seek ways to reduce our debt and debt leverage by improving our operating performance and through a variety of other means available to us. These means might include leasing vacant properties, selling properties, raising capital or through other actions.
The PW PWV Loan is evidenced by a note issued by PW PWV to the benefit of the lender for $15,500,000, with a fixed interest rate of 4.62% and fully amortizes over the life of the financing which matures in 2054 (35 years).
The PW PWV Loan is evidenced by a note issued by PW PWV to the benefit of the lender for $15,500,000, with a fixed interest rate of 4.62% and fully amortizes over the life of the financing which matures in 2054 (35 years). The PW PWV Loan is non-recourse to Power REIT.
On February 3, 2021, as part of the closing for the Canndescent acquisition, the Trust issued 192,308 shares of Power REIT’s Series A Preferred Stock with a fair value of $5,000,008 less $2,205 of costs.
On February 3, 2021, as part of the closing for the Canndescent (Desert Hot Spring, CA) acquisition, the Trust issued 192,308 shares of Power REIT’s Series A Preferred Stock with a fair value of $5,000,008 less $2,205 of costs.
Preferred Dividend Arrearages As of December 31, 2022, the Trust has 336,944 aggregate outstanding shares of Series A Preferred Stock of (par value $25.00 per share). During the fourth quarter of 2022, the Trust did not declare a dividend on its Series A Preferred Stock.
Preferred Dividend Arrearages As of December 31, 2023, the Trust has 336,944 aggregate outstanding shares of Series A Preferred Stock of (par value $25.00 per share). During the year of 2023, the Trust did not declare a dividend on its Series A Preferred Stock.
Effective October 28, 2022, the terms of the Debt Facility were amended such that the amortization period was extended from 5 years to 10 years for the calculation of debt service coverage ratio and a 6-month debt service payment reserve requirement was established.
On October 28, 2022, the terms of the Greenhouse Loan were amended such that the amortization period was extended from 5 years to 10 years for the calculation of debt service coverage ratio and a 6-month debt service payment reserve requirement of $1 million was established.
Capital Recycling In the later part of 2022, we commenced property reviews to establish a plan for the portfolio and, if appropriate, will seek to dispose of properties that we do not believe meet financial and strategic criteria given economic, market and other circumstances.
Capital Recycling In the later part of 2022, we commenced property reviews to establish a plan for the portfolio and, where appropriate, have been disposing of and seeking to dispose of properties that we do not believe meet financial and strategic criteria given economic, market and other circumstances.
Our expenses, other than dividend payments on our Series A Preferred Stock, are for general and administrative (“G&A”) expenses, which consist principally of insurance, legal and other professional fees, consultant fees, NYSE American listing fees, shareholder service company fees and auditing costs as well as property related expenses that are not covered by tenants. 59 During 2022, revenue has been concentrated from certain tenants.
Our expenses, other than dividend payments on our Series A Preferred Stock, are for general and administrative expenses, which consist principally of insurance, legal and other professional fees, consultant fees, NYSE American listing fees, shareholder service company fees and auditing costs as well as property related expenses that are not covered by tenants.
Disposing of these properties can enable us to redeploy our capital to other uses, such as to repay debt, to reinvest in other real estate assets and development and redevelopment projects, and for other corporate purposes. Along these lines, in early 2023 we completed sales of assets for total gross proceeds of $2.5 million (See Subsequent Events).
Disposing of these properties can enable us to redeploy or recycle our capital to other uses, such as to repay debt, to reinvest in other real estate assets and development and redevelopment projects, and for other corporate purposes. Along these lines, in 2023 we completed sales of assets for total gross proceeds of approximately $7.3 million.
As of December 31, 2022, the cumulative amount of unpaid dividends on our issued and outstanding Series A Preferred Shares totaled approximately $163,000 or $0.4844 per share. 61 Borrowings On December 31, 2012, as part of the Salisbury land acquisition, PWSS assumed existing municipal financing (“Municipal Debt”). The Municipal Debt has approximately 10 years remaining.
As of December 31, 2023, the cumulative amount of unpaid dividends on our issued and outstanding Series A Preferred Shares totaled approximately $816,000. 54 Borrowings On December 31, 2012, as part of the Salisbury land acquisition, PWSS assumed existing municipal financing (“Municipal Debt”). The Municipal Debt has approximately 10 years remaining.
PWRS issued a note to the benefit of the lender dated November 6, 2015 with a maturity date of October 14, 2034 and a 4.34% interest rate. The balance of the PWRS Bonds as of December 31, 2022 was approximately $7,393,000 (net of approximately $258,000 of capitalized debt costs).
PWRS issued a note to the benefit of the lender dated November 6, 2015 with a maturity date of October 14, 2034 and a 4.34% interest rate. The 2015 PWRS Loan is non-recourse to Power REIT. The balance of the PWRS Bonds as of December 31, 2023 was approximately $6,957,000 (net of approximately $235,000 of capitalized debt costs).
It is possible that such impairments, if required, could be material. 63 For further information, see Note 2 to the consolidated financial statements appearing following Item 16 of this document, which is incorporated herein by reference.
For further information, see Note 2 to the consolidated financial statements appearing following Item 16 of this document, which is incorporated herein by reference.
The balance of the loan as of December 31, 2022 was $14,615,000 (net of approximately $285,000 of capitalized debt costs). On December 21, 2021, Power REIT entered into a Debt Facility with initial availability of $20 million.
The balance of the loan as of December 31, 2023 was approximately $14,412,000 (net of approximately $276,000 of capitalized debt costs). On December 21, 2021, a wholly-owned subsidiary of Power REIT (“PW CanRE Holdings”) entered into the Greenhouse Loan with initial availability of $20 million.
Results of Operations Results of Operations for the Year ended December 31, 2022 as compared to the year ended December 31, 2021 Our total revenue for the fiscal years 2022 and 2021 was $8,517,720 and $8,457,914 respectively.
Results of Operations Results of Operations for the Year ended December 31, 2023 as compared to the year ended December 31, 2022 Revenue during the years ending December 31, 2023 and 2022 was $2,357,695 and $8,517,720, respectively.
Preferred Stock During 2014, the Trust expanded its equity financing activities by offering a series of preferred shares to the public. The Series A Preferred Stock ranks, as to dividend rights and rights upon liquidation, dissolution or winding up, senior to the Trust’s common shares.
The Series A Preferred Stock ranks, as to dividend rights and rights upon liquidation, dissolution or winding up, senior to the Trust’s common shares.
During the year ended December 31, 2021, the Trust’s net cash generated by operating activities was $8,000,559. The difference was due to the decrease in net income generated by tenants defaulting on leases. 60 During the year ended December 31, 2022, our net cash used in investing activities was $20,955,110.
During the year ended December 31, 2023, our net cash used by operating activities was $2,622,874. During the year ended December 31, 2022, the Trust’s net cash generated by operating activities was $6,840,237. The difference was due to the decrease in net income generated by tenants defaulting on leases.
During the year ended December 31, 2022, our net cash generated in financing activities was $14,791,443 which included $16,000,000 of proceeds from a new debt facility, payments on long-term debt of $674,979, payment of debt issuance costs of $43,958 and payments for dividend payments to the holders of our Series A Preferred Stock of $489,620.
During the year ended December 31, 2022, our net cash generated was $14,791,443 which included $16,000,000 of proceeds from a new Greenhouse Loan, payments on long-term debt of $674,979, payment of debt issuance costs of $43,958 and payments for dividend payments to the holders of our Series A Preferred Stock of $489,620. 53 Our cash outlays at Power REIT (parent company) consist principally of professional fees, consultant fees, NYSE American listing fees, legal, insurance, shareholder service company fees, auditing costs and general and administrative expenses.
We regularly review the application of our accounting policies and evaluate the appropriateness of the estimates that are required to be made in order to prepare our consolidated financial statements. Typically, estimates may require adjustments from time to time based on, among other things, changing circumstances and new or better information.
Typically, estimates may require adjustments from time to time based on, among other things, changing circumstances and new or better information. 56 The accounting policies that we consider to be our “critical accounting policies” are those that we believe are either the most judgmental or involve the selection or application of alternative accounting policies, and that in each case are material to our consolidated financial statements.
We anticipate that our cash from operations and property sales should be sufficient to support our operations and our debt service obligations; To the extent we need to raise additional capital to meet our obligations, there can be no assurance that financing will be available when needed on favorable terms.
To the extent we need to raise additional capital to meet our obligations, there can be no assurance that financing on favorable terms will be available when needed. If we are unable to sell certain assets when anticipated at prices anticipated, we may not have sufficient cash to fund operations and commitments.
As of December 31, 2022, the Trust’s assets consisted of a total of approximately 112 miles of railroad infrastructure plus branch lines and related real estate, approximately 601 acres of fee simple land leased to seven utility scale solar power generating projects with an aggregate generating capacity of approximately 108 Megawatts (“MW”), and approximately 263 acres of land with 2,211,000 square feet of existing or under construction greenhouse/processing space.
As of December 31, 2023, the Trust’s assets consisted of approximately 112 miles of railroad infrastructure and related real estate which is owned by its subsidiary Pittsburgh & West Virginia Railroad (“P&WV”), approximately 501 acres of fee simple land leased to a number of utility scale solar power generating projects with an aggregate generating capacity of approximately 88 Megawatts (“MW”) and approximately 256 acres of land with approximately 2,163,000 square feet of existing or under construction CEA properties in the form of greenhouses.
The PWSS Term Loan carries a fixed interest rate of 5.0% for a term of 10 years and amortizes based on a 20-year principal amortization schedule. The loan is secured by PWSS’ real estate assets and a parent guarantee from the Trust.
In July 2013, PWSS borrowed $750,000 from a regional bank (the “PWSS Term Loan”). The PWSS Term Loan carries a fixed interest rate of 5.0% for a term of 10 years and amortizes based on a 20-year principal amortization schedule.
The Municipal Debt has a simple interest rate of 5.0% that is paid annually, due on February 1 of each year. The balance of the Municipal Debt as of December 31, 2022 was approximately $58,000. In July 2013, PWSS borrowed $750,000 from a regional bank (the “PWSS Term Loan”).
The Municipal Debt has a simple interest rate of 5.0% that is paid annually, due on February 1 of each year. The balance of the Municipal Debt as of December 31, 2023 was approximately $51,000. On January 30, 2024, the PWSS property was sold and the Municipal Debt was paid off (see Note 13 Subsequent Events).
The balance of the PWSS Term Loan as of December 31, 2022 was approximately $490,000 (net of approximately $1,400 of capitalized debt costs). On November 6, 2015, PWRS entered into a loan agreement (the “2015 PWRS Loan Agreement”) with a lender for $10,150,000 (the “2015 PWRS Loan”). The 2015 PWRS Loan is secured by land and intangibles owned by PWRS.
On January 30, 2024, the PWSS property was sold and the loan was paid off (see Note 13 Subsequent Events). On November 6, 2015, PWRS entered into a loan agreement (the “2015 PWRS Loan Agreement”) with a lender for $10,150,000 (the “2015 PWRS Loan”). The 2015 PWRS Loan is secured by land and intangibles owned by PWRS.
Readers are cautioned that other REITs may use different adjustments to their GAAP financial measures than we do, and that as a result, the Trust’s Core FFO may not be comparable to the FFO measures used by other REITs or to other non-GAAP or GAAP financial measures used by REITs or other companies. 64 CORE FUNDS FROM OPERATIONS (FFO) Years ended December 31, 2022 2021 Revenue $ 8,517,720 $ 8,547,914 Net Income (Loss) $ (14,253,483 ) $ 5,144,490 Stock-Based Compensation 682,259 382,328 Interest Expense - Amortization of Debt Costs 87,430 35,106 Amortization of Intangible Lease Asset 371,804 399,733 Amortization of Intangible Lease Liability (29,776 ) (35,951 ) Depreciation on Land Improvements 1,505,470 867,031 Impairment Expense 16,739,040 - Core FFO Available to Preferred and Common Stock 5,102,744 6,792,737 Preferred Stock Dividends (652,827 ) (652,834 ) Core FFO Available to Common Shares $ 4,449,917 $ 6,139,903 Weighted Average Shares Outstanding (basic) 3,377,676 3,178,215 Core FFO per Common Share 1.32 1.93 Item 7A.
CORE FUNDS FROM OPERATIONS (FFO) Years ended December 31, 2023 2022 Revenue $ 2,357,695 $ 8,517,720 Net Loss $ (14,365,513 ) $ (14,253,483 ) Stock-Based Compensation 885,314 682,259 Interest Expense - Amortization of Debt Costs 290,554 87,430 Amortization of Intangible Lease Asset 227,488 371,804 Amortization of Intangible Lease Liability - (29,776 ) Depreciation on Land Improvements 2,260,655 1,505,470 Impairment Expense 8,235,136 16,739,040 Gain on sale of property (1,053,923 ) - Core FFO Available to Preferred and Common Stock (3,520,289 ) 5,102,744 Preferred Stock Dividends (652,829 ) (652,827 ) Core FFO Available to Common Shares $ (4,173,118 ) $ 4,449,917 Weighted Average Shares Outstanding (basic) 3,389,661 3,377,676 Core FFO per Common Share (1.23 ) 1.32 Item 7A.
Our cash outlays, other than acquisitions, property improvements, dividend payments and interest expense, are for general and administrative (“G&A”) expenses, which consist principally of professional fees, consultant fees, NYSE American listing fees, insurance, shareholder service company fees and auditing costs as well as property related expenses that are not covered by tenants.
Our cash outlays at Power REIT (parent company) consist principally of professional fees, consultant fees, NYSE American listing fees, legal, insurance, shareholder service company fees, auditing costs and general and administrative expenses.
The facility is non-recourse to Power REIT and is structured without initial collateral but has springing liens to provide security against a significant number of Power REIT CEA portfolio properties in the event of default.
The facility is non-recourse to Power REIT and has perfected liens against all of Power REIT CEA portfolio properties except for the property located in Vinita, OK.
During the year ended December 31, 2022, the primary use of cash was for working capital requirements and investment activities which was offset by proceeds from a new long term debt facility. During the year ended December 31, 2022, our net cash generated by operating activities was $6,840,237.
Cash Flows Our cash and cash equivalents and restricted cash totaled $4,104,884 as of December 31, 2023, an increase of $257,013 from December 31, 2022. During the year ended December 31, 2023, the primary use of cash was for working capital requirements and financing activities which was offset by proceeds from the sale of two properties.
In addition, we are exploring the potential to use our existing corporate structure for strategic transactions including potentially merging assets or companies with the Trust.
In addition, we are exploring the potential to use our existing corporate structure for strategic transactions including potentially merging assets or companies with the Trust. On January 6, 2023, a wholly owned subsidiary of Power REIT, sold its interest in five ground leases related to utility scale solar farms located in Tulare County, California for gross proceeds of $2,500,000.
During the year ended December 31, 2021, the Trust’s net cash used in investing activities was $42,097,290. The difference was due to a decrease in the amount of acquisitions the Trust made in 2022 compared to 2021.
During the year ended December 31, 2023, our net cash generated in investing activities was $5,228,456. During the year ended December 31, 2022, the Trust’s net cash used in investing activities was $20,955,110. The difference was due to selling two properties in 2023.
During the twelve months ended December 31, 2021, Power REIT collected approximately 48% of its consolidated revenue from four properties. The tenants are NorthEast Kind Assets, LLC (“Sweet Dirt”), Fiore Management LLC (“Canndescent”), Norfolk Southern Railway and Regulus Solar LLC which represented approximately 15%, 12%, 11% and 10% of consolidated revenue respectively.
During 2023, the Trust’s revenue has been concentrated from certain tenants. For the fiscal year ended 2023, Power REIT collected approximately 84% of its consolidated revenue from two properties. The tenants are Norfolk Southern Railway and Regulus Solar LLC which represent 45% and 39% of consolidated revenue respectively.
Debt issuance expenses of approximately $275,000 were capitalized at the origination of the loan and amortization of approximately $53,000 has been recognized during the year ended December 31, 2022. As of December 31, 2022, $16,000,000 has been drawn against this Debt Facility and is outstanding compared to $0 outstanding at December 31, 2021.
Debt issuance expenses of approximately $0 and $44,000 have been capitalized during the twelve months ended December 31, 2023 and 2022, respectively.
Based on our leases in place as of December 31, 2022, we anticipate generating approximately $1,800,506 in cash rent excluding assets held for sale and approximately $8,500,000 in sales of at least two properties, however there can be no assurance that the properties will be sold or if sold that they will be at favorable prices.
Based on our leases in place as of December 31, 2023, we anticipate generating approximately $1,700,000 in cash rent from PWRS and PWV. In addition, the Trust sold two properties in the first quarter of 2024 for approximately $2,450,000 and is seeking additional property sales that may occur over the next twelve months.
We remain optimistic that we acquired this property at an attractive basis and that a new tenant can be secured to put the facility back into operation in the future. Our primary objective is to maximize the long-term value of the Trust for our shareholders.
Our primary objective is to maximize the long-term value of the Trust for our shareholders.
The accounting policies that we consider to be our “critical accounting policies” are those that we believe are either the most judgmental or involve the selection or application of alternative accounting policies, and that in each case are material to our consolidated financial statements. We believe that our revenue recognition policies meet these criteria.
We regularly review the application of our accounting policies and evaluate the appropriateness of the estimates that are required to be made in order to prepare our consolidated financial statements.
Removed
We are an internally managed real estate investment trust (“REIT”) that owns a portfolio of real estate assets related to transportation, energy infrastructure and Controlled Environment Agriculture (“CEA”) in the United States. In 2019, we expanded the focus of our real estate activities to include CEA properties in the form of greenhouses in the United States.
Added
We are structured as a holding company and owns our assets through twenty-four direct and indirect wholly-owned, special purpose subsidiaries that have been formed in order to hold real estate assets, obtain financing and generate lease revenue.
Removed
CEA is an innovative method of growing plants that involves creating optimized growing environments for a given crop indoors. Power REIT is focused on CEA in the form of a greenhouse which use approximately 70% less energy than indoor growing, 95% less water usage than outdoor growing, and does not have any agricultural runoff of fertilizers or pesticides.
Added
Recent Events On November 1, 2023, a wholly owned subsidiary of Power REIT (“PW SD”) sold its interest in a cannabis related greenhouse cultivation facility located in Maine to an affiliate of its tenant.
Removed
We believe greenhouse cultivation represents a sustainable solution from both a business and environmental perspective. Certain of our greenhouse properties are operated for the cultivation of cannabis by state-licensed operators. During 2022, we acquired a greenhouse focused on the cultivation of tomatoes.
Added
As previously announced, PW SD had entered into a Purchase and Sale Agreement related to this property that has been renegotiated based on current circumstances as part of proceeding towards closing.
Removed
We typically enter into long-term “triple net” leases where our tenants are responsible for all costs related to the property, including insurance, taxes and maintenance.
Added
The total consideration was $4,787,000, of which $3,400,000 was paid in cash, $537,000 was paid in the form of the release of the security deposit held by PW SD and seller financing in the form of an $850,000 note with an 8.5% interest rate that will accrue until maturity on October 30, 2025.
Removed
On March 31, 2022, Power REIT completed its first acquisition with the focus on the cultivation of food crops, through a newly formed wholly owned subsidiary, PW MillPro NE LLC, (“PW MillPro”), and acquired a 1,121,513 square foot greenhouse cultivation facility (the “MillPro Facility”) on an approximately 86-acre property and a separate approximately 4.88-acre property with a 21-room employee housing building (the “Housing Facility”) for $9,350,000 and closing costs of approximately $91,000 located in O’Neill, Nebraska.
Added
The note is secured by a second mortgage on the property and certain corporate and personal guarantees. Of the cash proceeds received from the Sweet Dirt sale, $1,642,187.50 was used to pay down the Greenhouse Loan.
Removed
The MillPro property is configured for the cultivation of tomatoes and during 2022 grew a preliminary crop. Unfortunately, the market for tomatoes compressed and the tenant was unable to meet its financial obligations.
Added
The purchaser is an unaffiliated third party and the price was established based on an arm’s length negotiation.
Removed
Liquidity As of December 31, 2022, our consolidated balance sheet reflected $2.85 million (after taking out $1million restricted cash) in cash and cash equivalents.
Added
The properties were acquired by Power REIT in 2013 for $1,550,000. 51 On November 1, 2023, a wholly owned subsidiary of Power REIT (“PW SD”) sold its interest in a cannabis related greenhouse cultivation facility located in Maine to an affiliate of its tenant.
Removed
We believe that this amount and future net cash provided by operations, property sales, and other sources of capital, should provide sufficient liquidity to meet our liquidity requirements in the short term, including for one year from the filing of this Annual Report.
Added
PW SD had entered into a Purchase and Sale Agreement related to this property that had been renegotiated as part of proceeding toward closing.
Removed
Net loss attributed to common shares for the fiscal year 2022 was $14,906,310 compared to net income attributed to common shares of $4,491,656 for 2021.
Added
The total consideration was $4,787,000, of which $3,400,000 was paid in cash, $537,000 was paid in the form of the release of the security deposit held by PW SD and seller financing in the form of an $850,000 note with an 8.5% interest rate that will accrue until maturity on October 30, 2025.
Removed
The difference between our 2022 and 2021 consolidated results was principally attributable to an impairment expense in the amount of $16,739,040 related to the challenges within the cannabis cultivation industry and estimating a reduction of property values within our portfolio.
Added
The note is secured by a second mortgage on the property and certain corporate and personal guarantees. The sale of the Tulare solar ground leases and the PW SD cannabis related greenhouse cultivation facility are part of a strategic review as we continue to evaluate alternatives to enhance liquidity and improve our opportunities.
Removed
Rental income increased $210,311 as a result of converting rent recognition on defaulted leases from a straight line to a cash basis which was offset with decrease in rental income from related parties of $143,135. Other income decreased by $7,370, depreciation expenses increased by $638,439, amortization expense decreased by $27,929 and interest expense increased in the amount of $618,100.
Added
Revenue during the year ended December 31, 2023, consisted of rental income of $1,139,148, direct financing lease income of $915,000 and other income of $303,547.
Removed
The increase in general and administrative expense of $638,021 was primarily due to an increase in payroll, audit and tax, and legal expenses. For the fourth quarter, 2022, we started to incur property maintenance costs including property tax accruals due to the tenants defaulting on leases and ceasing operations at our properties which totaled $878,020.
Added
The decrease in total revenue was primarily related to a decrease of $5,884,400 in rental income from unrelated parties and to a lesser extent a decrease in rental income of $578,991 from transactions with related parties, due to defaulted leases related to the challenges within the cannabis industry.
Removed
Liquidity and Capital Resources To meet our working capital and longer-term capital needs, we rely on cash provided by our operating activities, proceeds received from the issuance of equity securities, proceeds received from borrowings, which may be secured by liens on assets as well as proceeds from the sale of assets.
Added
The decrease in revenue is offset by an increase in other income of $303,366. Expenses for the year ended December 31, 2023 decreased $5,154,072 as compared to 2022. This is primarily due to a larger non-cash impairment charge of $16,739,040 in 2022 versus a non-cash impairment charge of $8,235,136 in 2023.
Removed
During 2021, we raised gross proceeds of approximately $36.7 million in proceeds from a non-dilutive Rights Offering of our common shares and entered into a debt financing agreement, as described below: ● On February 5, 2021, we closed our Rights Offering and raised gross proceeds of $36,659,941 by issuing 1,383,394 common shares at the subscription price of $26.50, pursuant to the exercise of rights issued to the holders of our common shares of record on December 28, 2020.
Added
Due to tenant defaults, property maintenance expense increased $1,465,462 and property tax increased $95,529. Also, general and administrative expense increased $234,113, depreciation expense increased $755,185, interest expense increased $943,859 offset by a decrease in amortization of intangible assets of $144,316.
Removed
On December 21, 2021, a wholly owned subsidiary of Power REIT entered into a Debt Facility (the “Debt Facility”) with initial availability of $20 million.
Added
Other income increased by $893,923 due to a gain on disposal of the Tulare and Sweet Dirt properties netted with debt modification expense of $160,000. Net loss attributable to common shareholders during the years ended December 31, 2023 and 2022 was $15,018,342 and $14,906,310, respectively. Net loss attributable to common shareholders increased by $112,032.
Removed
On January 6, 2023, we closed on the sale of an unencumbered portfolio of solar ground leases for gross proceeds of $2.5 million (See Subsequent Events). Cash Flows Our cash and cash equivalents and restricted cash totaled $3,847,871 as of December 31, 2022, an increase of $676,570 from December 31, 2021.
Added
For the year ended December 31, 2023, we accrued a dividend of our holders of Series A Preferred Stock of $652,829. For the year ended December 31, 2022, we accrued a dividend to our holders of Series A Preferred Stock of 163,207 and paid a cash dividend to our holders of Series A Preferred Stock of $489,620.
Removed
During the year ended December 31, 2021, the Trust’s net cash used in financing activities was $31,666,206. With the cash available as of December 31, 2022 and the sale and potential sale of certain assets, we believe these resources will be sufficient to fund our operations and commitments.
Added
Liquidity and Capital Resources Our cash and cash equivalents and restricted cash totaled $4,104,884 as of December 31, 2023, an increase of $257,013 from December 31, 2022. During the year ended December 31, 2023, the increase in cash was primarily due to the proceeds from the sale of the Tulare and Sweet Dirt properties.
Removed
At December 31, 2022, we owed debt in the principal amount of $39,100,104, which has debt service due of $1,168,819 over the next twelve months.
Added
Our current loan liabilities totaled approximately $15.5 million as of December 31, 2023.
Removed
Assessment of our ability to recover certain lease related costs must be made when we have a reason to believe that the tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such costs.

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