Power REIT
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
PW$6.75+0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001493152-24-018671
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001493152-24-030609
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 58 previous paragraphs and 60 current paragraphs.
40 unchanged; 14 reworded; 6 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
2 Security for the Greenhouse Loan
Current report
4 Property is vacant
Current report
7 Asset held for sale
Current report
Revenue during the three months ended June 30, 2024 and 2023 was $519,349 and $217,898, respectively. Revenue during the three months ended June 30, 2024, consisted of revenue from lease income from direct financing lease (railroad) of $228,750, total rental income of $229,779 consisting of $200,779 from Regulus (solar farm) and $29,000 from Colorado cannabis tenants and other income of $60,820 consisting of interest income. The $301,451 increase in total revenue was primarily related to the Trust writing off a net amount of $300,164 (which resulted in negative rental income for the three months ended June 30, 2023), in straight-line rent receivable against rental income based on its assessment of collecting all remaining contractual rent on the greenhouse property leases. Expenses for the three months ended June 30, 2024 compared to 2023 increased by $17,255,181 primarily due to an increase in non-cash impairment expense of $17,449,424 of property values and an increase in interest expense of $492,674 due to the default interest rate and late charges, forbearance fees, legal fees, foreclosure fees and appraisal fees caused by the default of the Greenhouse Loan offset by a decrease in depreciation expense of $421,300 as many of the properties are considered held for sale and not depreciated, a decrease in property expense of $130,934, a decrease in general and administrative expense of $105,030, and a decrease in property taxes of $29,653. Net loss attributable to common shares during the three months ended June 30, 2024 and 2023 was $19,308,376 and $2,354,646, respectively. Net loss attributable to common shares increased by $16,953,730.
Current report
Six Months Ended June 30, 2024 and 2023
Current report
Of the total amount of cash, approximately $2.5 million is non-restricted cash available for general corporate purposes and $480,000 is restricted cash related to the Greenhouse Loan.
Removed paragraphs (4)
Previous report
2 Building structure construction incomplete
Previous report
4Property is vacant
Previous report
7Asset held for sale
Previous report
8Loan secured by a second mortgage (Maine) excluding accrued interest sold in 2023
Reworded paragraphs (14)
Previous wording
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. As of March 31, 2024, 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 447 acres of fee simple land leased to a number of utility scale solar power generating projects with an aggregate generating capacity of approximately 82 Megawatts (“MW”) and approximately 249 acres of land with approximately 2,112,000 square feet of existing or under construction CEA properties in the form of greenhouses.
Current wording
We are structured as a holding company and own 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. As of June 30, 2024, 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 447 acres of fee simple land leased to a number of utility scale solar power generating projects with an aggregate generating capacity of approximately 82 Megawatts (“MW”) and approximately 249 acres of land with approximately 2,112,000 square feet of existing or under construction CEA properties in the form of greenhouses.
Previous wording
During the three months ended March 31, 2024, the Trust accrued a quarterly dividend of approximately $163,000 ($0.484375 per share per quarter) on Power REIT’s 7.75% Series A Cumulative Redeemable Perpetual Preferred Stock.
Current wording
During the six months ended June 30, 2024, the Trust accrued quarterly dividends of approximately $326,000 ($0.484375 per share per quarter) on Power REIT’s 7.75% Series A Cumulative Redeemable Perpetual Preferred Stock.
Previous wording
On January 30, 2024, a wholly owned subsidiary of Power REIT, PW Salisbury Solar LLC, sold its interest in a ground lease related to utility scale solar farms located in Salisbury, Mass. for gross proceeds of $1.2 million. The purchaser is an unaffiliated third party and the price was established based on an arm’s length negotiation. As part of the transaction, the Municipal Debt and the PWSS Term Loan were paid off.
Current wording
On January 30, 2024, a wholly owned subsidiary of Power REIT, PW Salisbury Solar LLC, sold its interest in a ground lease related to utility scale solar farms located in Salisbury, Massachusetts for gross proceeds of $1.2 million. The purchaser is an unaffiliated third party and the price was established based on an arm’s length negotiation. As part of the transaction, the Municipal Debt and the PWSS Term Loan were paid off.
Previous wording
Our wholly owned subsidiary, PW MillPro NE LLC, (“PW MillPro”), owns 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”) located in O’Neill, Nebraska (collectively the “Property”). Unfortunately, the market for tomatoes compressed and the original tenant was unable to meet its financial obligations and vacated the property. In February of 2024, PW MillPro 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. There can be no assurance that the tenant will perform on either the Lease or Purchase.
Current wording
Our wholly owned subsidiary, PW MillPro NE LLC, (“PW MillPro”), owns 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”) located in O’Neill, Nebraska (collectively the “Property”). Unfortunately, the market for tomatoes compressed and the original tenant was unable to meet its financial obligations and vacated the property. In February of 2024, PW MillPro entered into a 20-year triple-net lease with a tenant 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. There can be no assurance that the tenant will fulfill its lease obligations or purchase the property and the tenant is currently in default on the lease.
Previous wording
5Tenant is not current on rent/in default
Current wording
5 Tenant is not current on rent/in default
Previous wording
6An impairment has been taken against this asset
Current wording
6 An impairment has been taken against this asset
Previous wording
9Loan secured by a first mortgage (Ordway properties) sold on January 8, 2024
Current wording
8 Loan secured by a first mortgage (Ordway properties) sold on January 8, 2024 and is security for the Greenhouse Loan
Previous wording
Revenue during the three months ended March 31, 2024 and 2023 was $534,612 and $1,004,732, respectively. Revenue during the three months ended March 31, 2024, consisted of revenue from lease income from direct financing lease of $228,750, total rental income of $260,639, and other income of $45,223. The decrease in total revenue was primarily related to a $434,053 decrease in rental income from the cannabis tenants due to defaulted leases related to the challenges within the cannabis industry and a decrease in other income of $36,067. Expenses for the three months ended March 31, 2024 compared to 2023 increased by $781,774 primarily due to a non-cash impairment expense on two properties of $549,557 and an increase in interest expense of $477,740 due to the default interest accrual for the Greenhouse Loan. The difference is also due to a decrease in depreciation expense of $116,511 as many of the properties are considered held for sale, a decrease in property expense of $140,817, a decrease of $14,564 in property tax offset by an increase in general and administrative expenses of $26,369. Other income decreased by $486,058 due to a smaller gain of on the disposal of two properties in January, 2024. Net loss attributable to common shares during the three months ended March 31, 2024 and 2023 was 2,240,205 and $502,253, respectively. Net loss attributable to common shares increased by $1,737,952.
Current wording
Revenue during the six months ended June 30, 2024 and 2023 was $1,053,961 and $1,222,630, respectively. Revenue during the six months ended June 30, 2024, consisted of revenue from lease income from direct financing lease (railroad) of $457,500, total rental income of $490,418 consisting of $401,558 from Regulus (solar farm) and $88,860 from Colorado and California cannabis tenants, and other income of $106,043 consisting of interest income. The decrease in total revenue was primarily related to a $133,889 decrease in rental income from the cannabis tenants due to defaulted leases related to the challenges within the cannabis industry and a decrease in other income of $34,780. Expenses for the six months ended June 30, 2024 compared to 2023 increased by $18,036,955 primarily due to an increase in non-cash impairment expense of $17,998,981 of property values and an increase in interest expense of $970,414 due to the default interest and late charges, forbearance fees, legal fees, foreclosure fees and appraisal fees related to the Greenhouse loan, offset by a decrease in depreciation expense of $537,811 as many of the properties are considered held for sale and not depreciated, a decrease in property expense of $271,751, a decrease of $44,217 in property tax and a decrease in general and administrative expenses of $78,661. Other income/expense recognizes a decrease in gain on sale by $646,058 due to a smaller gain of on the disposal of two properties in January, 2024 and loan modification expense decreases by $160,000. Net loss attributable to common shares during the six months ended June 30, 2024 and 2023 was $21,548,581 and $2,856,899, respectively. Net loss attributable to common shares increased by $18,691,682.
Previous wording
For the three months ended March 31, 2024 and 2023, we accrued a cash dividend to our holders of Series A Preferred Stock of $163,207 and $163,207, respectively.
Current wording
For the six months ended June 30, 2024 and 2023, we accrued a cash dividend to our holders of Series A Preferred Stock of $326,414 and $326,414, respectively.
Previous wording
Our cash and cash equivalents and restricted cash totaled $4,421,788 as of March 31, 2024, an increase of $316,904 from December 31, 2023. During the three months ended March 31, 2024, the increase in cash was primarily due to the sale of properties.
Current wording
Our cash and cash equivalents and restricted cash totaled $2,935,628 as of June 30, 2024, a decrease of $1,169,256 from December 31, 2023. During the six months ended June 30, 2024, the decrease in cash was primarily due to the monthly expenses related to the vacant greenhouse properties and paydown of the Greenhouse Loan.
Previous wording
Our current loan liabilities totaled approximately $15 million as of March 31, 2024. 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.
Current wording
Our current loan liabilities totaled approximately $16.4 million as of June 30, 2024. The current loan liabilities include approximately $15.7 million of a bank loan secured by the majority of the greenhouse portfolio (the “Greenhouse Loan”) and which is in default and is non-recourse to the Trust. We are not current on payment of property taxes for the greenhouse portfolio which are included on the Balance Sheet as accrued expenses and liabilities held for sale for approximately $920,000. If the property tax remains delinquent, the greenhouse portfolio will be subject to foreclosure actions starting in 2025.
Previous wording
For the three months ended March 31, 2024, 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.
Current wording
For the six months ended June 30, 2024, 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.
Previous wording
The Greenhouse Loan is in default and in March 2024, the lender filed a litigation seeking among other things, foreclosure and appointment of a receiver. Since 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. However, if we cannot resolve matters with the lender, it may lead to distressed sales which would have a negative impact on our prospects. A forbearance agreement with the lender for the Greenhouse Loan was effective on May 10, 2024, which provides additional time to retire the loan. The expiration date of the forbearance agreement is September 30, 2024. There can be no assurance that our efforts to sell, re-lease or recapitalize the assets secured by the Greenhouse Loan will ultimately retire the loan per the requirements of the forbearance agreement.
Current wording
The Greenhouse Loan is in default and in March 2024, the lender filed a litigation seeking among other things, foreclosure and appointment of a receiver. Since 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 given that non-restricted cash should provide greater than twelve months of liquidity for capital needs unrelated to the greenhouse properties which are security for the Greenhouse Loan. If we cannot resolve matters with the lender, it may lead to distressed sales which would have a negative impact on our prospects. A forbearance agreement with the lender for the Greenhouse Loan was effective on May 10, 2024, which provides additional time to retire the loan. The expiration date of the forbearance agreement is September 30, 2024. We are in discussions with the lender to continue a process of orderly sales of assets to try and maximize value but there can be no assurance the bank will extend the forbearance. There can be no assurance that our efforts to sell, re-lease or recapitalize the assets which are security for the Greenhouse Loan will ultimately retire the loan per the requirements of the forbearance agreement.
Previous wording
A reconciliation of our Core FFO to net income for the three months ended March 31, 2024, and 2023 is included in the table below:
Current wording
A reconciliation of our Core FFO to net income for the three and six months ended June 30, 2024, and 2023 is included in the table below: