Power REIT
For the period ended Sep 30, 2024. Filed Oct 31, 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.
Sep 30, 2024 · Filed Oct 31, 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 2024-06-30; filed 2024-08-07.
0001493152-24-030609
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0001493152-24-043245
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 60 previous paragraphs and 55 current paragraphs.
37 unchanged; 12 reworded; 6 added; 10 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 8 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
Effective October 1, 2024, the PW CanRE Holdings entered into an extension of the forbearance agreement with the lender for the Greenhouse Loan. The forbearance agreement terminates on January 31, 2025.
Current report
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 (collectively the “PW Defendants”) for Breach of Contract, Unjust Enrichment and Account Stated in the amount of approximately $600,000. The litigation relates to purported work by Anchor at the greenhouse property owned by PW MI CanRE Marengo LLC in Michigan. On July 9, 2024, Anchor and the PW Defendants entered into a settlement agreement whereby Anchor will complete certain work at the greenhouse property in Michigan and the PW Defendants will pay Anchor $265,000 ($150,000 up front and $11,500 per month for ten months commencing on September 1, 2024) as well as the return of certain uninstalled equipment provided by Anchor. In connection with the Anchor Settlement, the Trust recognized $351,000 as income related to forgiveness of accounts payable during the quarter ended September 30, 2024.
Current report
On September 11, 2024, PW CO CanRE Cloud Nine LLC received a Final Order and Entry of Judgement in favor of PW CO CanRE Cloud Nine LLC in the amount of approximately $10.9 million. The Trust is evaluating the potential to collect against the defendants in this litigation for this Judgement, but will treat any recovery on a cash basis for accounting purposes.
Current report
4Property is vacant
Current report
7Asset held for sale
Current report
Nine Months Ended September 30, 2024 and 2023
Removed paragraphs (10)
Previous report
● 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;
Previous report
● Selling off non-core properties and underperforming assets;
Previous report
● Seeking to re-lease properties that are vacant or have non-performing tenants
Previous report
● Raising the overall level of quality of our portfolio and of individual properties in our portfolio;
Previous report
● Improving the operating results of our properties; and
Previous report
4 Property is vacant
Previous report
7 Asset held for sale
Previous report
Six Months Ended June 30, 2024 and 2023
Previous report
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 report
CORE FUNDS FROM OPERATIONS (FFO)
Reworded paragraphs (12)
Previous 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.
Current wording
During the nine months ended September 30, 2024, the Trust did not declare quarterly dividends of approximately $490,000 ($0.484375 per share per quarter) on Power REIT’s 7.75% Series A Cumulative Redeemable Perpetual Preferred Stock.
Previous wording
5 Tenant is not current on rent/in default
Current wording
5Tenant is not current on rent/in default
Previous wording
6 An impairment has been taken against this asset
Current wording
6An impairment has been taken against this asset
Previous wording
8 Loan secured by a first mortgage (Ordway properties) sold on January 8, 2024 and is security for the Greenhouse Loan
Current wording
8Loan 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 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 wording
Revenue during the three months ended September 30, 2024 and 2023 was $1,426,112 and $488,531, respectively. Revenue during the three months ended September 30, 2024, consisted of revenue from lease income from direct financing lease (railroad) of $228,750, total rental income of $1,138,504 consisting of $200,780 from Regulus (solar farm), $13,000 from Colorado cannabis tenants and $924,724 of security deposit recognized as rental income due to leases in default and other income of $58,858 consisting mostly of interest income. The $937,581 increase in total revenue was primarily related to the Trust recognizing security deposits as rental income. Expenses for the three months ended September 30, 2024 compared to 2023 decreased by $8,409,436 primarily due to a decrease in non-cash impairment expense of $8,039,733 of property values offset by an increase in interest expense of $205,370 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, as well as a decrease in depreciation expense of $420,155 as many of the properties are considered held for sale and not depreciated, a decrease in property expense of $46,038, a decrease in general and administrative expense of $101,038, and a decrease in property taxes of $7,842. Other income/expense recognizes an increase forgiveness of accounts payable by $350,704. Net loss attributable to common shares during the three months ended September 30, 2024 and 2023 was $488,222 and $10,185,943, respectively. Net loss attributable to common shares decreased by $9,697,721.
Previous 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.
Current wording
Revenue during the nine months ended September 30, 2024 and 2023 was $2,480,073 and $1,684,559, respectively. Revenue during the nine months ended September 30, 2024, consisted of revenue from lease income from direct financing lease (railroad) of $686,250, total rental income of $1,628,922 consisting of $602,338 from Regulus (solar farm), $101,860 from Colorado and California cannabis tenants and $924,724 of security deposit recognized as rental income due to leases in default, and other income of $164,901 consisting mostly of of interest income. The $795,514 increase in total revenue was primarily related to the Trust recognizing security deposits as rental income. Expense for the nine months ended September 30, 2024 compared to 2023 increased by $9,627,519 primarily due to an increase in non-cash impairment expense of $9,959,248 of property values and an increase in interest expense of $1,175,784 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 $957,966 as many of the properties are considered held for sale and not depreciated, a decrease in property expense of $279,593, a decrease of $90,255 in property tax and a decrease in general and administrative expenses of $179,699. 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, loan modification expense decreases by $160,000 and forgiveness of accounts payable increases by $324,102. Net loss attributable to common shares during the nine months ended September 30, 2024 and 2023 was $22,036,803 and $13,042,842, respectively. Net loss attributable to common shares increased by $8,993,961.
Previous 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.
Current wording
Our cash and cash equivalents and restricted cash totaled $2,395,642 as of September 30, 2024, a decrease of $1,709,242 from December 31, 2023. During the nine months ended September 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 $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.
Current wording
Our current loan liabilities totaled approximately $17.0 million as of September 30, 2024. The current loan liabilities include approximately $16.3 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 $996,000. If the property tax remains delinquent, the greenhouse portfolio will be subject to foreclosure actions starting in 2025.
Previous wording
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.
Current wording
Of the total amount of cash, approximately $2.2 million is non-restricted cash available for general corporate purposes and $163,000 is restricted cash related to the Greenhouse Loan.
Previous 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.
Current wording
For the nine months ended September 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, 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 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.
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 original forbearance agreement was September 30, 2024. On September 30, 2024, the PW CanRE Holdings entered into an amendment to the forbearance agreement which moves the expiration of the forbearance agreement to January 31, 2025. 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 again if the loan is not retired in a timely fashion. There can be no assurance that the 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 and six months ended June 30, 2024, and 2023 is included in the table below:
Current wording
A reconciliation of our Core FFO to net income for the three and nine months ended September 30, 2024, and 2023 is included in the table below:
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Taking Steps to Position the Company for Future Growth Opportunities