Power REIT 8-K, filed Apr 15, 2025
Power REIT (PW)
About this 8-K
Power REIT filed this 8-K on April 15, 2025, reporting on events of April 11, 2025.
Items reported
- Item 2.01: Completed an acquisition or sale of assets
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 2.01 – Completion of Acquisition or Disposition of Assets
As previously disclosed, Power REIT, through subsidiaries, invested in a portfolio of Controlled Environment Agriculture properties in the form of greenhouses (the “Greenhouse Portfolio”). About 50% of the Greenhouse Portfolio square footage was focused on growing produce and the other 50% was focused on cannabis. Unfortunately, the portfolio has not performed, and the Greenhouse Portfolio is largely vacant resulting in significant property related expenses without revenue to cover these costs as well as the cash requirements to cover debt service.
As previously disclosed, the Greenhouse Portfolio was security for a loan (the “Greenhouse Loan”) that was in default and the lender filed litigation and foreclosure actions. As previously disclosed, prior forbearance agreements with the lender expired on January 31, 2025. The loan was non-recourse to Power REIT but secured by the Greenhouse Portfolio. The Greenhouse Portfolio has been marketed for sale but, unfortunately, the market for these special purpose assets has been weak and we have not been able to generate enough sales to satisfy the obligations to the lender.
Power REIT, through its subsidiaries, has now resolved issues with its lender concerning the Greenhouse Loan by providing deeds-in-lieu of foreclosure for the properties in Michigan and Nebraska. In return, the lender released the remaining collateral back to subsidiaries of Power REIT and released obligations related to the Greenhouse Loan. Power REIT will continue to manage these retained assets, which are properties in Ordway, Colorado; a property in Walsenburg, Colorado; a property in Desert Hot Springs, California; a first mortgage on two properties in Ordway, Colorado; and a second mortgage on a property in Elliot, Maine. In addition, a subsidiary owns a greenhouse property located in Vinita, Oklahoma that was not security for the Greenhouse Loan.
The transaction related to the Greenhouse Loan results in the write-off of the Nebraska and Michigan properties, along with the remaining balance of the Greenhouse Loan. It will also relieve the ongoing costs associated with maintaining these properties. Power REIT will continue to seek to realize value from the retained assets and is exploring a shift in focus and is evaluating real estate distressed situations including properties, loans and companies.
Item 9.01. Financial Statements and Exhibits.
(b) Pro forma financial information
The pro forma financial information of the Trust as adjusted to give effect for giving deeds-in-lieu for the properties in Michigan and Nebraska to the lender for the Greenhouse Loan in exchange for a release of the remaining collateral and obligations related to the Greenhouse Loan.
(d) Exhibits
99.1 Unaudited Pro Forma Consolidated Financial Statements
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| POWER REIT | ||
| Date: April 15, 2025 | By | /s/ David H. Lesser |
| David H. Lesser | ||
| Chairman of the Board and Chief Executive Officer | ||
Exhibit 99.1
Unaudited Pro Forma Consolidated Financial Statements
On April 11, 2025 the Trust consummated the transaction of providing the lender with deeds-in-lieu of foreclosure for greenhouse properties in Michigan and Nebraska in exchange for released obligations related to the Greenhouse Loan.
The following unaudited pro forma consolidated financial statements of the Trust have been prepared to show the pro pro forma financial information of the Trust as adjusted to give effect for giving deeds-in-lieu of foreclosure for the properties in Michigan and Nebraska to the lender for the Greenhouse Loan in exchange for a release of the remaining collateral and obligations related to the Greenhouse Loan by applying pro forma adjustments to our historical financial information. The unaudited pro forma consolidated financial statements are based upon the historical consolidated financial statements of the Trust included in its Annual Report on Form 10-K for the year ended December 31, 2024.
The unaudited pro forma statements of operations for the year ended December 31, 2024 have been prepared to give effect to the transaction had it occurred on January 1, 2024.
The following unaudited pro forma consolidated financial information is intended to provide investors with information about the impact of disposing of the Michigan and Nebraska properties along with satisfying the Greenhouse Loan by showing how this might have affected historical financial statements, illustrating the scope of the change in the historical financial position and results of operations. These unaudited pro forma financial statements are prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had the transaction been consummated as of the date indicated. This pro forma financial information should not be viewed as indicative of the Trust’s financial results in the future and should be read in conjunction with the Trust’s financial statements as filed on Form 10-K for the year ended December 31, 2024.
POWER REIT AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year ended December 31, 2024
| Historical (a) | Transaction (b) | Pro Forma | ||||||||||
| REVENUE | ||||||||||||
| Lease income from direct financing lease – railroad | $ | 915,000 | $ | - | $ | 915,000 | ||||||
| Rental income | 1,135,193 | 1,135,193 | ||||||||||
| Rental income - related party | 785,000 | (785,000 | ) | - | ||||||||
| Other income | 214,682 | - | 214,682 | |||||||||
| TOTAL REVENUE | 3,049,875 | (785,000 | ) | 2,264,875 | ||||||||
| EXPENSES | ||||||||||||
| Amortization of intangible assets | 227,488 | - | 227,488 | |||||||||
| General and administrative | 1,494,339 | (22,656 | ) | 1,471,683 | ||||||||
| Property expenses | 1,583,017 | (715,400 | ) | 867,617 | ||||||||
| Property taxes | 413,319 | (73,731 | ) | 339,588 | ||||||||
| Depreciation expense | 819,893 | (617,154 | ) | 202,739 | ||||||||
| Impairment expense | 19,954,260 | (14,084,412 | ) | 5,869,848 | ||||||||
| Interest expense | 3,866,140 | (2,830,459 | ) | 1,035,681 | ||||||||
| TOTAL EXPENSES | 28,358,456 | (18,343,812 | ) | 10,014,644 | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||
| Gain on sale of properties | 247,136 | - | 247,136 | |||||||||
| Loan modification expense | - | - | - | |||||||||
| Forgiveness of accounts payable | 350,704 | (350,704 | ) | - | ||||||||
| TOTAL OTHER INCOME (EXPENSE) | 597,840 | (350,704 | ) | 247,136 | ||||||||
| NET LOSS | (24,710,741 | ) | 17,208,108 | (7,502,633 | ) | |||||||
| Preferred Stock Dividends | (652,828 | ) | - | (652,828 | ) | |||||||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | (25,363,569 | ) | $ | 17,208,108 | $ | (8,155,461 | ) | ||||
| Loss Per Common Share: | ||||||||||||
| Basic | $ | (7.48 | ) | $ | (2.41 | ) | ||||||
| Diluted | (7.48 | ) | (2.41 | ) | ||||||||
| Weighted Average Number of Shares Outstanding: | ||||||||||||
| Basic | 3,389,661 | 3,389,661 | ||||||||||
| Diluted | 3,389,661 | 3,389,661 | ||||||||||
| Cash dividend per Series A Preferred Share: | $ | - | $ | - | ||||||||
| Accumulated undeclared dividend per Series A Preferred Shares: | 1.94 | 1.94 | ||||||||||
(a) Historical financial information derived from Power REIT Report on Form 10-K as of December 31, 2024
(b) Represents adjustments to reflect the settlement with the lender for the Greenhouse Loan
POWER REIT AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
As of December 31,2024
| Historical (a) | Transaction (b) | Pro Forma | ||||||||||
| ASSETS | ||||||||||||
| Land | $ | 4,470,000 | $ | - | $ | 4,470,000 | ||||||
| Net investment in direct financing lease - railroad | 9,150,000 | - | 9,150,000 | |||||||||
| Total real estate assets | 13,620,000 | 13,620,000 | ||||||||||
| Cash and cash equivalents | 2,194,501 | - | 2,194,501 | |||||||||
| Prepaid expenses and deposits | 207,177 | - | 207,177 | |||||||||
| Intangible lease asset, net of accumulated amortization | 2,276,933 | - | 2,276,933 | |||||||||
| Deferred rent receivable | 338,106 | - | 338,106 | |||||||||
| Mortgage loan receivables | 1,602,000 | - | 1,602,000 | |||||||||
| Assets held for sale | 25,817,005 | (17,082,502 | ) | 8,734,503 | ||||||||
| Other assets | 9,831 | - | 9,831 | |||||||||
| TOTAL ASSETS | $ | 46,065,553 | $ | (17,082,502 | ) | $ | 28,983,050 | |||||
| LIABILITIES AND EQUITY | ||||||||||||
| Accounts payable | $ | 173,700 | $ | - | $ | 173,700 | ||||||
| Accrued expenses | 95,699 | - | 95,699 | |||||||||
| Other liabilities | - | - | - | |||||||||
| Liabilities held for sale | 1,670,098 | (178,429 | ) | 1,491,669 | ||||||||
| Current portion of long-term debt, net of unamortized discount | 17,445,220 | (16,719,546 | ) | 725,674 | ||||||||
| Long-term debt, net of unamortized discount | 19,965,043 | - | 19,965,045 | |||||||||
| TOTAL LIABILITIES | 39,349,760 | (16,897,975 | ) | 22,451,785 | ||||||||
| Equity: | ||||||||||||
| Series A 7.75% Cumulative Redeemable Perpetual Preferred Stock Par Value $25.00 (1,675,000 shares authorized; 336,944 issued and outstanding as of December 31, 2024 and December 31, 2023) | 8,489,952 | - | 8,489,952 | |||||||||
| Common Shares, $0.001 par value (98,325,000 shares authorized; 3,389,661 shares issued and outstanding as of September 30, 2024 and December 31, 2023) | 3,389 | - | 3,389 | |||||||||
| Additional paid-in capital | 47,948,200 | - | 47,948,200 | |||||||||
| Accumulated deficit | (49,725,748 | ) | (184,528 | ) | (49,910,276 | ) | ||||||
| Total Equity | 6,715,793 | 6,531,265 | ||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 46,065,553 | $ | 28,983,050 | ||||||||
(a) Historical financial information derived from Power REIT Report on Form 10-K as of December 31, 2024
(b) Represents adjustments to reflect the settlement with the lender for the Greenhouse Loan