Name: Power REIT Q2 2022 Earnings Call
Start: 2022-08-12T00:00:00.000Z

Executive Summary

Q2 2022 revenue was $2.233M, down 1.5% year over year (Q2 2021: $2.268M) but up 12.5% sequentially (Q1 2022: $1.986M) . EPS was $0.23 (basic and diluted) versus $0.42 in Q2 2021 and $0.25 in Q1 2022 .
Core FFO per common share was $0.41, declining from $0.51 in Q2 2021 but improving from $0.40 in Q1 2022; management highlighted stability sequentially amid tenant pressure from cannabis price compression .
Michigan licensing advanced: CRA’s pre-licensure inspection (Aug 9) identified no deficiencies; BFS approval timing remains uncertain. PW is recognizing Michigan rent on a cash basis and estimates the property could add ~$0.38 Core FFO/share per quarter if straight-lining resumes .
Portfolio mix continues to diversify: 2.2M+ sq ft of greenhouses with ~51% food and ~49% cannabis; $11.5M drawn on a $20M debt facility at 5.52% fixed, maintaining DSCR ≥2.0x .
No Wall Street (S&P Global) consensus estimates were available for Q2 2022; estimate comparisons are therefore not provided.

What Went Well and What Went Wrong

Sequential Core FFO stability: “Core FFO for the period ended June 30, 2022, of $0.41 per share compares to $0.40 per share for the quarter ended March 31, 2022” .
Licensing progress in Michigan: “CRA performed a pre-licensure inspection and identified that no deficiencies existed” with application submitted; mediation ongoing with the township .
Strategic diversification: Acquired a 1.12M sq ft tomato greenhouse in Nebraska at an ~11% unlevered yield on cost, supporting the food-cultivation thesis and lowering exposure to cannabis cycles .

Cannabis price compression: Management emphasized “significant price compression” impacting tenants; PW executed seven lease amendments to provide temporary relief while preserving straight-line economics .
Revenue recognition challenges: Several leases moved to cash-basis due to collectability assessments; Q2 included a net straight-line rent write-off of ~$302K year-to-date across five greenhouse leases .
Profitability pressure: Net income attributable to common fell year over year, driven by lower unrelated-party rental income and higher depreciation, interest, and G&A .

Metric	Q4 2021	Q1 2022	Q2 2022
Revenue ($USD Millions)	$1.786	$1.986	$2.233
Net Income Attributable to Common ($USD Millions)	$0.671	$0.998	$0.782
EPS (Basic, $)	$0.21	$0.25	$0.23
EPS (Diluted, $)	$0.21	$0.25	$0.23
Core FFO per Common Share ($)	$0.35	$0.40	$0.41
Net Income Margin (%)	37.6% (=$0.671/$1.786)	50.3% (=$0.998/$1.986)	35.0% (=$0.782/$2.233)
Consensus EPS (S&P Global)	N/A*	N/A*	N/A*
Consensus Revenue (S&P Global)	N/A*	N/A*	N/A*

Values marked with * unavailable; Values retrieved from S&P Global.

Revenue composition (Q2 2022):

Component	Q2 2022 ($USD)
Lease income (railroad, direct financing lease)	$228,750
Rental income	$2,004,199
Other income	$4

KPIs and balance sheet highlights:

KPI	Q2 2022
Cash and Equivalents	$1.192M
Long-term Debt (Principal)	$35.0M; scheduled principal $34.992M outstanding
Debt Facility Drawn	$11.5M at 5.52% fixed; DSCR ≥2.0x
Portfolio Overview	22 CEA properties (>2.2M sq ft), 7 solar ground leases (601 acres), 112 miles railroad

Metric	Period	Previous Guidance	Current Guidance	Change
Michigan rent commencement	Lease term	Not specified; revenue recognition suspended due to licensing uncertainty	Cash rent payments begin January 2023; straight-line accounting may resume when collectability is clear	Update (timing specified)
Michigan Core FFO impact (if straight-lining)	Per quarter	~$0.38/share per quarter potential	~$0.38/share per quarter potential reaffirmed	Maintained
Expected cash rent (next 12 months)	Next 12 months	Not disclosed	$11,959,403 expected cash rent	New disclosure
Preferred dividend	Quarterly	$0.484375/share per quarter	$0.484375/share per quarter; Aug 1 declaration for Sept 15 payment	Maintained
Debt facility	Ongoing	$20M availability; 5.52% fixed rate	$11.5M drawn; DSCR covenant ≥2.0x (in compliance)	Maintained (status update)

No public Q2 2022 earnings call transcript was found; themes below reflect management commentary in the 8-K/10-Q.

Topic	Previous Mentions (Q4 2021, Q1 2022)	Current Period (Q2 2022)	Trend
Cannabis price compression	Q1: “price for wholesale cannabis has compressed dramatically… significant impact on cannabis tenants”	Continued price compression; seven lease amendments; some leases on cash-basis	Persistent pressure
Michigan licensing/regulatory	Q1: Hemp license received Apr 27, 2022; litigation with township ongoing	CRA pre-licensure inspection no deficiencies; BFS approval pending; rent recognition cash-basis	Progress but timing uncertain
Diversification to food greenhouse	Q1: Nebraska tomato greenhouse acquired; ~11% yield on cost	Portfolio ~51% food cultivation; continued emphasis on greenhouses	Expanding
Tenant restructurings/collectability	Q1: Evictions and replacement tenants; lease amendments	Seven lease amendments executed; $302K YTD straight-line write-off; cash-basis for certain leases	Ongoing triage
Capital markets/liquidity	Q4: $20M facility established (5.42%); Q1: $11.5M drawn	$11.5M drawn; DSCR ≥2.0x; cash $1.192M	Stable liquidity; higher interest burden

“Power REIT is currently focused on greenhouse as a unique real estate asset class… we remain optimistic that our investment thesis focused on greenhouses provides a competitive advantage relative to… warehouse/indoor facilities.” — David Lesser, CEO .
“Wholesale cannabis prices nationwide have compressed… We are working with our tenants… have executed a number of lease amendments… Ultimately, we expect supply and demand to revert to sustainable levels… lower cost of production in greenhouses… represent the viable path forward.” — David Lesser .

No Q2 2022 earnings call transcript was available; no Q&A disclosures were found in filings. Key clarifications from filings addressed Michigan licensing timing, rent recognition policy, and tenant support actions .

S&P Global consensus estimates for Q2 2022 EPS and revenue were not available; estimate comparisons and beat/miss analysis cannot be provided. Values retrieved from S&P Global.

Sequential stability with Core FFO per share rising to $0.41 despite ongoing tenant stress; the 12.5% q/q revenue increase reflects partial normalization and related-party rent contributions .
Michigan remains a material catalyst: CRA pre-licensure approval (no deficiencies) is positive, but BFS timing drives when rent recognition can resume; potential ~$0.38 Core FFO/share per quarter is meaningful if collectability improves .
Active portfolio triage mitigates downside: seven lease amendments preserve straight-line economics while easing near-term cash burdens; risk remains if price compression persists .
Diversification into food greenhouse assets supports medium-term resilience by reducing reliance on cannabis market cycles and potentially stabilizing rent flows .
Liquidity and leverage: $11.5M drawn at 5.52% increases interest expense; DSCR covenant compliance indicates manageable coverage, but higher rates pressure net income and FFO sensitivity .
Revenue composition shows core reliance on rental income; monitoring collectability and tenant performance is critical for near-term cash flow and FFO trajectory .
Preferred dividend maintained at $0.484375/share per quarter; no common dividend noted, aligning capital allocation with debt amortization and portfolio investments .