Power REIT (PW)·Q3 2021 Earnings Summary

Executive Summary

• Q3 2021 delivered strong growth driven by accretive CEA acquisitions: Revenue rose to $2.547M (+128% YoY), diluted EPS to $0.49 (+96% YoY), and Core FFO per share to $0.62 (+77% YoY) .
• Sequentially, revenue grew from $2.268M (Q2) to $2.547M, EPS from $0.41 to $0.49, and Core FFO per share from $0.51 to $0.62, reflecting the contribution from newly deployed capital and lease economics despite a non-cash rent adjustment .
• Management raised forward Core FFO guidance to an annual run-rate of ~$3.68 (Q1 2022 quarterly run-rate of ~$0.92 per share), up from ~$3.24 previously, underpinned by completion of the $37M Rights Offering deployment and the 556K sf Michigan greenhouse acquisition and amendment .
• Catalysts: largest-ever acquisition in Michigan (556,146 sf) on ~20% unlevered Core FFO yield, amendment funding Phase 2 improvements, and tenant remediation (PSP eviction/new lease at Golden Leaf) that de-risks operations and supports further run-rate expansion .

What Went Well and What Went Wrong

• What Went Well

  • Record external growth: closed the largest acquisition to date (Michigan 556K sf) at ~20% unlevered Core FFO yield; “We completed our largest acquisition… which is highly accretive given the yield and size of the transaction” .
  • Guidance raised: forward Core FFO per share run-rate to ~$3.68 annualized; “Power REIT trades at an 18.1x multiple… provides a compelling value proposition” .
  • Portfolio scale: 21 CEA properties totaling >1,000,000 sf; strategic lease amendment (~$4.1M) adds ~0.83M annual rent at similar economics, supporting 2022 ramp .

• What Went Wrong

  • Tenant issues: PSP failed to complete construction; legal action and eviction followed to mitigate damages and enable re-leasing; Q3 included a non-cash $320,493 rent adjustment (−$0.10 per share) tied to PSP lease termination .
  • Legacy lease termination: OCG Mav 5 lease terminated; while replaced with Golden Leaf on same terms, OCG paid 36% of invested capital, highlighting execution risk with tenants .
  • Near-term timing/dilution: management reiterated quarterly results could be below run-rate due to transaction timing and rights-offering dilution (noted earlier in 2021), tempering near-term linearity .

Financial Results

Margins

KPIs and Portfolio

Notes:

• Q3 metrics include a $320,493 non-cash rent adjustment (−$0.10/share) tied to PSP lease termination .

Estimates vs Actuals

• Wall Street (S&P Global) consensus for Q3 2021 EPS and revenue was unavailable for PW; no estimate comparison can be made (Values unavailable via S&P Global).

Guidance Changes

Earnings Call Themes & Trends

Note: No Q3 earnings call transcript was available for PW in our document corpus; themes reflect management commentary and press releases .

Management Commentary

• “We completed our largest acquisition to date by acquiring the largest cannabis cultivation facility in the state of Michigan… unleveraged yield of 20%… demonstrative of our updated business plan focused on the sustainable cultivation of cannabis in greenhouse properties” — CEO David Lesser .
• “With the current stock price at 67.00 and a Forward Core FFO run rate of $3.68, Power REIT trades at an 18.1x multiple… combined with a relatively low Forward Core FFO multiple… provides a compelling value proposition” — CEO David Lesser .
• On MI amendment: “Providing funding for additional improvements… increases straight-line annual rent by approximately $830,000… ~20% unleveraged core FFO yield” .
• On remediation: “OCG… was not able to operate… terminated… executed a new lease… same terms… provides full return of original invested capital over three years and thereafter ~13% return, increasing 3% per annum” .

Q&A Highlights

• No formal Q3 2021 earnings call transcript found for PW; key clarifications came via 8-K press releases:
  • Forward Core FFO run-rate methodology and timing impacts (transaction timing, dilution) .
  • Michigan market scale and pricing dynamics supporting initial economics (2021 sales projected ~$2.0B) .
  • Tenant remediation steps (PSP eviction, Golden Leaf replacement) and lease structures designed to recoup capital rapidly .

Estimates Context

• S&P Global consensus estimates for PW Q3 2021 EPS and revenue were unavailable. As a result, no comparison to estimates can be provided, and no beat/miss assessment is possible. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

• Run-rate moved higher: Guidance to ~$3.68 annual Core FFO/share (Q1 2022 ~$0.92/quarter) reflects full deployment and MI addition; expect quarterly variability with timing, but trajectory is up .
• Largest acquisition creates scale and durability: MI 556K sf greenhouse at ~20% unlevered yield plus Phase 2 upgrades (automation, energy curtains, dry/cure) should underpin cash flow growth in 2022–2023 .
• Rapid capital recapture via front-loaded rents: Lease structures target full recovery of invested capital within ~3 years, supporting self-funding of continued growth and non-dilutive financing .
• Active tenant risk management: PSP eviction/new tenant and OCG replacement de-risk the portfolio; watch lease-up and licensing milestones to confirm ramp .
• Sustainability angle differentiates cost curve: Greenhouse cultivation (~70% less energy, ~90% less water vs indoor/field) supports low-cost production and resilience amid price compression over time .
• Trading lens: With management framing PW at ~18.1x forward Core FFO (stock $67 context), multiple expansion/contraction hinges on execution at MI and continued accretive deals funded by debt/preferred .
• Near-term trading implication: Positive momentum into early 2022 as MI improvements near completion and initial cultivation/lease economics flow through; monitor regulatory/licensing and tenant performance updates .

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