Power REIT (NYSE-AMEX: PW) has finalized the acquisition of land parcel in southern Colorado.
The Old Bethpage, New York-based real estate investment trust purchased some 4.3 acres via a subsidiary — PropCo — for $150,000. Power REIT noted Monday that it intends to use the land — dubbed Tamarack 7 — to construct a greenhouse for the cultivation of medical cannabis.
PropCo obliged its tenant, Fifth Ace, through a triple-net lease it entered, to fund taxes and expenses related to maintenance and insurance of the property. The lease has a 20-year term, with two five-year renewal options for the tenant.
Under the lease deal — structured to provide annual rent of around $262,000 — Fifth Ace agreed to retain a medical marijuana permit and to operate under the states and municipal regulations.
Moreover, Power REIT opted to fund the build-out of a greenhouse and processing facility spanning 18,000 square feet with roughly $1.22 million.
“This transaction is the latest example of our growth model to create a portfolio of Controlled Environment Agriculture properties,” stated Power REIT chairman and CEO David Lesser.
He explained that Southern Colorado is an “ideal greenhouse cultivation environment,” adding that they enabled their tenant to apply a grow method, which would “produce higher yields at lower costs than traditional growing methods.”
Earlier this year, the company secured $15.5 million in debt financing to fund acquisitions. Besides Tamarack 7, the company also obtained Maverick 5, a 5,040 square-feet property in May.
The price tag for the southern Colorado property was $490,000, including $150,000 of the original price, and an additional $340,000 aimed to fund the construction of 5,040 square feet of greenhouse space.
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