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Power REIT (PW): A Quarterly Update

Power REIT (PW) just released a big time earnings report and press release! However, PW is a micro-cap and does not receive publicity from big investing news sources. Luckily, Fundasy Investor is here to fill you in on what happened!

The Press Release

The full transcript is here, but I’ll pull you the important part.

“The Maverick 5 expansion is immediately accretive to FFO… Omitting future available capital deployments, this transaction along with the other recently announced greenhouse related transactions should increase FFO by over 65% on a run rate basis relative to Power REIT’s stabilized FFO prior to embarking on our updated business plan in July 2019. Assuming Power REIT deploys its remaining capital equally over the next two quarters, the year-end “run-rate” for FFO per share should exceed $1.60 per share, which assumes that the capital is deployed at a 12.5% yield. Similarly, if Power REIT deploys its capital at a rate in-line with recent acquisitions, the year end FFO “run-rate” could exceed $1.90 per share, which more than triples the previous performance prior to the implementation of Power REIT’s new business plan in the middle of last year.

FFO = Net Income + Depreciation + Amortization – Gains on Sales of Property.

Interpretation: “We’re making 65% more money since mid-July 2019. If we continue making purchases like the current ones, we’ll make $1.90 per share in FFO each year thereafter ( for a full year of rents ).”

That’s all amazing. However, still some people might be scratching their heads asking me what that means…I’ll provide some context.

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With the current lease agreements, all renters receive 6 months of free rent while the greenhouses are under construction. The two properties signed in July 2019 contributed to this quarter’s results. With only the current properties, the full year FFO increased 65%, not too shabby.

However, if you take all the current rents and the rest that will be signed in the next two quarters a full year’s rent will equate to $1.90 FFO per share. That’s over 300% growth from the 2019 full year FFO.

The stock is still trading at less than 10 times forward FFO though. Even REITs with no growth at all trade around 15 times forward FFO. Implying the stock is undervalued a minimum 50%, not taking their growth into account.

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What’s even more amazing is that all this material is free to subscribers! Only Fundasy covers unique opportunities like this.

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The Earnings Report

With only two new properties (three more already signed) the 2020 Q1 Earnings report was pretty good:

  • 43% growth in Net Income from Q1 2019 attributable to common shares (43% EPS growth as well, no dilution)
  • 36% growth in FFO from Q1 2019
  • 59% growth in revenue from Q1 2019

Interpretation: The company is making more money and is growing fast in profitability. It’s still at a value discount, due to its inherent risky nature of its size and industry. I think even at today’s prices, in a year and a half you will be very pleased with the stock price. These blow out results are from only two more properties paying rent. They will continue to pay rent all year and three more properties will start midway through 2020.

The horizon is bright. It’s even brighter for subscribers. No other financial website covers these small names. That’s the Fundasy Investor difference.

Here at Fundasy, we don’t recommend BS to subscribers that we don’t own. We are long PW. Investors should still do their own research though.

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