A New York-based Real Estate Investment Trust announced in a press release it has finalized a lease amendment to fund additional improvements to its greenhouse cultivation facility in Marengo Township, Michigan, near Battle Creek.
Power REIT is providing funding for additional improvements to the Property on the same economic terms as the original lease. Power REIT’s capital commitment related to the additional budget items is approximately $4.1 million, increasing annual rent by approximately $830,000.
Including the additional funding announced, Power REIT’s total capital commitment is approximately $25.6 million for the purchase and improvement of 556,146 square feet of greenhouse and processing space. From that investment, Power REIT will receive $5.1 million in annual rents.
The Property is leased to Marengo Cannabis LLC, which is a wholly owned subsidiary of Millennium Cannabis LLC which is a wholly owned subsidiary of Millennium Investment & Acquisition Company. David Lesser is Chairman and CEO of Power REIT and also Chairman and CEO of Millennium Investment & Acquisition Company.
Property Improvements
The additional items for Phase 2 of facility improvements focus on transitioning the facility from pepper farming to cannabis cultivation. The greenhouse upgrades include air circulation fans, exhaust fans with carbon filters as well as installation of an upgraded greenhouse automation system. The existing energy curtain will be replaced, and a blackout curtain will be added for photoperiod control necessary for optimizing greenhouse cultivation of cannabis.
Three quarters of an acre of the greenhouse will be converted into nursery space adjacent to the new state-of-the-art propagation room that is currently under construction. The construction of fourteen dedicated spaces incorporating precision energy-efficient environmental control equipment will ensure optimal conditions for the critical phase of drying and curing the harvested plants. Other general improvements are included in this lease addendum as well as upgrades to the office space, upgrades to the head-house, and installation of video surveillance and other security systems.
Construction and Progress
Improvements are currently underway for the modifications contemplated in the original lease. Perimeter security fencing, site grading, access gates and the parking lot are nearing completion. Fire separation between the head house and post-production has been erected and the construction of the propagation room is underway.
Michigan Cannabis Market Update
For the month of September 2021, the Michigan Marijuana Regulatory Agency reported regulated cannabis product sales of $161,339,691 (Medical and Adult Use) which represents 52.4 percent growth year over year. The price of flower in Michigan remains strong at $3,064 (MMRA), as impressive sales growth continues with total sales for 2021 on track to reach $2 billion.