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PW > SEC Filings for PW > Form 10-Q on 15-May-2014All Recent SEC Filings

Show all filings for POWER REIT

Form 10-Q for POWER REIT


15-May-2014

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing the words "believe," "expect," "will," "anticipate," "intend," "estimate," "project," "plan," "assume" or other similar expressions, or negatives of those expressions, although not all forward-looking statements contain these identifying words. All statements contained in this report regarding our future strategy, future operations, projected financial position, estimated future revenues, projected costs, future prospects, the future of our industries and results that might be obtained by pursuing management's current or future plans and objectives are forward-looking statements.

You should not place undue reliance on any forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our forward-looking statements are based on the information currently available to us and speak only as of the date of the filing of this report. New risks and uncertainties arise from time to time, and it is impossible for us to predict these matters or how they may affect us. Over time, our actual results, performance, financial condition or achievements may differ from the anticipated results, performance, financial condition or achievements that are expressed or implied by our forward-looking statements, and such differences may be significant and materially adverse to our security holders. Our forward-looking statements contained herein speak only as of the date hereof, and we make no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Power REIT is a Maryland-domiciled REIT that holds, develops, acquires and manages real estate assets related to transportation and energy infrastructure in the United States. Within the transportation and energy infrastructure sectors, Power REIT is focused on making new acquisitions of real estate that are or will be leased to renewable energy generation projects, such as utility-scale solar farms and wind farms, that have low or minimal technology risk.

Power REIT is structured as a holding company and owns its assets through three wholly-owned, special purpose subsidiaries that have been formed in order to hold real estate assets and generate lease revenue. Power REIT was formed as part of a reorganization and reverse triangular merger of P&WV that closed on December 2, 2011. P&WV survived the reorganization as a wholly-owned subsidiary of the Registrant. The Company's investment strategy, which is focused on transportation and energy infrastructure-related real estate, builds upon its subsidiary P&WV's historical ownership of railroad real estate assets, which are currently triple-net leased to NSC.

As of March 31, 2014, the Company's assets consisted of approximately 112 miles of railroad infrastructure and related real estate leased to a railway company; approximately 54 acres of fee simple land leased to a 5.7MW solar farm in Massachusetts; and approximately 100 acres of fee simple land leased to a number of California solar farms with an aggregate generating capacity of approximately 20MW. Power REIT is actively seeking to expand its portfolio of real estate related to renewable energy generation projects, and is pursuing investment opportunities that qualify for REIT ownership within solar, wind, hydroelectric, geothermal, transmission and other infrastructure projects.

Revenue during the first quarter of 2014 and first quarter of 2013 was approximately $298,000 and $251,000, respectively. Net income (loss) available for distribution during the first quarter of 2014 and first quarter of 2013 was approximately $57,000 and $(111,000), respectively. The difference between our 2014 and 2013 first quarter results were principally attributable to the following: contribution of an additional $47,000 of additional rental income from acquired properties; a $127,000 decrease of litigation expenses related to the NSC litigation; a $27,000 decrease of general and administrative expense; a $38,000 increase of interest expense related to loans to acquire property.

The Trust's cash outlays, other than acquisitions and dividend payments, are for general and administrative ("G&A") expenses, which consist principally of legal and other professional fees, consultant fees, trustees' fees, NYSE MKT listing fees, shareholder service company fees and auditing costs, litigation expenses, interest expense and property taxes. The Trust expects that it will continue to incur substantial litigation expenses during the remainder of 2014 related to the NSC litigation.

To meet its working capital and longer-term capital needs, Power REIT relies on cash provided by its operating activities, proceeds received from the issuance of equity securities and proceeds received from borrowings, which are typically secured by liens on acquired assets.

During the first quarter of 2014, the Company completed the sale of 108,060 shares of Preferred Stock that have been sold for total gross proceeds of $2,702,000.

FUNDS FROM OPERATIONS - NON GAAP FINANCIAL MEASURES

We assess and measure our overall operating results based upon an industry performance measure referred to as Core Funds From Operations ("Core FFO") which management believes is a useful indicator of our operating performance. This report contains supplemental financial measures that are not calculated pursuant to U.S. generally accepted accounting principles ("GAAP"), including the measure identified by us as Core FFO. Following is a definition of this measure, an explanation as to why we present it and, at the end of this section, a reconciliation of core FFO to the most directly comparable GAAP financial measure.

Core FFO: Management believes that Core FFO is a useful supplemental measure of the Company's operating performance. Management believes that alternative measures of performance, such as net income computed under GAAP, or Funds From Operations computed in accordance with the definition used by the National Association of Real Estate Investment Trusts ("NAREIT"), include certain financial items that are not indicative of the results provided by the Company's asset portfolio and inappropriately affect the comparability of the Company's period-over-period performance. These items include non-recurring expenses, such as those incurred in connection with litigation, one-time upfront acquisition expenses that are not capitalized under ASC-805 and certain non-cash expenses, including stock-based compensation expense amortization. Therefore, management uses Core FFO and defines it as net income excluding such items. Management believes that, for the foregoing reasons, these adjustments to net income are appropriate. The Company believes that Core FFO is a useful supplemental measure for the investing community to employ, including when comparing the Company to other REITs that disclose similarly adjusted FFO figures, and when analyzing changes in the Company's performance over time. Readers are cautioned that other REITs may use different adjustments to their GAAP financial measures than we do, and that as a result, the Company's Core FFO may not be comparable to the FFO measures used by other REITs or to other non-GAAP or GAAP financial measures used by REITs or other companies.


                        CORE FUNDS FROM OPERATIONS (FFO)
           (Dollars in thousands except share and per share amounts)


                                                   Three months ended March 31,
                                                      2014                2013
Core FFO                                         $           199       $       167
Growth - Core FFO                                             19 %
Core FFO per share:
  Basic                                          $          0.12       $      0.10
  Diluted                                        $          0.12       $      0.10
Growth - Core FFO per share:
  Basic                                                       20 %
  Diluted                                                     20 %
Weighted average number of shares outstanding:
  Basic                                                1,674,733         1,623,250
  Diluted                                              1,688,080         1,623,250

                 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
                             (Dollars in thousands)

                                    Three months ended March 31,
                                    2014                  2013
Net Income (loss)               $         57         $          (111 )
Litigation expenses                      113                     240
Property acquisition expenses              4                      11
Stock-based compensation                  22                      27
Amortization                               3                       -
Core FFO                        $        199         $           167

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