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PW > SEC Filings for PW > Form 10-Q on 19-Oct-2011All Recent SEC Filings




Quarterly Report



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 or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such difference might 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.


All of the Trust's railroad properties are leased to Norfolk and Western Railway Company, now known as Norfolk Southern Corporation ("NSC"), for 99 years, with unlimited renewals on the same terms. Cash rental is a fixed amount of $915,000 per year, with no provision for change during the term of the lease and any renewal periods. This cash rental is the only current source of funds. Although the lease provides for additional rentals to be recorded, these amounts do not increase cash flow or net income as they are charged to NSC's settlement account with no requirement for payment, except at termination or non renewal of the lease. Due to the indeterminate settlement date, these additional rental amounts are not recorded for financial reporting purposes.

In comparing the third quarter of 2011 with the preceding second quarter of 2011 and the third quarter of 2010, revenues totaled $229,000, $229,000, and $229,000, respectively. Net income and income available for distribution was $174,000, $127,000 and $202,000 respectively.

Trust's cash outlays, other than dividend payments, are for general and administrative (G&A) expenses, which include professional fees, consultants, office rental and director's fees. The existing leased properties are maintained entirely at NSC's expense.

Due to substantial constraints on the Trust's income and increasing costs related to complying with the laws and regulations related to its public companies, the Trust is seeking to broaden its business to include new investments in transportation and energy infrastructure assets, consistent with its status as an infrastructure focused real-estate investment trust (REIT). The Trust raised approximately $1,019,000 of gross proceeds in connection with a rights offering that closed on March 16, 2011 and plans to use the proceeds to provide working capital for its business expansion. The Trust expects that G&A expenses will increase in 2011 as it commences activities to further its business expansion and position the Trust for future growth.

On August 31, 2011, the Trust filed a preliminary Form S-4 (the "Registration Statement") with the Securities Exchange Commission ("SEC") to effect a reorganization of the Trust under "Power REIT," a newly formed, Maryland domiciled REIT and wholly owned subsidiary of Trust. The Board of Trustees believes the reorganization is in the best interest of the Trust as it pursues growth as an infrastructure REIT. The Board of Trustees believes the reorganization should provide the Trust with greater access to the capital markets, more flexibility in structuring transactions and that the "Power REIT" name is better aligned with the Trust's current business plan. The Trust's real asset infrastructure investment strategy is expected to build upon on its historical ownership of the Pittsburgh & West Virginia Railroad ("PWV").

Summary of Reorganization

The Trust's Board of Trustees and the Board of Trustees of POWER REIT have each approved the reincorporation of the Trust from the Commonwealth of Pennsylvania to the State of Maryland, which will be accomplished through the merger (the "Reincorporation Merger") of Trust with POWER REIT PA, a Pennsylvania limited liability company and wholly-owned subsidiary of Power REIT. Upon the effective date of the reincorporation merger, holders of Trust common shares will receive one newly issued common share, $0.001 par value per share, of Power REIT for each common share of Trust that they own, without any action of shareholders required, and the Trust will survive the Reincorporation Merger as a wholly-owned subsidiary of Power REIT.

Following the consummation of the Reincorporation Merger, Power REIT intends to reorganize itself into an umbrella partnership REIT structure (the "UPREIT Reorganization") by contributing the equity shares of the Trustto Power REIT, LP, a to be formed Delaware limited partnership (the "Operating Partnership"). Upon the completion of the UPREIT Reorganization, Power REIT will initially own all of the equity interests of the Operating Partnership, and the Trust will continue as a wholly-owned subsidiary of the Operating Partnership.

The Registration Statement has not yet become effective and the information in the Registration Statement may be changed by the Trust in the future prior to its effectiveness. The Trust currently expects to complete the reorganization in the fourth quarter of 2011 following the effectiveness of its Registration Statement. It is possible that factors outside the control of the Trust could result in the reorganization being completed at a later time, or not at all or that the Board of Trustees may, in their sole discretion, cancel or modify the reorganization at any time for any reason.

There can be no assurance that the Trust will be successful in broadening its business. See Note Regarding Forward-Looking Statements and additional risk factors that are more fully disclosed in Trust's Form S-4 as filed with the SEC on August 31, 2011.

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