UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
OR
(Commission file number)
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
of incorporation or organization) |
(I.R.S. Employer
Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
common shares, $ par value, outstanding at May 13, 2026.
TABLE OF CONTENTS
| 2 |
POWER REIT AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| March 31, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Land | $ | $ | ||||||
| Greenhouse cultivation and processing facilities, net of accumulated depreciation | ||||||||
| Net investment in direct financing lease - railroad | ||||||||
| Total real estate assets | ||||||||
| Cash and cash equivalents | ||||||||
| Prepaid expenses and deposits | ||||||||
| Intangible lease asset, net of accumulated amortization | ||||||||
| Deferred rent receivable | ||||||||
| Mortgage loan receivables | ||||||||
| Assets held for sale | ||||||||
| Other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Liabilities held for sale | ||||||||
| Current portion of long-term debt, net of unamortized discount | ||||||||
| Long-term debt, net of unamortized discount | ||||||||
| TOTAL LIABILITIES | ||||||||
| Equity: | ||||||||
| Series A | ||||||||
| Common Shares, $ par value ( shares authorized; and shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively) | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Equity | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 3 |
POWER REIT AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| REVENUE | ||||||||
| Lease income from direct financing lease – railroad | $ | $ | ||||||
| Rental income | ||||||||
| Other income | ||||||||
| TOTAL REVENUE | ||||||||
| EXPENSES | ||||||||
| Amortization of intangible assets | ||||||||
| General and administrative | ||||||||
| Property expenses and taxes | ||||||||
| Depreciation expense | ||||||||
| Impairment expense | ||||||||
| Interest expense | ||||||||
| TOTAL EXPENSES | ||||||||
| OTHER EXPENSE | ||||||||
| Loss on sale of properties | ( | ) | ||||||
| Unrealized loss on marketable securities | ( | ) | ( | ) | ||||
| TOTAL OTHER EXPENSE | ( | ) | ( | ) | ||||
| NET LOSS | ( | ) | ( | ) | ||||
| Preferred Stock Dividends | ( | ) | ( | ) | ||||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | ( | ) | $ | ( | ) | ||
| Loss Per Common Share: | ||||||||
| Basic | $ | ( | ) | $ | ( | ) | ||
| Diluted | ( | ) | ( | ) | ||||
| Weighted Average Number of Shares Outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| Cash dividend per Series A Preferred Share: | $ | $ | ||||||
| Accumulated undeclared dividend per Series A Preferred Shares: | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
POWER REIT AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the Quarters Ended March 31, 2026 and 2025
(Unaudited)
Series A 7.75% Cumulative Redeemable Perpetual Preferred Stock Par Value $25.00 | Common Shares | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Issuance of Common Shares for Cash, net of Stock Issuance Costs | - | |||||||||||||||||||||||||||
| Stock-Based Compensation | - | - | ||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock-Based Compensation | - | - | ||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 5 |
POWER REIT AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of intangible lease asset | ||||||||
| Amortization of debt costs | ||||||||
| Stock-based compensation | ||||||||
| Impairment expense | ||||||||
| Depreciation | ||||||||
| Unrealized gain on marketable securities | ||||||||
| Loss on sale of property | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Deferred rent receivable | ( | ) | ||||||
| Prepaid expenses and deposits | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Other liabilities | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities | ||||||||
| Cash received for sale of properties | ||||||||
| Investment of marketable securities | ( | ) | ||||||
| Cash received for mortgage loan receivables | ||||||||
| Net cash provided by investing activities | ||||||||
| Financing Activities | ||||||||
| Proceeds received from debt | ||||||||
| Principal payment on debt | ( | ) | ( | ) | ||||
| Proceeds from stock issuance | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net decrease in cash and cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Cash and cash equivalents and restricted cash, beginning of period | $ | $ | ||||||
| Cash and cash equivalents and restricted cash, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Non-cash transactions | ||||||||
| Accrued interest transferred to loan | ||||||||
| Transfer of previously paid S-3 expense from other assets to APIC | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
1 – GENERAL INFORMATION
Power REIT (the “Registrant” or the “Trust”, and together with its consolidated subsidiaries or “Power REIT”, unless the context requires otherwise) is a Maryland-domiciled, internally-managed real estate investment trust (a “REIT”) that owns a portfolio of real estate assets related to transportation, energy infrastructure and Controlled Environment Agriculture (“CEA”) in the United States.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Trust, as defined below, these unaudited consolidated financial statements include all adjustments necessary to present fairly the information set forth herein. All such adjustments are of a normal recurring nature. Results for interim periods are not necessarily indicative of results to be expected for a full year.
These unaudited consolidated financial statements should be read in conjunction with the Trust’s audited consolidated financial statements and notes included in its latest Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 31, 2026.
The
Trust is structured as a holding company and owns its assets through seventeen direct and indirect wholly-owned, special purpose subsidiaries
that have been formed in order to hold real estate assets, obtain financing and generate lease revenue. As of March 31, 2026 the Trust’s
assets consisted of approximately 112 miles of railroad infrastructure and related real estate which is owned by its subsidiary Pittsburgh
& West Virginia Railroad (“P&WV”), approximately
During
the three months ended March 31, 2026, the Trust did not declare a quarterly dividend of approximately $
On
February 11, 2026, the PW CO CanRE Mav 14 LLC (“Mav 14”) property was sold at action. As part of the sale, the Trust wrote
off accrued property tax of approximately $
The
Trust has elected to be treated for tax purposes as a REIT, which means that it is exempt from U.S. federal income tax if a sufficient
portion of its annual income is distributed to its shareholders, and if certain other requirements are met. In order for the Trust to
maintain its REIT qualification, at least % of its ordinary taxable annual income must be distributed to shareholders. As of December
31, 2024, the last tax return completed to date, the Trust has a federal net operating loss of $
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash
The
Trust considers all highly liquid investments with original maturity of three months or less to be cash equivalents. Power REIT places
its cash and cash equivalents with high-credit quality financial institutions. At times, the Trust’s deposits may exceed Federal
Deposit Insurance Corporation (FDIC) coverage limits which are currently set at $
| 7 |
The Trust records all equity-based incentive grants to officers and non-employee members of the Trust’s Board of Trustees in general and administrative expenses in the Trust’s Consolidated Statement of Operations based on their fair value determined on the date of grant. Share-based compensation expense is recognized on a straight-line basis over the vesting term of the outstanding equity awards.
Basis of Presentation
These unaudited consolidated financial statements have been prepared in accordance with GAAP.
Principles of Consolidation
The accompanying consolidated financial statements include Power REIT and its wholly-owned subsidiaries. All intercompany balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding. Diluted net loss per common share is computed similar to basic net loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The dilutive effect of the Trust’s options is computed using the treasury stock method. As of each of March 31, 2026 and December 31, 2025, the total number of common stock equivalents was , composed entirely of stock options.
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Numerator: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Preferred Stock Dividends | ( | ) | ( | ) | ||||
| Numerator for basic and diluted EPS - loss available to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Denominator for basic and diluted EPS - Weighted average shares | ||||||||
| Basic and diluted loss per common share | $ | ) | $ | ) | ||||
Real Estate Assets and Depreciation of Investment in Real Estate
The Trust expects that most of its transactions will be accounted for as asset acquisitions. In an asset acquisition, the Trust is required to capitalize closing costs and allocates the purchase price on a relative fair value basis. For the three months ended March 31, 2026 and 2025, there were no acquisitions. In making estimates of relative fair values for purposes of allocating purchase price, the Trust utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, its own analysis of recently acquired and existing comparable properties in its portfolio and other market data. The Trust also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the relative fair value of the tangible acquired. The Trust allocates the purchase price of acquired real estate to various components as follows:
| ● | Land – Based on actual purchase if acquired as raw land. When property is acquired with improvements, the land price is established based on market comparables and market research to establish a value with the balance allocated to improvements for the land. |
| 8 |
| ● | Improvements – When a property is acquired with improvements, the land price is established based on market comparables and market research to establish a value with the balance allocated to improvements for the land. The Trust also evaluates the improvements in terms of replacement cost and condition to confirm that the valuation assigned to improvements is reasonable. Depreciation is calculated on a straight-line method over the useful life of the improvements. | |
| ● | Lease Intangibles – The Trust recognizes lease intangibles when there’s an existing lease assumed with the property acquisitions. In determining the fair value of in-place leases (the avoided cost associated with existing in-place leases) management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes reimbursable (based on market lease terms) real estate taxes, insurance, other operating expenses, as well as estimates of lost market rental revenue during the expected lease-up periods. The values assigned to in-place leases are amortized over the remaining term of the lease.
The fair value of above-or-below market leases is estimated based on the present value (using an interest rate which reflected the risks associated with the leases acquired) of the difference between contractual amounts to be received pursuant to the leases and management’s estimate of market lease rates measured over a period equal to the estimated remaining term of the lease. An above market lease is classified as an intangible asset and a below market lease is classified as an intangible liability. The capitalized above-market or below-market lease intangibles are amortized as a reduction of, or an addition to, rental income over the estimated remaining term of the respective leases. | |
| Intangible assets related to leasing costs consist of leasing commissions and legal fees. Leasing commissions are estimated by multiplying the remaining contract rent associated with each lease by a market leasing commission. Legal fees represent legal costs associated with writing, reviewing, and sometimes negotiating various lease terms. Leasing costs are amortized over the remaining useful life of the respective leases. | ||
| ● | Construction in Progress (CIP) - The Trust classifies greenhouses or buildings under development and/or expansion as construction-in-progress until construction has been completed and certificates of occupancy permits have been obtained upon which the asset is then classified as an improvement. The value of CIP is based on actual costs incurred. |
Depreciation
Depreciation
is computed using the straight-line method over the estimated useful lives of
Assets Held for Sale
Assets held for sale are measured at the lower of their carrying amount or estimated fair value less cost to sell. As of March 31, 2026 and December 31, 2025, the Trust has several properties that are considered assets held for sale. See Note 7 for discussion of its assets held for sale.
| 9 |
Impairment of Long-Lived Assets
Real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the property might not be recoverable, which is referred to as a “triggering event.” A property to be held and used is considered impaired only if management’s estimate of the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges, are less than the carrying value of the property. This estimate takes into consideration factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors.
If there is a triggering event in relation to a property to be held and used, the Trust will estimate the aggregate future cash flows, less estimated capital expenditures, to be generated by the property, undiscounted and without interest charges. In addition, this estimate may consider a probability weighted cash flow estimation approach when alternative courses of action to recover the carrying amount of a long-lived asset are under consideration or when a range of possible values is estimated.
The determination of undiscounted cash flows requires significant estimates by management, including the expected course of action at the balance sheet date that would lead to such cash flows. Subsequent changes in estimated undiscounted cash flows arising from changes in the anticipated action to be taken with respect to the property could impact the determination of whether an impairment exists and whether the effects could materially affect the Trust’s net income. To the extent estimated undiscounted cash flows are less than the carrying value of the property, the loss will be measured as the excess of the carrying amount of the property over the estimated fair value of the property.
While
the Trust believes its estimates of future cash flows are reasonable, different assumptions regarding a number of factors, including
market rents, listing prices, economic conditions, and occupancies, could significantly affect these estimates. When impairment exists,
the long-lived asset is adjusted to an estimate of fair value. In estimating fair value, if appraisal reports are available, the Trust
uses the sales comparable approach methodology where applicable within appraisal reports; when appraisal reports are not available, the
Trust uses opinions of value from brokers involved with listing properties for sale and other market value information available to it.
The Trust will record an impairment charge if it believes that there is other than a temporary decline in market value below the carrying
value of the investment. During the three months ended March 31, 2026 and 2025, an impairment charge was expensed in the amount of approximately
$
Any decline in the estimated fair values of the Trust’s assets could result in impairment charges in the future. It is possible that such impairments, if required, could be material.
Revenue Recognition
The Railroad Lease (“P&WV Lease”) is treated as a direct financing lease. As such, income to P&WV under the Railroad Lease is recognized when received.
Lease revenue from solar land and CEA properties are accounted for as operating leases. Any such leases with rent escalation provisions are recorded on a straight-line basis when the amount of escalation in lease payments is known at the time Power REIT enters into the lease agreement, or known at the time Power REIT assumes an existing lease agreement as part of an acquisition (e.g., an annual fixed percentage escalation) over the initial lease term, subject to a collectability assessment, with the difference between the contractual rent receipts and the straight-line amounts recorded as “deferred rent receivable” or “deferred rent liability”. Collectability is assessed at quarter-end for each tenant receivable using various criteria including past collection issues, the current economic and business environment affecting the tenant and guarantees. If collectability of the contractual rent stream is not deemed probable, revenue will only be recognized upon receipt of cash from the tenant. During the three months ended March 31, 2026 and 2025, the Trust did not write off any straight-line rent receivable against rental income. Expenses for which tenants are contractually obligated to pay, such as maintenance, property taxes and insurance expenses are not reflected in the Trust’s consolidated financial statements unless paid by the Trust.
| 10 |
The following table provides the breakdown of rental income recognition (not including the direct finance lease):
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Straight-Line Rent | $ | $ | ||||||
| Cash Basis Rent | ||||||||
| $ | $ | |||||||
Deferred
rent receivable as of March 31, 2026 and December 31, 2025 is approximately $
Intangibles
A
portion of the acquisition price of the assets acquired by PW Regulus Solar, LLC (“PWRS”) has been allocated on the Trust’s
consolidated balance sheets between Land and Intangibles’ fair values at the date of acquisition. The total amount of in-place
lease intangible assets established was approximately $
Intangible
Assets are evaluated whenever events or circumstances indicate the carrying value of these assets may not be recoverable. There were
The following table provides a summary of the Intangible Assets:
| For the Years Ended December 31, | ||||||||||||||||
| Accumulated Amortization | Accumulated Amortization | |||||||||||||||
| Cost | Through 12/31/25 | Through 3/31/2026 | Net Book Value | |||||||||||||
| Asset Intangibles - PWRS | $ | $ | $ | $ | ||||||||||||
The following table provides a summary of the current estimate of future amortization of Intangible Assets for the subsequent years ending December 31:
| 2026 (9 month remaining) | $ | |||
| 2027 | $ | |||
| 2028 | $ | |||
| 2029 | $ | |||
| 2030 | $ | |||
| Thereafter | $ | |||
| Total | $ |
Net Investment in Direct Financing Lease – Railroad
P&WV’s
net investment in its leased railroad property, recognizing the lessee’s perpetual renewal options, was estimated to have a current
value of $
| 11 |
Fair Value
Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Trust measures its financial assets and liabilities in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.
| ○ | Level 1 – valuations for assets and liabilities traded in active exchange markets, or interest in open-end mutual funds that allow a company to sell its ownership interest back at net asset value on a daily basis. Valuations are obtained from readily available pricing sources for market transactions involving identical assets, liabilities or funds. | |
| ○ | Level 2 – valuations for assets and liabilities traded in less active dealer, or broker markets, such as quoted prices for similar assets or liabilities or quoted prices in markets that are not active. Level 2 includes U.S. Treasury, U.S. government and agency debt securities, and certain corporate obligations. Valuations are usually obtained from third party pricing services for identical or comparable assets or liabilities. | |
| ○ | Level 3 – valuations for assets and liabilities that are derived from other valuation methodologies, such as option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. |
In determining fair value, the Trust utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considering counterparty credit risk.
The
carrying amounts of Power REIT’s financial instruments, including cash and cash equivalents, prepaid expenses, and accounts payable
approximate fair value because of their relatively short-term maturities. The carrying value of long-term debt approximates fair value
since the related rates of interest approximate current market rates. As of March 31, 2026 and December 31, 2025, the Trust owns publicly
traded REIT securities with a fair market value of $
Mortgage Loan Receivables
On
October 30, 2023, PW ME CanRE SD LLC (“PW SD”) provided seller financing in connection with the sale of the two Maine properties
in the form of an $
On
January 6, 2024, PW CO CanRE Sherman 6 LLC (“PW Sherman”) provided seller financing in conjunction with selling the Sherman
6 and Tamarack 14 properties in the amount of $
On
June 9, 2025, PW Sherman provided seller financing in conjunction with selling the Tamarack 13 property in the amount of $
After
reviewing the collectivity for mortgage loan receivables, the Trust recorded an allowance for receivable of approximately $
| 12 |
Other Income
Other
income included in total revenue for the three months ended March 31, 2026 and 2025 is approximately $
Other Assets
Other
assets as of March 31, 2026 and December 31, 2025 is approximately $
Interest Expense
Interest
expense for the three months ended March 31, 2026 related to the PW PWV Loan (defined below) and the 2015 PWRS Loan (defined below) was
approximately $
General and Administrative Expenses
General
and Administrative Expense for the three months ended March 31, 2026 and 2025 is approximately $
Preferred Stock
As
of March 31, 2026, the Trust has issued approximately $
Property Expenses and Taxes
Property expenses and taxes for the three months ended
March 31, 2026 and 2025 is approximately $
The Trust is not current on payment of
property taxes for the Greenhouse Portfolio. These taxes are included on the Balance Sheet as accrued expenses and liabilities held for
sale of approximately $
Impact of New Accounting Pronouncements
The Trust has evaluated all recent accounting pronouncements and believes either they are not applicable or that none of them will have a significant effect on the Trust’s financial statements.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” to improve disclosures about the nature of expenses in commonly presented financial statement captions. ASU 2024-03 is effective for all public business entities for annual reporting periods beginning after December 15, 2026, on either a prospective or retrospective basis. Early adoption is permitted. The Trust is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.
| 13 |
3 – LIQUIDITY AND CAPITAL RESOURCE
The Trust’s objectives when managing its capital are to seek to ensure that there are adequate capital resources to safeguard the Trust’s ability to continue operating and maintain adequate levels of funding to support its ongoing operations and development such that it can continue to provide returns to shareholders. The Trust’s management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued.
As of March 31, 2026, the Trust had incurred recurring losses from operations and negative operating cash flows. However, Trust believes that, based on its current forecasts, its cash on hand, together with cash flow from operations, should be sufficient to fund the Trust’s capital requirements for at least the next twelve months from the issuance date of its consolidated financial statements. The Trust can make no assurance regarding its ability to achieve its forecasts, which are materially dependent on the Trust’s financial performance and the ever-changing market.
On
a consolidated basis, the Trust’s cash and cash equivalents totaled $
The Trust intends to continue to focus on maximizing the value of the greenhouse properties. This will include entering into new leases and selling properties based on market conditions. The Trust will also continue to focus on improving cash collections from existing tenants. In addition, the Trust is exploring strategic alternatives that may or may not include real estate investments in an effort to increase shareholder value. The Trust may also raise capital in the form of debt or equity to provide liquidity. However, the Trust cannot predict, with certainty, the outcome of these actions to generate liquidity.
4 – DISPOSITIONS
2026 Dispositions
On
February 11, 2026, the PW CO CanRE Mav 14 LLC (“Mav 14”) property was sold at action. As part of the sale, the Trust wrote
off accrued property tax of approximately $
2025 Dispositions
On
June 9, 2025, a wholly owned subsidiary of Power REIT, PW CO CanRE MF LLC, sold a cannabis related greenhouse cultivation property located
in Ordway, Colorado. The property was described in prior filings as Tam 13 and was vacant. The purchaser was an unaffiliated third party
who had previously acquired two adjacent properties from subsidiaries of the Trust and the price was established based on an arm’s
length negotiation. The sale price was $
As previously disclosed, a subsidiary of the Trust had a loan secured by most of the greenhouse properties which was non-recourse to the Trust and in default and the lender had initiated litigation including foreclosure actions. On April 11, 2025, Power REIT resolved issues with its lender concerning the Greenhouse Loan by providing deeds-in-lieu of foreclosure for greenhouse properties in Michigan and Nebraska. The transaction related to the Greenhouse Loan resulted in the write-off of the Nebraska and Michigan properties, along with the remaining balance of the Greenhouse Loan.
On
January 31, 2025, a wholly owned subsidiary of Power REIT, PW CO CanRE JAB LLC, sold one of its interests in a cannabis related greenhouse
cultivation property located in Ordway, Colorado. The property was described in prior filings as Tam 18 and was vacant. The purchaser
was an unaffiliated third party and the price was established based on an arm’s length negotiation. The sale price was $
| 14 |
5 – DIRECT FINANCING LEASES AND OPERATING LEASES
Information as Lessor Under ASC Topic 842
To
generate positive cash flow, as a lessor, the Trust leases its facilities to tenants in exchange for payments. The Trust’s leases
for its railroad, solar farms and greenhouse cultivation facilities have lease terms ranging between
The following table provides the breakdown of revenue:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Lease income from direct financing lease - Railroad | $ | $ | ||||||
| Rental income from operating lease - Solar farm lease | $ | $ | ||||||
| Rental income from operating lease - Greenhouse - Cannabis lease | $ | $ | ||||||
| $ | $ | |||||||
Due to significant price compression in the wholesale cannabis market, the Trust’s cannabis related tenants have experienced severe financial distress. Unfortunately, starting in 2022, collections from the CEA portfolio has diminished to a nominal amount. The Trust intends to continue to focus on maximizing the value of the CEA portfolio. This will include entering into new leases and selling properties based on market conditions. The Trust will also continue to focus on improving cash collections from existing tenants. In addition, the Trust is exploring strategic alternatives that may or may not include real estate investments in an effort to increase shareholder value.
Historically,
the Trust’s revenue has been concentrated to a relatively limited number of investments, industries and lessees. For the three
months ended March 31, 2026, Power REIT recognized approximately
The following is a schedule by years of minimum future rentals on non-cancelable operating leases as of March 31, 2026 for assets and assets held for sale where revenue recognition is considered on a straight-line basis:
| Assets Held for Use | ||||
| 2026 (9 months remaining) | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
6 – LONG-TERM DEBT
On
November 6, 2015, PWRS entered into a loan agreement (the “2015 PWRS Loan Agreement”) with a certain lender for $
On
November 25, 2019, Power REIT, through a subsidiary, PW PWV Holdings LLC (“PW PWV”), entered into a loan agreement (the “PW
PWV Loan Agreement”) with a certain lender for $
| 15 |
As
previously disclosed, a subsidiary of the Trust had a loan secured by most of the greenhouse properties which was non-recourse to the
Trust and in default and the lender had initiated litigation including foreclosure actions. On April 11, 2025, Power REIT resolved issues
with its lender concerning the Greenhouse Loan by providing deeds-in-lieu of foreclosure for greenhouse properties in Michigan and Nebraska.
In return, the lender released the remaining collateral back to subsidiaries of Power REIT and released obligations related to the Greenhouse
Loan. Power REIT will seek to realize value from the retained assets by leasing and/or selling. The transaction related to the Greenhouse
Loan resulted in the write-off of the Nebraska and Michigan properties, along with the remaining balance of the Greenhouse Loan. It will
also relieve the ongoing costs associated with maintaining the Nebraska and Michigan properties. The balance of the Greenhouse Loan as
of March 31, 2026 and December 31, 2025 is $
The amount of principal payments remaining on Power REIT’s debt as of March 31, 2026 is as follows:
| Total Debt | ||||
| 2026 (9 month remaining) | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Long term debt | $ | |||
7 – IMPAIRMENT AND ASSETS HELD FOR SALE
For
the three months ended March 31, 2026 and 2025, the Trust recorded a non-cash impairment charge of approximately $
A summary of the Trust’s impairment expense for the three months ended March 31, 2026 and 2025 is below:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Assets Held for Sale | $ | $ | ||||||
| Long-Lived Assets | ||||||||
| - | ||||||||
| $ | $ | |||||||
As of March 31, 2026, the Trust considered Maverick 1 (Ordway, CO), Tamarack 7 including MIP (Ordway, CO), Tamarack 19 (Ordway, CO), Tamarack 3 (Ordway, CO), Tamarack 27 and 28 (Ordway, CO), Tamarack 4 and 5 (Ordway, CO), Walsenburg (CO), Desert Hot Spring (CA), and Vinita (OK), as Assets Held for Sale.
The Trust has aggregated and classified the assets and liabilities of properties to be sold as held for sale in its Consolidated Balance Sheets as of March 31, 2026 since all criteria under ASC 360-10-45-9 were met. The balance sheet as of December 31, 2025 has been recast to achieve comparability by including the Tamarack 7 property which is now considered held for sale as of March 31, 2026. The December 31, 2025 balance sheet also includes the Maverick 14 property which was sold during the first three months of 2026.
| 16 |
The assets and liabilities of assets held for sale were as follows:
| March 31, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Land | ||||||||
| Greenhouse cultivation and processing facilities, net of accumulated depreciation | ||||||||
| TOTAL ASSETS - Held for sale | ||||||||
| LIABILITIES | ||||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| TOTAL LIABILITIES - Held for sale | ||||||||
ATM Program
On
January 24, 2025, the Trust entered into a sales agreement (the “Sales Agreement”), with AGP pursuant to which the Trust
may, from time to time, issue and sell its common shares in an “at the market offering,” however, AGP is not obligated to
sell any common shares and there are limits on the dollar amount of common shares the Trust can sell pursuant to the Sales Agreement.
In addition, the Trust’s ability to raise capital through the sale of securities may be limited by the rules of the SEC and NYSE
American LLC (“NYSE American”) that place limits on the number and dollar amount of securities that may be sold. There can
be no assurances that the Trust will be able to raise the funds needed, especially in light of the fact that its ability to sell securities
registered on its registration statement on Form S-3 will be limited until such time as the market value of the Trust’s voting
securities held by non-affiliates is $
Summary of Share Based Compensation Activity
Power REIT’s 2020 Equity Incentive Plan, which superseded the 2012 Equity Incentive Plan, was adopted by the Board on May 27, 2020 and approved by shareholders on June 24, 2020. It provides for the grant of the following awards: (i) Incentive Stock Options; (ii) Nonstatutory Stock Options; (iii) SARs; (iv) Restricted Stock Awards; (v) RSU Awards; (vi) Performance Awards; and (vii) Other Awards. The Plan’s purpose is to secure and retain the services of Employees, Trustees and Consultants; to provide incentives for such persons to exert maximum efforts for the success of the Trust and to provide a means by which such persons may be given an opportunity to benefit from increases in value of the common shares through the granting of awards. As of March 31, 2026, the aggregate number of common shares that may be issued pursuant to outstanding awards is currently which is subject to adjustment per the Plan.
Summary of Share-Based Compensation Activity – Options
On July 15, 2022, the Trust granted non-qualified stock options (“options”) to acquire common shares at a price of $ to its independent trustees, officers and an employee. The term of each option is years. The options vested over three years as follows: in a series of thirty-six (36) equal monthly installments measured from the Vesting Commencement Date on the same date of the month as the Vesting Commencement Date which is August 1, 2022. The options are fully vested.
The Trust accounts for share-based payments using the fair value method. The Trust recognizes all share-based payments in its financial statements based on their grant date fair values and market closing price, calculated using the Black-Scholes option valuation model.
| 17 |
| Expected Volatility | % | |||
| Expected Dividend Yield | % | |||
| Expected Term (in years) | ||||
| Risk Free Rate | % | |||
| Estimate of Forfeiture Rate | % |
The
Trust uses historical data to estimate dividend yield and volatility and the “simplified method” as described in the SEC
Staff Accounting Bulletin #110 to determine the expected term of the option grants. The risk-free interest rate for the expected term
of the options is based on the U.S. treasury yield curve on the grant date. The Trust does not have historical data of forfeiture, and
as a policy, has used a
The summary of share-based compensation activity for the three months ended March 31, 2026, with respect to the Trust’s stock options, is as follows:
| Summary of Activity - Options | ||||||||||||
| Weighted | ||||||||||||
| Number of | Average | Aggregate | ||||||||||
| Options | Exercise Price | Intrinsic Value | ||||||||||
| Balance as of December 31, 2025 | $ | |||||||||||
| Options Forfeited | - | |||||||||||
| Balance as of March 31, 2026 | ||||||||||||
| Options exercisable as of March 31, 2026 | $ | |||||||||||
The weighted average remaining term of the options is years.
Summary of Share-Based Compensation Activity – Restricted Stock
During the three months ended March 31, 2026, the Trust did not grant any shares of restricted stock to its officer or independent trustees.
Share-based Compensation
During the three months ended March 31, 2026, the Trust recorded approximately $ of non-cash expense related to restricted stock and options granted compared to approximately $ of non-cash expense related to restricted stock and approximately $ of non-cash expense related to options granted for the three months ended March 31, 2025. As of March 31, 2026, there was unrecognized share-based compensation expense for restricted stock and options. The Trust does not currently have a policy regarding the repurchase of shares on the open market related to equity awards and does not currently intend to acquire shares on the open market.
Preferred Stock Dividends
During
the three months ended March 31, 2026 and 2025, the Trust did not declare a quarterly dividend of approximately $
9 – SEGMENT INFORMATION
The
Trust operates as
10 – CONTINGENCIES
The Trust’s wholly-owned subsidiary, P&WV, is subject to various restrictions imposed by the Railroad Lease with NSC, including restrictions on share and debt issuance, including guarantees.
Legal Proceedings
From time to time, the Trust is party to various litigation matters incidental to the conduct of its business. The Trust is not presently party to any legal proceedings the resolution of which it believes would have a material adverse effect on its business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels.
11 - SUBSEQUENT EVENTS
On
May 4, 2026, Power REIT received repayment of a previously written-off seller financing loan related to a prior asset sale which was previously referred to as the Sweet Dirt loan. Total
proceeds received were approximately $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our unaudited financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended December 31, 2025, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed on March 31, 2026 (the “2025 10-K”) with the U.S. Securities and Exchange Commission (the “SEC”). This discussion, particularly information with respect to our future results of operations or financial condition, business strategy, plans and objectives for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. You should review the disclosure under Part 1, Item 1A of the 2025 10-K for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. References in this Quarterly Report on Form 10-Q to the “Registrant” or the “Trust” refer to Power REIT and “we,” “us,” “our” and “Power REIT” refer to Power REIT, together with its consolidated subsidiaries.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”) includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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, including those identified below, under Part II, Item 1A. “Risk Factors” and elsewhere in this Report, and those identified under Part I, Item 1A of the 2025 10-K. 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.
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Overview
We are a Maryland-domiciled, internally-managed real estate investment trust (a “REIT”) that owns a portfolio of real estate assets related to transportation, energy infrastructure and Controlled Environment Agriculture (“CEA”) in the United States.
We are structured as a holding company and own our assets through seventeen direct and indirect wholly-owned, special purpose subsidiaries that have been formed in order to hold real estate assets, obtain financing and generate lease revenue. As of March 31, 2026, our assets consisted of approximately 112 miles of railroad infrastructure and related real estate which is owned by our subsidiary Pittsburgh & West Virginia Railroad (“P&WV”), approximately 447 acres of fee simple land leased to a number of utility scale solar power generating projects with an aggregate generating capacity of approximately 82 Megawatts (“MW”) and approximately 77 acres of land with approximately 330,000 square feet of CEA properties in the form of greenhouses (the “Greenhouse Portfolio)
During the three months ended March 31, 2026, the Trust did not declare a quarterly dividend of approximately $163,000 ($0.484375 per share per quarter) to holders of Power REIT’s 7.75% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”).
Our primary objective is to maximize the long-term value for our shareholders. To that end, our business goals are to obtain the best possible rental income at our properties in order to maximize our cash flows, net operating income, funds from operations, funds available for distribution to shareholders and other operating measures and results, and ultimately to maximize the values of our properties.
To achieve this primary goal, we have developed a business strategy focused on increasing the values of our properties, and ultimately of the Trust, which includes:
● Raising capital by monetizing the embedded value in our portfolio to improve our liquidity position and, as appropriate reducing debt levels to strengthen our balance sheet;
● Selling off non-core properties and underperforming assets;
● Seeking to re-lease properties that are vacant or have non-performing tenants
● Seeking to minimize the carrying costs related to the Greenhouse Portfolio given the speculative nature of valuing these asset;
● Raising the overall level of quality of our portfolio and of individual properties in our portfolio;
● Improving the operating results of our properties; and
●Taking steps to position ourselves for future growth opportunities.
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Recent Events
On February 11, 2026, the PW CO CanRE Mav 14 LLC (“Mav 14”) property was sold at action. As part of the sale, the Trust wrote off accrued property tax of approximately $61,000 and recognized a total loss of approximately $494,000.
Improving Our Balance Sheet by Reducing Debt and Leverage; Maintaining Liquidity
Leverage
We continue to seek ways to reduce our debt and debt leverage by improving our operating performance and through a variety of other means available to us. These means might include leasing vacant properties, selling properties, raising capital or through other actions.
Capital Recycling
In the later part of 2022, we commenced property reviews to establish a plan for the portfolio and, where appropriate, have been disposing of and seeking to dispose of properties that we do not believe meet financial and strategic criteria given economic, market and other circumstances. Disposing of these properties can enable us to redeploy or recycle our capital to other uses, such as to repay debt, to reinvest in other real estate assets and development and redevelopment projects, and for other corporate purposes. Along these lines, in 2023 and 2024 we completed sales of assets for total gross proceeds of approximately $9.81 million which included approximately $2.1 million of seller financing provided to the buyers. During 2025, we completed sales of assets for total gross proceeds of approximately $325,000 which included approximately $105,000 of seller financing provided to a buyer. We also have several properties that we are marketing for sale and/or lease which have been classified as “Assets Held for Sale.”
Improving Our Portfolio
We are currently seeking to refine our property holdings by selling greenhouse properties and/or re-leasing them in an effort to improve the overall performance going forward. Effective April 11, 2025, we closed on a settlement agreement with the lender for the Greenhouse Loan, which resulted in the write-off of the Nebraska and Michigan properties, along with the remaining balance of the Greenhouse Loan. The transaction also relieved the ongoing costs associated with maintaining the Nebraska and Michigan properties. We will continue to seek to realize value from the retained assets. This will include entering into new leases and selling properties based on market conditions. We will also continue to focus on improving cash collections from existing tenants. In addition, we are exploring strategic alternatives that may or may not include real estate investments in an effort to increase shareholder value.
Taking Steps to Position the Company for Future Growth Opportunities
We are taking steps designed to position ourselves to create shareholder value. In connection therewith, we have implemented processes designed to ensure strong internal discipline in the use, harvesting and recycling of our capital, and these processes will be applied in connection with seeking to reposition properties.
We may seek to acquire, in an opportunistic, selective and disciplined manner, properties that have operating metrics that are better than or equal to our existing portfolio averages, and that we believe have strong potential for increased cash flows and appreciation in value. Taking advantage of any acquisition opportunities would likely involve some use of debt or equity capital. We will pursue transactions that we expect can meet the financial and strategic criteria we apply, given economic, market and other circumstances. In addition, we are exploring the potential to use our existing corporate structure for strategic transactions including potentially merging assets or companies with us. The Trust is also exploring strategic alternatives that may or may not include real estate investments in an effort to increase shareholder value.
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The following table is a summary of our properties as of March 31, 2026:
| Property Type/Name | Acres | Size1 | Gross Book Value2 | |||||||||
| Railroad Property | ||||||||||||
| P&WV - Norfolk Southern | 112 miles | $ | 9,150,000 | |||||||||
| Solar Farm Land | ||||||||||||
| California | ||||||||||||
| PWRS | 447 | 82 | 9,183,548 | |||||||||
| Solar Total | 447 | 82 | $ | 9,183,548 | ||||||||
| Greenhouse - Cannabis | ||||||||||||
| Ordway, Colorado | ||||||||||||
| Maverick 15,6 | 5.20 | 17,368 | 1,594,582 | |||||||||
| Tamarack 73,5 | 4.32 | 18,000 | 1,364,585 | |||||||||
| Tamarack 7 (MIP)3,4,5 | 636,351 | |||||||||||
| Tamarack 193,5,6 | 2.11 | 18,528 | 1,311,116 | |||||||||
| Tamarack 8 - Apotheke4,5 | 4.31 | 21,548 | 2,061,542 | |||||||||
| Tamarack 35,6 | 2.20 | 24,512 | 2,080,414 | |||||||||
| Tamarack 27 and 283,5,6 | 4.00 | 38,440 | 1,872,340 | |||||||||
| Maverick 5 - Jacksons Farms4,5 | 5.20 | 15,000 | 1,358,634 | |||||||||
| Tamarack 4 and 53,5,6 | 4.41 | 26,076 | 2,239,870 | |||||||||
| Mortgage Loan | 859,761 | |||||||||||
| Mortgage Loan | 92,670 | |||||||||||
| Walsenburg, Colorado 3,5,6 | 35.00 | 74,800 | 4,219,170 | |||||||||
| Desert Hot Springs, California3,5,6 | 0.85 | 35,505 | 7,685,000 | |||||||||
| Vinita, Oklahoma3,5,6 | 9.35 | 40,000 | 2,593,313 | |||||||||
| Eliot, ME - Mortgage Loan5,7 | 597,000 | |||||||||||
| Greenhouse Total | 76.95 | # | 329,777 | $ | 30,566,348 | |||||||
| Total Portfolio | $ | 48,899,896 | ||||||||||
| Impairment and Allowance for Receivable | 20,895,269 | |||||||||||
| Depreciation and Amortization | 4,985,090 | |||||||||||
| Net Book Value Net of Impairment, Allowance for Receivable, Depreciation and Amortization | $ | 23,019,537 | ||||||||||
1 Solar Farm Land size represents Megawatts and CEA property size represents greenhouse square feet
2 Gross Book Value for our Greenhouse Portfolio represents purchase price (excluding capitalized acquisition costs) plus improvements costs
3Property is vacant
4Tenant is not current on rent/in default
5An impairment/allowance for receivable has been taken against this asset
6Asset held for sale
7Loan is in default
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Critical Accounting Estimates
The consolidated financial statements are prepared in conformity with accounting principles and generally accepted in the United States of America (“GAAP”), which requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods. None of the estimates are considered critical accounting estimates.
Results of Operations
Three Months Ended March 31, 2026 and 2025
Revenue
Revenue during the three months ended March 31, 2026 and 2025 was $480,436 and $485,794, respectively. Revenue during the three months ended March 31, 2026, consisted of rental income of $215,679, direct financing lease income of $228,750, and other income of $36,007. The decrease in total revenue was due to an increase in rental income of $4,900 and a decrease in other income of $10,258.
During the three months ended March 31, 2026, the Trust’s revenue was concentrated from certain tenants. For the three months ended March 31, 2026, Power REIT collected approximately 96% of its rental income and lease income from direct financing lease from the tenants of two properties. The tenants are Norfolk Southern Railway and Regulus Solar LLC which represent 51% and 45% of rental income and lease income from direct financing lease, respectively. For the three months ended March 31, 2025, Power REIT collected approximately 98% of its rental income and lease income from direct financing lease from two properties. The tenants were Norfolk Southern Railway and Regulus Solar LLC which represented 52% and 46% of rental income and lease income from direct financing lease, respectively.
Expenses
Expenses for the three months ended March 31, 2026 compared to the same period in 2025 decreased by $1,024,395 to $845,441, primarily due to a decrease in interest expense of $757,059 due to the settlement of the Greenhouse Loan and a decrease in property expenses and taxes of $401,986 and to a lesser extent, a decrease in general and administrative expense of $120,867, offset by an increase in impairment expense of $247,353 and an increase in depreciation expense of $8,164.
Our non-property related expenses, are for general and administrative expenses, which consist principally of insurance, legal and other professional fees, consultant fees, NYSE American listing fees, shareholder service company fees and auditing costs as well as property related expenses that are not covered by tenants.
Other Expense
Other income increased by $499,197 primarily due to a loss on sale of properties of $493,890, and by an unrealized loss on marketable securities of $5,307.
Net Loss Attributable to Common Shareholders
Net loss attributable to common shareholders during the three months ended March 31, 2026 was $1,056,479 compared to a net loss of $1,576,319 for the three months ended March 31, 2025, a decrease of $519,840.
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Liquidity and Capital Resources
Our cash, cash equivalents and restricted cash totaled $2,036,085 as of March 31, 2026, a decrease of $199,221 from December 31, 2025. Our current loan liabilities totaled approximately $770,000 as of March 31, 2026 as compared to approximately $759,000 as of December 31, 2025.
Effective April 11, 2025, we entered into a settlement agreement with the lender under the Greenhouse Loan that resulted in the write-off of the Nebraska and Michigan properties, along with the remaining balance of the Greenhouse Loan. The transaction also relieves the ongoing costs associated with maintaining the Nebraska and Michigan properties.
We are not current on payment of property taxes for the Greenhouse Portfolio. These taxes are included on the Balance Sheet as accrued expenses and liabilities held for sale of approximately $1,310,000. If the property taxes remain delinquent, the remaining Greenhouse Portfolio will be subject to tax foreclosure actions.
On January 24, 2025, the Trust entered into a sales agreement (the “Sales Agreement”), with A.G.P./Alliance Global Partners (“AGP”) pursuant to which it may, from time to time, issue and sell its common shares in an “at the market offering,” however, AGP is not obligated to sell any common shares and there are limits on the dollar amount of common shares it can sell pursuant to the Sales Agreement. In addition, the Trust’s ability to raise capital through the sale of securities may be limited by the rules of the SEC and NYSE American LLC (“NYSE American”) that place limits on the number and dollar amount of securities that may be sold. There can be no assurances that the Trust will be able to raise the funds needed, especially in light of the fact that its ability to sell securities registered on its registration statement on Form S-3 will be limited until such time as the market value of the Trust’s voting securities held by non-affiliates is $75 million or more. As of March 31, 2026, 282,613 common shares have been sold pursuant to the Sales Agreement. During the three months ended March 31, 2026, the Trust sold 10,781 common shares pursuant to the Sales Agreement for net proceeds of $10,945.
During the three months ended March 31, 2026, we generated approximately $55,000 of cash from debt service related to the seller financing provided in 2024 and 2025. The remaining seller financing agreements have a combined remaining balance of $962,431 as of March 31, 2026.
We will continue to seek to maximize value from the retained assets. This will include entering into new leases and selling properties based on market conditions. We will also continue to focus on improving cash collections from existing tenants. In addition, we are exploring strategic alternatives that may or may not include real estate investments in an effort to increase shareholder value.
Cash Used in Operating Activities
During the three months ended March 31, 2026 and 2025, cash used in operating activities was $147,117 and $436,648, respectively. The decrease in cash used is primarily due to a smaller net loss during the three months ending March 31, 2026, as well as favorable changes in working capital, including a decrease in prepaid expense, stock-based compensation and a decrease in accrued expenses.
Our cash outlays at Power REIT (parent company) consist principally of professional fees, consultant fees, NYSE American listing fees, legal, insurance, shareholder service company fees, auditing costs and general and administrative expenses. Our cash outlays related to our various property-owning subsidiaries consist principally of principal and interest expense on debts, property maintenance, property taxes, insurance, legal as well as other property related expenses that are not covered by tenants. To the extent we need to raise additional capital to meet our obligations, there can be no assurance that financing on favorable terms will be available when needed. Although we entered into the Sales Agreement the rules of the SEC and NYSE American place limits on the number and dollar amount of securities that may be sold. There can be no assurances that we will be able to raise the funds needed. If we are unable to sell certain assets when anticipated at prices anticipated, we may not have sufficient cash to fund operations and commitments beyond the next twelve months.
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Cash Provided By Investing Activities
Cash provided by investing activities during for the three months ended March 31, 2026 and 2025 were $28,604 and $92,260, respectively. The decrease of $63,656 is mainly due to lower proceeds from property sales and no purchases of marketable securities, and, to a lesser extent, less cash received from mortgage loans for the three months ended Marh 31, 2026 as compared to 2025.
Cash Used/Provided By Financing Activities
Cash used in financing activities during the three months ended March 31, 2026 was $80,708, compared to $146,013 generated by financing activities during the same period in the prior year. The decrease of $226,721 is primarily due to lower proceeds received from debt and lower principal payments on long-term debt and, partially offset by proceeds received from the sale of common shares pursuant to the Sales Agreement during the quarter ended March 31, 2026.
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 our management believes to be a useful indicator of our operating performance. Core FFO is a non-GAAP financial measure. Core FFO should not be construed as a substitute for net income (loss) (as determined in accordance with GAAP) for the purpose of analyzing our operating performance or financial position, as Core FFO is not defined by GAAP. The 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.
Our management believes that Core FFO is a useful supplemental measure of our operating performance. Our 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 our asset portfolio and inappropriately affect the comparability of our period-over-period performance. These items include non-recurring expenses, and certain non-cash expenses, including amortization and certain upfront financing costs. Therefore, management uses Core FFO and defines it as net income excluding such items. We believe that Core FFO is a useful supplemental measure for the investing community to employ, including when comparing us to other REITs that disclose similarly computed Core FFO figures, and when analyzing changes in our performance over time. Readers are cautioned that other REITs may use different adjustments to their GAAP financial measures than we use, and that as a result, our 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.
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A reconciliation of our Core FFO to net income for the three months ended March 31, 2026 and 2025 is included in the table below:
CORE FUNDS FROM OPERATIONS (FFO)
(Unaudited)
| Three Months Ended March, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | 480,436 | $ | 485,794 | ||||
| Net Income (Loss) | $ | (893,272 | ) | $ | (1,413,112 | ) | ||
| Stock-Based Compensation | - | 143,213 | ||||||
| Interest Expense - Amortization of Debt Costs | 7,848 | 7,847 | ||||||
| Amortization of Intangible Lease Asset | 56,872 | 56,872 | ||||||
| Depreciation on Land Improvements | 10,866 | - | ||||||
| Impairment Expense | 247,353 | - | ||||||
| Loss on sale of property | 493,890 | - | ||||||
| Core FFO Available to Preferred and Common Stock | (76,443 | ) | (1,205,180 | ) | ||||
| Preferred Stock Dividends | (163,207 | ) | (163,207 | ) | ||||
| Core FFO Available to Common Shares | $ | (239,650 | ) | $ | (1,368,387 | ) | ||
| Weighted Average Shares Outstanding (basic) | 3,672,274 | 3,389,661 | ||||||
| Core FFO per Common Share | (0.07 | ) | (0.40 | ) | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a–15(b) under the Exchange Act, the Trust’s management including the Trust’s Board of Directors, with the participation of our principal executive officer who is also our principal financial officer, carried out an evaluation of the effectiveness of the Trust’s disclosure controls and procedures (as defined under Rule 13a–15(e) under the Exchange Act) as of the end of the period covered by this Report. Based upon that evaluation, the Trust’s management concluded that, as of March 31, 2026, the Trust’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Trust in the reports that the Trust files or submits under the Exchange Act, is recorded, processed, summarized and reported to the Trust’s management, within the time periods specified in the SEC’s rules and forms, due to a material weakness in our controls relating to accounting for complex transactions identified in the quarterly period ended June 30, 2024, which has not been remediated as of March 31, 2026. Specifically, our Series A Preferred Stock was historically classified as mezzanine equity instead of being classified as equity.
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Remediation Plan
To address the material weakness described above, we intend to engage outside consultants to enhance our analysis of, and aid in our accounting for, complex transactions as needed.
Limitations on the Effectiveness of Controls
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Trust have been detected. The design and operation of a control system must also reflect that there are resource constraints and management is necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls.
Changes in Internal Control over Financial Reporting
Other than as set forth above, there were no changes in our internal controls over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are, from time to time, the subject of claims and suits arising out of matters related to our business. In general, litigation claims can be expensive, and time consuming to bring or defend against and could result in settlements or damages that could significantly affect financial results. It is not possible to predict the final resolution of the current litigation to which we are party to, and the impact of certain of these matters on our business, results of operations, and financial condition could be material. Regardless of the outcome, litigation has adversely impacted our business because of defense costs, diversion of management resources and other factors.
Item 1A. Risk Factors.
Our results of operations and financial condition are subject to numerous risks and uncertainties as described in the 2025 10-K, which risk factors are incorporated herein by reference. The following information updates, and should be read in conjunction with, the information disclosed in Part I, Item 1A, “Risk Factors,” contained in the 2025 10-K. You should carefully consider the risks set forth in the 2025 10-K and the following risks, together with all the other information in this Report, including our consolidated financial statements and notes thereto. If any of the risks actually materialize, our operating results, financial condition and liquidity could be materially adversely affected. Except as disclosed below, there have been no material changes from the risk factors disclosed in the 2025 10-K.
We have incurred a loss for the quarter ended March 31, 2026 and may be unable to generate sufficient revenue to cover expenses or generate net income.
For the quarter ended March 31, 2026, we had a net loss attributable to common shareholders of approximately $1.1 million, compared to a net loss of approximately $1.6 million for the quarter ended March 31, 2025. There can be no assurance that we will be able to generate sufficient revenue to pay our expenses or generate net income. As of March 31, 2026, we had an accumulated deficit of approximately $52.8 million. On a consolidated basis, the Trust’s cash and cash equivalents totaled approximately $2.0 million as of March 31, 2026, a decrease of approximately $200,000 from March 31, 2025.
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We may need to raise additional capital or sell additional properties to fund our operations.
As of March 31, 2026, we had an accumulated deficit of approximately $52.8 million and a net loss attributable to common shareholders of approximately $1.1 million. As of March 31, 2026, the Trust had approximately $2.0 million of cash and cash equivalents and approximately $290,000 of accounts payable and approximately $1.4 million of liabilities for assets held for sale.
It is the Trust’s plan to focus on selling properties, entering into new leases, improving cash collections from existing tenants and the raising capital in the form of debt or equity is effectively implemented, the Trust’s plan could potentially provide enough liquidity to fund its operations. However, the Trust cannot predict, with certainty, the outcome of its actions to generate liquidity, including its ability to sell properties, and the failure to do so could negatively impact its future operations.
On January 24, 2025, the Trust entered into the Sales Agreement with AGP pursuant to which it may, from time to time, issue and sell its common shares in an “at the market offering,” however, AGP is not obligated to sell any common shares and there are limits on the dollar amount of common shares it can sell pursuant to the Sales Agreement. In addition, the Trust’s ability to raise capital through the sale of securities may be limited by the rules of the SEC and NYSE American LLC (“NYSE American”) that place limits on the number and dollar amount of securities that may be sold. There can be no assurances that the Trust will be able to raise the funds needed through the Sales Agreement, especially in light of the fact that its ability to sell securities registered on its registration statement on Form S-3 will be limited until such time as the market value of the Trust’s voting securities held by non-affiliates is $75 million or more. As of March 31, 2026, 282,613 common shares have been sold pursuant to the Sales Agreement for gross proceeds of approximately $300,000. During the three months ended March 31, 2026, the Trust sold 10,781 common shares pursuant to the Sales Agreement for net proceeds of $10,945.
We have identified material weaknesses in our internal controls, and we cannot provide assurances that these material weaknesses will be effectively remediated or that additional weaknesses will not occur in the future.
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a- 15(f) under the Exchange Act. We identified a material weakness in our controls in the quarterly period ended June 30, 2024 relating to accounting for complex transactions, which has not been remediated as of March 31, 2026. Specifically, our Series A Preferred Stock was historically classified as mezzanine equity instead of being classified as equity.
While we have hired outside consultants to aid in our accounting for complex transactions and plan to take remedial action to address the material weakness in our internal controls, we cannot provide any assurance that such remedial measures, or any other remedial measures we take, will be effective. In addition, a material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are designed and operate effectively. Although management believes that the material weakness in our internal controls will be remediated, there can be no assurance that the deficiencies will be remediated in the near future or that the internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in our internal controls in the future.
As a result of our failure to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, security holders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common shares.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud. Our failure to maintain an effective system of internal controls, and any failure by us to implement required new or improved internal controls or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. In addition, any testing by us, as and when required, conducted in connection with Section 404 of the Sarbanes-Oxley Act, or Section 404, or any subsequent testing by our independent registered public accounting firm, as and when required, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. As a growing company, implementing and maintaining effective controls may require more resources, and we may encounter internal control integration difficulties. Our failure to maintain effective internal controls over financial reporting, may result in us not being able to accurately report our financial results, detect or prevent fraud, or file our periodic reports in a timely manner, which may, among other adverse consequences, cause investors to lose confidence in our reported financial information and lead to a decline in the trading price of our common shares.
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The investment portfolio is, and in the future may continue to be, concentrated in its exposure to a relatively few numbers of investments, industries and lessees.
Historically, our revenue has been concentrated to a relatively limited number of investments, industries and lessees. During the three months ended March 31, 2026, we collected approximately 96% of our consolidated revenue from two properties. The tenants were NSC and Regulus Solar, LLC which represent 51% and 45% of consolidated revenue respectively.
We are exposed to risks inherent in this sort of investment concentration. Financial difficulty or poor business performance on the part of any single lessee or a default on any single lease will expose us to a greater risk of loss than would be the case if we were more diversified and holding numerous investments, and the underperformance or non-performance of any of its assets may severely adversely affect our financial condition and results from operations. Our lessees could seek the protection of bankruptcy, insolvency or similar laws, which could result in the rejection and termination of our lease agreements and could cause a reduction in our cash flows. Furthermore, we may continue to concentrate our investment activities in the CEA and cannabis sectors, which subjects us to more risks than if we were diversified across many sectors. At times, the performance of the CEA and infrastructure sectors may lag the performance of other sectors or the broader market as a whole.
If our acquisitions or our overall business performance fail to meet expectations, the amount of cash available to us to pay dividends may decrease and we could default on our loans, which are secured by collateral in our properties and assets.
We may not be able to achieve operating results that will allow us to pay dividends at a specific level or to increase the amount of these dividends from time to time. Also, restrictions and provisions in any credit facilities we enter into or any debt securities we issue may limit our ability to pay dividends. We cannot assure you that you will receive dividends at a particular time, or at a particular level, or at all.
Unfortunately, our tenants related to the Greenhouse Portfolio have failed to perform on their lease obligations which has created a significant liquidity issue related to this portfolio of assets. A portion of the properties included in the Greenhouse Portfolio secure the Greenhouse Loan which was non-recourse to us and the lender under the Greenhouse Loan has liens against such properties. On April 11, 2025, Power REIT resolved issues with its lender concerning the Greenhouse Loan by providing deeds-in-lieu of foreclosure for greenhouse properties in Michigan and Nebraska. In return, the lender released the remaining collateral back to subsidiaries of Power REIT and released obligations related to the Greenhouse Loan. Power REIT will continue to seek to realize value from these retained assets by leasing and/or selling.
PW Regulus Solar, LLC (“PWRS”), one of our subsidiaries, entered into a loan agreement (the “2015 PWRS Loan Agreement”) that is non-recourse to us and secured by all of PWRS’ interest in the land and intangibles. As of March 31, 2026, the balance under the 2015 PWRS Loan Agreement was approximately $5,972,000 (net of unamortized debt costs of approximately $185,000).
Pittsburgh & West Virginia Railroad (“PWV”), one of our subsidiaries, entered into a Loan Agreement in the amount of $15,500,000 that is non-recourse to Power REIT and secured by our equity interest in our subsidiary PWV which is pledged as collateral. The balance of the loan as of March 31, 2026 is $13,917,000 (net of approximately $256,000 of capitalized debt costs).
We have substantial debt and preferred shares outstanding with substantial liquidation preference, which could adversely affect our overall financial health and our operating flexibility.
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We have substantial debt and preferred shares outstanding with substantial liquidation preference. These obligations may prevent us from using our cash flows for other purposes. If we are unable to satisfy these obligations, we might default on our debt and our financial condition and results of operations would be adversely affected.
In an effort to conserve liquidity and create financial flexibility, we have not declared dividends on our Series A Preferred Stock since the fourth quarter of 2022. As a result, unpaid dividends increase the liquidation preference for our Series A Preferred Stock. As of March 31, 2026, the amount of unpaid, undeclared dividends on the outstanding shares of Series A Preferred Stock is approximately $2,285,000.
Since a significant percentage of our assets are used to secure our debt, this reduces the amount of collateral available for future secured debt or credit support and reduces our flexibility in how we handle these secured assets. This level of debt and related security could also limit our ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of our business strategy or other purposes and could limit our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt.
In addition to our current debt, we might incur additional debt in the future in order to finance improvement or development of properties, acquisitions or for other general corporate purposes, which could exacerbate the risks described above. These consequences could have a material adverse effect on our business, financial condition and results of operations.
The issuance of securities with claims that are senior to those of our common shares, including our Series A Preferred Stock, may limit or prevent us from paying dividends on our common shares. There is no limitation on our ability to issue securities senior to our common shares or incur indebtedness.
Our common shares are equity interests that rank junior to our indebtedness and other non-equity claims with respect to assets available to satisfy claims against us, and junior to our preferred securities that by their terms rank senior to our common shares in our capital structure, including our Series A Preferred Stock. As of March 31, 2026, we had outstanding debt in the principal amount of $19.9 million and we have issued approximately $8.5 million (par value) of Series A Preferred Stock not including dividends which are cumulative and have not been declared. This debt and these preferred securities rank senior to our common shares in our capital structure. We expect that in due course we may incur more debt, and issue additional preferred securities as we pursue our business strategy.
In the case of indebtedness, specified amounts of principal and interest are customarily payable on specified due dates. In the case of preferred securities, such as our Series A Preferred Stock, holders are provided with a senior claim to distributions, according to the specific terms of the securities. In contrast, however, in the case of common shares, dividends are payable only when, as and if declared by our board of trustees and depend on, among other things, our results of operations, financial condition, debt service requirements, obligations to pay distributions to holders of preferred securities, such as the Series A Preferred Stock, other cash needs and any other factors that the board of trustees may deem relevant or that they are required to consider as a matter of law. Incurring additional debt, or issuing of additional preferred securities, may limit or eliminate the amounts available to pay dividends on our Series A Preferred Stock and common shares.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a) Unregistered Sales of Equity Securities
We did not sell any equity securities during the quarter ended March 31, 2026 in transactions that were not registered under the Securities Act other than as previously disclosed in our filings with the SEC.
(b) Use of Proceeds
Not applicable.
(c) Issuer Purchases of Equity Securities
Not applicable.
Item 3. Defaults Upon Senior Securities.
During the three months ended March 31, 2026, the Trust did not declare a quarterly dividend of approximately $163,000 to holders of Power REIT’s Series A Preferred Stock in order to preserve liquidity. As of May 15, 2026, the amount of unpaid dividends on the outstanding shares of Series A Preferred Stock is approximately $2,285,000.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
During
the three months ended March 31, 2026, no trustee or officer of the Trust
Item 6. Exhibits.
*Filed herewith
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-Q for the quarter ended March 31, 2026 to be signed on its behalf by the undersigned thereunto duly authorized.
| POWER REIT | |
| /s/ David H. Lesser | |
| David H. Lesser | |
| Chairman, CEO, CFO, Secretary and Treasurer | |
| Date: May 15, 2026 |
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