NEW YORK, NY / ACCESSWIRE / June 7, 2017 / SeeThruEquity, a leading independent equity research and corporate access firm focused on small-cap and micro-cap public companies, today announced it has initiated coverage on Power REIT (NYSE MKT: PW) with a price target of $12.80.
The report is available here: PW Initiation Report.
Power REIT is a small capitalization real estate investment trust (REIT), which acquires, owns and manages real-estate properties related to alternative energy and transportation infrastructure. Power REIT is managed by CEO and Chairman David Lesser, who brings over 30 years of experience in finance, banking and real estate to the role, including serving as President of Hudson Bay Partners, LP, and as a Director in Merrill Lynch's real-estate investment banking group. Power REIT's strategy leverages Lesser's industry experience with a disciplined investment process focused on identifying undervalued infrastructure assets with attractive risk adjusted returns stemming from both income as well as embedded real-estate value. In our view, Power REIT offers compelling value, with income-generating real estate assets that trade at a substantial discount to fair value, and option-like upside potential from the resolution of an ongoing legal dispute with Norfolk Southern.
Highlights from the report include:
Power REIT offers value and has key events on the horizon
We see several key events ahead for Power REIT, as the company trades at nearly a 40% discount to management-adjusted Net Asset Value (NAV) of $11.31 per share, and 11.9x our estimate of annual FFO per share of $0.59. Through its wholly owned subsidiaries, Power REIT has access to a stream of income-producing real estate properties in the alternative energy sector, and a sizeable railroad real estate holding, in the form of a long-term lease with Norfolk Southern Corp. In addition to annual payments of approximately $915,000 (which are received in quarterly payments), Power REIT has asserted that the lease is in default and that it is owed at least $17mn in debt payments, plus $3.5mn in legal fees, from Norfolk Southern. Power REIT has been engaged in litigation with Norfolk Southern since December 2011, and management has stated that it believes a key legal ruling should to occur by 3Q17. A favorable ruling would likely create meaningful value for Power REIT - a potential valuation catalyst considering the disputed amount of $20.5mn (plus possible interest) in relation to Power REIT's market capitalization. A loss would likely bring an end to litigation activities, resulting in what management estimates would be a $17mn NOL tax carryforward to offset future income. Either way, the resolution of the suit may serve as a valuation catalyst, as it is expected to free up cash flows from litigation expenses, which could be allocated towards a buyback or the re-instatement of a common dividend.
Attractive alternative energy real estate portfolio
We are attracted to Power REIT's core income generating portfolio of real estate leased to solar power generating companies. Power REIT controls approximately 600 acres of land leased to over 107 Megawatts of utility-scale solar farms. These projects have long term power off-take agreements with utilities and are located in California and Massachusetts, states with favorable policy towards renewable energy production. Power REIT receives approximately 50% of its net operating income from solar projects, and has shown that it can identify attractive, income generating assets in the space.
Initiate coverage with a price target of $12.80
In our view, Power REIT represents a compelling value opportunity owning an attractive stream of income from a portfolio of real estate in the form of long term leases to solar farms and a railroad. Additionally, Power REIT offers option-like upside potential if it is successful in litigation over debt and legal fees it believes it is owed from Norfolk Southern, its tenant for the railroad.
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About Power REIT
Power REIT is a real estate investment trust (REIT) that acquires, owns and manages real-estate related to energy and transportation infrastructure. Infrastructure assets often have significant embedded real-estate value due to their proximity to supporting infrastructure, favorable geographic or other locational advantages and ownership of hard to acquire operating permits and/or rights of way. Within the energy sector, Power REIT is focused on acquiring land and other real-estate interests related to renewable energy based generating facilities. Within the transportation sector, Power REIT owns 112 miles of railroad infrastructure and real estate. www.Pwreit.com.
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