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LONG-TERM DEBT | 3 Months Ended
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Mar. 31, 2024
Debt Disclosure [Abstract] |
LONG-TERM DEBT | 6 – LONG-TERM DEBT On December 31, 2012, as part of the Salisbury land acquisition, PW Salisbury Solar, LLC (“PWSS”) assumed existing municipal financing (“Municipal Debt”). The Municipal Debt has approximately 9 years remaining. The Municipal Debt has a simple interest rate of 5.0% that is paid annually, due on February 1 of each year. The balance of the Municipal Debt as of March 31, 2024 and December 31, 2023 is approximately $0 and $51,000 respectively. On January 30, 2024, the PWSS property was sold and the loan was paid off. In July 2013, PWSS borrowed $750,000 from a regional bank (the “PWSS Term Loan”). The PWSS Term Loan carries a fixed interest rate of 5.0% for a term of 10 years and amortizes based on a 20-year principal amortization schedule. The loan is secured by PWSS’ real estate assets and a parent guarantee from the Trust. The balance of the PWSS Term Loan as of March 31, 2024 and December 31, 2023 is approximately $0 and $456,000 (net of approximately $0 of capitalized debt costs), respectively. On January 30, 2024 the PWSS property was sold and the loan was paid off. On November 6, 2015, PWRS entered into a loan agreement (the “2015 PWRS Loan Agreement”) with a certain lender for $10,150,000 (the “2015 PWRS Loan”). The 2015 PWRS Loan is secured by land and intangibles owned by PWRS. PWRS issued a note to the benefit of the lender dated November 6, 2015 with a maturity date of October 14, 2034 and a 4.34% interest rate. As of March 31, 2024 and December 31, 2023, the balance of the 2015 PWRS Loan was approximately $6,944,000 (net of unamortized debt costs of approximately $230,000) and $6,957,000 (net of unamortized debt costs of approximately $235,000), respectively. On November 25, 2019, Power REIT, through a newly formed subsidiary, PW PWV Holdings LLC (“PW PWV”), entered into a loan agreement (the “PW PWV Loan Agreement”) with a certain lender for $15,500,000 (the “PW PWV Loan”). The PW PWV Loan is secured by pledge of PW PWV’s equity interest in P&WV, its interest in the Railroad Lease and a security interest in a deposit account (the “Deposit Account”) pursuant to a Deposit Account Control Agreement dated November 25, 2019 into which the P&WV rental proceeds is deposited. Pursuant to the Deposit Account Control Agreement, P&WV has instructed its bank to transfer all monies deposited in the Deposit Account to the escrow agent as a dividend/distribution payment pursuant to the terms of the PW PWV Loan Agreement. The PW PWV Loan is evidenced by a note issued by PW PWV to the benefit of the lender for $15,500,000, with a fixed interest rate of 4.62% and fully amortizes over the life of the financing which matures in 2054 (35 years). The balance of the loan as of March 31, 2024 and December 31, 2023 is $14,359,000 (net of approximately $273,000 of capitalized debt costs) and $14,412,000 (net of approximately $276,000 of capitalized debt costs). On December 21, 2021, a wholly-owned subsidiary of Power REIT (“PW CanRE Holdings”) entered into a debt facility with initial availability of $20 million (the “Greenhouse Loan”). The facility is non-recourse to Power REIT and has perfected liens against all of Power REIT CEA portfolio properties except for the property located in Vinita, OK. The Greenhouse Loan had a 12 month draw period and then converts to a term loan that is fully amortizing over five years. The interest rate on the Greenhouse Loan was 5.52% with a default interest rate of $5.0% and throughout the term of the loan, a debt service coverage ratio of equal to or greater than 2.00 to 1.00 must be maintained. On October 28, 2022, the terms of the Greenhouse Loan were amended such that the amortization period was extended from 5 years to 10 years for the calculation of debt service coverage ratio and a 6-month debt service payment reserve requirement of $1 million was established. On March 13, 2023 the Greenhouse Loan entered into an additional modification of which the terms are summarized as follows:
- | The total commitment is reduced from $20 million to $16 million.
- | The interest rate is changed to the greater of: (i) 1% above the Prime rate and (ii) 8.75%.
- | Monthly payments on the Greenhouse Loan will be interest only until maturity.
- | A portion of the proceeds from the sale of assets within the Borrowing Base for the Greenhouse Loan will be required to pay the outstanding loan amount.
- | The maturity date of the Greenhouse Loan is changed to December 21, 2025.
- | The Debt Service Coverage ratio will be 1.50 to 1.00 and the test will be performed on an annual basis and is eliminated until the calendar year 2024.
- | The definition of assets included in the Borrowing Base for the Greenhouse Loan no longer eliminates assets where tenants are in default for failure to make timely rent payments.
- | An agreed upon minimum liquidity amount shall be maintained in the amount of $1 million.
- | A $160,000 fee will be charged by the bank for the modification.
Debt issuance expenses of $0 have been capitalized during the three months ended March 31, 2024 and 2023, respectively. Amortization of approximately $0 and $13,000 has been recognized for the three months ended March 31, 2024 and 2023, respectively and $0 and approximately $46,000 deferred debt issuance costs were re-classed as contra liability upon the loan commitment reduction for the three months ended March 31, 2024 and 2023. The balance of the loan as of March 31, 2024 and December 31, 2023 is approximately $14,358,000 (net of approximately $0 of debt costs). During the three months ended March 31, 2024 and 2023, the Trust also recognized $0 and $160,000, respectively of loan modification expense in connection with the March 13, 2023 modification. As of March 31, 2024, PW CanRe Holdings, LLC has an outstanding balance on the Greenhouse Loan of $14,358,000. The lender has declared a default of the loan which allows for the acceleration of the Greenhouse Loan which is being treated as a current debt obligation. On March 13, 2024, East West Bank (“EWB”) initiated a complaint in the Superior Court of California, County of Los Angeles (Case 24STCV06180) against PW CanRE Holdings, LLC, PW CanRE of Colorado Holdings LLC, PW ME CanRE SD LLC, PW CO CanRE Walsenburg LLC, PW Co CanRE JKL LLC, PW CO CanRE JAB LLC, PW CO CanRE Tam 19 LLC, PW CO CanRE Mav 14 LLC, PW CO CanRE Gas Station LLC, PW CO CanRE Grail LLC, PW CO CanRE Tam 7 LLC, PW CO CanRE Cloud Nine LLC, PW CO CanRE Apotheke LLC, PW CO CanRE Mav 5 LLC, PW CO CanRE MF LLC, PW MillPro NE LLC, PW CA CanRE Canndescent LLC and PW MI CanRE Marengo LLC. The litigation relates to a loan secured by various properties held by PW CanRE Holdings, LLC through its ownership of the various subsidiaries that are also named in the complaint. The complaint is seeking (i) Judicial Foreclosure (ii) Specific Performance (iii) Appointment of Receiver; (iv) Injunctive Relief; (v) Breach of Contract (Security Agreement); (vi) Breach of Contract (Guaranty); (vii) Money Due; and (viii) Account Stated. There can be no assurance that PW CanRe, LLC Holdings will be able to satisfy the requirements of the lender which could result in the foreclosure of collateral. Although the Greenhouse Loan is non-recourse to Power REIT, foreclosure of properties would result in a decrease in assets and potential income to Power REIT. On May 10, 2024, the Greenhouse Loan entered into an additional modification and forbearance agreement to allow more time for the repayment of the loan. There can be no assurance that our efforts to sell, re-lease or recapitalize the assets secured by the Greenhouse Loan will ultimately retire the loan per the requirements of the forbearance agreement. The amount of principal payments remaining on Power REIT’s long-term debt as of March 31, 2024 including the modified repayment schedule for the Greenhouse Loan is as follows: SCHEDULE OF LONG TERM DEBT
2024 (Nine months remaining) |  |  | 14,993,630 |
2025 |  |  | 749,218 |
2026 |  |  | 791,212 |
2027 |  |  | 835,036 |
2028 |  |  | 880,909 |
Thereafter |  |  | 17,913,996 |
Long term debt |  | $ | 36,164,001 |

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