v3.26.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 6 Months Ended
Jun. 30, 2026
Accounting Policies [Abstract]  
Cash

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 $250,000 per depositor. The Trust has not experienced any losses from maintaining cash accounts in excess of federally insured limits.

 
Stock Based Compensation Accounting Policy

Stock Based Compensation Accounting Policy

 

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

Basis of Presentation

 

These unaudited consolidated financial statements have been prepared in accordance with GAAP.

 
Principles of Consolidation

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

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.

 
Income/(Loss) per Common Share

Income/(Loss) per Common Share

 

Basic net income/(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 June 30, 2026 and December 31, 2025, the total number of common stock equivalents was 18,750, composed entirely of stock options.

 

On June 2, 2026, the Trust effected a 1 for 10 reverse stock split. All share and per-share amounts in these financial statements have been retroactively adjusted to reflect the reverse stock split for all periods presented.

 

 

The following table sets forth the computation of basic and diluted loss per common share:

 

             
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2026   2025   2026   2025 
                 
Numerator:                    
                     
Net income/(loss)  $435,548   $320,913   $(457,724)  $(1,092,199)
Preferred Stock Dividends   (163,207)   (163,207)   (326,414)   (326,414)
Numerator for basic and diluted EPS income (loss) available to common shareholders  $272,341   $157,706   $(784,138)  $(1,418,613)
                     
Denominator:                    
Denominator for basic and diluted EPS - Weighted average shares   367,174    338,966    367,174    338,966 
                     
Basic and diluted gain/(loss) per common share  $0.74   $0.47   $(2.14)  $(4.19)

 
Real Estate Assets and Depreciation of Investment in Real Estate

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 six months ended June 30, 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.
     
  ● 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

 

Depreciation is computed using the straight-line method over the estimated useful lives of 20 years for greenhouses, 10 years for the MIP, 39 years for auxiliary buildings, except for PW CA Canndescent, LLC for which it was determined that the buildings have a useful life of 37 years. For the three months ended June 30, 2026 and 2025, approximately $6,000 and $20,000 depreciation expense was recorded, respectively. For the six months ended June 30, 2026 and 2025, approximately $17,000 and $23,000 depreciation expense was recorded, respectively.

 
Assets Held for Sale

Assets Held for Sale

 

The Trust classifies a property as held for sale when all of the criteria in ASC 360-10-45-9 are met: management, having the authority to approve the action, has committed to a plan to sell the property; the property is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; an active program to locate a buyer and other actions required to complete the plan have been initiated; the sale is probable and the transfer is expected to qualify for recognition as a completed sale within one year; the property is being actively marketed at a price that is reasonable in relation to its current fair value; and it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Properties classified as held for sale are reported at the lower of carrying value or fair value less costs to sell and are no longer depreciated. As of June 30, 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.

 
Impairment of Long-Lived Assets

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.” The measurement model applied depends on whether the property is classified as held for sale or held for use.

 

Properties classified as held for sale.

 

Upon classification of a property as held for sale, and at each subsequent reporting date, the property is measured at the lower of its carrying value or fair value less costs to sell, and an impairment charge is recognized for any excess of carrying value over that amount. Because the Trust treats each individual property as a separate asset group, this assessment is performed on a property-by-property basis. Fair value less costs to sell is estimated using the most current market information available for each property, consisting of the listing price under the current listing agreement, the purchase option price contained in the related lease agreement, or, where available, the price in an executed purchase and sale agreement, in each case reduced by estimated broker commissions and other direct costs of disposal.

 

During the three months ended June 30, 2026 and 2025, impairment charges of approximately $119,000 and $14,000, respectively, were recognized with respect to properties classified as held for sale. During the six months ended June 30, 2026 and 2025, such charges were approximately $366,000 and $14,000, respectively.

 

Properties classified as held for use.

 

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. 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. 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

 

During the three and six months ended June 30, 2026, no triggering events were identified with respect to properties classified as held for use, and accordingly no impairment charge was recognized. During the three and six months ended June 30, 2025, impairment charges of $0 were recognized with respect to properties classified as held for use.

In the aggregate, impairment charges of approximately $119,000 and $14,000 were expensed during the three months ended June 30, 2026 and 2025, respectively, and approximately $366,000 and $14,000 during the six months ended June 30, 2026 and 2025, respectively. 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

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 and six months ended June 30, 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.

 

The following table provides the breakdown of rental income recognition (not including the direct finance lease):

 

             
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2026   2025   2026   2025 
                 
Straight-Line Rent  $200,779   $200,779   $401,558   $401,558 
Cash Basis Rent   21,500    35,360    36,400    45,360 
                     
Rental income  $222,279   $236,139   $437,958   $446,918 

 

Deferred rent receivable as of June 30, 2026 and December 31, 2025 is approximately $107,000 and $328,000, respectively.

 
Intangibles

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 $4,714,000, which is amortized over a 20.7-year period. For each of the three months ended June 30, 2026 and 2025, approximately $57,000 of the intangibles was amortized. For each of the six months ended June 30, 2026 and 2025, approximately $113,000 of the intangibles was amortized.

 

Intangible Assets are evaluated whenever events or circumstances indicate the carrying value of these assets may not be recoverable. There were no impairment charges recorded for Intangible Assets for the three and six months ended June 30, 2026 and 2025.

 

 

The following table provides a summary of the Intangible Assets:

 

       Accumulated Amortization   Amortization     
   Cost   Through 12/31/25   For 6 Months ended 6/30/26   Net Book Value 
                     
Asset Intangibles - PWRS  $4,713,548   $2,664,103   $113,744   $1,935,701 

 

The following table provides a summary of the current estimate of future amortization of Intangible Assets for the subsequent years ending December 31:

 

      
2026 (6 months remaining)  $113,744 
2027  $227,488 
2028  $227,488 
2029  $227,488 
2030  $227,488 
Thereafter  $912,005 
Total  $1,935,701 

 
Net Investment in Direct Financing Lease – Railroad

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 $9,150,000, assuming an implicit interest rate of 10%.

 
Fair Value

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 June 30, 2026 and December 31, 2025, the Trust owns publicly traded level 1 REIT securities with a fair market value of $52,024 and $86,537, respectively, based on the closing prices of those dates.

 

 
Mortgage Loan Receivables

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 $850,000 note with an 8.5% interest rate that accrued until maturity on October 30, 2025 and a default rate of 18%, thereafter. The note was secured by a second mortgage on the property and certain corporate and personal guarantees. On December 10, 2024, the property owner sold one of the two properties, and PW SD received a payment in the amount of $253,000 which paid down the note to a balance of $597,000. On May 4, 2026, Power REIT received payment of approximately $794,000, which included $597,000 of principal with the remaining amount relating to accrued interest and reimbursement of certain legal fees. As of June 30, 2026, the balance of this loan is $0.

 

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 $1,250,000 with an initial 10% interest rate that increases over time to 15% until maturity. The seller financing had a three-year maturity with a fixed amortization schedule of $40,000 for the first month and second months, $45,000 for the third month and $15,000 per month thereafter until maturity. The note is secured by a first mortgage on the properties and certain corporate and personal guarantees. As of June 30, 2026 and December 31, 2025, the balance of the loan was approximately $835,000 and $884,000 respectively. On June 9, 2025, PW Sherman agreed to modify the terms of the note whereby payments are based on a five-year amortization schedule at an 11% per annum interest rate and with a balloon payment for the balance due on May 1, 2030.

 

On June 9, 2025, PW Sherman provided seller financing in conjunction with selling the Tamarack 13 property in the amount of $105,000 with an 11% per annum interest rate until maturity. The seller financing has a five-year maturity and fully amortizes over the life of the note with fixed monthly payments of $2,283 per month. The note is secured by a first mortgage on the property and a personal guarantee of the owner of the entity which purchased the property. As of June 30, 2026, and December 31, 2025, the balance of the loan is approximately $88,000 and $97,000, respectively.

 

After reviewing the collectivity for mortgage loan receivables, the Trust recorded an allowance for receivable of approximately $0.6 million during the year ended December 31, 2025. There was no allowance for receivables for the six months ended June 30, 2026 or June 30, 2025.

 
Other Income

Other Income

 

Other income included in total income for the three months ended June 30, 2026 and 2025 is approximately $839,000 and $42,000, respectively. The increase was primarily attributable to income recognized upon the repayment of the PW SD mortgage loan, as well as interest income earned during the three months ended June 30, 2026, compared to interest income earned during the corresponding period in 2025. Other income included in total income for the six months ended June 30, 2026 and 2025 is approximately $875,000 and $88,000, respectively. The increase was primarily attributable to income recognized upon the repayment of the PW SD mortgage loan, as well as interest income earned during the six months ended June 30, 2026, compared to interest income earned during the corresponding period in 2025. 

 
Other Assets

Other Assets

 

Other assets as of June 30, 2026 and December 31, 2025 is approximately $265,000 and $299,000 respectively. Other assets as of June 30, 2026 primarily consists of approximately $52,000 of fair market value of securities of a publicly traded REIT and approximately $213,000 of prepaid expenses related to the filing of an S-3 Registration Statement with the SEC and associated offering related expenses. Other assets as of December 31, 2025 primarily consist of approximately $86,000 of fair market value of securities of a publicly traded REIT and approximately $212,000 of prepaid expenses related to the filing of an S-3 Registration Statement with the SEC.

 

 
Interest Expense

Interest Expense

 

Interest expense for the three months ended June 30, 2026 related to the PW PWV Loan (defined below) and the 2015 PWRS Loan (defined below) was approximately $167,000 and $72,000, respectively, compared to interest expense for the three months ended June 30, 2025 that was approximately $170,000, $78,000 and $322,000, respectively, related to the PW PWV Loan, the 2015 PWRS Loan and the Greenhouse Loan (defined below), respectively. Interest expense for the six months ended June 30, 2026 related to the PW PWV Loan (defined below) and the 2015 PWRS Loan (defined below) was approximately $336,000 and $146,000, respectively, compared to interest expense for the six months ended June 30, 2025 that was approximately $341,000, $158,000 and $1,070,000, respectively, related to the PW PWV Loan, the 2015 PWRS Loan and the Greenhouse Loan, respectively.

 
General and Administrative Expenses

General and Administrative Expenses

 

General and Administrative Expense for the three months ended June 30, 2026 and 2025 is approximately $241,000 and $341,000, respectively, which includes a non-cash share-based compensation expense of approximately $0 and $143,000, respectively. General and Administrative Expense for the six months ended June 30, 2026 and 2025 is approximately $447,000 and $668,000, respectively, which includes a non-cash share-based compensation expense of approximately $0 and $286,000, respectively.

 
Preferred Stock

Preferred Stock

 

As of June 30, 2026, the Trust has issued approximately $8.5 million of its Series A Preferred Stock. The shares of Series A Preferred Stock have no stated maturity, are not currently subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless they are redeemed, repurchased or converted.

 

Property Expenses and Taxes

 

Property expenses and taxes for the three months ended June 30, 2026 and 2025 is approximately $80,000 and $252,000, respectively. Property expenses and taxes for the six months ended June 30, 2026 and 2025 is approximately $162,000 and $735,000, respectively.

 

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 $1,325,000. If the property taxes remain delinquent, the remaining Greenhouse Portfolio will be subject to tax foreclosure actions.

 
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

The Trust has evaluated recent accounting pronouncements and determined that, except as discussed below, none are expected to have a significant effect on the Trust’s consolidated financial statements or related disclosures. 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 ASU 2024-03 on its consolidated financial statements and related disclosures.