Atlanta, Jan. 17, 2023 (GLOBE NEWSWIRE) — UC Asset LP (OTCQB: UCASU) announced last week that the company entered a MOU to acquire a 10,000 square foot cannabis cultivation property in the State of Oklahoma, through a non-cash acquisition deal. Upon closing of the acquisition, UCASU will invest $1 million to build extra 5,000 square feet of cannabis cultivation facility at the same site.
After acquisition, the current operator on the property, Fire Ranch Farm, will continue to rent the property from UC Asset. UC Asset expects to receive monthly rents representing a 14.4% cash on cash annual return. The lease is locked for 3 years, and monthly rent will increase by 5% every 24 months after the first 3 years.
The non-cash acquisition will be closed through the issuance of 2.5 million preferred shares of UC Asset to the current property owner. Those preferred shares will have a fixed conversion rate of 1:1, which means that one preferred share may be converted into one common share, and one common share only, when conversion will be allowed in the future.
Holder of the preferred shares will receive no dividends from UC Asset, unless those preferred shares are converted into common shares. Meanwhile, common shareholders will continue to receive cash dividends from the company, shall the company decide to distribute any.
However, if preferred shareholder converts his holdings into common shares, he will be entitled to receive dividend. This additional dividend obligation raises the concern that whether the conversion of said preferred shares will dilute the interests of existing shareholders.
Greg Bankston, managing general partner of UC Asset, confirms that the conversion terms include strong protection for exist shareholders.
“There exists a three-party agreement, that for any preferred shares converted, the monthly rent on the property will be increased proportionally, so that the company will generate more income from the property,” explains Bankston.
Bankston adds that, according to the estimate by the management, the increase of rent may outweigh the additional dividend allocated to newly converted shares.
Bankston also confirms that the company are working with concerned parties to reach definitive agreements and close the transfer of the property as soon as possible.
This 10,000 square foot cannabis property, according to Bankston, is built to the state-of-art standard, with computerized and automatized environment control, and has the capacity to host full cycle cannabis production from creating clones/genetics to extracting cannabinoids.
“This will be our first cannabis property, and it is our one and only selection after screening numerous opportunities in the past 15 months,” says Larry Wu, founder of UC Asset. “Since we announced our intention to invest in cannabis property in October 2021, our team have made hundreds of phone calls to potential sellers, screened tens of opportunities, and conducted research in 5 different states, including Colorado, California and New York. That is why we are so confident in our final choice. We believe Oklahoma is the future for cannabis cultivation, and our investment in the Sooner State will lead us to great success, sooner than later,” asserts Wu.
About UC Asset LP
UC Asset LP is a limited partnership formed for the purpose of investing in real estate with innovative strategies. For more information about UC Asset, please visit: www.ucasset.com