In 2014, we formed our subsidiary, GrowCo, Inc. (“GrowCo”). GrowCo’s focus is to become the number one provider of greenhouses, related infrastructure, and services to growers of cannabis, in states where such activity is legal. At this time, GrowCo does not “touch the plant”. In 2015, our first greenhouse was constructed and partially finished. Our initialtenant, Suncanna, began paying rent for the entire first greenhouse and warehouse effective September 1, 2015 and began partial occupancy in October2015. Subsequently, in 2016 Suncanna was evicted and all accrued rent was written off. In 2016 we entered into lease agreements with a related party,Johnny Cannaseed, for our first two greenhouses. The first greenhouse was 50% occupied on December 1, 2016 and rent began to accrue as of that date. The second half of the greenhouse began to accrue rent on March 2, 2017. We expect the second greenhouse to be completed by mid-2017 and be occupied and accrue rent at that time.
Lease revenue is recognized monthly at the end of each month. Total lease payments under the 120-month lease agreement for 50% of the GCP1 greenhouse, which are $21,433,000, is divided by the lease term. Therefore, the average lease rate per month is $179,000 for one half of the total greenhouse. This spreads the total amount of the lease payment stream over the life of the lease. Total expected monthly revenue from greenhouse leasing, once the 2nd one is completed in mid-2017, is $716,000 (or $8,592,000 annualy).
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