The small cannabis trust has a new attempt to raise millions of dollars from investors. It makes lofty returns promises despite its track record suggesting otherwise.
UC Asset LP announced this week plans to raise $10 million via a Regulation A offer. Georgia’s real estate company said it is currently managing $1.6 million of cannabis property equity. The majority comes from the January 2023 purchase of Fire Ranch Farms 10,000 square-foot cultivation center. Green Market Report Previously reported. Larry Wu called Oklahoma the “future of cannabis cultivation” when he founded it.
That deal, structured entirely in UC Asset stock, came with a lease-back agreement promising 14.4% annual returns, which the company noted in its Thursday news release, “in addition to potential upside from property appreciation.” The company has had a remarkably uneven financial performance since that time. The company had projected profits between $0.10 and $0.15 per share for 2021. However, the actual results were $0.03 by 2023.
It follows a number of abandoned plans including a similar fundraiser in 2022, a promised NASDAQ upgrade, and, most recently, a buyback management shares announced in September.
Wu’s announcement contains an interesting admission regarding the company’s failed fundraising effort: “We understood that back then we didn’t have a track record of managing a cannabis portfolio successfully.”
Wu, however, referred to the current market as an opportunity for buyers, stating that cannabis properties have likely “hit historical lows.”
The new offering proposes preferred shares carrying an 8% annual dividend – more than double the 3.94% average for U.S. equity REITs, according to S&P Global Market Intelligence. Investors may have limited options for selling their investments.
The news release states that “UC Asset’s preferential shares are not publicly traded.” Wu says that the preferred shares are eligible for conversion into common stock after six months of holding. UC Assets’ common shares are traded currently on OTCQB.”
UC Asset said that it could also consider working with traditional banks for the completion of its offering.