UC Asset LP, (OTCQB UCASU), purchased a cannabis property worth $3 million. The property includes 16,500 square foot of cultivation area and 1,550 square foot of office space. UC Asset told investors that it previously owned 50% of the property, which it acquired in May 2023, paying $1 million cash and issuing $600,000 of preferred shares to the then-owner. The company bought the remainder of 50% for $1.5million.
A licensed independent appraiser valued the property recently at $3.4 Million, excluding all equipment used for cannabis cultivation. With this deal, the portfolio value of the company has now reached $7 million.
“With the exception of $250,000 in financing, the remaining $1.25 million is de facto an investment by the seller in our company,” says Larry Wu, founder of UC Asset. The seller of UC Asset is also a significant owner of our current tenant. This can be interpreted to mean that the tenant has now become a strategic partner in UC Asset.
Instead of making the $1.5 million payment in cash, the company gave the seller preferred shares with a face value of $1 million, traded $250,000 in equity, and secured $250,000 in financing with assistance from a third party.
As part of the deal, the current tenant entered into a five-year double-net lease with UC Asset, increasing the monthly rent from $12,000 to $13,000 immediately. This will go up to $16,000 in January of 2019.
Wu stated that this deal was part of a strategic plan for expanding our investments in cannabis properties. The cannabis properties in our portfolio currently have the best return on investment and the greatest potential for appreciation over the next few years. This is especially true if federal regulations change to allow banks to offer mortgages to owners of cannabis properties.
UC Asset, a cannabis investment company, announced last month that it would launch a Reg A+ secondary public offering to raise a minimum of $10,000,000. Majority of funds will go towards investing in cannabis properties.
Investors were told that the cash balance of the company at the end the the first half 2024 was only $18,590.
According to our management, this level is not comfortable. According to the annual report, the company has been working to improve its cash position, including selling a lot of land that we had originally planned to develop in July of 2024.