UC Asset's Strategic $3M Cannabis Property Acquisition Boosts Growth Potential

UC Asset Expands its Footprint with $3 Million Cannabis Property

In a significant move within the burgeoning cannabis sector, UC Asset LP (OTCQB: UCASU) has announced the acquisition of a cannabis property worth $3 million. This venture includes a substantial 1,550 square feet of office space alongside 16,500 square feet dedicated to cannabis cultivation. This strategic acquisition enhances UC Asset’s portfolio and showcases its growing commitment to real estate investment in the cannabis industry.

Previously, UC Asset owned 50% of the property and has now acquired the remaining half for $1.5 million. An independent appraisal valued the entire property at a remarkable $3.4 million, excluding the equipment for cultivation. Notably, the entire $1.5 million for this transaction was not settled in cash at the closing, showcasing a creative financing approach. Instead, UC Asset issued preferred shares valued at $1 million to the seller, alongside trading $250,000 in equity and securing an additional $250,000 in financing through third-party assistance.

Larry Wu, the founder of UC Asset, expressed that the transaction showcases an investment by the seller into UC Asset itself. Given that the seller retains a significant ownership stake in the tenant operating on the property, this partnership further reinforces UC Asset's prospects amidst the challenges typically faced in the cannabis industry. Wu emphasized that the cannabis sector presents risks due to a high default rate among tenants, driven by the volatile nature of the emerging cannabis market.

To navigate this risk, UC Asset has strategically focused on forming long-term partnerships with tenants, encouraging them to become strategic investors in the company as well. This innovative approach paves the way for mutual benefits between UC Asset and its tenants. The tenant has also entered into a five-year double-net lease, which increases the monthly rent from $12,000 to $13,000 immediately, with a further increase to $16,000 anticipated by next year.

Wu highlighted that this acquisition is an integral part of UC Asset's larger strategy to expand investments in cannabis properties. Currently, these properties yield the highest return on equity (ROE) within the company's portfolio and display promising potential for appreciation, particularly amidst prospective changes in federal regulations that could enable commercial banks to offer mortgage loans to cannabis property owners.

In line with this strategy, UC Asset recently declared plans for a secondary public offering (SPO) via Regulation A+, aiming to raise a maximum of $10 million, with the funds primarily earmarked for further investments in cannabis properties. With this acquisition, UC Asset’s total real estate portfolio now stands at roughly $7 million, which includes $3 million in cannabis properties alone, significantly bolstering its position for a successful SPO. As a notable leader in cannabis real estate investments, UC Asset is among only four US public companies maintaining a substantial cannabis property portfolio.

The property in question is engineered for comprehensive cannabis production with advanced computerized environmental controls, facilitating efficient full-cycle production from genetic cultivation to cannabinoid extraction.

About UC Asset LP

UC Asset LP is a limited partnership dedicated to innovative real estate investment strategies. To learn more about UC Asset and its ventures, please visit www.ucasset.com.

This acquisition signals a pivotal moment not just for UC Asset, but also reflects the evolving landscape of the cannabis industry, where strategic investments are crucial for navigating competitive challenges and maximizing growth opportunities.