Post: UC Asset buys remaining ownership of a cannabis property

UC Asset typically gives sellers shares in the company in lieu of cash.

UC Asset LP (OTCQB: UCASU) bought a $3 million cannabis property, which includes 1,550 square feet of office space and 16,500 square feet of cannabis cultivation 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 purchased the remaining 50% for $1.5 million.

The company said an independent licensed appraiser recently valued the property at a replacement cost of $3.4 million, which excludes all the equipment for cannabis cultivation. This deal brings the company’s portfolio valuation to $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. “Since the seller is also a major owner of the current tenant, this can be interpreted as that our tenant has become a strategic investor 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. It will increase to $16,000 at the beginning of next year.

“This deal is part of our strategic plan to expand our investment in cannabis properties,” Wu said. “Among our portfolio properties, cannabis properties currently yield the highest return on equity and have the most promising potential for appreciation in the coming years, especially if a change in federal regulations will allow commercial banks to provide mortgage loans to cannabis property owners.”

Last month, UC Asset announced plans to launch a secondary public offering via Reg A+ to raise a maximum of $10 million. The majority of the funds raised will be used to invest in cannabis properties.

The company last reported earnings in September 2024, when it told […]

UC Asset buys remaining ownership of a cannabis property