Good afternoon, ladies and gentlemen, and welcome to the Presidio Property Trust Second Quarter 2021 Earnings Call. At this time, all participants have been placed on a listen-only mode. It is now my pleasure to turn the floor over to your host, Lowell Hartkorn. Sir, the floor is yours.

Thank you, operator. Good afternoon and welcome to Presidio Property Trust’s second quarter 2021 Earnings Call. My name is Lowell Hartkorn, Investor Relations here at Presidio. Joining me on the call today are Jack Heilbron, our President and Chief Executive Officer; Adam Sragovicz, Chief Financial Officer; Gary Katz, Senior Vice President of Asset Management; and Larry Dubose, the Head of our Model Homes division. Jack, Adam, Gary, and Larry will make prepared remarks today, and then, we'll be happy to take your questions via chat. At any time during this call, you can click on the Ask Question button on the media player window to submit questions to our team. We ask for your patience today, following social distancing recommendations; each of us from the company will be speaking from separate offices. Unless otherwise noted, comparisons made on this conference call will be between the second quarter of 2021 and the second quarter of 2020. In addition, today's discussion will include forward-looking statements, which are always subject to risks and uncertainties. Actual results could differ materially from these forward-looking statements. Please refer to our SEC filings for a detailed discussion of potential risks and uncertainties. During this call we will use rounding and abbreviations for the sake of brevity. We will also be discussing non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are included in our earnings press release, which was just filed on our Form 8-K. Earlier today, as a reminder, this conference call will be made available for a replay in the presentation area of the Investors sections of our website www.presidiopt.com, where we will also post our prepared remarks following the conclusion of this call. With that, let me turn the call over to Jack Heilbron, our President and CEO.

Thank you, Lowell. So much can change in a quarter. At one point during the second quarter, the market capitalization of our entire company was only $25 million. For those of you that have been following our progress, you know that in June, we raised $23 million of gross proceeds by selling a new series of preferred shares, and in July, we raised an additional $10 million of gross proceeds by selling additional common shares and warrants. With the new two million warrants now outstanding at a strike price of $5.50, that represents a potential new $11 million in equity capital should the warrants be exercised at some point over their five years life. Our company's diversified nature remains one of our important strengths. We hope to announce an acquisition or two soon with the capital that we've recently raised. And these are opportunities that are only available to us because of our flexible approach. We are focused on areas with solid population growth, substantial university, government employment, and tenants who provide necessary services. There are still plenty of acquisition opportunities out there, which we will look forward to telling you about soon. I will now turn the call over to Adam Sragovicz, our CFO to share some of the financial highlights of the quarter and the first half for the year.

Thank you, Jack. As our shareholder base continues to grow, I would like to extend a welcome to all our new shareholders and a reminder that you can stay up-to-date on our company by visiting the Investors section of our website at www.presidiopt.com, where we post press releases as well as SEC filings. Our press releases should also be visible at your favorite financial website or brokerage from your online account if you look under our stock ticker SQFT. At a high level, even though we sold four commercial properties in the first half of 2021, our core FFO, which is our main measurement of cash flow, was higher for the first half of 2021 when compared to the first half of 2020. Core FFO was $1.7 million in the first half of 2021 versus $1.5 million in the first half of 2020. Among other factors, this illustrates the effect of significantly lower interest expense, where we no longer have the expensive mezzanine debt impacting our financial performance. Going forward, we hope to grow the company with equity and use debt where prudent and customary, such as first liens when we acquire properties. Jack mentioned the importance of being a diversified REIT, the benefits of which are reflected in our overall revenue collection this quarter during a time of turmoil suffered by many. For the second quarter of 2021, we collected 97% of the rent that we billed on a consolidated level, which includes the effects of rent abatements and deferrals related to COVID. The strongest areas of the business, the Model Homes and Office Properties, saw 100% of the budgeted revenue collected. The industrial properties were also strong with 85% of budgeted rent collected, and retail was the most challenging area with 81% of billed rents. However, Model Homes and Office Properties accounted for 83% of the quarter's rents. So, the portfolio on balance performed well during the year due to the strength of the core business. COVID’s impact on our business in the first half of 2021, primarily rent abatements extended to businesses operated by retail tenants affected by COVID, totaled approximately $90,000 or only 2% of rents for the quarter. I'll pass the call now to Gary Katz to address leasing and property activity.

Thanks, Adam. Continuing our success during the first quarter of 2021, the first half of the year has been a good one for leasing. We executed 29 leases covering a total of about 1,100 square feet, around a third of these transactions represent new tenants, while the remainder consists of lease renewals or extensions. Given the current environment, tenant retention has been strong as most tenants are choosing to stay put and extend their leases rather than relocate, and some are even negotiating expansions. We currently have 16 additional prospective lease transactions in the pipeline and are optimistic about current leasing demand. Our office portfolio consists largely of suburban office properties in regions that are either high growth such as Denver or stable such as Fargo. Our tenants regularly go into the office, often without the capability to work from home, and we have so far seen limited effects of COVID in 2021. On the property sales front, during 2021, we sold three Colorado office properties and one California retail property, representing $33 million of transaction volume. We currently have just one property, a California retail center, on the market for sale. We will continue to market properties for sale when we believe stockholder value will be enhanced. As Adam mentioned, because of our diversified portfolio of properties and tenants, the pandemic has not had a significant impact on our rent collections. Of the 220 plus tenants in our portfolio, we currently have rent abatement or deferral agreements with only two tenants, and all are currently abiding by the terms as planned. Looking forward, we currently see a lot of positive tenant activity in the market with a solid number of inquiries for space to request. Regarding acquisitions, we are busy evaluating many opportunities, some of which we hope to tell you about within the next month or two. To buy smart in the market today, it requires an openness to various property types, such as single tenant, niche healthcare, or unique industries. It also requires us to spend more time visiting the properties, speaking with tenants, and evaluating tenant credit. We feel that we have a strong position to execute and provide long-term shareholder value and look forward to telling you soon about new additions to the Presidio property portfolio. I'll pass the call now over to Larry Dubose, who will cover activity in the Model Home division.

Thank you, Gary. Our markets continued to perform very well. Once again, we collected 100% of billed rents in the first half of 2021, validating our approach of viewing these assets as vital to homebuilders. COVID continues to have an impact on our markets as prices continue to increase. Although the pace of the increase is slowing, builders continue to struggle with shortages of staff, supplies for building, and the cost of inputs. In the first half of 2021, we sold 32 model homes for approximately $15.1 million, and we recognized a gain of over $2 million. During the first half of the year, we acquired six model home properties and leased them back to the homebuilders under leases. The purchase price for the properties was approximately $2.9 million. This is a slower pace of acquisitions than you saw last year when we acquired 11 more properties in the first half of 2020. We have seen prices surge and witnessed builders able to sell their inventory quickly. Our success over many years has been achieved by not chasing every cycle. We already see inventories of new homes creeping up, and price increases slowing. We are confident that builders will return to our program as the current cycle runs its course and that we will buy well, both to manage shareholder risk and position us with good results in the next cycle. I'll pass the call now to Adam to answer questions from our listeners.

Thank you, Larry. We will now take some questions from our listeners. If you have not already done so, please click on the Ask Question button in your media player window if you would like to submit a question. The first question is partially for Jack, I suppose, and partially for Gary. With all the money that's been raised, when do you expect that you'll be deploying it by purchasing new properties?

This is Jack. I'll take it first and I'll pass it to Gary. We are in the process of doing that. Frankly, I anticipate it will probably take us through the remainder of the third quarter and into the fourth quarter before the money is put to use. Gary?

Thanks, Jack. We have a property in escrow to close next week. We've got a pipeline of assets that we are actively pursuing, which, if we just did a few of those, will hit the investment targets. So, we feel strongly about being able to hit the investment target within the next quarter or so.

Great. Thank you. Another question, probably for both of you, is how might another lockdown affect the properties?

This is Jack. I think, from my point of view, it depends on the type of lockdown. Right now, there have not been any lockdowns with the delta variant, but we have had some slowing with mask mandates taking effect. If there is another hard lockdown like we experienced a little over a year ago now, it didn't affect us a lot at that time, and I don't expect it to affect us much going forward. Gary?

Yes. To follow on that, with the bulk of our properties located in Colorado and North Dakota versus California, for example, the lockdowns were much more minimally effective than they were locally in California. We survived the lockdowns in great shape last time, and even if a lockdown were to be at the same degree as it was last time, we feel we'd be equally able to survive that in good standing.

Great. Another question, this one probably goes to Jack. Do you have plans to raise more capital, and what can we expect?

As a REIT, our goal is to continually raise capital. We do not want to make it dilutive in the process of doing it. But I suspect over the next few years, if the markets are cooperative, we will continue to tap the equity markets, which is why we filed a shelf offering, an S-3 for up to $200 million of varied capital. Adam?

Great. I agree with that. The shelf is effective for three years from April of this year, 2021, to April of 2024. Based on various rules about how much we could raise, I would expect that we would access that full amount, which will be somewhere probably between $50 million and $200 million depending on market conditions and business opportunities. So, I agree with Jack, just with a little more detail around the S-3 shelf registration that you mentioned. The last question that I see here from the audience is, are there any major mergers or acquisitions that would affect the bottom line? Obviously, we have to be careful about discussing any of those things. But Jack, you could maybe speak generally about the kinds of things that we see and what we're looking at.

We are always open to the right merger or combination with another entity. That being said, we have no talks ongoing, nothing planned, and nothing in the pipeline. Adam?

Great. Well, I think I'll pass the call now over to Lowell to conclude. Thank you very much.

Thank you, Adam. This concludes Presidio’s second quarter 2021 earnings call. Please be sure to visit our website at www.presidio.com and click on the Investor section to stay up to date on our press releases and SEC filings. We have also posted supplemental financial information there, in addition to what we filed with the SEC. Thanks to everyone for taking the time to join us today. To those listening to the recording, we look forward to visiting with you again when we discuss the results of our third quarter of 2021, which we expect to have in November. Again, thank you all, and good day.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you. Thank you for your participation. Thank you, gentlemen.