8-K
Presidio Property Trust, Inc. (SQFT)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 15, 2023
PresidioProperty Trust, Inc.
(Exact name of registrant as specified in its charter)
| Maryland | 001-34049 | 33-0841255 |
|---|---|---|
| (State<br> or other jurisdiction<br><br> <br>of<br> incorporation) | (Commission<br><br> <br>File<br> Number) | (IRS<br> Employer<br><br> <br>Identification<br> No.) |
4995Murphy Canyon Road, Suite 300
SanDiego, California 92123
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (760) 471-8536
NotApplicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
| Title of each class | TradingSymbol(s) | Name of each exchange on which registered |
|---|---|---|
| Series<br> A Common Stock, $0.01 par value per share | SQFT | The<br> Nasdaq Stock Market LLC |
| 9.375%<br> Series D Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share | SQFTP | The<br> Nasdaq Stock Market LLC |
| Series<br> A Common Stock Purchase Warrants to Purchase Shares of Common Stock | SQFTW | The<br> Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition |
|---|
PressRelease
On May 15, 2023, Presidio Property Trust, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2023, and made the press release available on its website, www.PresidioPT.com. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
The Company also made available on its website a financial supplement containing financial data of the Company (“Supplemental Financial Information”) for the quarter ended March 31, 2023, and such Supplemental Financial Information is attached hereto as Exhibit 99.2 and is incorporated by reference herein.
The information in this Item 2.02 of this Current Report on Form 8-K, including the information contained in the exhibits, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 7.01 | Regulation FD Disclosure. |
|---|
The Supplemental Financial Information furnished by the Company and posted to its website as described above under Item 2.02 is hereby incorporated by reference into this Item 7.01.
| Item 9.01 | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits |
| --- | --- |
| 99.1 | Press Release dated May 15, 2023 |
| 99.2 | Supplemental Financial Information for the quarter ended March 31, 2023 |
| 104 | Cover<br> Page Interactive Data File (embedded with the inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date:<br> May 16, 2023 | PRESIDIO PROPERTY TRUST, INC. | |
|---|---|---|
| By: | /s/ Adam Sragovicz | |
| Name: | Adam<br> Sragovicz | |
| Title: | Chief<br> Financial Officer |
Exhibit99.1
PresidioProperty Trust, Inc. Announces Earnings for the Quarter Ended March 31, 2023
SanDiego, California, May 15, 2023 – Presidio Property Trust, Inc. (Nasdaq: SQFT, SQFTP) (the “Company”), an internally managed, diversified real estate investment trust (“REIT”), today reported earnings for its quarter ended March 31, 2022.
QuarterEnded March 31, 2023, Financial Results
Net loss attributable to the Company’s common stockholders for the three months ended March 31, 2023, was approximately $(1,530,988), or $(0.13) per basic and diluted share, compared to a net income of approximately $(3,824,053), or $(0.32) per basic and diluted share for the three months ended March 31, 2022. The change in net income attributable to the Company’s common stockholders was a result of:
| ● | A<br> decrease in Series A Warrant Dividends of approximately $2.5 million due to a large dividend payment in Q1 2022 and not in Q1 2023. |
|---|---|
| ● | Rental<br> revenue decreased by about 11.5% from Q1 2022 compared to Q1 2023. This was mainly related to the sale of the World Plaza building<br> in March of 2022. The Company has not yet invested in another commercial building that would drive comparable rental revenue. Additionally,<br> a major tenant lease in our Colorado property expired on December 31, 2023, and only 20% of the space was released during the first<br> quarter of 2023. The Company is expecting increases in rental revenue with continued leasing efforts and has already entered into<br> a lease agreement with KLJ Engineering LLC for approximately 33,000 square feet of space in the Grand Pacific Building, with an expected<br> start date in November of 2023. |
| ● | Preferred<br> Stock Series D dividends totaled approximately $0.5 million in Q1 2023, which is similar to Q1 2022. |
FFO (non-GAAP) for the three months ended March 31, 2022, increased by approximately $2.5 million to approximately $(228,914) from $(2,812,659) for the three months ended March 31, 2022. A reconciliation of FFO to net income, the most directly comparable GAAP financial measure, is attached to this press release. However, because FFO excludes depreciation and amortization as well as the changes in the value of the Company’s properties that result from use or market conditions, each of which have real economic effects and could materially impact the Company’s results from operations, the utility of FFO as a measure of the Company’s performance is limited.
We believe Core FFO (non-GAAP) provides a useful metric in comparing operations between reporting periods and in assessing the sustainability of our ongoing operating performance. Core FFO increased by about $110,000, from approximately $(75,000) in the three months ended March 31, 2022, to approximately $32,000 in the three months ended March 31, 2023.
Acquisitionsand Dispositions for 2022
| ● | The<br> Company acquired nine model home properties and leased them back to the homebuilders under triple net leases during the quarter ended<br> March 31, 2023. The purchase price for these properties was $5 million. The purchase price consisted of cash payments of $0.7 million<br> and mortgage notes of $1.7 million. |
|---|---|
| ● | The<br> Company sold three model home properties for approximately $1.6 million and recognized a gain of approximately $0.4 million. |
Dividendspaid during the first three quarters of 2022:
| ● | During<br> the first quarter of 2023, the Company paid a dividend of $0.022 per share to shareholders of Series A common stock. |
|---|---|
| ● | During<br> 2022, the Company paid three monthly dividends in the total amount of $0.58593 per share to shareholders of Series D preferred stock. |
AboutPresidio Property Trust
Presidio is an internally managed, diversified REIT with holdings in model home properties which are triple-net leased to homebuilders, office, industrial, and retail properties. Presidio’s model homes are leased to homebuilders located in Arizona, Illinois, Texas, Wisconsin, and Florida. Our office, industrial and retail properties are located primarily in Colorado, with properties also located in Maryland, North Dakota, Texas, and Southern California. While geographical clustering of real estate enables us to reduce our operating costs through economies of scale by servicing several properties with less staff, it makes us susceptible to changing market conditions in these discrete geographic areas, including those that have developed as a result of COVID-19. Presidio is also the sponsor of the Special Purpose Acquisition Company (SPAC) Murphy Canyon Acquisition Corp. (NASDAQ: MURF), which currently holds approximately $23.6 million in trust. Murphy Canyon Acquisition Corp. is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. For more information on Presidio, please visit the Company’s website at https://www.PresidioPT.com.
Definitions
Non-GAAPFinancial Measures
Fundsfrom Operations (“FFO”) – The Company evaluates performance based on Funds From Operations, which we refer to as FFO, as management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company defines FFO as net income or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness, acquisition costs of newly acquired properties that are not capitalized and lease acquisition costs that are not capitalized plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on properties or investments in non-consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate share of FFO from, non-consolidated REITs.
However, because FFO excludes depreciation and amortization as well as the changes in the value of the Company’s properties that result from use or market conditions, each of which have real economic effects and could materially impact the Company’s results from operations, the utility of FFO as a measure of the Company’s performance is limited. In addition, other REITs may not calculate FFO in accordance with the NAREIT definition as the Company does, and, accordingly, the Company’s FFO may not be comparable to other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of the Company’s performance.
CoreFunds from Operations (“Core FFO”) – We calculate Core FFO by using FFO as defined by NAREIT and adjusting for certain other non-core items. We also exclude from our Core FFO calculation acquisition costs, loss on early extinguishment of debt, changes in the fair value of the earn-out, changes in fair value of contingent consideration, non-cash warrant dividends and the amortization of stock-based compensation.
We believe Core FFO provides a useful metric in comparing operations between reporting periods and in assessing the sustainability of our ongoing operating performance. Other equity REITs may calculate Core FFO differently or not at all, and, accordingly, the Company’s Core FFO may not be comparable to such other REITs’ Core FFO.
CautionaryNote Regarding Forward-Looking Statements
This press release contains statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and other federal securities laws. Forward-looking statements are statements that are not historical, including statements regarding management’s intentions, beliefs, expectations, representations, plans or predictions of the future, and are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “will,” “should” and “could.” Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur. Except as required by law, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the “ Risk Factors” section of the Company’s documents filed with the SEC, copies of which are available on the SEC’s website, www.sec.gov.
InvestorRelations Contact:
Presidio Property Trust, Inc.
Lowell Hartkorn, Investor Relations
LHartkorn@presidiopt.com
Telephone: (760) 471-8536 x1244
PresidioProperty Trust, Inc. and Subsidiaries
CondensedConsolidated Balance Sheets
| December 31, | |||||
|---|---|---|---|---|---|
| 2022 | |||||
| ASSETS | |||||
| Real estate assets and lease intangibles: | |||||
| Land | 19,763,455 | $ | 19,189,386 | ||
| Buildings and improvements | 129,597,365 | 125,979,374 | |||
| Tenant improvements | 14,273,012 | 13,861,839 | |||
| Lease intangibles | 4,110,139 | 4,110,139 | |||
| Real estate assets and lease intangibles held for investment, cost | 167,743,971 | 163,140,738 | |||
| Accumulated depreciation and amortization | (35,757,830 | ) | (34,644,511 | ) | |
| Real estate assets and lease intangibles held for investment, net | 131,986,141 | 128,496,227 | |||
| Real estate assets held for sale, net | 1,884,935 | 2,016,003 | |||
| Real estate assets, net | 133,871,076 | 130,512,230 | |||
| Other assets: | |||||
| Cash, cash equivalents and restricted cash | 11,891,930 | 16,516,725 | |||
| Deferred leasing costs, net | 1,528,338 | 1,516,835 | |||
| Goodwill | 2,423,000 | 2,423,000 | |||
| Other assets, net (see Note 6) | 3,601,246 | 3,511,681 | |||
| Total other assets | 19,444,514 | 23,968,241 | |||
| Investments held in Trust (see Notes 2 & 9) | 23,658,838 | 136,871,183 | |||
| TOTAL ASSETS | 176,974,428 | $ | 291,351,654 | ||
| LIABILITIES AND EQUITY | |||||
| Liabilities: | |||||
| Mortgage notes payable, net | 98,240,332 | $ | 95,899,176 | ||
| Mortgage notes payable related to properties held for sale, net | 1,309,228 | 999,523 | |||
| Mortgage notes payable, total net | 99,549,560 | 96,898,699 | |||
| Accounts payable and accrued liabilities | 3,353,449 | 4,028,564 | |||
| Accounts payable and accrued liabilities of SPAC (see Notes 2 & 9) | 6,586,458 | 5,046,725 | |||
| Accrued real estate taxes | 1,133,336 | 1,879,875 | |||
| Dividends payable preferred stock | 178,435 | 178,511 | |||
| Lease liability, net | 39,360 | 46,833 | |||
| Below-market leases, net | 16,997 | 18,240 | |||
| Total liabilities | 110,857,595 | 108,097,447 | |||
| Commitments and contingencies (Note 2 & 9): | |||||
| SPAC Class A common stock subject to possible redemption; 2,187,728 as of March 31, 2023 and 13,225,000 shares as of December 31, 2022 (at 10.45 per share), net of issuance cost of approximately 6,400,000 | 16,501,755 | 130,411,135 | |||
| Equity: | |||||
| Series D Preferred Stock, 0.01 par value per share; 1,000,000 shares authorized; 913,601 shares issued and outstanding (liquidation preference 25.00 per share) as of March 31, 2023 and 913,987 shares issued and outstanding as of December 31, 2022 | 9,136 | 9,140 | |||
| Series A Common Stock, 0.01 par value per share, shares authorized: 100,000,000; 11,835,264 shares and 11,807,893 shares were issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 118,353 | 118,079 | |||
| Additional paid-in capital | 180,766,097 | 182,044,157 | |||
| Dividends and accumulated losses | (140,160,393 | ) | (138,341,750 | ) | |
| Total stockholders’ equity before noncontrolling interest | 40,733,193 | 43,829,626 | |||
| Noncontrolling interest | 8,881,885 | 9,013,446 | |||
| Total equity | 49,615,078 | 52,843,072 | |||
| TOTAL LIABILITIES AND EQUITY | 176,974,428 | $ | 291,351,654 |
All values are in US Dollars.
PresidioProperty Trust, Inc. and Subsidiaries
CondensedConsolidated Statements of Operations
(Unaudited)
| For the Three Months Ended<br><br> <br>March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Revenues: | ||||||
| Rental income | $ | 3,942,053 | $ | 4,452,318 | ||
| Fees and other income | 179,438 | 120,823 | ||||
| Total revenue | 4,121,491 | 4,573,141 | ||||
| Costs and expenses: | ||||||
| Rental operating costs | 1,574,990 | 1,583,473 | ||||
| General and administrative | 1,964,620 | 1,583,691 | ||||
| Depreciation and amortization | 1,333,574 | 1,339,225 | ||||
| Total costs and expenses | 4,873,184 | 4,506,389 | ||||
| Other income (expense): | ||||||
| Interest expense - mortgage notes | (867,767 | ) | (1,017,713 | ) | ||
| Interest and other income, net | 742,117 | 73,605 | ||||
| Gain on sales of real estate, net | 417,337 | 1,522,785 | ||||
| Income tax expense | (148,453 | ) | (265,239 | ) | ||
| Total other income (expense), net | 143,234 | 313,438 | ||||
| Net income (loss) | (608,459 | ) | 380,190 | |||
| Less: Income attributable to noncontrolling interests | (387,081 | ) | (1,208,676 | ) | ||
| Net loss attributable to Presidio Property Trust, Inc. stockholders | $ | (995,540 | ) | $ | (828,486 | ) |
| Less: Preferred Stock Series D dividends | (535,448 | ) | (539,056 | ) | ||
| Less: Series A Warrant dividend | — | (2,456,511 | ) | |||
| Net loss attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,530,988 | ) | $ | (3,824,053 | ) |
| Net loss per share attributable to Presidio Property Trust, Inc. common stockholders: | ||||||
| Basic & Diluted | $ | (0.13 | ) | $ | (0.32 | ) |
| Weighted average number of common shares outstanding - basic & diluted | 11,834,656 | 11,773,649 |
PresidioProperty Trust, Inc. and Subsidiaries
Reconciliationof Net Income to FFO and Core FFO
(Unaudited)
| For the Three Months Ended<br><br> <br>March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Net loss attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,530,988 | ) | $ | (3,824,053 | ) |
| Adjustments: | ||||||
| Income attributable to noncontrolling interests | 387,081 | 1,208,676 | ||||
| Depreciation and amortization | 1,333,574 | 1,339,225 | ||||
| Amortization of above and below market leases, net | (1,244 | ) | (13,722 | ) | ||
| Loss (Gain) on sale of real estate assets | (417,337 | ) | (1,522,785 | ) | ||
| FFO | $ | (228,914 | ) | $ | (2,812,660 | ) |
| Stock Based Compensation | 260,845 | 280,981 | ||||
| Series A Warrant dividend | - | 2,456,512 | ||||
| Core FFO | $ | 31,932 | $ | (75,167 | ) | |
| Weighted average number of common shares outstanding - basic | 11,834,656 | 11,773,649 | ||||
| Core FFO / Wgt Avg Share | $ | 0.003 | $ | (0.01 | ) |
Exhibit99.2
SUPPLEMENTAL FINANCIAL INFORMATION
As of March 31, 2023
| FORWARD-LOOKING<br> STATEMENTS |
|---|
This presentation contains “forward-looking statements” within the meaning of the federal securities laws that involve risks and uncertainties, many of which are beyond our control. Our actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in the Quarterly Report on Form 10-Q. Forward-looking statements relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, financial condition, liquidity, capital resources, cash flows, dividends, results of operations and other financial and operating information. When used in this presentation, the words “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “should,” “project,” “plan,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.
The forward-looking statements contained in this presentation are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to it and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to the factors, risks and uncertainties described in the Annual Report on Form 10-K, as filed March 28, 2023 (“Annual Report”) and the Company’s Quarterly Report on Form 10-Q filed with the SEC on the date hereof (“Quarterly Report”), changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors described in the “Risk Factors” section of the Annual Report and the Quarterly Report, many of which are beyond our control. Should one or more of these risks or uncertainties materialize or should any of our assumptions prove to be incorrect, our actual results may vary in material respects from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. Any forward-looking statement made by us in this presentation speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.
| COMPANY<br> OVERVIEW | |||
|---|---|---|---|
 |
Corporate Information | ||
| --- | --- | --- | --- |
| San<br> Diego, CA | |||
| 1999 | |||
| CA,<br> CO, MD, ND & TX | |||
| 17 | |||
| ● | Presidio<br> Property Trust, Inc. (“Presidio” or the “Company”) was founded in 1999 as NetREIT | ||
| ●<br><br><br> <br><br><br> <br><br><br> <br>● | Presidio<br> is an internally managed real estate company focused on commercial real estate opportunities<br> in often overlooked and regionally dominant markets<br> <br> The<br> Company acquires, owns, and manages office and industrial real estate assets in markets with strong demographic and economic drivers<br> with attractive going-in cap rates | Portfolio Summary (Number / Square Footage) | |
| Office | 8<br> properties / 606,724 sq. ft. | ||
| Retail | 3<br> properties / 65,242 sq. ft. | ||
| Industrial | 1<br> property / 150,099 sq. ft. | ||
| Model<br> Homes ^(1)^ | 5<br> funds / 98 homes | ||
| ● | Presidio’s<br> commercial portfolio currently includes 12 commercial properties with a book value of approximately 93 million | ||
| ● | In<br> addition to its commercial real estate holdings, Presidio generates fees and rental income from affiliated entities, which manage<br> and/or own a portfolio of model homes (1) | Portfolio Value & Debt | |
| Book<br> Value | $133.8<br> million ^(2)^ | ||
| Existing<br> Secured Debt | $100.4<br> million | ||
| (1)<br> The Company holds partial ownership interests in several entities which own model home properties<br><br> <br><br><br> <br>(2)<br> Includes book value of model homes |
All values are in US Dollars.
| COMMERCIAL<br> PORTFOLIO | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in000’s) Property Location | Sq., Ft. | Date Acquired | Year Property Constructed | Purchase Price (1) | Occupancy | Percent Ownership | Mortgage On property | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Office/Industrial Properties: | ||||||||||||||
| Genesis Plaza, San Diego, CA (2) | 57,807 | 08/10 | 1989 | 10,000 | 91.9 | % | 76.4 | % | 6,026 | |||||
| Dakota Center, Fargo, ND | 119,434 | 05/11 | 1982 | 9,575 | 58.1 | % | 100.0 | % | 9,381 | |||||
| Grand Pacific Center, Bismarck, ND | 93,711 | 03/14 | 1976 | 5,350 | 56.0 | % | 100.0 | % | 3,465 | |||||
| Arapahoe Center, Colorado Springs, CO | 79,023 | 12/14 | 2000 | 11,850 | 100.0 | % | 100.0 | % | 7,558 | |||||
| West Fargo Industrial, West Fargo, ND | 150,099 | 08/15 | 1998/2005 | 7,900 | 96.0 | % | 100.0 | % | 4,000 | |||||
| 300 N.P., West Fargo, ND | 34,517 | 08/15 | 1922 | 3,850 | 64.4 | % | 100.0 | % | 0 | |||||
| One Park Centre, Westminster CO | 69,174 | 08/15 | 1983 | 9,150 | 84.9 | % | 100.0 | % | 6,133 | |||||
| Shea Center II, Highlands Ranch, CO | 121,306 | 12/15 | 2000 | 25,325 | 60.6 | % | 100.0 | % | 17,158 | |||||
| Baltimore, Baltimore, MD | 31,752 | 12/21 | 2006 | 8,892 | 100.0 | % | 100.0 | % | 5,670 | |||||
| Total Office/Industrial Properties | 756,823 | $ | 91,892 | 77.2 | % | $ | 59,391 | |||||||
| Retail Properties: | ||||||||||||||
| Union Town Center, Colorado Springs, CO | 44,042 | 12/14 | 2003 | 11,212 | 82.3 | % | 100.0 | % | 7,986 | |||||
| Research Parkway, Colorado Springs, CO | 10,700 | 08/15 | 2003 | 2,850 | 88.8 | % | 100.0 | % | 1,634 | |||||
| Mandolin, Houston, TX (3) | 10,500 | 08/21 | 2021 | 4,892 | 100.0 | % | 61.3 | % | 3,620 | |||||
| Total Retail Properties | 65,242 | $ | 18,954 | 86.2 | % | $ | 13,239 | |||||||
| 822,065 | $ | 110,846 | 77.9 | % | $ | 72,630 | ||||||||
| (1) | Prior<br> to January 1, 2009, “Purchase Price” includes our acquisition related costs and expenses for the purchase of the property.<br> After January 1, 2009, acquisition related costs and expenses were expensed when incurred until ASU 2017-01 was adopted by the Company<br> in 2017. Since then, acquisition related costs for real estate acquisitions that do not meet the definition of a business,<br> are capitalized. | |||||||||||||
| --- | --- | |||||||||||||
| (2) | Genesis<br> Plaza is owned by two tenants-in-common, each of which own 57% and 43%, respectively, and we beneficially own an aggregate of 76.4%,<br> based on our ownership percentages of each tenant-in-common. | |||||||||||||
| (3) | Owned<br>by NetREIT Highland LLC, which was formed in 2012. NetREIT Highland LLC is wholly owned by NetREIT Palm Self Storage LP (a joint venture<br>where Presidio Property trust owns 61.3%). | |||||||||||||
| MODEL<br> HOMES PORTFOLIO | ||||||||||||||
| --- | ||||||||||||||
| Geographic Region | No. of<br><br>Properties | Aggregate<br><br>Square Feet | Approximate<br><br> %<br><br>of Square<br><br> Feet | Current<br><br>Base <br><br>Annual<br><br>Rent | Approximate<br><br>of Aggregate<br><br>% Annual<br><br> Rent | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| Midwest | 4 | 12,307 | 4.2 | % | $ | 182,748 | 5.5 | % | ||||||
| Southeast | 4 | 9,875 | 3.3 | % | 172,428 | 5.2 | % | |||||||
| Southwest | 90 | 272,835 | 92.5 | % | 2,971,380 | 89.3 | % | |||||||
| Total | 98 | 295,017 | 100 | % | $ | 3,326,556 | 100 | % | ||||||
| CONSOLIDATED<br> BALANCE SHEET | ||||||||||||||
| --- | ||||||||||||||
| December 31, | ||||||||||||||
| --- | --- | --- | --- | --- | --- | |||||||||
| 2022 | ||||||||||||||
| (Unaudited) | ||||||||||||||
| ASSETS | ||||||||||||||
| Real estate assets and lease intangibles: | ||||||||||||||
| Land | 19,763,455 | $ | 19,189,386 | |||||||||||
| Buildings and improvements | 129,597,365 | 125,979,374 | ||||||||||||
| Tenant improvements | 14,273,012 | 13,861,839 | ||||||||||||
| Lease intangibles | 4,110,139 | 4,110,139 | ||||||||||||
| Real estate assets and lease intangibles held for investment, cost | 167,743,971 | 163,140,738 | ||||||||||||
| Accumulated depreciation and amortization | (35,757,830 | ) | (34,644,511 | ) | ||||||||||
| Real estate assets and lease intangibles held for investment, net | 131,986,141 | 128,496,227 | ||||||||||||
| Real estate assets held for sale, net | 1,884,935 | 2,016,003 | ||||||||||||
| Real estate assets, net | 133,871,076 | 130,512,230 | ||||||||||||
| Other assets: | ||||||||||||||
| Cash, cash equivalents and restricted cash | 11,891,930 | 16,516,725 | ||||||||||||
| Deferred leasing costs, net | 1,528,338 | 1,516,835 | ||||||||||||
| Goodwill | 2,423,000 | 2,423,000 | ||||||||||||
| Other assets, net (see Note 6) | 3,601,246 | 3,511,681 | ||||||||||||
| Total other assets | 19,444,514 | 23,968,241 | ||||||||||||
| Investments held in Trust (see Notes 2 & 9) | 23,658,838 | 136,871,183 | ||||||||||||
| TOTAL ASSETS | 176,974,428 | $ | 291,351,654 | |||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Liabilities: | ||||||||||||||
| Mortgage notes payable, net | 98,240,332 | $ | 95,899,176 | |||||||||||
| Mortgage notes payable related to properties held for sale, net | 1,309,228 | 999,523 | ||||||||||||
| Mortgage notes payable, total net | 99,549,560 | 96,898,699 | ||||||||||||
| Accounts payable and accrued liabilities | 3,353,449 | 4,028,564 | ||||||||||||
| Accounts payable and accrued liabilities of SPAC (see Notes 2 & 9) | 6,586,458 | 5,046,725 | ||||||||||||
| Accrued real estate taxes | 1,133,336 | 1,879,875 | ||||||||||||
| Dividends payable preferred stock | 178,435 | 178,511 | ||||||||||||
| Lease liability, net | 39,360 | 46,833 | ||||||||||||
| Below-market leases, net | 16,997 | 18,240 | ||||||||||||
| Total liabilities | 110,857,595 | 108,097,447 | ||||||||||||
| Commitments and contingencies (Note 2 & 9): | ||||||||||||||
| SPAC Class A common stock subject to possible redemption; 2,187,728 as of March 31, 2023 and 13,225,000 shares as of December 31, 2022 (at 10.45 per share), net of issuance cost of approximately 6,400,000 | 16,501,755 | 130,411,135 | ||||||||||||
| Equity: | ||||||||||||||
| Series D Preferred Stock, 0.01 par value per share; 1,000,000 shares authorized; 913,601 shares issued and outstanding (liquidation preference 25.00 per share) as of March 31, 2023 and 913,987 shares issued and outstanding as of December 31, 2022 | 9,136 | 9,140 | ||||||||||||
| Series A Common Stock, 0.01 par value per share, shares authorized: 100,000,000; 11,835,264 shares and 11,807,893 shares were issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 118,353 | 118,079 | ||||||||||||
| Additional paid-in capital | 180,766,097 | 182,044,157 | ||||||||||||
| Dividends and accumulated losses | (140,160,393 | ) | (138,341,750 | ) | ||||||||||
| Total stockholders’ equity before noncontrolling interest | 40,733,193 | 43,829,626 | ||||||||||||
| Noncontrolling interest | 8,881,885 | 9,013,446 | ||||||||||||
| Total equity | 49,615,078 | 52,843,072 | ||||||||||||
| TOTAL LIABILITIES AND EQUITY | 176,974,428 | $ | 291,351,654 |
All values are in US Dollars.
| CONSOLIDATED<br> STATEMENT OF OPERATIONS | ||||||
|---|---|---|---|---|---|---|
| For the Three Months Ended<br><br> March 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | |||||
| Revenues: | ||||||
| Rental income | $ | 3,942,053 | $ | 4,452,318 | ||
| Fees and other income | 179,438 | 120,823 | ||||
| Total revenue | 4,121,491 | 4,573,141 | ||||
| Costs and expenses: | ||||||
| Rental operating costs | 1,574,990 | 1,583,473 | ||||
| General and administrative | 1,964,620 | 1,583,691 | ||||
| Depreciation and amortization | 1,333,574 | 1,339,225 | ||||
| Total costs and expenses | 4,873,184 | 4,506,389 | ||||
| Other income (expense): | ||||||
| Interest expense - mortgage notes | (867,767 | ) | (1,017,713 | ) | ||
| Interest and other income, net | 742,117 | 73,605 | ||||
| Gain on sales of real estate, net | 417,337 | 1,522,785 | ||||
| Income tax expense | (148,453 | ) | (265,239 | ) | ||
| Total other income (expense), net | 143,234 | 313,438 | ||||
| Net income (loss) | (608,459 | ) | 380,190 | |||
| Less: Income attributable to noncontrolling interests | (387,081 | ) | (1,208,676 | ) | ||
| Net loss attributable to Presidio Property Trust, Inc. stockholders | $ | (995,540 | ) | $ | (828,486 | ) |
| Less: Preferred Stock Series D dividends | (535,448 | ) | (539,056 | ) | ||
| Less: Series A Warrant dividend | — | (2,456,511 | ) | |||
| Net loss attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,530,988 | ) | $ | (3,824,053 | ) |
| Net loss per share attributable to Presidio Property Trust, Inc. common stockholders: | ||||||
| Basic & Diluted | $ | (0.13 | ) | $ | (0.32 | ) |
| Weighted average number of common shares outstanding - basic & diluted | 11,834,656 | 11,773,649 | ||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||
| --- | ||||||
| For the Three Months Ended<br><br> March 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | |||||
| Cash flows from operating activities: | ||||||
| Net (loss) income | $ | (608,459 | ) | $ | 380,190 | |
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||
| Depreciation and amortization | 1,333,574 | 1,339,225 | ||||
| Stock compensation | 260,845 | 280,981 | ||||
| Bad debt expense | 54,493 | 13,416 | ||||
| Gain on sale of real estate assets, net | (417,337 | ) | (1,522,785 | ) | ||
| Net change in fair value marketable securities | (72,738 | ) | 79,144 | |||
| Net change in fair value SPAC Trust Account | (664,232 | ) | (10,182 | ) | ||
| Amortization of financing costs | 72,879 | 65,018 | ||||
| Amortization of below-market leases | (1,243 | ) | (13,723 | ) | ||
| Straight-line rent adjustment | (157,194 | ) | (19,660 | ) | ||
| Changes in operating assets and liabilities: | ||||||
| Other assets | 219,199 | 295,357 | ||||
| Accounts payable and accrued liabilities | (764,077 | ) | (1,393,193 | ) | ||
| Accounts payable and accrued liabilities for the SPAC | (137,300 | ) | 62,908 | |||
| Accrued real estate taxes | (746,539 | ) | (534,956 | ) | ||
| Net cash used in operating activities | (1,628,129 | ) | (978,260 | ) | ||
| Cash flows from investing activities: | ||||||
| Real estate acquisitions | (5,039,455 | ) | (2,427,890 | ) | ||
| Additions to buildings and tenant improvements | (597,873 | ) | (319,737 | ) | ||
| Investment in marketable securities | (1,586,042 | ) | (172,866 | ) | ||
| Proceeds from sale of marketable securities | 1,437,717 | 755,989 | ||||
| Investment of SPAC IPO proceeds into Trust Account | (155,403 | ) | (134,895,000 | ) | ||
| Withdraw from Trust Account for SPAC taxes | 200,050 | — | ||||
| Withdraw from Trust Account for Redemption of SPAC Shares | 113,831,930 | — | ||||
| Deletions / (additions) to deferred leasing costs | 1,936 | (18,352 | ) | |||
| Proceeds from sales of real estate, net | 1,458,822 | 14,763,130 | ||||
| Net cash provided by (used in) investing activities | 109,551,682 | (122,314,726 | ) | |||
| Cash flows from financing activities: | ||||||
| Proceeds from mortgage notes payable, net of issuance costs | 3,518,981 | 7,365,855 | ||||
| Repayment of mortgage notes payable | (886,707 | ) | (3,275,234 | ) | ||
| Payment of deferred offering costs | — | (3,159,411 | ) | |||
| Distributions to noncontrolling interests, net | (518,642 | ) | (258,410 | ) | ||
| Proceeds from initial public offering of SPAC | — | 132,250,000 | ||||
| Redemption of SPAC shares | (113,831,930 | ) | — | |||
| Repurchase of Series D Preferred Stock, at cost | (6,947 | ) | — | |||
| Dividends paid to Series D Preferred Stockholders | (535,448 | ) | (539,056 | ) | ||
| Dividends paid to Series A Common Stockholders | (287,655 | ) | (1,298,252 | ) | ||
| Net cash (used in) provided by financing activities | (112,548,348 | ) | 131,085,492 | |||
| Net (decrease) increase in cash equivalents and restricted cash | (4,624,795 | ) | 7,792,506 | |||
| Cash, cash equivalents and restricted cash - beginning of period | 16,516,725 | 14,702,089 | ||||
| Cash, cash equivalents and restricted cash - end of period | $ | 11,891,930 | $ | 22,494,595 | ||
| Supplemental disclosure of cash flow information: | ||||||
| Interest paid-mortgage notes payable | $ | 1,119,189 | $ | 951,727 | ||
| Non-cash financing activities: | ||||||
| Deferred offering cost SPAC, underwriting commission payable | $ | 4,628,750 | $ | 4,628,750 | ||
| Accrued excise tax on January 24, 2023 SPAC redemptions | $ | 1,140,683 | $ | — | ||
| Dividends payable - Preferred Stock Series D | $ | 178,435 | $ | 179,685 | ||
| EBITDAre<br>RECONCILIATION | ||||||
| --- | ||||||
| For the Three Months Ended<br><br> March 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | |||||
| Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,530,988 | ) | $ | (3,824,053 | ) |
| Adjustments | ||||||
| Interest Expense | 867,767 | 1,017,713 | ||||
| Depreciation and Amortization | 1,332,330 | 1,325,503 | ||||
| Asset Impairment | - | - | ||||
| Net loss (gain) on sale of real estate | (417,337 | ) | (1,522,785 | ) | ||
| Gain on PPP Loan Forgiveness | - | |||||
| Income Taxes | 148,453 | 265,239 | ||||
| EBITDAre | $ | 400,225 | $ | (2,738,383 | ) | |
| FFO<br> AND CORE FFO RECONCILIATION | ||||||
| --- |
(Unaudited)
| For the Three Months Ended <br><br>March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,530,988 | ) | $ | (3,824,053 | ) |
| Adjustments: | ||||||
| Income attributable to noncontrolling interests | 387,081 | 1,208,676 | ||||
| Depreciation and amortization | 1,333,574 | 1,339,225 | ||||
| Amortization of above and below market leases, net | (1,244 | ) | (13,722 | ) | ||
| Impairment of real estate assets | - | - | ||||
| Loss (Gain) on sale of real estate assets | (417,337 | ) | (1,522,785 | ) | ||
| FFO | $ | (228,914 | ) | $ | (2,812,659 | ) |
| Stock Based Compensation | 260,845 | 280,981 | ||||
| Series A Warrant dividend | - | 2,456,511 | ||||
| Core FFO | $ | 31,932 | $ | (75,167 | ) | |
| Weighted average number of common shares outstanding - basic | 11,834,656 | 11,773,649 | ||||
| Core FFO / Wgt Avg Share | $ | 0.00 | $ | (0.01 | ) | |
| Quarterly Dividends / Share | $ | 0.022 | $ | 0.105 | ||
| SEGMENT<br> DATA | ||||||
| --- |
| DEFINITIONS<br> – NON-GAAP MEASUREMENTS |
|---|
EBITDAre- EBITDAre is defined by NAREIT as earnings before interest, taxes, depreciation, and amortization, gain or loss on disposal of depreciated assets, and impairment write-offs.
Fundsfrom Operations (“FFO”) – The Company evaluates performance based on Funds From Operations, which we refer to as FFO, as management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company defines FFO, a non-GAAP measure, as net income or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness, acquisition costs of newly acquired properties that are not capitalized and lease acquisition costs that are not capitalized plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on properties or investments in non-consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate share of FFO from, non-consolidated REITs.
However, because FFO excludes depreciation and amortization as well as the changes in the value of the Company’s properties that result from use or market conditions, each of which have real economic effects and could materially impact the Company’s results from operations, the utility of FFO as a measure of the Company’s performance is limited. In addition, other REITs may not calculate FFO in accordance with the NAREIT definition as the Company does, and, accordingly, the Company’s FFO may not be comparable to other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of the Company’s performance.
CoreFunds from Operations (“Core FFO”) – We calculate Core FFO, a non-GAAP measure, by using FFO as defined by NAREIT and adjusting for certain other non-core items. We also exclude from our Core FFO calculation acquisition costs, loss on early extinguishment of debt, changes in the fair value of the earn-out, changes in fair value of contingent consideration, non-cash warrant dividends and the amortization of stock-based compensation.
We believe Core FFO provides a useful metric in comparing operations between reporting periods and in assessing the sustainability of our ongoing operating performance. Other equity REITs may calculate Core FFO differently or not at all, and, accordingly, the Company’s Core FFO may not be comparable to such other REITs’ Core FFO.