Presidio Property Trust, Inc 8-K, filed Nov 14, 2022
Presidio Property Trust, Inc. (SQFT)
About this 8-K
Presidio Property Trust, Inc filed this 8-K on November 14, 2022, reporting on events of November 11, 2022.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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| Item 2.02 | Results of Operations and Financial Condition |
Press Release
On November 11, 2022, Presidio Property Trust, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2022, 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 September 30, 2022, 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 November 11, 2022 | |
| 99.2 | Supplemental Financial Information for the quarter ended June 30, 2022 | |
| 104 | Cover 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: November 14, 2022 | PRESIDIO PROPERTY TRUST, INC. | |
| By: | /s/ Adam Sragovicz | |
| Name: | Adam Sragovicz | |
| Title: | Chief Financial Officer | |
Exhibit 99.1
Presidio Property Trust, Inc. Announces Earnings for
the First Three Quarters Ended September 30, 2022
San Diego, California, November 11, 2022 – Presidio Property Trust, Inc. (Nasdaq: SQFT, SQFTP) (the “Company”), an internally managed, diversified real estate investment trust (“REIT”), today reported earnings for its first three quarters ended September 30, 2022. The first, second and third quarter financial measures referenced herein are unaudited.
“We are pleased to report our third quarter earnings, as well as the announcement that Murphy Canyon Acquisition Corp, sponsored by a subsidiary of Presidio, entered into a definitive business combination agreement on November 8, 2022. After evaluating dozens of companies, the Conduit team really impressed us both with their creative development approach and their asset pipeline,” said Jack Heilbron, Chief Executive Officer of both Presidio and of Murphy. “Conduit’s team has an impressive track record of achievement in science, medicine, and industry. Their current assets and pipeline address a wide range of indications, and we believe that those indications are in important markets, full of opportunity. We look forward to seeing Conduit thrive and grow in the public markets.”
“In the third quarter of 2022, 13 office, retail, and industrial leases were signed totaling nearly 52,000 square feet. These leases are comprised of 6 new leases and 7 existing tenant renewals,” noted Gary Katz, the Company’s Chief Investment Officer. “For the year to date, we have signed 45 leases for nearly 170,000 square feet of space, split approximately between 50% new leases and 50% renewals, and we have renewed 70% of our expiring leases, based on rentable area.”
Quarter Ended September 30, 2022, Financial Results
Net loss attributable to the Company’s common stockholders for the three months ended September 30, 2022, was approximately $(1,302,000), or $(0.11) per basic and diluted share, compared to a net income of approximately $(1,391,000), or $(0.13) per basic and diluted share for the three months ended September 30, 2021. The change in net income attributable to the Company’s common stockholders was a result of:
| ● | Operating income less; operating expense, G&A and depreciation & amortization, decreased by $274,000 or 41% in the second quarter 2022 as compared to the second quarter in 2021, mainly due to the additional G&A expenses for Murphy Canyon Acquisition Corp. | |
| ● | A 9% decrease in interest expense for the second quarter of 2022, after the sale of commercial properties in 2021 and payoff of their related mortgages. | |
| ● | Gain on sale of real estate of 7 model homes sold in the third quarter of 2022 for approximately $1.3 million, compared to a gain on sale during the third quarter of 2021 totaling approximately $0.6 million for 7 model homes. | |
| ● | Preferred Stock Series D dividends totaled approximately $0.5 million in Q3 2022, which is similar to Q3 2021. |
FFO (non-GAAP) for the three months ended September 30, 2022, increased by approximately $100,000 to approximately $(190,000) from $(290,000) for the three months ended September 30, 2021. 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.
Acquisitions and Dispositions for the first three quarters of 2022
| ● | The Company acquired 15 model homes for approximately $8.1 million. The purchase price was paid through cash payments of approximately $2.5 million and mortgage notes of approximately $5.6 million. | |
| ● | World Plaza, which was sold on March 11, 2022, for approximately $10.0 million and the Company recognized a loss of approximately $0.3 million. | |
| ● | The Company disposed of 25 model homes for approximately $13.5 million and recognized a gain of approximately $4.3 million. |
Acquisitions and Dispositions during the first three quarters of 2021:
| ● | The Company acquired six model homes for approximately $2.9 million. These acquisitions were paid for with approximately $0.9 million in cash payments and approximately $2.0 million in mortgage loans. | |
| ● | On August 17, 2021, the Company, through its 61.3% owned subsidiaries NetREIT Palm Self Storage, LP and NetREIT Highland LLC, acquired a single story newly constructed 10,500 square foot building in Houston, Texas for a purchase price of approximately $4.9 million, in connection with a like-kind exchange transaction pursued under Section 1031 of the Code 1986, as amended (the “Internal Revenue Code”). The building is 100% occupied under a 15-year triple net lease. | |
| ● | Waterman Plaza was sold on January 28, 2021, for approximately $3.5 million and the Company recognized a loss of approximately $0.2 million. | |
| ● | Garden Gateway was sold on February 19, 2021, for approximately $11.2 million and the Company recognized a loss of approximately $1.4 million. | |
| ● | Highland Court was sold on May 20, 2021, for approximately $10.23 million and the Company recognized a loss of approximately $1.6 million. | |
| ● | Executive Office Park was sold on May 21, 2021, 2021, for approximately $8.1 million and the Company recognized a gain of approximately $2.5 million. | |
| ● | The Company disposed of 39 model homes for approximately $19.0 million and recognized a gain of approximately $2.9 million. |
Dividends paid during the first three quarters of 2022:
| ● | During the first quarter of 2022, the Company paid a dividend of $0.105 per share to shareholders of Series A common stock. | |
| ● | During the second quarter of 2022, the Company paid a dividend of $0.106 per share to shareholders of Series A common stock. | |
| ● | During the third quarter of 2022, the Company paid a dividend of $0.02 per share to shareholders of Series A common stock. | |
| ● | During the first nine months of 2022, the Company paid nine monthly dividends in the total amount of $1.758 per share to shareholders of Series D preferred stock. |
About Presidio 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 primarily in Texas 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 a number of 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 $136 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-GAAP Financial Measures
Funds from 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.
Core Funds 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.
Cautionary Note 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.
Investor Relations Contact:
Presidio Property Trust, Inc.
Lowell Hartkorn, Investor Relations
LHartkorn@presidiopt.com
Telephone: (760) 471-8536 x1244
Presidio Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Real estate assets and lease intangibles: | ||||||||
| Land | $ | 18,223,947 | $ | 21,136,379 | ||||
| Buildings and improvements | 116,206,836 | 119,224,375 | ||||||
| Tenant improvements | 12,911,091 | 12,752,518 | ||||||
| Lease intangibles | 4,110,139 | 4,110,139 | ||||||
| Real estate assets and lease intangibles held for investment, cost | 151,452,013 | 157,223,411 | ||||||
| Accumulated depreciation and amortization | (31,321,223 | ) | (30,589,969 | ) | ||||
| Real estate assets and lease intangibles held for investment, net | 120,130,790 | 126,633,442 | ||||||
| Real estate assets held for sale, net | 6,656,116 | 11,431,494 | ||||||
| Real estate assets, net | 126,786,906 | 138,064,936 | ||||||
| Cash, cash equivalents and restricted cash | 18,569,075 | 14,702,089 | ||||||
| Deferred leasing costs, net | 1,244,753 | 1,348,234 | ||||||
| Goodwill | 2,423,000 | 2,423,000 | ||||||
| Other assets, net | 3,892,377 | 4,658,504 | ||||||
| Investments held in Trust (see Notes 2 & 9) | 135,706,687 | — | ||||||
| TOTAL ASSETS | $ | 288,622,798 | $ | 161,196,763 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Liabilities: | ||||||||
| Mortgage notes payable, net | $ | 89,115,802 | $ | 87,324,319 | ||||
| Mortgage notes payable related to properties held for sale, net | 5,025,578 | 1,535,513 | ||||||
| Mortgage notes payable, total net | 94,141,380 | 88,859,832 | ||||||
| Accounts payable and accrued liabilities | 4,441,731 | 4,569,537 | ||||||
| Accounts payable and accrued liabilities of SPAC (see Notes 2 & 9) | 4,944,878 | 15,499 | ||||||
| Accrued real estate taxes | 1,493,634 | 1,940,913 | ||||||
| Dividends payable preferred stock | 178,916 | 179,685 | ||||||
| Lease liability, net | 54,218 | 75,547 | ||||||
| Below-market leases, net | 31,963 | 73,130 | ||||||
| Total liabilities | 105,286,720 | 95,714,143 | ||||||
| Commitments and contingencies (Note 2 & 9) | ||||||||
| SPAC Class A common stock subject to possible redemption; 13,225,000 shares (at $10.20 per share), net of issuance cost of approximately $6,400,000 | 129,246,639 | — | ||||||
| Equity: | ||||||||
| Series D Preferred Stock, $0.01 par value per share; 1,000,000 shares authorized; 916,061 shares issued and outstanding (liquidation preference $25.00 per share) as of September 30, 2022 and December 31, 2021, respectively | 9,161 | 9,200 | ||||||
| Series A Common Stock, $0.01 par value per share, shares authorized: 100,000,000; 11,655,583 shares and 11,599,720 shares were issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 116,556 | 115,997 | ||||||
| Additional paid-in capital | 182,235,077 | 186,492,012 | ||||||
| Dividends and accumulated losses | (137,304,308 | ) | (130,947,434 | ) | ||||
| Total stockholders’ equity before noncontrolling interest | 45,056,486 | 55,669,775 | ||||||
| Noncontrolling interest | 9,032,953 | 9,812,845 | ||||||
| Total equity | 54,089,439 | 65,482,620 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 288,622,798 | $ | 161,196,763 | ||||
Presidio Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues: | ||||||||||||||||
| Rental income | $ | 4,243,887 | $ | 4,185,212 | $ | 12,884,280 | $ | 14,216,234 | ||||||||
| Fees and other income | 148,088 | 190,967 | 401,697 | 675,283 | ||||||||||||
| Total revenue | 4,391,975 | 4,376,179 | 13,285,977 | 14,891,517 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Rental operating costs | 1,434,225 | 1,414,518 | 4,365,781 | 4,739,256 | ||||||||||||
| General and administrative | 1,509,139 | 1,479,261 | 4,306,835 | 4,361,297 | ||||||||||||
| Depreciation and amortization | 1,318,164 | 1,306,874 | 3,973,582 | 4,104,018 | ||||||||||||
| Impairment of real estate assets | — | — | — | 300,000 | ||||||||||||
| Total costs and expenses | 4,261,528 | 4,200,653 | 12,646,198 | 13,504,571 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense - mortgage notes | (1,382,120 | ) | (1,030,883 | ) | (3,485,693 | ) | (3,542,940 | ) | ||||||||
| Interest expense - note payable | — | — | — | (279,373 | ) | |||||||||||
| Interest and other (expense), net | 590,586 | (13,886 | ) | 757,318 | (67,329 | ) | ||||||||||
| Gain on sales of real estate, net | 1,307,258 | 627,322 | 4,057,527 | 2,060,336 | ||||||||||||
| Gain on extinguishment of government debt | — | — | — | 10,000 | ||||||||||||
| Income tax expense | (294,996 | ) | (182,607 | ) | (819,520 | ) | (471,506 | ) | ||||||||
| Total other income (expense), net | 220,728 | (600,054 | ) | 509,632 | (2,290,812 | ) | ||||||||||
| Net income (loss) | 351,175 | (424,528 | ) | 1,149,411 | (903,866 | ) | ||||||||||
| Less: Income attributable to noncontrolling interests | (1,114,928 | ) | (427,303 | ) | (3,032,806 | ) | (1,759,608 | ) | ||||||||
| Net loss attributable to Presidio Property Trust, Inc. stockholders | $ | (763,753 | ) | $ | (851,831 | ) | $ | (1,883,395 | ) | $ | (2,663,474 | ) | ||||
| Less: Preferred Stock Series D dividends | (538,286 | ) | (539,056 | ) | (1,616,397 | ) | (634,892 | ) | ||||||||
| Less: Series A Warrant dividend | — | — | (2,456,512 | ) | — | |||||||||||
| Net loss attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,302,039 | ) | $ | (1,390,887 | ) | $ | (5,956,304 | ) | $ | (3,298,366 | ) | ||||
| Net loss per share attributable to Presidio Property Trust, Inc. common stockholders: | ||||||||||||||||
| Basic & Diluted | $ | (0.11 | ) | $ | (0.13 | ) | $ | (0.51 | ) | $ | (0.33 | ) | ||||
| Weighted average number of common shares outstanding - basic & diluted | 11,780,090 | 10,833,847 | 11,784,500 | 9,955,046 | ||||||||||||
Presidio Property Trust, Inc. and Subsidiaries
Reconciliation of Net Income to FFO and Core FFO
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| 09/30/22 | 09/30/21 | 09/30/22 | 09/30/21 | |||||||||||||
| Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,302,039 | ) | $ | (1,390,887 | ) | $ | (5,956,304 | ) | $ | (3,298,366 | ) | ||||
| Adjustments: | ||||||||||||||||
| Income attributable to noncontrolling interests | 1,114,928 | 427,303 | 3,032,806 | 1,759,608 | ||||||||||||
| Depreciation and amortization | 1,318,164 | 1,306,874 | 3,973,582 | 4,104,018 | ||||||||||||
| Amortization of above and below market leases, net | (13,722 | ) | (6,022 | ) | (41,167 | ) | (4,417 | ) | ||||||||
| Impairment of real estate assets | - | - | - | 300,000 | ||||||||||||
| Loss (gain) on sale of real estate assets, net | (1,307,258 | ) | (627,322 | ) | (4,057,527 | ) | (2,060,336 | ) | ||||||||
| FFO | $ | (189,927 | ) | $ | (290,054 | ) | $ | (3,048,610 | ) | $ | 800,507 | |||||
| Restricted stock compensation | 293,136 | 285,704 | 861,837 | 867,903 | ||||||||||||
| Series A Warrant dividend (non-cash) | - | - | 2,456,512 | - | ||||||||||||
| Core FFO | $ | 103,209 | $ | (4,350 | ) | $ | 269,739 | $ | 1,668,410 | |||||||
| Weighted average number of common shares outstanding - basic and diluted | 11,780,090 | 10,833,847 | 11,784,500 | 9,955,046 | ||||||||||||
| Core FFO / Wgt Avg Share | $ | 0.01 | $ | (0.00 | ) | $ | 0.02 | $ | 0.17 | |||||||
Exhibit 99.2
SUPPLEMENTAL FINANCIAL INFORMATION
As of September 2022
| FORWARD-LOOKING 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 30, 2022 (“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 OVERVIEW | |
 |
Corporate Information | |||
| Headquarters | San Diego, CA | |||
| Founded | 1999 | |||
| Key Geographies | CA, CO, MD, ND, TX & MD | |||
| Employees | 19 | |||
| ● | Presidio Property Trust, Inc. (“Presidio” or the “Company”) was founded in 1999 as NetREIT | |||
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●
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Presidio is an internally managed real estate company focused on commercial real estate opportunities in often overlooked and regionally dominant markets
The Company acquires, owns, and manages office and industrial real estate assets in markets with strong demographic and economic drivers with attractive going-in cap rates |
Portfolio Summary (Number / Square Footage) | ||
| Office | 8 properties / 605,763 sq. ft. | |||
| Retail | 3 properties / 65,242 sq. ft. | |||
| Industrial | 1 property / 150,030 sq. ft. | |||
| Model Homes (1) | 5 funds / 82 homes | |||
| ● | Presidio’s commercial portfolio currently includes 12 commercial properties with a book value of approximately $94 million | |||
| ● | In addition to its commercial real estate holdings, Presidio generates fees and rental income from affiliated entities, which manage and/or own a portfolio of model homes (1) | Portfolio Value & Debt | ||
| Book Value | $126.8 million (2) | |||
| Existing Secured Debt | $94.8 million | |||
(1) The Company holds partial ownership interests in several entities which own model home properties
(2) Includes book value of model homes | ||||
| COMMERCIAL PORTFOLIO | |
| ($ 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 | 96.2 | % | 76.4 | % | 6,085 | |||||||||||||||
| Dakota Center, Fargo, ND | 119,434 | 05/11 | 1982 | 9,575 | 71.8 | % | 100.0 | % | 9,503 | |||||||||||||||
| Grand Pacific Center, Bismarck, ND (3) | 93,000 | 03/14 | 1976 | 5,350 | 56.5 | % | 100.0 | % | 3,528 | |||||||||||||||
| Arapahoe Center, Colorado Springs, CO | 79,023 | 12/14 | 2000 | 11,850 | 100.0 | % | 100.0 | % | 7,645 | |||||||||||||||
| West Fargo Industrial, West Fargo, ND | 150,099 | 08/15 | 1998/2005 | 7,900 | 96.7 | % | 100.0 | % | 4,060 | |||||||||||||||
| 300 N.P., West Fargo, ND | 34,517 | 08/15 | 1922 | 3,850 | 75.5 | % | 100.0 | % | 0 | |||||||||||||||
| One Park Centre, Westminster CO | 69,174 | 08/15 | 1983 | 9,150 | 80.4 | % | 100.0 | % | 6,192 | |||||||||||||||
| Shea Center II, Highlands Ranch, CO | 121,306 | 12/15 | 2000 | 25,325 | 90.9 | % | 100.0 | % | 17,298 | |||||||||||||||
| Baltimore, Baltimore, MD | 31,752 | 12/21 | 2006 | 8,685 | 100.0 | % | 100.0 | % | 5,670 | |||||||||||||||
| Total Office/Industrial Properties | 756,112 | $ | 91,685 | 84.9 | % | $ | 59,981 | |||||||||||||||||
| Retail Properties: | ||||||||||||||||||||||||
| Union Town Center, Colorado Springs, CO | 44,042 | 12/14 | 2003 | 11,212 | 84.8 | % | 100.0 | % | 8,063 | |||||||||||||||
| Research Parkway, Colorado Springs, CO | 10,700 | 08/15 | 2003 | 2,850 | 100.0 | % | 100.0 | % | 1,663 | |||||||||||||||
| Mandolin, Houston, TX (4) | 10,500 | 08/21 | 2021 | 4,892 | 100.0 | % | 61.3 | % | 3,651 | |||||||||||||||
| Total Retail Properties | 65,242 | $ | 18,954 | 89.7 | % | $ | 13,377 | |||||||||||||||||
| 821,354 | $ | 110,639 | 885.3 | $ | 73,704 | |||||||||||||||||||
| (1) | Prior to January 1, 2009, “Purchase Price” includes our acquisition related costs and expenses for the purchase of the property. After January 1, 2009, acquisition related costs and expenses were expensed when incurred until ASU 2017-01 was adopted by the Company in 2017. Since then, acquisition related costs for real estate acquisitions that do not meet the definition of a business, are capitalized. |
| (2) | Genesis 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%, based on our ownership percentages of each tenant-in-common. |
(3) |
Property held for sale as of September 30, 2022. |
| (4) | Owned by NetREIT Highland LLC, which was formed in 2012. NetREIT Highland LLC is wholly owned by NetREIT Palm Self Storage LP (a joint venture where Presidio Property trust owns 61.3%). |
| MODEL HOMES PORTFOLIO | |
| Region | No. of Properties | Aggregate Square Feet | Approximate % of Aggregate Square Feet | Current Annual
Base Rent | Approximate %
of Aggregate Annual Rent | Purchase Price | Current Mortgage Balance | ||||||||||||||||||||||
| Southwest | 79 | 243,308 | 96.1 | % | $ | 2,409,732 | 94.5 | % | $ | 33,116,369 | $ | 20,792,387 | |||||||||||||||||
| Northeast | 2 | 6,153 | 2.4 | % | 80,844 | 3.3 | % | 898,250 | 294,245 | ||||||||||||||||||||
| Midwest | 1 | 3,663 | 1.5 | % | 57,420 | 2.2 | % | 638,000 | 384,724 | ||||||||||||||||||||
| Total | 82 | 253,124 | 100.0 | % | $ | 2,547,996 | 100.0 | % | $ | 34,652,619 | $ | 21,471,356 | |||||||||||||||||
| CONSOLIDATED BALANCE SHEET | |
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Real estate assets and lease intangibles: | ||||||||
| Land | $ | 18,223,947 | $ | 21,136,379 | ||||
| Buildings and improvements | 116,206,836 | 119,224,375 | ||||||
| Tenant improvements | 12,911,091 | 12,752,518 | ||||||
| Lease intangibles | 4,110,139 | 4,110,139 | ||||||
| Real estate assets and lease intangibles held for investment, cost | 151,452,013 | 157,223,411 | ||||||
| Accumulated depreciation and amortization | (31,321,223 | ) | (30,589,969 | |||||
| Real estate assets and lease intangibles held for investment, net | 120,130,790 | 126,633,442 | ||||||
| Real estate assets held for sale, net | 6,656,116 | 11,431,494 | ||||||
| Real estate assets, net | 126,786,906 | 138,064,936 | ||||||
| Cash, cash equivalents and restricted cash | 18,569,075 | 14,702,089 | ||||||
| Deferred leasing costs, net | 1,244,753 | 1,348,234 | ||||||
| Goodwill | 2,423,000 | 2,423,000 | ||||||
| Other assets, net | 3,892,377 | 4,658,504 | ||||||
| Investments held in Trust (see Notes 2 & 9) | 135,706,687 | — | ||||||
| TOTAL ASSETS | $ | 288,622,798 | $ | 161,196,763 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Liabilities: | ||||||||
| Mortgage notes payable, net | $ | 89,115,802 | $ | 87,324,319 | ||||
| Mortgage notes payable related to properties held for sale, net | 5,025,578 | 1,535,513 | ||||||
| Mortgage notes payable, total net | 94,141,380 | 88,859,832 | ||||||
| Accounts payable and accrued liabilities | 9,386,609 | 4,585,036 | ||||||
| Accrued real estate taxes | 1,493,634 | 1,940,913 | ||||||
| Dividends payable preferred stock | 178,916 | 179,685 | ||||||
| Lease liability, net | 54,218 | 75,547 | ||||||
| Below-market leases, net | 31,963 | 73,130 | ||||||
| Total liabilities | 105,286,720 | 95,714,143 | ||||||
| Commitments and contingencies (Note 2 & 9) | ||||||||
| SPAC Class A common stock subject to possible redemption; 13,225,000 shares (at $10.20 per share), net of issuance cost of approximately $6,400,000 | 129,246,639 | — | ||||||
| Equity: | ||||||||
| Series D Preferred Stock, par value per share; 1,000,000 shares authorized; 920,000 shares issued and outstanding (liquidation preference $25.00 per share) as of June 30, 2022 and December 31, 2021, respectively | 9,161 | 9,200 | ||||||
| Series A Common Stock, $0.01 par value per share, shares authorized: 100,000,000; 11,793,757 shares and 11,599,720 shares were issued and outstanding at June 30, 2022 and December 31, 2021, respectively | 116,556 | 115,997 | ||||||
| Additional paid-in capital | 182,235,077 | 186,492,012 | ||||||
| Dividends and accumulated losses | (135,304,308 | ) | (130,947,434 | ) | ||||
| Total stockholders’ equity before noncontrolling interest | 45,056,486 | 55,669,775 | ||||||
| Noncontrolling interest | 9,032,953 | 9,812,845 | ||||||
| Total equity | 54,089,439 | 65,482,620 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 288,622,798 | $ | 161,196,763 | ||||
| CONSOLIDATED STATEMENT OF OPERATIONS | |
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues: | ||||||||||||||||
| Rental income | $ | 4,243,887 | $ | 4,185,212 | $ | 12,884,280 | $ | 14,216,234 | ||||||||
| Fees and other income | 148,088 | 190,967 | 401,697 | 675,283 | ||||||||||||
| Total revenue | 4,391,975 | 4,376,179 | 13,285,977 | 14,891,517 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Rental operating costs | 1,434,225 | 1,414,518 | 4,365,781 | 4,739,256 | ||||||||||||
| General and administrative | 1,509,139 | 1,479,261 | 4,306,835 | 4,361,297 | ||||||||||||
| Depreciation and amortization | 1,318,164 | 1,306,874 | 3,973,682 | 4,104,018 | ||||||||||||
| Impairment of real estate assets | — | — | — | 300,000 | ||||||||||||
| Total costs and expenses | 4,261,528 | 4,200,653 | 12,646,198 | 13,504,571 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense-mortgage notes | (1,382,120 | ) | (1,030,883 | ) | (3,485,693 | ) | (3,542,940 | ) | ||||||||
| Interest expense - note payable | — | — | — | (279,373 | ) | |||||||||||
| Interest and other (expense), net | 590,586 | (13,886 | ) | 757,318 | (67,329 | ) | ||||||||||
| Gain on sales of real estate, net | 1,307,258 | 627,322 | 4,057,527 | 2,060,336 | ||||||||||||
| Gain on extinguishment of government debt | — | — | — | 10,000 | ||||||||||||
| Income tax expense | (294,996 | ) | (182,607 | ) | (819,520 | ) | (471,506 | ) | ||||||||
| Total other income (expense), net | 220,728 | (600,054 | ) | 509,632 | (2,290,812 | ) | ||||||||||
| Net income (loss) | 351,175 | (424,528 | ) | 1,149,411 | (903,866 | ) | ||||||||||
| Less: Income attributable to noncontrolling interests | (1,114,928 | ) | (427,303 | ) | (3,032,806 | ) | (1,759,608 | ) | ||||||||
| Net income (loss) attributable to Presidio Property Trust, Inc. stockholders | $ | (763,753 | ) | $ | (851,831 | ) | $ | (1,883,395 | ) | $ | (2,663,474 | ) | ||||
| Less: Preferred Stock Series D dividends | (538,286 | ) | (539,056 | ) | (1,616,397 | ) | (634,892 | ) | ||||||||
| Less: Series A Warrant dividend | — | — | (2,456,512 | ) | — | |||||||||||
| Net income (loss) attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,302,039 | ) | $ | (1,390,887 | ) | $ | (5,956,304 | ) | $ | (3,298,366 | ) | ||||
| Net income (loss) per share attributable to Presidio Property Trust, Inc. common stockholders: | ||||||||||||||||
| Basic & Diluted | $ | (0.11 | ) | $ | (0.13 | ) | $ | (0.51 | ) | $ | (0.33 | ) | ||||
| Weighted average number of common shares outstanding - basic & diluted | 11,780,090 | 10,833,847 | 11,784,500 | 9,955,046 | ||||||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |
| For the Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 1,149,411 | $ | (903,866 | ) | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 3,973,582 | 4,104,018 | ||||||
| Stock compensation | 861,837 | 867,903 | ||||||
| Bad debt expense | 11,116 | 52 | ||||||
| Gain on sale of real estate assets, net | (4,057,527 | ) | (2,060,336 | ) | ||||
| Gain on extinguishment of government debt | — | (10,000 | ) | |||||
| Net change in fair value marketable securities | 70,183 | 37,673 | ||||||
| Net change in fair value SPAC Trust Account | (811,687 | ) | — | |||||
| Impairment of real estate assets | — | 300,000 | ||||||
| Amortization of financing costs | 180,250 | 431,806 | ||||||
| Amortization of above-market leases | — | 42,064 | ||||||
| Amortization of below-market leases | (41,167 | ) | (46,481 | ) | ||||
| Straight-line rent adjustment | (148,181 | ) | (215,655 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Other assets | 585,984 | 633,354 | ||||||
| Accounts payable and accrued liabilities | 561,780 | (1,014,848 | ) | |||||
| Accrued real estate taxes | (447,279 | ) | (1,040,680 | ) | ||||
| Net cash provided operating activities | 1,888,302 | 1,125,004 | ||||||
| Cash flows from investing activities: | ||||||||
| Real estate acquisitions | (8,087,250 | ) | (7,758,066 | ) | ||||
| Additions to buildings and tenant improvements | (1,939,712 | ) | (1,122,051 | ) | ||||
| Investment in marketable securities | (1,243,672 | ) | (2,682,192 | ) | ||||
| Proceeds from sale of marketable securities | 1,787,695 | 1,032,297 | ||||||
| Investment of SPAC IPO proceeds into Trust Account | (134,895,000 | ) | — | |||||
| Additions to deferred leasing costs | (53,377 | ) | (97,932 | ) | ||||
| Proceeds from sales of real estate, net | 20,603,179 | 47,906,909 | ||||||
| Net cash (used in) provided by investing activities | (123,828,137 | ) | 37,278,965 | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from mortgage notes payable, net of issuance costs | 14,992,425 | 8,003,807 | ||||||
| Repayment of mortgage notes payable | (9,586,079 | ) | (41,862,782 | ) | ||||
| Repayment of note payable | — | (7,675,598 | ) | |||||
| Payment of deferred offering costs | (3,201,266 | ) | (572,458 | ) | ||||
| Distributions to noncontrolling interests, net | (3,812,698 | ) | (5,624,969 | ) | ||||
| Proceeds from initial public offering of SPAC | 132,859,920 | — | ||||||
| SPAC offering non-controlling interest adjustment | (609,920 | ) | — | |||||
| Issuance of Series A Common Stock, net of offering costs | — | 8,871,879 | ||||||
| Issuance of Series D Preferred Stock, net of offering costs | — | 20,489,803 | ||||||
| Repurchase of Series A Common Stock, at cost | (277,696 | ) | (68,396 | ) | ||||
| Repurchase of Series D Preferred Stock, at cost | (84,386 | ) | — | |||||
| Dividends paid to Series D Preferred Stockholders | (1,616,398 | ) | (455,207 | ) | ||||
| Dividends paid to Series A Common Stockholders | (2,857,081 | ) | (3,234,669 | ) | ||||
| Net cash provided by (used in) financing activities | 125,806,821 | (22,128,590 | ) | |||||
| Net increase in cash equivalents and restricted cash | 3,866,986 | 16,275,379 | ||||||
| Cash, cash equivalents and restricted cash - beginning of period | 14,702,089 | 11,540,917 | ||||||
| Cash, cash equivalents and restricted cash - end of period | $ | 18,569,075 | $ | 27,816,296 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid-mortgage notes payable | $ | 3,038,713 | $ | 3,407,689 | ||||
| Interest paid-notes payable | $ | — | $ | 103,861 | ||||
| Non-cash financing activities: | ||||||||
| Dividends payable - Preferred Stock Series D | $ | 178,916 | $ | 179,685 | ||||
| EBITDAre RECONCILIATION | |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| 9/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | |||||||||||||
| Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,302,039 | ) | $ | (1,390,887 | ) | $ | (5,956,304 | ) | $ | (3,298,366 | ) | ||||
| Adjustments: | ||||||||||||||||
| Interest Expense | 1,382,120 | 1,030,883 | 3,485,693 | 3,822,313 | ||||||||||||
| Depreciation and Amortization | 1,304,441 | 1,300,852 | 3,932,415 | 4,099,601 | ||||||||||||
| Asset Impairments | — | — | — | 300,000 | ||||||||||||
| Net Loss on Sales of RE | (1,307,258 | ) | (627,322 | ) | (4,057,527 | ) | (2,060,336 | ) | ||||||||
| Gain Extinguishment of Government Debt | — | — | — | (10,000 | ) | |||||||||||
| Income Taxes | 294,996 | 182,607 | 819,520 | 471,506 | ||||||||||||
| EBITDAre | $ | 372,260 | $ | 496,133 | $ | (1,776,203 | ) | $ | 3,324,718 | |||||||
| FFO AND CORE FFO RECONCILIATION | |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| 9/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | |||||||||||||
| Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,302,039 | ) | $ | (1,390,887 | ) | $ | (5,956,304 | ) | $ | (3,298,366 | ) | ||||
| Adjustments: | ||||||||||||||||
| Income attributable to noncontrolling interests | 1,114,928 | 427,303 | 3,032,806 | 1,759,608 | ||||||||||||
| Depreciation and amortization | 1,318,164 | 1,306,874 | 3,973,582 | 4,104,018 | ||||||||||||
| Amortization of above and below market leases, net | (13,722 | ) | (6,022 | ) | (41,167 | ) | (4,417 | ) | ||||||||
| Impairment of real estate assets | — | — | — | 300,000 | ||||||||||||
| Loss (gain) on sale of real estate assets, net | (1,307,258 | ) | (627,322 | ) | (4,057,527 | ) | (2,060,336 | ) | ||||||||
| FFO | $ | (189,927 | ) | $ | (290,054 | ) | $ | (3,048,610 | ) | $ | 800,507 | |||||
| Restricted stock compensation | 293,136 | 285,704 | 861,837 | 867,903 | ||||||||||||
| Series A Warrant Dividend | — | — | 2,456,512 | — | ||||||||||||
| Core FFO | $ | 103,209 | $ | (4,350 | ) | $ | 269,738 | $ | 1,668,410 | |||||||
| Weighted average number of common shares outstanding - basic and diluted | 111,780,090 | 10,833,847 | 11,784,500 | 9,955,046 | ||||||||||||
| Core FFO / Wgt Avg Share | $ | 0.01 | $ | (0.00 | ) | $ | 0.02 | $ | 0.17 | |||||||
| SEGMENT DATA | |
| DEFINITIONS – 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.
Funds from 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.
Core Funds 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.