SQFT 8-K
Presidio Property Trust, Inc. (SQFT)
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, 2021, Presidio Property Trust, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2021, 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 third quarter ended September 30, 2021, 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, 2021 | |
| 99.2 | Supplemental Financial Information for the third quarter ended September 30, 2021 | |
| 99.3 | Investor Presentation | |
| 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 12, 2021 | 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 Third Quarter Ended September 30, 2021
San Diego, California, November 11, 2021 – Presidio Property Trust, Inc. (Nasdaq: SQFT, SQFTP) (the “Company”), an internally managed, diversified real estate investment trust (“REIT”), today reported earnings for its third quarter ended September 30, 2021. All third quarter financial measures referenced herein are unaudited.
“We are pleased to report our third quarter earnings, continuing the strong rent collections that we saw throughout 2020 and 2021,” said Jack Heilbron, the Company’s President and Chief Executive Officer. “In the third quarter, we made our company’s first commercial acquisition in Texas. We collected 96% of billings in this period, as our diverse portfolio continues to perform well.”
“11 office, retail, and industrial leases were signed in the third quarter of 2021, with 2 new tenants and 9 existing tenant renewals,” noted Gary Katz, the Company’s Senior Vice President of Asset Management. “We continue to see solid leasing demand in the markets where our properties are located.”
Third Quarter Ended September 30, 2021 Financial Results
Net loss attributable to the Company’s common stockholders for the three months ended September 30, 2021 was approximately ($1.4 million), or ($0.13) per basic and diluted share, compared to a net loss of ($1.7 million), or ($0.20) per basic and diluted share for the three months ended September 30, 2020. The change in net loss attributable to the Company’s common stockholders was a result of:
| ● | A decrease in interest expense of approximately $1.1 million in connections with the reduction of mortgage notes and other notes payable during 2021; | |
| ● | A decrease in revenues of approximately $1.3 million due to the sale of four properties since the beginning of 2021; | |
| ● | A corresponding decrease in rental operating costs of approximately $0.7 million and a decrease of approximately $0.3 million in depreciation and amortization due to the sale of four properties since the beginning of 2021; | |
| ● | Offset by the addition of dividends for Series D Preferred Stock totaling approximately $0.5 million, not present during the three months ended September 30, 2020. |
Core FFO (non-GAAP) for the nine months ended September 30, 2021, increased by approximately $122,722 to $1.67 million from $1.55 million compared to the nine months ended September 30, 2020. A reconciliation of Core FFO to net income, the most directly comparable GAAP financial measure, is attached to this press release. However, because Core 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 Core FFO as a measure of the Company’s performance is limited.
Acquisitions and Dispositions for the first three quarters of 2021
| ● | Waterman Plaza, which was sold on January 28, 2021 for approximately $3.5 million and the Company recognized a loss of approximately $0.2 million. |
| ● | Garden Gateway, which was sold on February 19, 2021 for approximately $11.2 million and the Company recognized a loss of approximately $1.4 million. |
| ● | Highland Court, which 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, which was sold on May 21, 2021, 2021 for approximately $8.1 million and the Company recognized a gain of approximately $2.5 million. |
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.
During the nine months ended September 30, 2020, the Company acquired six model homes for approximately $2.9 million. The purchase price was paid through cash payments of approximately $0.9 million and mortgage notes of approximately $2.0 million.
During the nine months ended September 30, 2020, the Company disposed of 39 model homes for approximately $19.0 million and recognized a gain of approximately $2.9 million.
Dividends
On August 25, 2021, the board of directors of the Company declared a quarterly dividend of $0.103 per share of Series A Common Stock for the second quarter of 2021, payable on September 21, 2021 to stockholders of record as of September 7, 2021.
In accordance with the terms of the Series D Preferred Stock, the Series D monthly dividend has been approved by the Board of Directors through December 2021 in the amount of $0.10417 per share payable on the 15th of every month to stockholders of record of Series D Preferred Stock as of the last day of the prior month. Total dividends paid to Series D Preferred stockholders during the three months ended September 30, 2021 was $455,207.
Earnings Conference Call
The Company will hold a conference call at 1:30 pm Pacific Time on November 11, 2021, to discuss the Company’s financial results. A supplemental financial package to accompany the discussion of the results will be posted on the Company’s website www.presidiopt.com.
Webcast
To listen to the conference call over the Internet, and to be able to submit questions to the Company, click on the link under “Presentations” in the “Investor” section of the Company’s website at www.presidiopt.com
Telephone Conference Call
Toll-Free: 888-506-0062
International: 973-528-0011
Entry code: 651306
To listen to the call by phone, participants can reference the Presidio Property Q3 2021 Earnings Call. Please dial in at least 10 minutes before the scheduled start time.
Conference Call Replay
Toll Free: 877-481-4010
International: 919-882-2331
Replay Passcode: 43366
The telephone replay of the call will be available later in the day on November 11, 2021, continuing through November 25, 2021. A replay will also be available at the webcast link under “Presentations” in the “Investor” section of the Company’s website until November 11, 2022.
About Presidio Property Trust
Presidio is an internally managed, diversified REIT with holdings in office, industrial, and retail properties, and model home properties which are triple-net leased to homebuilders. Presidio’s model homes are leased to homebuilders located primarily in Texas and Florida and its office, industrial and retail properties are located primarily in Colorado, with properties also located in North Dakota and in Southern California. While geographical clustering of real estate enables Presidio to reduce its operating costs through economies of scale by servicing a number of properties with less staff, it makes Presidio susceptible to changing market conditions in these discrete geographic areas, including those that have developed as a result of COVID-19. 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 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.
Same Store Net Operating Income (“Same Store NOI”) – Same Store NOI is calculated as the net operating income attributable to the properties continuously owned and operated for the entirety of the reporting periods presented. The Company’s definition of Same Store NOI excludes properties that were not stabilized during both of the applicable reporting periods. These exclusions may include, but are not limited to, acquisitions, dispositions and properties undergoing repositioning or significant renovations.
We believe Same Store NOI is an important measure of comparison because it allows for comparison of operating results of stabilized properties owned and operated for the entirety of both applicable periods and therefore eliminates variations caused by acquisitions, dispositions or repositioning during such periods. Other REITs may calculate Same Store NOI differently and our calculation should not be compared to that of other REITs.
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 Contacts:
Presidio Property Trust, Inc.
Lowell Hartkorn, Investor Relations
Telephone: (760) 471-8536 x1244
Presidio Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Real estate assets and lease intangibles: | ||||||||
| Land | $ | 18,082,521 | $ | 18,827,000 | ||||
| Buildings and improvements | 110,786,670 | 115,409,423 | ||||||
| Tenant improvements | 12,466,083 | 11,960,018 | ||||||
| Lease intangibles | 4,110,139 | 4,110,139 | ||||||
| Real estate assets and lease intangibles held for investment, cost | 145,445,413 | 150,306,580 | ||||||
| Accumulated depreciation and amortization | (29,564,702 | ) | (26,551,789 | ) | ||||
| Real estate assets and lease intangibles held for investment, net | 115,880,711 | 123,754,791 | ||||||
| Real estate assets held for sale, net | 10,006,947 | 42,499,176 | ||||||
| Real estate assets, net | 125,887,658 | 166,253,967 | ||||||
| Cash, cash equivalents and restricted cash | 27,816,296 | 11,540,917 | ||||||
| Deferred leasing costs, net | 1,258,134 | 1,927,951 | ||||||
| Goodwill | 2,423,000 | 2,423,000 | ||||||
| Other assets, net | 4,449,538 | 3,422,781 | ||||||
| TOTAL ASSETS | $ | 161,834,626 | $ | 185,568,616 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Liabilities: | ||||||||
| Mortgage notes payable, net | $ | 86,061,131 | $ | 94,664,266 | ||||
| Mortgage notes payable related to properties held for sale, net | 194,549 | 25,365,430 | ||||||
| Mortgage notes payable, total net | 86,255,680 | 120,029,696 | ||||||
| Note payable, net | — | 7,500,086 | ||||||
| Accounts payable and accrued liabilities | 4,704,493 | 5,126,199 | ||||||
| Accrued real estate taxes | 1,508,006 | 2,548,686 | ||||||
| Dividends payable preferred stock | 179,685 | — | ||||||
| Lease liability, net | 82,439 | 102,323 | ||||||
| Below-market leases, net | 86,852 | 139,045 | ||||||
| Total liabilities | 92,817,155 | 135,446,035 | ||||||
| Commitments and contingencies (Note 9) | ||||||||
| Equity: | ||||||||
| Series D Preferred Stock, $0.01 par value per share; 1,000,000 shares authorized; 920,000 and 0 shares issued and outstanding (liquidation preference $25.00 per share) as of September 30, 2021 and December 31, 2020, respectively | 9,200 | — | ||||||
| Series A Common Stock, $0.01 par value, shares authorized: 100,000,000; 11,490,230 shares and 9,508,363 shares were issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 114,902 | 95,038 | ||||||
| Additional paid-in capital | 185,727,368 | 156,463,146 | ||||||
| Dividends and accumulated losses | (128,207,540 | ) | (121,674,505 | ) | ||||
| Total stockholders’ equity before noncontrolling interest | 57,643,930 | 34,883,679 | ||||||
| Noncontrolling interest | 11,373,541 | 15,238,902 | ||||||
| Total equity | 69,017,471 | 50,122,581 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 161,834,626 | $ | 185,568,616 | ||||
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, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenues: | ||||||||||||||||
| Rental income | $ | 4,185,212 | $ | 5,433,303 | $ | 14,216,234 | $ | 18,098,514 | ||||||||
| Fees and other income | 190,967 | 230,265 | 675,283 | 715,609 | ||||||||||||
| Total revenue | 4,376,179 | 5,663,568 | 14,891,517 | 18,814,123 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Rental operating costs | 1,414,518 | 2,108,621 | 4,739,256 | 6,489,547 | ||||||||||||
| General and administrative | 1,479,261 | 1,366,380 | 4,361,297 | 3,996,696 | ||||||||||||
| Depreciation and amortization | 1,306,874 | 1,626,917 | 4,104,018 | 4,823,673 | ||||||||||||
| Impairment of real estate assets | — | — | 300,000 | 845,674 | ||||||||||||
| Total costs and expenses | 4,200,653 | 5,101,918 | 13,504,571 | 16,155,590 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense-mortgage notes | (1,030,883 | ) | (1,439,771 | ) | (3,542,940 | ) | (4,605,175 | ) | ||||||||
| Interest expense - note payable | — | (704,189 | ) | (279,373 | ) | (2,365,987 | ) | |||||||||
| Interest and other (expense), net | (13,886 | ) | (12,270 | ) | (67,329 | ) | (10,865 | ) | ||||||||
| Gain on sales of real estate, net | 627,322 | 332,714 | 2,060,336 | 656,975 | ||||||||||||
| Gain on extinguishment of government debt | — | — | 10,000 | — | ||||||||||||
| Income tax expense | (182,607 | ) | (122,602 | ) | (471,506 | ) | (257,602 | ) | ||||||||
| Total other expense, net | (600,054 | ) | (1,946,118 | ) | (2,290,812 | ) | (6,582,654 | ) | ||||||||
| Net loss | (424,528 | ) | (1,384,468 | ) | (903,866 | ) | (3,924,121 | ) | ||||||||
| Less: Income attributable to noncontrolling interests | (427,303 | ) | (363,777 | ) | (1,759,608 | ) | (854,070 | ) | ||||||||
| Net loss attributable to Presidio Property Trust, Inc. stockholders | $ | (851,831 | ) | $ | (1,748,245 | ) | $ | (2,663,474 | ) | $ | (4,778,191 | ) | ||||
| Less: Preferred Stock Series D dividends | (539,056 | ) | — | (634,892 | ) | — | ||||||||||
| Net loss attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,390,887 | ) | $ | (1,748,245 | ) | $ | (3,298,366 | ) | $ | (4,778,191 | ) | ||||
| Net income (loss) per share attributable to Presidio Property Trust, Inc. common stockholders: | ||||||||||||||||
| Basic & Diluted | $ | (0.13 | ) | $ | (0.20 | ) | $ | (0.33 | ) | $ | (0.54 | ) | ||||
| Weighted average number of common shares outstanding - basic & diluted | 10,833,847 | 8,922,525 | 9,955,046 | 8,900,547 | ||||||||||||
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 | |||||||||||||||
| 9/30/2021 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||||||
| Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,390,887 | ) | $ | (1,748,245 | ) | $ | (3,298,366 | ) | $ | (4,778,191 | ) | ||||
| Adjustments: | ||||||||||||||||
| Income attributable to noncontrolling interests | 427,303 | 363,777 | 1,759,608 | 854,070 | ||||||||||||
| Depreciation and amortization | 1,306,874 | 1,626,917 | 4,104,018 | 4,823,673 | ||||||||||||
| Amortization of above and below market leases, net | (6,022 | ) | (26,182 | ) | (4,417 | ) | (84,427 | ) | ||||||||
| Impairment of real estate assets | — | — | 300,000 | 845,674 | ||||||||||||
| Loss (gain) on sale of real estate assets, net | (627,322 | ) | (332,714 | ) | (2,060,336 | ) | (656,975 | ) | ||||||||
| FFO | $ | (290,054 | ) | $ | (116,447 | ) | $ | 800,507 | $ | 1,003,824 | ||||||
| Restricted stock compensation | 285,704 | 180,622 | 867,903 | 541,865 | ||||||||||||
| Core FFO | $ | (4,350 | ) | $ | 64,175 | $ | 1,668,410 | $ | 1,545,689 | |||||||
| Weighted average number of common shares outstanding - basic and diluted | 10,833,847 | 8,922,525 | 9,955,046 | 8,900,547 | ||||||||||||
| Core FFO / Wgt Avg Share | $ | (0.00 | ) | $ | 0.01 | $ | 0.17 | $ | 0.17 | |||||||
Presidio Property Trust, Inc. and Subsidiaries
Same Store Net Operating Income - Commercial Properties
(Unaudited)
For the Three Months Ended September 30, | Variance | |||||||||||||||
| 2021 | 2020 | % | ||||||||||||||
| Rental revenues | $ | 3,678,124 | $ | 3,552,605 | $ | 125,519 | 3.5 | % | ||||||||
| Rental operating costs | 1,531,030 | 1,487,900 | 43,130 | 2.9 | % | |||||||||||
| Same Store Net operating income | $ | 2,147,094 | $ | 2,064,705 | $ | 82,389 | 5.7 | % | ||||||||
| Operating Ratios: | ||||||||||||||||
| Number of same properties | 11 | 11 | ||||||||||||||
| Occupancy, end of period | 82.7 | % | 86.1 | % | (3.4 | )% | ||||||||||
| Operating costs as a percentage of total revenues | 41.6 | % | 41.9 | % | (0.3 | )% | ||||||||||
For the Nine Months Ended September 30, | Variance | |||||||||||||||
| 2021 | 2020 | % | ||||||||||||||
| Rental revenues | $ | 11,143,337 | $ | 11,369,041 | $ | (225,704 | ) | (2.0 | )% | |||||||
| Rental operating costs | 4,443,608 | 4,534,593 | (90,985 | ) | (2.0 | )% | ||||||||||
| Same Store Net operating income | $ | 6,699,729 | $ | 6,834,448 | $ | (134,719 | ) | (1.5 | )% | |||||||
| Operating Ratios: | ||||||||||||||||
| Number of same properties | 11 | 11 | ||||||||||||||
| Occupancy, end of period | 82.7 | % | 86.1 | % | (3.4 | )% | ||||||||||
| Operating costs as a percentage of total revenues | 39.9 | % | 39.9 | % | 0.0 | % | ||||||||||
Exhibit 99.2
SUPPLEMENTAL FINANCIAL INFORMATION
As of September 30, 2021
| 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, 2021 (“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 | |
| COMMERCIAL PORTFOLIO | |
| Property Location ($ in 000s) | Sq. Ft. | Date Acquired | Year Property Constructed | Purchase Price (1) | Occupancy | Percent Ownership | Mortgage Outstanding | |||||||||||||||||
| Office/Industrial Properties: | ||||||||||||||||||||||||
| Genesis Plaza, San Diego, CA (2)(3) | 57,807 | 08/10 | 1989 | 10,000 | 75 | % | 65.6 | % | 6,196 | |||||||||||||||
| Dakota Center, Fargo, ND | 119,434 | 05/11 | 1982 | 9,575 | 57 | % | 100.0 | % | 9,734 | |||||||||||||||
| Grand Pacific Center, Bismarck, ND | 93,058 | 04/14 | 1976 | 5,350 | 72 | % | 100 | % | 3,650 | |||||||||||||||
| Arapahoe Service Center II, Centennial, CO | 79,023 | 12/14 | 2000 | 11,850 | 100 | % | 100.0 | % | 7,812 | |||||||||||||||
| West Fargo Industrial, West Fargo, ND | 150,030 | 08/15 | 1998/2005 | 7,900 | 89 | % | 100 | % | 4,177 | |||||||||||||||
| 300 N.P., West Fargo, ND | 34,517 | 08/15 | 1922 | 3,850 | 67 | % | 100 | % | 2,243 | |||||||||||||||
| One Park Centre, Westminster, CO | 69,174 | 08/15 | 1983 | 9,150 | 100 | % | 100.0 | % | 6,305 | |||||||||||||||
| Shea Center II, Highlands Ranch, CO | 121,301 | 12/15 | 2000 | 25,325 | 96.8 | % | 97 | % | 17,559 | |||||||||||||||
| Total Office/Industrial Properties | 724,344 | $ | 83,000 | 82.1 | % | $ | 57,677 | |||||||||||||||||
| Retail Properties: | ||||||||||||||||||||||||
| World Plaza, San Bernardino, CA (4) | 55,810 | 09/07 | 1974 | 7,650 | 100.0 | % | 100.0 | % | — | |||||||||||||||
| Union Town Center, Colorado Springs, CO | 44,042 | 12/14 | 2003 | 11,212 | 76 | % | 100.0 | % | 8,198 | |||||||||||||||
| Research Parkway, Colorado Springs, CO | 10,700 | 8/15 | 2003 | 2,850 | 100.0 | % | 100.0 | % | 1,720 | |||||||||||||||
| Mandolin, Houston, TX | 10,500 | 8/21 | 2021 | 4,892 | 100.0 | % | 61.3 | % | 1,558 | |||||||||||||||
| Total Retail Properties | 121,052 | $ | 26,604 | 94.0 | % | $ | 11,475 | |||||||||||||||||
| Total Commercial Properties | 845,396 | $ | 109,604 | 92 | % | $ | 69,152 | |||||||||||||||||
| (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 recognized as expense when incurred. |
| (2) | Approximately 9,224 square feet, or 16.0% of this property, is occupied by us as our corporate offices and related parties. |
| (3) | This property is owned by two tenants-in-common, each of which owns 57% and 43%, respectively, and we beneficially own an aggregate interest of 76.4%. |
| (4) | This property is classified as held for sale as of September 30, 2021. |
| MODEL HOMES PORTFOLIO | |
| Region | No. of Properties | Aggregate Square Feet | Approximate % of Aggregate | Current Annual Base Rent | Approximate % of Aggregate | Purchase Price | Current Mortgage Balance | |||||||||||||||||
| Southwest | 79 | 237,416 | 92.95 | % | $ | 2,206,128 | 91.70 | % | $ | 29,126,974 | $ | 19,032,335 | ||||||||||||
| Southeast | 3 | 8,201 | 3.21 | % | 61,528 | 2.56 | % | 736,700 | 541,592 | |||||||||||||||
| Northeast | 2 | 6,153 | 2.41 | % | 80,844 | 3.36 | % | 898,250 | 610,211 | |||||||||||||||
| Midwest | 1 | 3,663 | 1.43 | % | 57,420 | 2.39 | % | 638,000 | 401,234 | |||||||||||||||
| Total | 85 | 255,433 | 100 | % | $ | 2,405,920 | 100 | % | $ | 31,399,924 | $ | 20,585,372 | ||||||||||||
| CONSOLIDATED BALANCE SHEET | |
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Real estate assets and lease intangibles: | ||||||||
| Land | $ | 18,082,521 | $ | 18,827,000 | ||||
| Buildings and improvements | 110,786,670 | 115,409,423 | ||||||
| Tenant improvements | 12,466,083 | 11,960,018 | ||||||
| Lease intangibles | 4,110,139 | 4,110,139 | ||||||
| Real estate assets and lease intangibles held for investment, cost | 145,445,413 | 150,306,580 | ||||||
| Accumulated depreciation and amortization | (29,564,702 | ) | (26,551,789 | ) | ||||
| Real estate assets and lease intangibles held for investment, net | 115,880,711 | 123,754,791 | ||||||
| Real estate assets held for sale, net | 10,006,947 | 42,499,176 | ||||||
| Real estate assets, net | 125,887,658 | 166,253,967 | ||||||
| Cash, cash equivalents and restricted cash | 27,816,296 | 11,540,917 | ||||||
| Deferred leasing costs, net | 1,258,134 | 1,927,951 | ||||||
| Goodwill | 2,423,000 | 2,423,000 | ||||||
| Other assets, net | 4,449,538 | 3,422,781 | ||||||
| TOTAL ASSETS | $ | 161,834,626 | $ | 185,568,616 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Liabilities: | ||||||||
| Mortgage notes payable, net | $ | 86,061,131 | $ | 94,664,266 | ||||
| Mortgage notes payable related to properties held for sale, net | 194,549 | 25,365,430 | ||||||
| Mortgage notes payable, total net | 86,255,680 | 120,029,696 | ||||||
| Note payable, net | — | 7,500,086 | ||||||
| Accounts payable and accrued liabilities | 4,704,493 | 5,126,199 | ||||||
| Accrued real estate taxes | 1,508,006 | 2,548,686 | ||||||
| Dividends payable preferred stock | 179,685 | — | ||||||
| Lease liability, net | 82,439 | 102,323 | ||||||
| Below-market leases, net | 86,852 | 139,045 | ||||||
| Total liabilities | 92,817,155 | 135,446,035 | ||||||
| Commitments and contingencies (Note 9) | ||||||||
| Equity: | ||||||||
| Series D Preferred Stock, $0.01 par value per share; 1,000,000 shares authorized; 920,000 and 0 shares issued and outstanding (liquidation preference $25.00 per share) as of September 30, 2021 and December 31, 2020, respectively | 9,200 | — | ||||||
| Series A Common Stock, $0.01 par value per share, shares authorized: 100,000,000; 11,490,230 shares and 9,508,363 shares were issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 114,902 | 95,038 | ||||||
| Additional paid-in capital | 185,727,368 | 156,463,146 | ||||||
| Dividends and accumulated losses | (128,207,540 | ) | (121,674,505 | ) | ||||
| Total stockholders’ equity before noncontrolling interest | 57,643,930 | 34,883,679 | ||||||
| Noncontrolling interest | 11,373,541 | 15,238,902 | ||||||
| Total equity | 69,017,471 | 50,122,581 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 161,834,626 | $ | 185,568,616 | ||||
| CONSOLIDATED STATEMENT OF OPERATIONS | |
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenues: | ||||||||||||||||
| Rental income | $ | 4,185,212 | $ | 5,433,303 | $ | 14,216,234 | $ | 18,098,514 | ||||||||
| Fees and other income | 190,967 | 230,265 | 675,283 | 715,609 | ||||||||||||
| Total revenue | 4,376,179 | 5,663,568 | 14,891,517 | 18,814,123 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Rental operating costs | 1,414,518 | 2,108,621 | 4,739,256 | 6,489,547 | ||||||||||||
| General and administrative | 1,479,261 | 1,366,380 | 4,361,297 | 3,996,696 | ||||||||||||
| Depreciation and amortization | 1,306,874 | 1,626,917 | 4,104,018 | 4,823,673 | ||||||||||||
| Impairment of real estate assets | — | — | 300,000 | 845,674 | ||||||||||||
| Total costs and expenses | 4,200,653 | 5,101,918 | 13,504,571 | 16,155,590 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense-mortgage notes | (1,030,883 | ) | (1,439,771 | ) | (3,542,940 | ) | (4,605,175 | ) | ||||||||
| Interest expense - note payable | — | (704,189 | ) | (279,373 | ) | (2,365,987 | ) | |||||||||
| Interest and other (expense), net | (13,886 | ) | (12,270 | ) | (67,329 | ) | (10,865 | ) | ||||||||
| Gain on sales of real estate, net | 627,322 | 332,714 | 2,060,336 | 656,975 | ||||||||||||
| Gain on extinguishment of government debt | — | — | 10,000 | — | ||||||||||||
| Income tax expense | (182,607 | ) | (122,602 | ) | (471,506 | ) | (257,602 | ) | ||||||||
| Total other expense, net | (600,054 | ) | (1,946,118 | ) | (2,290,812 | ) | (6,582,654 | ) | ||||||||
| Net loss | (424,528 | ) | (1,384,468 | ) | (903,866 | ) | (3,924,121 | ) | ||||||||
| Less: Income attributable to noncontrolling interests | (427,303 | ) | (363,777 | ) | (1,759,608 | ) | (854,070 | ) | ||||||||
| Net loss attributable to Presidio Property Trust, Inc. stockholders | $ | (851,831 | ) | $ | (1,748,245 | ) | $ | (2,663,474 | ) | $ | (4,778,191 | ) | ||||
| Less: Preferred Stock Series D dividends | (539,056 | ) | — | (634,892 | ) | — | ||||||||||
| Net loss attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,390,887 | ) | $ | (1,748,245 | ) | $ | (3,298,366 | ) | $ | (4,778,191 | ) | ||||
| Net income (loss) per share attributable to Presidio Property Trust, Inc. common stockholders: | ||||||||||||||||
| Basic & Diluted | $ | (0.13 | ) | $ | (0.20 | ) | $ | (0.33 | ) | $ | (0.54 | ) | ||||
| Weighted average number of common shares outstanding - basic & diluted | 10,833,847 | 8,922,525 | 9,955,046 | 8,900,547 | ||||||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |
For the Nine Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (903,866 | ) | $ | (3,924,121 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 4,104,018 | 4,823,673 | ||||||
| Stock compensation | 867,903 | 541,865 | ||||||
| Bad debt expense | 52 | 93,958 | ||||||
| Gain on sale of real estate assets, net | (2,060,336 | ) | (656,975 | ) | ||||
| Gain on extinguishment of government debt | (10,000 | ) | — | |||||
| Net change in fair value marketable securities | 37,673 | — | ||||||
| Impairment of real estate assets | 300,000 | 845,674 | ||||||
| Accretion of original issue discount | — | 1,013,405 | ||||||
| Amortization of financing costs | 431,806 | 992,705 | ||||||
| Amortization of above-market leases | 42,064 | 38,012 | ||||||
| Amortization of below-market leases | (46,481 | ) | (122,439 | ) | ||||
| Straight-line rent adjustment | (215,655 | ) | 67,732 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Other assets | 633,354 | 2,171,813 | ||||||
| Accounts payable and accrued liabilities | (1,014,848 | ) | (1,974,401 | ) | ||||
| Accrued real estate taxes | (1,040,680 | ) | (1,014,760 | ) | ||||
| Net cash provided by operating activities | 1,125,004 | 2,896,141 | ||||||
| Cash flows from investing activities: | ||||||||
| Real estate acquisitions | (7,758,066 | ) | (8,996,248 | ) | ||||
| Additions to buildings and tenant improvements | (1,122,051 | ) | (2,510,152 | ) | ||||
| Investment in marketable securities | (2,682,192 | ) | — | |||||
| Proceeds from sale of marketable securities | 1,032,297 | — | ||||||
| Additions to deferred leasing costs | (97,932 | ) | (137,961 | ) | ||||
| Proceeds from sales of real estate, net | 47,906,909 | 33,810,274 | ||||||
| Net cash provided by investing activities | 37,278,965 | 22,165,913 | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from mortgage notes payable, net of issuance costs | 8,003,807 | 13,339,739 | ||||||
| Repayment of mortgage notes payable | (41,862,782 | ) | (32,399,522 | ) | ||||
| Repayment of note payable | (7,675,598 | ) | (5,224,402 | ) | ||||
| Payment of extension costs, note payable | — | (351,025 | ) | |||||
| Payment of deferred offering costs | (572,458 | ) | (435,736 | ) | ||||
| Distributions to noncontrolling interests, net | (5,624,969 | ) | (358,357 | ) | ||||
| Issuance of Common Stock Series A, net of offering costs | 8,871,879 | — | ||||||
| Issuance of Preferred Stock Series D, net of offering costs | 20,489,803 | — | ||||||
| Repurchase of common stock, at cost | (68,396 | ) | (18,000 | ) | ||||
| Dividends paid to preferred stockholders | (455,207 | ) | — | |||||
| Dividends paid to common stockholders | (3,234,669 | ) | — | |||||
| Net cash used in financing activities | (22,128,590 | ) | (25,447,303 | ) | ||||
| Net increase (decrease) in cash equivalents and restricted cash | 16,275,379 | (385,249 | ) | |||||
| Cash, cash equivalents and restricted cash - beginning of period | 11,540,917 | 10,391,275 | ||||||
| Cash, cash equivalents and restricted cash - end of period | $ | 27,816,296 | $ | 10,006,026 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid-mortgage notes payable | $ | 3,407,689 | $ | 4,542,959 | ||||
| Interest paid-notes payable | $ | 103,861 | $ | 604,679 | ||||
| Non-cash financing activities: | ||||||||
| Issuance of stock for limited partnership interests | $ | — | $ | 1,247,990 | ||||
| Dividends payable - Preferred Stock Series D | $ | 179,685 | $ | — | ||||
| EBITDAre RECONCILIATION | |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| 9/30/2021 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||||||
| Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,390,887 | ) | $ | (1,748,245 | ) | $ | (3,298,366 | ) | $ | (4,778,191 | ) | ||||
| Adjustments: | ||||||||||||||||
| Interest Expense | 1,030,883 | 2,143,960 | 3,822,313 | 6,971,162 | ||||||||||||
| Depreciation and Amortization | 1,300,852 | 1,600,735 | 4,099,601 | 4,739,246 | ||||||||||||
| Asset Impairments | — | — | 300,000 | 845,674 | ||||||||||||
| Net Loss on Sales of RE | (627,322 | ) | (332,714 | ) | (2,060,336 | ) | (656,975 | ) | ||||||||
| Gain Extinguishment of Government Debt | — | — | (10,000 | ) | — | |||||||||||
| Income Taxes | 182,607 | 122,602 | 471,506 | 257,602 | ||||||||||||
| EBITDAre | $ | 496,133 | $ | 1,786,338 | $ | 3,324,718 | $ | 7,378,518 | ||||||||
| FFO AND CORE FFO RECONCILIATION | |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| 9/30/2021 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||||||
| Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders | $ | (1,390,887 | ) | $ | (1,748,245 | ) | $ | (3,298,366 | ) | $ | (4,778,191 | ) | ||||
| Adjustments: | ||||||||||||||||
| Income attributable to noncontrolling interests | 427,303 | 363,777 | 1,759,608 | 854,070 | ||||||||||||
| Depreciation and amortization | 1,306,874 | 1,626,917 | 4,104,018 | 4,823,673 | ||||||||||||
| Amortization of above and below market leases, net | (6,022 | ) | (26,182 | ) | (4,417 | ) | (84,427 | ) | ||||||||
| Impairment of real estate assets | — | — | 300,000 | 845,674 | ||||||||||||
| Loss (gain) on sale of real estate assets, net | (627,322 | ) | (332,714 | ) | (2,060,336 | ) | (656,975 | ) | ||||||||
| FFO | $ | (290,054 | ) | $ | (116,447 | ) | $ | 800,507 | $ | 1,003,824 | ||||||
| Restricted stock compensation | 285,704 | 180,622 | 867,903 | 541,865 | ||||||||||||
| Core FFO | $ | (4,350 | ) | $ | 64,175 | $ | 1,668,410 | $ | 1,545,689 | |||||||
| Weighted average number of common shares outstanding - basic and diluted | 10,833,847 | 8,922,525 | 9,955,046 | 8,900,547 | ||||||||||||
| Core FFO / Wgt Avg Share | $ | (0.00 | ) | $ | 0.01 | $ | 0.17 | $ | 0.17 | |||||||
| SAME STORE ANALYSIS | |
For the Three Months Ended September 30, | Variance | |||||||||||||||
| 2021 | 2020 | % | ||||||||||||||
| Rental revenues | $ | 3,678,124 | $ | 3,552,605 | $ | 125,519 | 3.5 | % | ||||||||
| Rental operating costs | 1,531,030 | 1,487,900 | 43,130 | 2.9 | % | |||||||||||
| Same Store Net operating income | $ | 2,147,094 | $ | 2,064,705 | $ | 82,389 | 5.7 | % | ||||||||
| Operating Ratios: | ||||||||||||||||
| Number of same properties | 11 | 11 | ||||||||||||||
| Occupancy, end of period | 82.7 | % | 86.1 | % | (3.4 | )% | ||||||||||
| Operating costs as a percentage of total revenues | 41.6 | % | 41.9 | % | (0.3 | )% | ||||||||||
For the Nine Months Ended September 30, | Variance | |||||||||||||||
| 2021 | 2020 | % | ||||||||||||||
| Rental revenues | $ | 11,143,337 | $ | 11,369,041 | $ | (225,704 | ) | (2.0 | )% | |||||||
| Rental operating costs | 4,443,608 | 4,534,593 | (90,985 | ) | (2.0 | )% | ||||||||||
| Same Store Net operating income | $ | 6,699,729 | $ | 6,834,448 | $ | (134,719 | ) | (1.5 | )% | |||||||
| Operating Ratios: | ||||||||||||||||
| Number of same properties | 11 | 11 | ||||||||||||||
| Occupancy, end of period | 82.7 | % | 86.1 | % | (3.4 | )% | ||||||||||
| Operating costs as a percentage of total revenues | 39.9 | % | 39.9 | % | 0.0 | % | ||||||||||
| 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 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.
Same Store Net Operating Income (“Same Store NOI”) – Same Store NOI, a non-GAAP measure, is calculated as the net operating income attributable to the properties continuously owned and operated for the entirety of the reporting periods presented. The Company’s definition of Same Store NOI excludes properties that were not stabilized during both of the applicable reporting periods. These exclusions may include, but are not limited to, acquisitions, dispositions and properties undergoing repositioning or significant renovations.
The Company evaluates the performance of its same-store property operating results based upon net operating income from continuing operations, which is a non-GAAP supplemental financial measure. The Company defines NOI as operating revenues (rental income, tenant reimbursements and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance and provision for bad debt) less interest expense. NOI excludes certain items that are not considered to be controllable in connection with the management of an asset such as non-property income and expenses, depreciation and amortization, asset management fees and corporate general and administrative expenses. The Company believes that net income is the GAAP measure that is most directly comparable to NOI; however, NOI should not be considered as an alternative to net income as the primary indicator of operating performance as it excludes the items described above.
We believe Same Store NOI, a non-GAAP measure, is an important measure of comparison because it allows for comparison of operating results of stabilized properties owned and operated for the entirety of both applicable periods and therefore eliminates variations caused by acquisitions, dispositions or repositioning during such periods. Other REITs may calculate Same Store NOI differently and our calculation should not be compared to that of other REITs.
Exhibit 99.3
