0001493152-23-041342.txt : 20231115
0001493152-23-041342.hdr.sgml : 20231115
20231114175159
ACCESSION NUMBER: 0001493152-23-041342
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 28
CONFORMED PERIOD OF REPORT: 20231114
ITEM INFORMATION: Results of Operations and Financial Condition
ITEM INFORMATION: Regulation FD Disclosure
ITEM INFORMATION: Financial Statements and Exhibits
FILED AS OF DATE: 20231115
DATE AS OF CHANGE: 20231114
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Presidio Property Trust, Inc.
CENTRAL INDEX KEY: 0001080657
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798]
IRS NUMBER: 330841255
STATE OF INCORPORATION: MD
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-34049
FILM NUMBER: 231408278
BUSINESS ADDRESS:
STREET 1: 4995 MURPHY CANYON ROAD
STREET 2: SUITE 300
CITY: SAN DIEGO
STATE: CA
ZIP: 92123
BUSINESS PHONE: 760-471-8536
MAIL ADDRESS:
STREET 1: 4995 MURPHY CANYON ROAD
STREET 2: SUITE 300
CITY: SAN DIEGO
STATE: CA
ZIP: 92123
FORMER COMPANY:
FORMER CONFORMED NAME: NETREIT, INC.
DATE OF NAME CHANGE: 20100903
FORMER COMPANY:
FORMER CONFORMED NAME: NETREIT
DATE OF NAME CHANGE: 19990225
8-K
1
form8-k.htm
Date
of Report (Date of earliest event reported): November 14, 2023
Presidio
Property Trust, Inc.
(Exact
name of registrant as specified in its charter)
Maryland
001-34049
33-0841255
(State
or other jurisdiction
of
incorporation)
(Commission
File
Number)
(IRS
Employer
Identification
No.)
4995
Murphy Canyon Road, Suite 300
San
Diego, California92123
(Address
of principal executive offices, including zip code)
Registrant’s
telephone number, including area code: (760)471-8536
Not
Applicable
(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
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement
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
Trading
Symbol(s)
Name
of each exchange on which registered
Series
A Common Stock, $0.01 par value per share
SQFT
The
Nasdaq Stock Market LLC
9.375%
Series D Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share
SQFTP
The
Nasdaq Stock Market LLC
Series
A Common Stock Purchase Warrants to Purchase Shares of Common Stock
SQFTW
The
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 2.02Results of Operations and Financial Condition
Press
Release
On
November 14, 2023, Presidio Property Trust, Inc. (the “Company”) issued a press release announcing its financial results
for the quarter ended September 30, 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 September 30, 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 7.01Regulation 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.
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, 2023
PRESIDIO
PROPERTY TRUST, INC.
By:
/s/
Ed Bentzen
Name:
Ed
Bentzen
Title:
Chief
Financial Officer
EX-99.1
2
ex99-1.htm
Exhibit
99.1
Presidio
Property Trust, Inc. Announces Earnings for
the
Quarter Ended September 30, 2023
San
Diego, California, November 14, 2023 – Presidio Property Trust, Inc. (Nasdaq: SQFT, SQFTP, SQFTW) (the “Company”),
an internally managed, diversified real estate investment trust (“REIT”), today reported earnings for its quarter ended September
30, 2023.
Quarter
Ended September 30, 2023, Financial Results
Net
income attributable to the Company’s common stockholders for the three months ended September 30, 2023 was approximately $20.96
million, or $1.77 per basic and diluted share, compared to a net loss of approximately $1.30 million, or $(0.11) per basic and diluted
share for the three months ended September 30, 2022. The change in net income attributable to the Company’s common stockholders
was a result of:
●
During
September, the Company’s sponsored SPAC Murphy Canyon Acquisition Corp. completed its business combination with Conduit Pharmaceuticals,
Inc., resulting in the Company recognizing a gain on deconsolidation of $40.32 million.
●
The
Company remeasured the fair market value of its investment in Conduit as of September 30, 2023, resulting in a loss of approximately
$17.68 million on the Conduit marketable securities.
●
The
gain on sale of real estate decreased approximately $0.5 million for the three months ended September 30, 2023 as compared to the
same period in 2022. This is directly related to the number of model homes that were sold in each quarter. There were seven model
homes sold in Q3 2022 with an average gain per home of $180k, compared to five model homes sold in Q3 2023 with an average gain per
home of $144k.
●
Noncontrolling
interest payments were approximately $442,000 smaller in Q3 2023 compared to Q3 2022. This is due to the Company selling homes in
its joint ventures. In the joint venture partnerships, the Company sold 3 homes for a gain of $0.6 million and 6 homes for a gain
of $1.1 million in Q2 2023 and Q2 2022 respectively.
FFO
(non-GAAP) decreased by approximately $0.2 million to approximately $(414,365) from $(189,927) for the three months ended September 30,
2023, and September 30, 2022, respectively. 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 decreased by about $0.2 million, from approximately $91,054 in the three months ended
September 30, 2022, to approximately $(126,673) in the three months ended September 30, 2023. A reconciliation of Core FFO to net income,
the most directly comparable GAAP financial measure, is attached to this press release.
Acquisitions
and Dispositions for the first three quarters of 2023
●
The
Company acquired 25 model home properties and leased them back to the homebuilders under triple net leases during the nine months
ended September 30, 2023. The purchase price for these properties was $13.7 million. The purchase price consisted of cash payments
of $4.2 million and mortgage notes of $9.5 million.
●
The
Company sold 15 model home properties for approximately $7.8 million and recognized a gain of approximately $2.3 million.
Dividends
paid during the three quarters of 2023:
●
During
the first, second and third quarters of 2023, the Company declared dividends to common shareholders of $0.022, $0.023 and $0.023
per share, respectively, for a total of $0.068 per share.
●
During
the nine months ended September 30, 2023, the Company paid nine monthly dividends, which totaled $1.75779 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 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 owns approximately 6.5% of the outstanding common
stock of Conduit Pharmaceuticals Inc., a disease agnostic multi-asset clinical-stage disease-agnostic life science company providing
an efficient model for compound development. 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 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.
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. Forward-looking
statements also include statements relating to the closing of the business combination with Conduit within a certain timeframe or at
all. 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,
2023
2022
(Unaudited)
ASSETS
Real estate assets and lease intangibles:
Land
$
20,580,587
$
19,189,386
Buildings and improvements
133,531,747
125,979,374
Tenant improvements
15,636,305
13,861,839
Lease intangibles
4,110,139
4,110,139
Real estate assets and lease intangibles held for investment, cost
173,858,778
163,140,738
Accumulated depreciation and amortization
(37,845,097
)
(34,644,511
)
Real estate assets and lease intangibles held for investment, net
136,013,681
128,496,227
Real estate assets held for sale, net
2,434,624
2,016,003
Real estate assets, net
138,448,305
130,512,230
Other assets:
Cash, cash equivalents and restricted cash
7,778,764
16,516,725
Deferred leasing costs, net
1,501,812
1,516,835
Goodwill
2,423,000
2,423,000
Investment in Conduit Pharmaceuticals marketable securities (see Notes 2 & 9)
23,996,141
—
Other assets, net (see Note 6)
3,785,367
3,511,681
Total other assets
39,485,084
23,968,241
Investments held in Trust (see Notes 2 & 9)
-
136,871,183
TOTAL ASSETS
$
177,933,389
$
291,351,654
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net
$
101,059,368
$
95,899,176
Mortgage notes payable related to properties held for sale, net
1,428,848
999,523
Mortgage notes payable, total net
102,488,216
96,898,699
Accounts payable and accrued liabilities
5,294,349
4,028,564
Accounts payable and accrued liabilities of SPAC (see Notes 2 & 9)
-
5,046,725
Accrued real estate taxes
1,506,532
1,879,875
Dividends payable
478,253
178,511
Lease liability, net
23,989
46,833
Below-market leases, net
14,509
18,240
Total liabilities
109,805,848
108,097,447
Commitments and contingencies (Note 2 & 9):
SPAC Class A common stock subject to possible redemption; none as of September 30, 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
-
130,411,135
Equity:
Series D Preferred Stock, $0.01 par value per share; 1,000,000 shares authorized; 898,940 shares issued and outstanding (liquidation preference $25.00 per share) as of September 30, 2023 and 913,987 shares issued and outstanding as of December 31, 2022
8,989
9,140
Series A Common Stock, $0.01 par value per share, shares authorized: 100,000,000; 11,859,726 shares and 11,807,893 shares were issued and outstanding at September 30, 2023 and December 31, 2022, respectively
118,597
118,079
Additional paid-in capital
181,483,892
182,044,157
Dividends and accumulated losses
(121,638,764
)
(138,341,750
)
Total stockholders’ equity before noncontrolling interest
59,972,714
43,829,626
Noncontrolling interest
8,154,827
9,013,446
Total equity
68,127,541
52,843,072
TOTAL LIABILITIES AND EQUITY
$
177,933,389
$
291,351,654
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,
2023
2022
2023
2022
Revenues:
Rental income
$
4,262,790
$
4,243,887
$
12,534,431
$
12,884,280
Fees and other income
221,384
148,088
615,107
401,697
Total revenue
4,484,174
4,391,975
13,149,538
13,285,977
Costs and expenses:
Rental operating costs
1,478,479
1,434,225
4,452,628
4,365,781
General and administrative
1,635,610
1,509,139
5,413,413
4,306,835
Depreciation and amortization
1,351,705
1,318,164
4,054,109
3,973,582
Total costs and expenses
4,465,794
4,261,528
13,920,150
12,646,198
Other income (expense):
Interest expense - mortgage notes
(1,375,199
)
(1,382,120
)
(3,579,381
)
(3,485,693
)
Interest and other income, net
254,486
590,586
1,394,687
757,318
Gain on sales of real estate, net
757,285
1,307,258
2,294,574
4,057,527
Loss on Conduit marketable securities
(17,682,154
)
—
(17,682,154
)
—
Gain on deconsolidation of SPAC
40,321,483
—
40,321,483
—
Income tax expense
(134,620
)
(294,996
)
(632,147
)
(819,520
)
Total other income, net
22,141,281
220,728
22,117,062
509,632
Net income
22,159,661
351,175
21,346,450
1,149,411
Less: Income attributable to noncontrolling interests
(673,279
)
(1,114,928
)
(2,155,212
)
(3,032,806
)
Net income (loss) attributable to Presidio Property Trust, Inc. stockholders
$
21,486,382
$
(763,753
)
$
19,191,238
$
(1,883,395
)
Less: Preferred Stock Series D dividends
(527,873
)
(538,286
)
(1,595,606
)
(1,616,397
)
Less: Series A Warrant dividend
—
—
—
(2,456,512
)
Net income (loss) attributable to Presidio Property Trust, Inc. common stockholders
$
20,958,509
$
(1,302,039
)
$
17,595,632
$
(5,956,304
)
Net loss per share attributable to Presidio Property Trust, Inc. common stockholders:
Basic & Diluted
$
1.77
$
(0.11
)
$
1.49
$
(0.51
)
Weighted average number of common shares outstanding - basic & dilutive
11,851,343
11,780,090
11,841,847
11,784,500
FFO
and Core FFO Reconciliation
For the Three Months Ended
For the Nine Months Ended
09/30/23
09/30/22
09/30/23
09/30/22
Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders
$
20,958,509
$
(1,302,039
)
$
17,595,632
$
(5,956,304
)
Adjustments:
Income attributable to noncontrolling interests
673,279
1,114,928
2,155,212
3,032,806
Depreciation and amortization
1,351,705
1,318,164
4,054,109
3,973,582
Amortization of above and below market leases, net
(1,244
)
(13,722
)
(3,731
)
(41,167
)
Impairment of real estate assets
-
-
-
-
Loss on Conduit marketable securities
17,682,154
-
17,682,154
-
Gain on deconsolidation of SPAC
(40,321,483
)
-
(40,321,483
)
-
Loss (gain) on sale of real estate assets, net
(757,285
)
(1,307,258
)
(2,294,574
)
(4,057,527
)
FFO
$
(414,365
)
$
(189,927
)
$
(1,132,681
)
$
(3,048,610
)
Restricted stock compensation
287,691
293,136
828,193
861,837
Series A Warrant dividend (non-cash)
-
-
-
2,456,512
Core FFO
$
(126,673
)
$
103,209
$
(304,488
)
$
269,739
Weighted average number of common shares outstanding - basic and diluted
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
OVERVIEW
●
Presidio
Property Trust, Inc. (“Presidio” or the “Company”) was founded in 1999 as NetREIT
●
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
●
Presidio’s
commercial portfolio currently includes 12 commercial properties with a book value of approximately $92 million
●
In
addition to its commercial real estate holdings, Presidio generates fees and rental income from affiliated entities, which manage
and/or own a portfolio of model homes (1)
(1)
The
Company holds partial ownership interests in several entities which own model home properties
(2)
Includes
book value of model homes
COMMERCIAL
PORTFOLIO
($ 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
100.0
%
76.4
%
5,968
Dakota Center, Fargo, ND
119,434
05
/11
1982
9,575
58.1
%
100.0
%
9,260
Grand Pacific Center, Bismarck, ND
95,244
03
/14
1976
5,350
54.6
%
100.0
%
3,806
Arapahoe Center, Colorado Springs, CO
79,023
12
/14
2000
11,850
88.0
%
100.0
%
7,471
West Fargo Industrial, West Fargo, ND
150,099
08
/15
1998
/2005
7,900
100.0
%
100.0
%
3,943
300 N.P., West Fargo, ND
34,517
08
/15
1922
3,850
66.4
%
100.0
%
-
One Park Centre, Westminster CO
69,174
08
/15
1983
9,150
82.3
%
100.0
%
6,074
Shea Center II, Highlands Ranch, CO
121,306
12
/15
2000
25,325
62.1
%
100.0
%
17,023
Baltimore, Baltimore, MD
31,752
12
/21
2006
8,892
100.0
%
100.0
%
5,670
Total Office/Industrial Properties
758,356
$
91,892
77.2
%
$
59,215
Retail Properties:
Union Town Center, Colorado Springs, CO
44,042
12
/14
2003
11,212
79.5
%
100.0
%
7,910
Research Parkway, Colorado Springs, CO
10,700
08
/15
2003
2,850
100.0
%
100.0
%
1,604
Mandolin, Houston, TX (3)
10,500
08
/21
2021
4,892
100.0
%
61.3
%
3,589
Total Retail Properties
65,242
$
18,954
86.2
%
$
13,103
823,598
$
110,846
77.9
%
$
72,318
(1)
Starting
in January 1, 2009, acquisition related costs and expenses were expensed when incurred until ASU 2017-01 was adopted by the Company
in 2017. Since adoption in 2017, 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)
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
Geographic Region
No. of Properties
Aggregate Square Feet
Approximate % of Square Feet
Current Base Annual Rent
Approximate of Aggregate % Annual Rent
Midwest
4
12,307
4.0
%
$
182,748
4.9
%
Southeast
4
9,875
3.2
%
172,428
4.6
%
Southwest
94
287,075
92.8
%
3,401,016
90.5
%
Total
102
309,257
100.0
%
$
3,756,192
100.0
%
CONSOLIDATED
BALANCE SHEET
Presidio
Property Trust, Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
September 30,
December 31,
2023
2022
(Unaudited)
ASSETS
Real estate assets and lease intangibles:
Land
$
20,580,587
$
19,189,386
Buildings and improvements
133,531,747
125,979,374
Tenant improvements
15,636,305
13,861,839
Lease intangibles
4,110,139
4,110,139
Real estate assets and lease intangibles held for investment, cost
173,858,778
163,140,738
Accumulated depreciation and amortization
(37,845,097
)
(34,644,511
)
Real estate assets and lease intangibles held for investment, net
136,013,681
128,496,227
Real estate assets held for sale, net
2,434,624
2,016,003
Real estate assets, net
138,448,305
130,512,230
Other assets:
Cash, cash equivalents and restricted cash
7,778,764
16,516,725
Deferred leasing costs, net
1,501,812
1,516,835
Goodwill
2,423,000
2,423,000
Investment in Conduit Pharmaceuticals marketable securities (see Notes 2 & 9)
23,996,141
—
Other assets, net (see Note 6)
3,785,367
3,511,681
Total other assets
39,485,084
23,968,241
Investments held in Trust (see Notes 2 & 9)
-
136,871,183
TOTAL ASSETS
$
177,933,389
$
291,351,654
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net
$
101,059,368
$
95,899,176
Mortgage notes payable related to properties held for sale, net
1,428,848
999,523
Mortgage notes payable, total net
102,488,216
96,898,699
Accounts payable and accrued liabilities
5,294,349
4,028,564
Accounts payable and accrued liabilities of SPAC (see Notes 2 & 9)
-
5,046,725
Accrued real estate taxes
1,506,532
1,879,875
Dividends payable
478,253
178,511
Lease liability, net
23,989
46,833
Below-market leases, net
14,509
18,240
Total liabilities
109,805,848
108,097,447
Commitments and contingencies (Note 2 & 9):
SPAC Class A common stock subject to possible redemption; none as of September 30, 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
-
130,411,135
Equity:
Series D Preferred Stock, $0.01 par value per share; 1,000,000 shares authorized; 898,940 shares issued and outstanding (liquidation preference $25.00 per share) as of September 30, 2023 and 913,987 shares issued and outstanding as of December 31, 2022
8,989
9,140
Series A Common Stock, $0.01 par value per share, shares authorized: 100,000,000; 11,859,726 shares and 11,807,893 shares were issued and outstanding at September 30, 2023 and December 31, 2022, respectively
118,597
118,079
Additional paid-in capital
181,483,892
182,044,157
Dividends and accumulated losses
(121,638,764
)
(138,341,750
)
Total stockholders’ equity before noncontrolling interest
59,972,714
43,829,626
Noncontrolling interest
8,154,827
9,013,446
Total equity
68,127,541
52,843,072
TOTAL LIABILITIES AND EQUITY
$
177,933,389
$
291,351,654
CONSOLIDATED
STATEMENT OF OPERATIONS
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,
2023
2022
2023
2022
Revenues:
Rental income
$
4,262,790
$
4,243,887
$
12,534,431
$
12,884,280
Fees and other income
221,384
148,088
615,107
401,697
Total revenue
4,484,174
4,391,975
13,149,538
13,285,977
Costs and expenses:
Rental operating costs
1,478,479
1,434,225
4,452,628
4,365,781
General and administrative
1,635,610
1,509,139
5,413,413
4,306,835
Depreciation and amortization
1,351,705
1,318,164
4,054,109
3,973,582
Total costs and expenses
4,465,794
4,261,528
13,920,150
12,646,198
Other income (expense):
Interest expense - mortgage notes
(1,375,199
)
(1,382,120
)
(3,579,381
)
(3,485,693
)
Interest and other income, net
254,486
590,586
1,394,687
757,318
Gain on sales of real estate, net
757,285
1,307,258
2,294,574
4,057,527
Loss on Conduit marketable securities
(17,682,154
)
—
(17,682,154
)
—
Gain on deconsolidation of SPAC
40,321,483
—
40,321,483
—
Income tax expense
(134,620
)
(294,996
)
(632,147
)
(819,520
)
Total other income, net
22,141,281
220,728
22,117,062
509,632
Net income
22,159,661
351,175
21,346,450
1,149,411
Less: Income attributable to noncontrolling interests
(673,279
)
(1,114,928
)
(2,155,212
)
(3,032,806
)
Net income (loss) attributable to Presidio Property Trust, Inc. stockholders
$
21,486,382
$
(763,753
)
$
19,191,238
$
(1,883,395
)
Less: Preferred Stock Series D dividends
(527,873
)
(538,286
)
(1,595,606
)
(1,616,397
)
Less: Series A Warrant dividend
—
—
—
(2,456,512
)
Net income (loss) attributable to Presidio Property Trust, Inc. common stockholders
$
20,958,509
$
(1,302,039
)
$
17,595,632
$
(5,956,304
)
Net loss per share attributable to Presidio Property Trust, Inc. common stockholders:
Basic & Diluted
$
1.77
$
(0.11
)
$
1.49
$
(0.51
)
Weighted average number of common shares outstanding - basic & dilutive
11,851,343
11,780,090
11,841,847
11,784,500
CONSOLIDATED
STATEMENT OF CASH FLOWS
Presidio
Property Trust, Inc. and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
September 30,
2023
2022
Cash flows from operating activities:
Net income
$
21,346,450
$
1,149,411
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
4,054,109
3,973,582
Stock compensation
828,193
861,837
Bad debt expense
27,729
11,116
Gain on sale of real estate assets, net
(2,294,574
)
(4,057,527
)
Gain on deconsolidation of SPAC investment
(40,321,483
)
—
Net change in Conduit fair value marketable securities
17,682,154
—
Net change in fair value marketable securities
(169,530
)
70,183
Net change in fair value SPAC Trust Account
(1,209,542
)
(811,687
)
Amortization of financing costs
263,863
180,250
Amortization of below-market leases
(3,731
)
(41,167
)
Straight-line rent adjustment
(280,619
)
(148,181
)
Changes in operating assets and liabilities:
Other assets
(92,877
)
585,984
Accounts payable and accrued liabilities
378,761
245,652
Accounts payable and accrued liabilities for the SPAC
652,577
316,128
Accrued real estate taxes
(373,343
)
(447,279
)
Net cash provided by operating activities
488,137
1,888,302
Cash flows from investing activities:
Real estate acquisitions
(13,715,923
)
(8,087,250
)
Additions to buildings and tenant improvements
(2,817,786
)
(1,939,712
)
Investment in marketable securities
(2,083,328
)
(1,243,672
)
Proceeds from sale of marketable securities
2,302,456
1,787,695
Investment of SPAC IPO proceeds into Trust Account
(624,998
)
(134,895,000
)
Withdrawals from Trust Account for SPAC taxes
832,480
—
Withdrawals from Trust Account for Redemption of SPAC Shares
137,157,011
—
Deletions / (additions) to deferred leasing costs
5,808
(53,377
)
Proceeds from sales of real estate, net
7,113,065
20,603,179
Net cash provided by (used in) investing activities
128,168,785
(123,828,137
)
Cash flows from financing activities:
Proceeds from mortgage notes payable, net of issuance costs
13,400,934
14,992,425
Repayment of mortgage notes payable
(7,885,953
)
(9,586,079
)
Payment of deferred offering costs
—
(3,201,266
)
Distributions to noncontrolling interests, net
(3,013,831
)
(3,812,698
)
Proceeds from initial public offering of SPAC
—
132,859,920
SPAC offering non-controlling interest adjustment
—
(609,920
)
Redemption of SPAC shares
(137,157,011
)
—
Repurchase of Series A Common Stock, at cost
—
(277,696
)
Repurchase of Series D Preferred Stock, at cost
(250,770
)
(84,386
)
Dividends paid to Series D Preferred Stockholders
(1,595,606
)
(1,616,398
)
Dividends paid to Series A Common Stockholders
(892,646
)
(2,857,081
)
Net cash (used in) provided by financing activities
(137,394,883
)
125,806,821
Net (decrease) increase in cash equivalents and restricted cash
(8,737,961
)
3,866,986
Cash, cash equivalents and restricted cash - beginning of period
16,516,725
14,702,089
Cash, cash equivalents and restricted cash - end of period
$
7,778,764
$
18,569,075
Supplemental disclosure of cash flow information:
Interest paid-mortgage notes payable
$
3,637,980
$
3,038,713
Non-cash financing activities:
Potentially convertible common stock for SPAC
$
—
$
134,895,000
Dividends payable - Common Stock Series A
$
302,495
$
—
Dividends payable - Preferred Stock Series D
$
175,758
$
178,916
EBITDAre
RECONCILIATION
For the Three Months Ended
For the Nine Months Ended
9/30/2023
9/30/2022
9/30/2023
9/30/2022
Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders
$
20,958,509
$
(1,302,039
)
$
17,595,632
$
(5,956,304
)
Adjustments:
Interest Expense
1,375,199
1,382,120
3,579,381
3,485,693
Depreciation and Amortization
1,350,461
1,304,441
4,050,378
3,932,415
Asset Impairments
-
—
-
—
Net Loss on Sales of RE
(757,285
)
(1,307,258
)
(2,294,574
)
(4,057,527
)
Loss on Conduit marketable securities
17,682,154
17,682,154
Gain on deconsolidation of SPAC
(40,321,483
)
—
(40,321,483
)
—
Income Taxes
134,620
294,996
632,147
819,520
EBITDAre
$
422,175
$
372,260
$
923,635
$
(1,776,203
)
FFO
AND CORE FFO RECONCILIATION
For the Three Months Ended
For the Nine Months Ended
09/30/23
09/30/22
09/30/23
09/30/22
Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders
$
20,958,509
$
(1,302,039
)
$
17,595,632
$
(5,956,304
)
Adjustments:
Income attributable to noncontrolling interests
673,279
1,114,928
2,155,212
3,032,806
Depreciation and amortization
1,351,705
1,318,164
4,054,109
3,973,582
Amortization of above and below market leases, net
(1,244
)
(13,722
)
(3,731
)
(41,167
)
Impairment of real estate assets
-
-
-
-
Loss on Conduit marketable securities
17,682,154
-
17,682,154
-
Gain on deconsolidation of SPAC
(40,321,483
)
-
(40,321,483
)
-
Loss (gain) on sale of real estate assets, net
(757,285
)
(1,307,258
)
(2,294,574
)
(4,057,527
)
FFO
$
(414,365
)
$
(189,927
)
$
(1,132,681
)
$
(3,048,610
)
Restricted stock compensation
287,691
293,136
828,193
861,837
Series A Warrant dividend (non-cash)
-
-
-
2,456,512
Core FFO
$
(126,673
)
$
103,209
$
(304,488
)
$
269,739
Weighted average number of common shares outstanding - basic and diluted
11,851,343
11,780,090
11,841,847
11,784,500
Core FFO / Wgt Avg Share
$
(0.011
)
$
0.01
$
(0.026
)
$
0.02
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.
For the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
The type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
Commission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act.
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.