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EX-99.1 - EXHIBIT 99.1 EARNINGS RELEASE - Presidio Property Trust, Inc.ex_208260.htm
8-K - FORM 8-K - Presidio Property Trust, Inc.sqft20201022_8k.htm

Exhibit 99.2

 

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SUPPLEMENTAL FINANCIAL INFORMATION

 

THIRD QUARTER 2020

 

 

 

 

FORWARD-LOOKING STATEMENTS
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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 13, 2020 (“Annual 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, 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 img08.jpg

 

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Presidio Property Trust, Inc. (“Presidio” or the “Company”) was founded in 1999 as NetREIT  
       
Presidio is a self-managed real estate company focused on commercial real estate opportunities in often overlooked and regionally dominant markets  
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The Company acquires 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 15 commercial properties with a book value of approximately $128.0 million    
     
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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)  

 

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(1) The Company holds partial ownership interests in several entities which own model home properties (2) includes book value of model homes

 

 

 

COMMERCIAL PORTFOLIO img08.jpg

 

Property Location ($ in 000s)

 

Sq. Ft.

 

Date
Acquired

 

Year
Property
Constructed

   

Purchase
Price (1)

   

Occupancy

   

Percent
Ownership

   

Mortgage
Outstanding

 

Office/Industrial Properties:

                                                 

Garden Gateway, Colorado Springs, CO(2)

    115,052  

03/07

 

1982/2006

    $ 15,126       76.4

%

    100.0

%

  $ 5,915  

Executive Office Park, Colorado Springs, CO(3)

    65,084  

07/08

    2000       10,126       96.6

%

    100.0

%

    4,755  

Genesis Plaza, San Diego, CA (4)(5)

    57,807  

08/10

    1989       10,000       74.7

%

    76.4

%

    6,302  

Dakota Center, Fargo, ND

    119,434  

05/11

    1982       9,575       86.0

%

    100.0

%

    9,955  

Grand Pacific Center, Bismarck, ND

    93,058  

04/14

    1976       5,350       74.2

%

    100.0

%

    3,767  

Arapahoe Service Center II, Centennial, CO

    79,023  

12/14

    2000       11,850       100.0

%

    100.0

%

    7,972  

West Fargo Industrial, West Fargo, ND

    150,030  

08/15

 

1998/2005

      7,900       84.0

%

    100.0

%

    4,291  

300 N.P., West Fargo, ND

    34,517  

08/15

    1922       3,850       72.8

%

    100.0

%

    2,283  

Highland Court, Centennial, CO (6)

    93,536  

08/15

    1984       13,050       63.3

%

    84.5

%

    6,313  

One Park Centre, Westminster, CO

    69,174  

08/15

    1983       9,150       81.4

%

    100.0

%

    6,411  

Shea Center II, Highlands Ranch, CO

    121,301  

12/15

    2000       25,325       87.9

%

    100.0

%

    17,728  

Total Office/Industrial Properties

    998,016               $ 121,302       82.0

%

          $ 75,692  
                                                   

Retail Properties:

                                                 

World Plaza, San Bernardino, CA

    55,810  

09/07

    1974       7,650       100.0

%

    100.0

%

    5,829  

Waterman Plaza, San Bernardino, CA(7)

    21,170  

08/08

    2008       7,164       85.9

%

    100.0

%

    3,240  

Union Town Center, Colorado Springs, CO

    44,042  

12/14

    2003       11,212       100.0

%

    100.0

%

    8,350  

Research Parkway, Colorado Springs, CO

    10,700  

8/15

    2003       2,850       100.0

%

    100.0

%

    1,774  

Total Retail Properties

    131,722               $ 28,876       97.7

%

          $ 19,193  

Total Commercial Properties

    1,129,738               $ 150,178       83.8

%

          $ 94,885  

 

(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)

As of August 27, 2020, this property is in escrow in connection with a purchase and sale agreement and, subject to satisfaction and/or waiver of certain contingencies (including buyer obtaining suitable financing), the transaction is expected to close in the fourth quarter of 2020.

   

(3)

As of September 3, 2020, one of the four buildings that comprise this property is in escrow in connection with a purchase and sale agreement and, subject to satisfaction and/or waiver of certain contingencies (including buyer obtaining suitable financing), the transaction is expected to close in the fourth quarter of 2020.

   

(4)

Approximately 9,224 square feet, or 16.0% of this property, is occupied by us as our corporate offices and related parties.

   

(5)

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%.

   

(6)

This property is owned by two tenants-in-common, of which we own approximately 60% and 52%, respectively, and we beneficially own an aggregate interest of 84.5%.

   

(7)

This property is classified as held for sale as of September 17, 2020.

   
 

 

MODEL HOMES PORTFOLIO img08.jpg

 

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

    104       305,203       83.7

%

  $ 3,036,024       80.2

%

  $ 39,174,002     $ 24,383,667  

Southeast

    18       41,621       11.4

%

    499,320       13.2

%

    6,205,606       3,638,343  

Midwest

    2       6,602       1.8

%

    99,276       2.6

%

    1,103,000       717,191  

East

    2       5,255       1.4

%

    70,716       1.9

%

    764,520       184,220  

Northeast

    2       6,153       1.7

%

    80,844       2.1

%

    898,250       591,240  
      128       364,834       100.0

%

  $ 3,786,180       100.0

%

  $ 48,145,378     $ 29,514,662  

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEET img08.jpg

(Unaudited)

 

 

   

September 30,

   

December 31,

 
   

2020

   

2019

 
   

(Unaudited)

         

ASSETS

               

Real estate assets and lease intangibles:

               

Land

  $ 24,063,107     $ 24,490,342  

Buildings and improvements

    133,689,849       133,767,144  

Tenant improvements

    15,095,039       14,043,829  

Lease intangibles

    5,321,295       5,321,295  

Real estate assets and lease intangibles held for investment, cost

    178,169,290       177,622,610  

Accumulated depreciation and amortization

    (31,769,133 )     (27,970,897 )

Real estate assets and lease intangibles held for investment, net

    146,400,157       149,651,713  

Real estate assets held for sale, net

    27,551,655       50,554,907  

Real estate assets, net

    173,951,812       200,206,620  

Cash, cash equivalents and restricted cash

    10,006,026       10,391,275  

Deferred leasing costs, net

    1,721,939       2,053,927  

Goodwill

    2,423,000       2,423,000  

Other assets, net

    3,715,172       5,709,586  

TOTAL ASSETS

  $ 191,817,949     $ 220,784,408  

LIABILITIES AND EQUITY

               

Liabilities:

               

Mortgage notes payable, net

  $ 107,114,310     $ 109,795,546  

Mortgage notes payable related to properties held for sale, net

    16,422,504       32,597,446  

Mortgage notes payable, total net

    123,536,814       142,392,992  

Note payable, net

    8,424,574       12,238,692  

Accounts payable and accrued liabilities

    5,266,774       5,673,815  

Accrued real estate taxes

    1,972,841       2,987,601  

Lease liability, net

    108,743       560,188  

Below-market leases, net

    187,493       309,932  

Total liabilities

    139,497,239       164,163,220  

Commitments and contingencies (Note 9)

               

Equity:

               

Series A Common Stock, $0.01 par value, shares authorized: 100,000,000; 8,922,036 and 8,881,842 shares were both issued and outstanding at September 30, 2020 and December 31, 2019, respectively

    89,220       88,818  

Additional paid-in capital

    153,358,708       152,129,120  

Dividends and accumulated losses

    (117,815,335 )     (113,037,144 )

Total stockholders' equity before noncontrolling interest

    35,632,593       39,180,794  

Noncontrolling interest

    16,688,117       17,440,394  

Total equity

    52,320,710       56,621,188  

TOTAL LIABILITIES AND EQUITY

  $ 191,817,949     $ 220,784,408  

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS img08.jpg

(Unaudited)

 

 

   

For the Three Months Ended September 30,

   

For the Nine Months Ended September 30,

 
   

2020

   

2019

   

2020

   

2019

 

Revenues:

                               

Rental income

  $ 5,433,303     $ 6,677,145     $ 18,098,514     $ 20,371,900  

Fees and other income

    230,265       323,725       715,609       929,221  

Total revenue

    5,663,568       7,000,870       18,814,123       21,301,121  

Costs and expenses:

                               

Rental operating costs

    2,108,621       2,533,064       6,489,547       7,822,616  

General and administrative

    1,366,380       1,451,873       3,996,696       4,632,244  

Depreciation and amortization

    1,626,917       1,755,253       4,823,673       5,714,446  

Impairment of real estate assets

                845,674        

Total costs and expenses

    5,101,918       5,740,190       16,155,590       18,169,306  

Other income (expense):

                               

Interest expense-Series B preferred stock

          (924,538 )           (2,200,262 )

Interest expense-mortgage notes

    (1,439,771 )     (1,723,844 )     (4,605,175 )     (5,485,194 )

Interest expense - note payable

    (704,189 )     (182,476 )     (2,365,987 )     (182,476 )

Interest and other income (expense), net

    (12,270 )     9,294       (10,865 )     19,227  

Gain on sales of real estate, net

    332,714       4,853,186       656,975       6,243,819  

Income tax expense

    (122,602 )     (338,713 )     (257,602 )     (611,952 )

Total other income (expense), net

    (1,946,118 )     1,692,909       (6,582,654 )     (2,216,838 )

Net (loss) income

    (1,384,468 )     2,953,589       (3,924,121 )     914,977  

Less: (Loss) income attributable to noncontrolling interests

    (363,777 )     (416,725 )     (854,070 )     (1,366,104 )

Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders

  $ (1,748,245 )   $ 2,536,864     $ (4,778,191 )   $ (451,127 )

Basic (loss) income per common share

  $ (0.20 )   $ 0.29     $ (0.54 )   $ (0.05 )

Weighted average number of common shares outstanding - basic

    8,922,525       8,852,348       8,900,547       8,860,228  

Diluted (loss) income per common share

  $ (0.20 )   $ 0.27     $ (0.54 )   $ (0.05 )

Weighted average number of common shares outstanding - diluted

    8,922,525       9,275,427       8,900,547       8,860,228  

 


 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS img08.jpg

(Unaudited)

 

   

For the Nine Months Ended September 30,

 
   

2020

   

2019

 

Cash flows from operating activities:

               

Net (loss) income

  $ (3,924,121 )   $ 914,977  

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

               

Depreciation and amortization

    4,823,673       5,714,446  

Stock compensation

    541,865       809,127  

Bad debt expense

    93,958       19,088  

Gain on sale of real estate assets, net

    (656,975 )     (6,243,819 )

Impairment of real estate assets

    845,674        

Accretion of original issue discount

    1,013,405       48,793  

Amortization of financing costs

    992,705       592,598  

Amortization of above-market leases

    38,012       42,796  

Amortization of below-market leases

    (122,439 )     (140,777 )

Straight-line rent adjustment

    67,732       (26,590 )

Changes in operating assets and liabilities:

               

Other assets

    2,171,813       1,709,386  

Accounts payable and accrued liabilities

    (1,974,401 )     (244,791 )

Accrued real estate taxes

    (1,014,760 )     (817,366 )

Net cash provided by operating activities

    2,896,141       2,377,868  

Cash flows from investing activities:

               

Real estate acquisitions

    (8,996,248 )     (6,116,035 )

Additions to buildings and tenant improvements

    (2,510,152 )     (5,182,033 )

Additions to deferred leasing costs

    (137,961 )     (661,401 )

Proceeds from sales of real estate, net

    33,810,274       29,211,836  

Net cash provided by investing activities

    22,165,913       17,252,367  

Cash flows from financing activities:

               

Proceeds from mortgage notes payable, net of issuance costs

    13,339,739       10,667,286  

Repayment of mortgage notes payable

    (32,399,522 )     (20,723,326 )

Proceeds from note payable, net of issuance cost of $1.1 million

          11,623,164  

Repayment of note payable

    (5,224,402 )      

Payment of extension costs, note payable

    (351,025 )      

Redemption of mandatorily redeemable preferred stock

          (16,900,000 )

Payment of deferred offering costs

    (435,736 )      

Distributions to noncontrolling interests, net of contributions

    (358,357 )     (628,462 )

Repurchase of common stock

    (18,000 )     (215,206 )

Dividends paid to stockholders

          (2,158,467 )

Net cash used in financing activities

    (25,447,303 )     (18,335,011 )

Net (decrease) increase in cash equivalents and restricted cash

    (385,249 )     1,295,224  

Cash, cash equivalents and restricted cash - beginning of period

    10,391,275       9,776,215  

Cash, cash equivalents and restricted cash - end of period

  $ 10,006,026     $ 11,071,439  

Supplemental disclosure of cash flow information:

               

Interest paid-Series B preferred stock

  $     $ 1,859,672  

Interest paid-mortgage notes payable

  $ 4,542,959     $ 4,792,830  

Interest paid-notes payable

  $ 604,679     $  

Non-cash financing activities:

               

Issuance of stock for limited partnership interests

  $ 1,247,990     $  

 

 

 

EBITDA RECONCILIATION img08.jpg

 

   

For the Three Months Ended September 30,

   

For the Nine Months Ended September 30,

 
   

2020

   

2019

   

2020

   

2019

 

Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders

  $ (1,748,245 )   $ 2,536,864     $ (4,778,191 )   $ (451,127 )

Adjustments:

                               

Income attributable to noncontrolling interests

    363,777     $ 416,725       854,070       1,366,104  

Depreciation and amortization

    1,626,917     $ 1,755,253       4,823,673       5,714,446  

Amortization of above and below market leases, net

    (26,182 )     (33,564 )     (84,427 )     (97,981 )

Impairment of real estate assets

    -     $ -       845,674       -  

Gain on sale of real estate assets

    (332,714 )   $ (4,853,186 )     (656,975 )     (6,243,819 )

FFO

  $ (116,447 )   $ (177,908 )   $ 1,003,824     $ 287,623  

Stock Based Compensation

    180,622       192,747       541,865       809,127  

Core FFO

  $ 64,175     $ 14,839     $ 1,545,689     $ 1,096,750  

 

 

 

 

 

FFO AND CORE FFO RECONCILIATION img08.jpg

 

   

For the Three Months Ended September 30,

   

For the Nine Months Ended September 30,

 
   

2020

   

2019

   

2020

   

2019

 

Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders

  $ (1,748,245 )   $ 2,536,864     $ (4,778,191 )   $ (451,127 )

Adjustments:

                               

Income attributable to noncontrolling interests

    363,777     $ 416,725       854,070       1,366,104  

Depreciation and amortization

    1,626,917     $ 1,755,253       4,823,673       5,714,446  

Amortization of above and below market leases, net

    (26,182 )     (33,564 )     (84,427 )     (97,981 )

Impairment of real estate assets

    -     $ -       845,674       -  

Gain on sale of real estate assets

    (332,714 )   $ (4,853,186 )     (656,975 )     (6,243,819 )

FFO

  $ (116,447 )   $ (177,908 )   $ 1,003,824     $ 287,623  

Stock Based Compensation

    180,622       192,747       541,865       809,127  

Core FFO

  $ 64,175     $ 14,839     $ 1,545,689     $ 1,096,750  

 

 

 

SAME STORE ANALYSIS img08.jpg

 


   

For the Three Months Ended

September 30,

   

Variance

   

For the Nine Months Ended

September 30,

   

Variance

 
   

2020

   

2019

   

$

   

%

   

2020

   

2019

   

$

   

%

 

Rental revenues

  $ 4,728,379     $ 4,944,888     $ (216,509 )     (4.4 )%   $ 15,104,102     $ 14,677,827     $ 426,275       2.9 %

Rental operating costs

    2,112,951       2,165,441       (52,490 )     (2.4 )%     6,338,882       6,327,656       11,226       0.2 %

Net operating income

  $ 2,615,428     $ 2,779,447     $ (164,019 )     (5.9 )%   $ 8,765,220     $ 8,350,171     $ 415,049       5.0 %

Operating Ratios:

                                                               

Number of same properties

    15       15                       15       15                  

Occupancy, end of period

    83.8 %     82.3 %             1.5 %     83.8 %     82.3 %             1.5 %

Operating costs as a percentage of total revenues

    44.7 %     43.8 %             0.9 %     42.0 %     43.1 %             (1.1 )%

 

 

 

 

SEGMENT DATA  

img07.jpg
 
 

 

DEFINITIONS – NON-GAAP MEASUREMENTS img08.jpg

 

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 and 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 equity 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 such 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 NOI 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.