Presidio Property Trust Files 2023 10-K, Highlighting Lease Expirations and Property Management

TL;DR

<b>Presidio Property Trust's 2023 10-K reveals significant tenant vacancy and upcoming loan maturities, with ongoing efforts to re-lease space and manage debt.</b>

AI Summary

Presidio Property Trust, Inc. (SQFTW) filed a Annual Report (10-K) with the SEC on April 16, 2024. Presidio Property Trust, Inc. filed its 2023 10-K report on April 16, 2024. The company's largest tenant, Halliburton, vacated its 536,080 sq ft space at Shea Center II in Colorado on December 31, 2022, impacting annual base rent by approximately $1.1 million. As of December 31, 2023, 20% of the former Halliburton space has been leased, with management actively seeking tenants for the remaining 80%. A $0.4 million impairment charge was recorded for eight model homes due to a short hold period and changes in builder product types. The loan on the Dakota Center property matures in July 2024, and management is in discussions with the lender for an extension and term modifications.

Why It Matters

For investors and stakeholders tracking Presidio Property Trust, Inc., this filing contains several important signals. The departure of a major tenant like Halliburton creates immediate revenue gaps and requires substantial effort to re-lease the space, impacting the company's financial stability. Upcoming loan maturities, such as the Dakota Center loan in July 2024, pose refinancing risks, especially in a rising interest rate environment, potentially increasing borrowing costs or requiring asset sales.

Risk Assessment

Risk Level: high — Presidio Property Trust, Inc. shows elevated risk based on this filing. The company faces high risk due to the vacancy of its largest tenant, Halliburton, which occupied 536,080 sq ft and contributed significantly to annual base rent, alongside upcoming loan maturities like the Dakota Center loan in July 2024, requiring active management and potential refinancing.

Analyst Insight

Presidio Property Trust needs to accelerate leasing efforts for the vacant Halliburton space and secure favorable terms for the Dakota Center loan maturity to mitigate financial risks.

Key Numbers

• 536,080 — Square Feet (Halliburton's former leased space)
• $1.1 million — Annual Base Rent (Impact of Halliburton's departure)
• 20% — Leased Space (Portion of former Halliburton space leased in 2023)
• 80% — Vacant Space (Remaining portion of former Halliburton space as of Dec 31, 2023)
• $0.4 million — Impairment Charge (Recorded for eight model homes)
• July 2024 — Loan Maturity (Dakota Center loan)

Key Players & Entities

• Presidio Property Trust, Inc. (company) — Filer name
• Halliburton (company) — Largest tenant that did not renew lease
• Shea Center II (company) — Property where Halliburton was located
• Dakota Center (company) — Property with upcoming loan maturity
• Genesis Plaza (company) — Property owned by tenants-in-common with company's beneficial ownership
• July 2024 (date) — Maturity date for Dakota Center loan
• December 31, 2022 (date) — Lease expiration date for Halliburton
• $1.1 million (dollar_amount) — Amount placed in reserve account for future mortgage payments related to Halliburton vacancy

FAQ

Risk Factors

• Tenant Vacancy Risk [high — operational]: The company faces significant risk from the vacancy of its largest tenant, Halliburton, which occupied 536,080 sq ft and contributed approximately $1.1 million in annual base rent, with 80% of the space still unleased as of December 31, 2023.
• Loan Maturity and Refinancing Risk [high — financial]: The loan on the Dakota Center property matures in July 2024, and management is seeking an extension and modifications, indicating potential refinancing challenges and increased borrowing costs.

Key Financial Figures

• $0.01 — ich Registered Series A Common Stock, $0.01 par value per share SQFT The Nasdaq
• $1.1 million — r 31, 2022, and we placed approximately $1.1 million in a reserve account with our lender to
• $21.9 million — purchase price for these properties was $21.9 million. The purchase price consisted of cash p
• $6.6 million — ase price consisted of cash payments of $6.6 million and mortgage notes of $15.3 million. A
• $15.3 million — s of $6.6 million and mortgage notes of $15.3 million. Acquisitions during the year ended De
• $15.6 million — e purchase price for the properties was $15.6 million. The purchase price consisted of cash p
• $4.8 million — ase price consisted of cash payments of $4.8 million and mortgage notes of $10.8 million. W
• $10.8 million — s of $4.8 million and mortgage notes of $10.8 million. We review our portfolio of investment
• $11.7 million — ties: 22 model homes for approximately $11.7 million and the Company recognized a gain of ap
• $3.2 million — pany recognized a gain of approximately $3.2 million. Dispositions during the year ended D
• $10.0 million — ld on March 11, 2022, for approximately $10.0 million and the Company recognized a loss of ap
• $0.3 million — pany recognized a loss of approximately $0.3 million. 31 model homes for approximately $17.
• $17.5 million — lion. 31 model homes for approximately $17.5 million and the Company recognized a gain of ap
• $5.4 million — pany recognized a gain of approximately $5.4 million. Model Home Properties Our Model Ho
• $50.8 million — with a net book value of approximately $50.8 million . 3 Table of Contents Our Model Ho

Filing Documents

• sqft20231231_10k.htm (10-K) — 2922KB
• ex_630277.htm (EX-21.1) — 19KB
• ex_600399.htm (EX-23.1) — 3KB
• ex_600400.htm (EX-31.1) — 12KB
• ex_600401.htm (EX-31.2) — 13KB
• ex_600403.htm (EX-32.1) — 8KB
• ex_648524.htm (EX-97.1) — 22KB
• 0001437749-24-012113.txt (&nbsp;) — 12484KB
• sqft-20231231.xsd (EX-101.SCH) — 91KB
• sqft-20231231_cal.xml (EX-101.CAL) — 67KB
• sqft-20231231_def.xml (EX-101.DEF) — 712KB
• sqft-20231231_lab.xml (EX-101.LAB) — 557KB
• sqft-20231231_pre.xml (EX-101.PRE) — 737KB
• sqft20231231_10k_htm.xml (XML) — 2235KB

BUSINESS

BUSINESS 2 ITEM 1A.

RISK FACTORS

RISK FACTORS 10 ITEM 1B. UNRESOLVED STAFF COMMENT 39 ITEM 1C CYBERSECURITY 39 ITEM 2.

PROPERTIES

PROPERTIES 40 ITEM 3.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 45 ITEM 4. MY SAFETY DISCLOSURES 45 Part II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERS PURCHASES OF EQUITY SECURITIES 45 ITEM 6. RESERVED 48 ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 49 ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 64 ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 64 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 65 ITEM 9A.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 65 ITEM 9B. OTHER INFORMATION 65 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 65 Part III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 66 ITEM 11.

EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION 66 ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 66 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE 66 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 66 Part IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 66 Table of Contents CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS, RISK FACTORS AND INDUSTRY DATA This Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 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 this Form 10-K. Important factors that may cause actual results to differ from projections include, but are not limited to: inherent risks associated with real estate investments and with the real estate industry; significant competition may decrease or prevent increases in our properties' occupancy and rental rates and may reduce the value of our properties; a decrease in demand for commercial space and model homes and/or an increase in operating costs; failure by any major tenant (or a substantial number of tenants) to make rental payments to us because of a deterioration of its financial condition, an early termination of its lease, a non-renewal of its lease, or a renewal of its lease on terms less favorable to us; challenging economic conditions facing us and our tenants may have a material adverse effect on our financial condition and results of operations; our failure to generate sufficient cash to pay dividends and to service or retire our debt obligations in a timely manner; our inability to borrow or raise sufficient capital to maintain or expand our real estate investment portfolio; adverse changes in the real estate financing markets, including poten

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