SAN DIEGO, CA / ACCESSWIRE / August 10, 2021 / Presidio Property Trust, Inc. (Nasdaq:SQFT, SQFTP) (the "Company"), an internally managed, diversified real estate investment trust ("REIT"), today reported earnings for its second quarter ended June 30, 2021. All second quarter financial measures referenced herein are unaudited.
"We are pleased to report our second quarter earnings, continuing the strong rent collections that we saw throughout 2020 and the beginning of 2021," said Jack Heilbron, the Company's President and Chief Executive Officer. "We believe the markets are acknowledging the value of our diversified approach, as we raised gross proceeds of $23 million in a new preferred equity issuance in June, and $10 million of additional common equity and warrants in July 2021."
"12 office and industrial leases were signed in the second quarter of 2021, with 1 new tenant and 11 existing tenant renewals," noted Gary Katz, the Company's Senior Vice President of Asset Management. "We believe that there is continued interest among existing tenants to renew, and among prospective tenants to lease new space, as our buildings typically are in desirable, stable locations."
Second Quarter Highlights
- Core FFO for the quarter was approximately $737,000, or $0.08 per fully diluted share
- Collected 96% of second quarter contractual base rent
- Executed a total of 12 new and renewal leases during the quarter, for incremental annual rental revenue of approximately $633,000
Second Quarter Ended June 30, 2021 Financial Results
Net income attributable to the Company's common stockholders for the three months ended June 30, 2021 was approximately $754,203, or $0.08 per basic and diluted share, compared to a net loss of $1.9 million, or ($0.22) per basic and diluted share for the three months ended June 30, 2020. The increase in net income attributable to the Company's common stockholders was a result of:
- A decrease in revenues of approximately $1.3 million due to the sale of four properties since the beginning of 2021;
- An increase in gain on sale of real estate - During the three months ended June 30, 2021, the company recorded a gain of approximately $2.6 million on the sale of real estate, compared to an approximately $334,000 loss during the three months ended June 30, 2020; partially offset by,
- A corresponding decrease in rental operating costs of approximately $0.5 million due to the sale of four properties compared to the first quarter of 2020.
FFO (non-GAAP) for the three months ended June 30, 2021, decreased by approximately $178,000 to $456,000 from $634,000 for the three months ended March 31, 2021. A reconciliation of FFO to net income, the most directly comparable GAAP financial measure, is attached to this press release. However, because FFO excludes depreciation and amortization as well as the changes in the value of the Company's properties that result from use or market conditions, each of which have real economic effects and could materially impact the Company's results from operations, the utility of FFO as a measure of the Company's performance is limited.
Acquisitions and Dispositions for the first two 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.
During the six months ended June 30, 2020, the Company acquired 6 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 six months ended June 30, 2020, the Company disposed of 32 model homes for approximately $15.1 million and recognized a gain of approximately $2.3 million.
Dividends
On May 25, 2021, the board of directors of the Company declared a quarterly dividend of $0.102 per share of Series A Common Stock for the second quarter of 2021, payable on June 21, 2021 to stockholders of record as of June 7, 2021.
On June 24, 2021, the board of directors of the Company declared the first dividend on its Series D Preferred Stock for the initial period from the issue date of June 15 to June 30, 2021. The dividend was paid in cash in the amount of $0.10417 per share on July 15, 2021, to stockholders of record as of June 30, 2021
Earnings Conference Call
The Company will hold a conference call at 1:30 pm Pacific Time on August 10, 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: 406818
To listen to the call by phone, participants can reference the Presidio Property Q2 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: 42052
The telephone replay of the call will be available later in the day on August 10, 2021, continuing through August 24, 2021. A replay will also be available at the webcast link under "Presentations" in the "Investor" section of the Company's website until August 10, 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
LHartkorn@presidiopt.com
Telephone: (760) 471-8536 x1244
Presidio Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| June 30, | December 31, | |||||
| 2021 | 2020 | |||||
| (Unaudited) | ||||||
ASSETS | ||||||
Real estate assets and lease intangibles: | ||||||
Land | $ | 17,199,715 | $ | 18,827,000 | ||
Buildings and improvements | 108,927,843 | 115,409,423 | ||||
Tenant improvements | 12,264,082 | 11,960,018 | ||||
Lease intangibles | 4,110,139 | 4,110,139 | ||||
Real estate assets and lease intangibles held for investment, cost | 142,501,779 | 150,306,580 | ||||
Accumulated depreciation and amortization | (28,480,085) | (26,551,789) | ||||
Real estate assets and lease intangibles held for investment, net | 114,021,694 | 123,754,791 | ||||
Real estate assets held for sale, net | 10,370,836 | 42,499,176 | ||||
Real estate assets, net | 124,392,530 | 166,253,967 | ||||
Cash, cash equivalents and restricted cash | 29,343,392 | 11,540,917 | ||||
Deferred leasing costs, net | 1,178,277 | 1,927,951 | ||||
Goodwill | 2,423,000 | 2,423,000 | ||||
Other assets, net | 3,509,354 | 3,422,781 | ||||
TOTAL ASSETS | $ | 160,846,553 | $ | 185,568,616 | ||
LIABILITIES AND EQUITY | ||||||
Liabilities: | ||||||
Mortgage notes payable, net | $ | 89,226,919 | $ | 94,664,266 | ||
Mortgage notes payable related to properties held for sale, net | 753,439 | 25,365,430 | ||||
Mortgage notes payable, total net | 89,980,358 | 120,029,696 | ||||
Note payable, net | - | 7,500,086 | ||||
Accounts payable and accrued liabilities | 4,391,594 | 5,126,199 | ||||
Accrued real estate taxes | 940,701 | 2,548,686 | ||||
Dividends payable preferred stock | 95,836 | - | ||||
Lease liability, net | 89,251 | 102,323 | ||||
Below-market leases, net | 98,883 | 139,045 | ||||
Total liabilities | 95,596,623 | 135,446,035 | ||||
Commitments and contingencies (Note 9) | ||||||
Equity: | ||||||
Series D Preferred Stock, $0.01 par value per share; 1,000,000 shares authorized; 0 and 920,000 shares issued and outstanding (liquidation preference $25.00 per share) as of June 30, 2021 and December 31, 2020, respectively | 9,200 | - | ||||
Series A Common Stock, $0.01 par value, shares authorized: 100,000,000; 9,508,363 shares were both issued and outstanding at June 30, 2021 and December 31, 2020, respectively | 95,038 | 95,038 | ||||
Additional paid-in capital | 176,943,749 | 156,463,146 | ||||
Dividends and accumulated losses | (125,590,168) | (121,674,505) | ||||
Total stockholders' equity before noncontrolling interest | 51,457,819 | 34,883,679 | ||||
Noncontrolling interest | 13,792,111 | 15,238,902 | ||||
Total equity | 65,249,930 | 50,122,581 | ||||
TOTAL LIABILITIES AND EQUITY | $ | 160,846,553 | $ | 185,568,616 | ||
Presidio Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
Revenues: | ||||||||||||
Rental income | $ | 4,553,798 | $ | 5,879,526 | $ | 10,031,021 | $ | 12,665,211 | ||||
Fees and other income | 292,785 | 241,878 | 484,316 | 485,344 | ||||||||
Total revenue | 4,846,583 | 6,121,404 | 10,515,337 | 13,150,555 | ||||||||
Costs and expenses: | ||||||||||||
Rental operating costs | 1,485,815 | 1,999,834 | 3,324,738 | 4,380,926 | ||||||||
General and administrative | 1,344,770 | 1,278,971 | 2,882,036 | 2,630,316 | ||||||||
Depreciation and amortization | 1,368,209 | 1,622,230 | 2,797,143 | 3,196,756 | ||||||||
Impairment of real estate assets | - | 845,674 | 300,000 | 845,674 | ||||||||
Total costs and expenses | 4,198,794 | 5,746,709 | 9,303,917 | 11,053,672 | ||||||||
Other income (expense): | ||||||||||||
Interest expense-mortgage notes | (1,207,036) | (1,477,628) | (2,512,057) | (3,165,404) | ||||||||
Interest expense - note payable | - | (795,728) | (279,373) | (1,661,798) | ||||||||
Interest and other income (expense), net | (20,657) | 8,400 | (53,443) | 1,405 | ||||||||
Gain on sales of real estate, net | 2,594,341 | 334,096 | 1,433,014 | 324,261 | ||||||||
Gain on extinguishment of government debt | - | - | 10,000 | - | ||||||||
Income tax expense | (238,701) | (51,369) | (288,899) | (135,000) | ||||||||
Total other income (expense), net | 1,127,947 | (1,982,229) | (1,690,758) | (4,636,536) | ||||||||
Net income (loss) | 1,775,736 | (1,607,534) | (479,338) | (2,539,653) | ||||||||
Less: Loss attributable to noncontrolling interests | (925,697) | (315,282) | (1,332,305) | (490,293) | ||||||||
Net income (loss) attributable to Presidio Property Trust, Inc. stockholders | $ | 850,039 | $ | (1,922,816) | $ | (1,811,643) | $ | (3,029,946) | ||||
Less: Preferred Stock Series D dividends | $ | (95,836) | $ | - | $ | (95,836) | $ | - | ||||
Net income (loss) attributable to Presidio Property Trust, Inc. common stockholders | $ | 754,203 | $ | (1,922,816) | $ | (1,907,479) | $ | (3,029,946) | ||||
Net income (loss) per share attributable to Presidio Property Trust, Inc. common stockholders | ||||||||||||
Basic | $ | 0.08 | $ | (0.22) | $ | (0.20) | $ | (0.34) | ||||
Diluted | $ | 0.08 | $ | (0.22) | $ | (0.20) | $ | (0.34) | ||||
Weighted average number of common shares outstanding - basic & diluted | 9,508,363 | 8,897,037 | 9,508,363 | 8,889,436 | ||||||||
Presidio Property Trust, Inc. and Subsidiaries
Reconciliation of Net Income to FFO and Core FFO
(Unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||
| 6/30/2021 | 6/30/2020 | 6/30/2021 | 6/30/2020 | |||||||||
Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders | $ | 754,203 | $ | (1,922,816) | $ | (1,907,479) | $ | (3,029,946) | ||||
Adjustments: | ||||||||||||
Income attributable to noncontrolling interests | 925,696 | 315,282 | 1,332,305 | 490,293 | ||||||||
Depreciation and amortization | 1,368,209 | 1,622,230 | 2,797,143 | 3,196,756 | ||||||||
Amortization of above and below market leases, net | 2,615 | (28,321) | 1,605 | (58,245) | ||||||||
Impairment of real estate assets | - | 845,674 | 300,000 | 845,674 | ||||||||
Loss (gain) on sale of real estate assets, net | (2,594,341) | (334,096) | (1,433,014) | (324,261) | ||||||||
FFO | $ | 456,382 | $ | 497,953 | $ | 1,090,560 | $ | 1,120,271 | ||||
Restricted stock compensation | 280,652 | 203,872 | 582,199 | 361,243 | ||||||||
Core FFO | $ | 737,034 | $ | 701,825 | $ | 1,672,759 | $ | 1,481,514 | ||||
Weighted average number of common shares outstanding - basic and diluted | 9,508,363 | 8,897,037 | 9,508,363 | 8,889,436 | ||||||||
Core FFO / Wgt Avg Share | $ | 0.08 | $ | 0.08 | $ | 0.18 | $ | 0.17 | ||||
Presidio Property Trust, Inc. and Subsidiaries
Same Store Net Operating Income - Commercial Properties
(Unaudited)
| For the Six Months Ended June 30, | Variance | |||||||||||||
| 2021 | 2020 | % | ||||||||||||
Rental revenues | $ | 7,465,213 | $ | 7,816,436 | $ | (351,223) | (4.5)% | |||||||
Rental operating costs | 2,912,578 | 3,046,693 | (134,115) | (4.4)% | ||||||||||
Same Store Net operating income | $ | 4,552,635 | $ | 4,769,743 | $ | (217,108) | (4.6)% | |||||||
Operating Ratios: | ||||||||||||||
Number of same properties | 11 | 11 | ||||||||||||
Occupancy, end of period | 85.1 | % | 85.2 | % | (0.1)% | |||||||||
Operating costs as a percentage of total revenues | 39.0 | % | 39.0 | % | (1.4)% | |||||||||
SOURCE: Presidio Property Trust
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